General Motors 2014 Annual Report Download - page 126

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In the year ended December 31, 2012 we were required to use the two-class method for calculating earnings per share as the
applicable market value of our common stock was below $33.00 per common share. Under the two-class method for computing
earnings per share, undistributed earnings are allocated to common stock and the Series B Preferred Stock according to their
respective participation rights in undistributed earnings, as if all the earnings for the period had been distributed. This allocation to the
Series B Preferred Stock holders reduced Net income attributable to common stockholders, resulting in a lower basic and diluted
earnings per share amount. The application of the two-class method resulted in an allocation of undistributed earnings to our Series B
Preferred Stock holders and, accordingly, 152 million common stock equivalents from the assumed conversion of the Series B
Preferred Stock are not considered outstanding for purposes of determining the weighted-average common shares outstanding in the
computation of diluted earnings per share for December 31, 2012.
In the years ended December 31, 2014, 2013 and 2012 warrants to purchase 46 million shares were not included in the computation
of diluted earnings per share because the warrants’ exercise price was greater than the average market price of the common shares.
Note 23. Stock Incentive Plans
Stock incentive plan awards outstanding at December 31, 2014 consist of awards granted under the 2014 Long-Term Incentive
Plan, the 2009 Long-Term Incentive Plan and the Salary Stock Plan. The 2014 Long-Term Incentive Plan was approved by
stockholders in June 2014 and replaced the 2009 Long-Term Incentive Plan and Salary Stock Plan. These plans are administered by
the Executive Compensation Committee of our Board of Directors. The aggregate number of shares with respect to which awards may
be granted under the 2014 Long-Term Incentive Plan shall not exceed 60 million. In January 2014 we amended the 2009 Long-Term
Incentive Plan and the Salary Stock Plan to provide cash payment, on a going forward basis, of dividend equivalents upon settlement
to active employees and certain former employees with outstanding awards as of the amendment date.
Long-Term Incentive Plan
We grant RSUs and PSUs under our 2014 Long-Term Incentive Plan and, prior to our 2014 Long-Term Incentive Plan, RSUs under
our 2009 Long-Term Incentive Plan. Shares awarded under the plans are subject to forfeiture if the participant leaves the company for
reasons other than those permitted under the plans such as retirement, death or disability. Our policy is to issue new shares upon
settlement of RSUs and PSUs.
We granted 8 million, 7 million and 7 million RSUs in the years ended December 31, 2014, 2013 and 2012. These awards either
cliff vest or ratably vest generally over a three-year service period, as defined in the terms of each award. Vesting and subsequent
settlement will generally occur based upon employment at the end of each specified service period.
We issued 4 million PSUs, equal to the targeted number of shares, in the year ended December 31, 2014. The ultimate number of
shares earned will be determined at the end of the specified performance period, which is three years, based on performance criteria
determined by the Executive Compensation Committee of the Board of Directors at the time of award. The number of shares earned
may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or
not met. PSU awards generally vest and settle at the end of a three-year period.
Salary Stock Plan
In the years ended December 31, 2013 and 2012 a portion of each participant’s salary was accrued on each salary payment date and
converted to RSUs on a quarterly basis. In June 2013 we amended the plan to provide for cash or share settlement of awards based on
election by the participant. The liability for these awards continues to be remeasured to fair value at the end of each reporting period.
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