GM Grants Executive Stock Options

General Motors Co. handed out its first stock options since emerging from bankruptcy in 2009, awarding grants to about 300 top executives based on their ability to deliver shareholder returns in line with industry peers and other factors.

Part of the company's long-term incentive plan, the options were granted this week. The stock awards are designed to retain top executives through noncompete clauses and tie compensation to company performance, a spokesman said, and were awarded as quickly as possible following shareholder approval last year.

Chief Executive Mary Barra was awarded 2.6 million options with a $31.32 strike price, gradually vesting over a four-year period beginning in 2017. She earned $16.4 million in her first year at the helm, during which she steered the company through a costly ignition-switch recall crisis and set lofty margin targets for the 107-year-old company.

GM President Dan Ammann received 976,139 options with the same conditions, according to a regulatory filing. GM's head of global product development Mark Reuss received 829,719 options, Chief Financial Officer Chuck Stevens received 623,645; and GM Europe President Karl-Thomas Neumann received 585,684.

The size of other awards for GM's top 300 executives wasn't disclosed.

The $31.32 price is based on the value of GM's shares as of Tuesday, and is in the lower end of the $28.82 to $38.99 range the stock has set over the past 52 weeks. The company filed bankruptcy in 2009 following a long financial decline, and went public again in 2010 with shares valued at $33.

GM last week reported solid earnings growth in the second quarter, with net income growing to $1.1 billion compared with $278 million in the same period a year earlier. The performance was fueled by 10.5% margins in North America and continued profit in China despite a market slowdown in its wider auto industry.

The options will vest in tranches, with 40% available in February 2017. The remaining 60% vesting over the following three years in 20% annual installments, provided GM's total shareholder returns meet or exceed the median for 14 competing auto manufacturers. Shares must be exercised by July 2025.

The awards carry noncompete and nonsolicitation restrictions, preventing executives from joining a competitor or recruiting other GM employees to follow them for one year after they leave the company.

Write to Gautham Nagesh at [e-mail]

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