General Motors 2015 Annual Report Download - page 90

Table of Contents
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First, with regard to the investigation by the Office, without prior notice, the Office approached us during the three months ended September 30, 2015 with
a specific proposal. We accepted the proposal on September 16, 2015 and entered into the DPA with the Office regarding its investigation of the events
leading up to certain recalls regarding faulty ignition switches announced in February and March 2014. Under the DPA we consented to the filing of a two-
count information (the Information) in the U.S. District Court for the Southern District of New York (the Court) charging GM with: (1) a scheme to conceal
material facts from a government regulator, in violation of Title 18, United States Code, Section 1001; and (2) wire fraud, in violation of Title 18, United
States Code, Section 1343. We have pled not guilty to the charges alleged in the Information. Under the DPA we agreed to pay the United States $900
million as a financial penalty. Prior to the three months ended September 30, 2015 there had been little to no discussions concerning potential resolution of
the matter such that no possible range of potential liability could be determined. Payment was made in the three months ended September 30, 2015.
Pursuant to the DPA, the Office agreed to recommend to the Court that prosecution of GM on the Information be deferred for three years. The Office also
agreed that if we are in compliance with all of our obligations under the DPA, the Office will, within 30 days after the expiration of the period of deferral
(including any extensions thereto), seek dismissal with prejudice of the Information filed against GM. The DPA further provides that, in the event the Office
determines during the period of deferral of prosecution (or any extensions thereof) that we have violated any provision of the DPA, the Office may, in its
discretion, either prosecute GM on the charges alleged in the Information or impose an extension of the period of deferral of prosecution of up to one
additional year, but in no event will the total term of the deferral-of-prosecution period under the DPA exceed four years.
In the DPA, we also agreed to retain an independent monitor (the Monitor) to review and assess our policies, practices or procedures related to statements
about motor vehicle safety, the provision of information to those responsible for recall decisions, recall processes and addressing known defects in certified
pre-owned vehicles. The Monitor’s authority will extend for a period of three years. The Office has the authority to lengthen the Monitor’s term for up to one
year if the Office determines we have violated the DPA. Likewise, the Office may shorten the Monitor’s term if the Office determines that a monitor is no
longer necessary. We are required to pay the compensation and expenses of the Monitor and of the persons hired under his or her authority. The Monitor
commenced his term in October 2015.
Second, with regard to the Shareholder Class Action described previously, prior to the three months ended September 30, 2015 there had been no
discussions concerning potential resolution of the matter such that no possible range of potential liability could be determined. During the three months
ended September 30, 2015 the parties both commenced and reached a proposed settlement of the lawsuit. On September 17, 2015 we announced we had
entered into a binding term sheet for the settlement of the Shareholder Class Action described above for $300 million. The court entered preliminary approval
of the settlement on November 20, 2015 and has set a final settlement fairness hearing for April 20, 2016.
Third, in the three months ended September 30, 2015 GM and attorneys representing certain personal injury claimants in the multidistrict litigation
engaged in substantive settlement discussions in which an agreement was reached as to both material financial and non-financial terms. On September 17,
2015 we announced we had reached a memorandum of understanding regarding a $275 million settlement that could potentially cover approximately 1,400
personal injury claimants who have lawsuits pending in the multidistrict litigation or who have otherwise asserted claims related to the Ignition Switch
Recall or certain other recalls announced in 2014. Prior to the three months ended September 30, 2015 the parties had a substantial gap in their respective
positions on financial issues such that no possible range of potential liability could be determined pursuant to the applicable accounting standard. Further,
prior to the three months ended September 30, 2015 the parties had also either not engaged in meaningful discussions concerning material non-financial
issues necessary for any agreement or had opposing positions on these issues. In December 2015 the court overseeing the multidistrict litigation established a
qualified settlement fund and appointed a special master to administer certain facets of the settlement pursuant to the terms of the memorandum of
understanding. The special master commenced his work in the three months ended December 31, 2015 and his work continues.
In the three months ended September 30, 2015 we recorded charges of approximately $1.5 billion in Automotive selling, general and administrative
expense in Corporate as a result of the DPA financial penalty and the settlements of the Shareholder Class Action and the multidistrict litigation and other
litigation associated with the ignition switch recalls described previously. These charges were treated as adjustments for EBIT-adjusted reporting purposes.
We believe it is probable that we will incur additional liabilities with regard to at least a portion of the remaining investigations, claims, and/or litigation
relating to the ignition switch recalls and other related recalls, whether through settlement or judgment. With regard to pending personal injury claims, we
have concluded from our analysis of available information that an additional $90 million in liability is probable beyond what has already been accrued. The
related charges were recorded in Automotive selling,
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