Company Name: General Motors Corp.
Public Availability Date: April 19, 2007

Document Sections:

INQUIRY LETTER
STAFF REPLY LETTER

[INQUIRY LETTER]

From: anne.t.larin@gm.com [mailto:anne.t.larin@gm.com]

Sent: Tuesday, February 06, 2007 12:36 PM

To: CFLETTERS

Cc: laparksx@gmail.com

Subject: Request for No-Action LetterStockholder Proposal

This is a filing, pursuant to Rule 14a-8(j), to omit the proposal received on December 29, 2006 from Lawrence Parks from the General Motors Corporation proxy materials for the 2007 Annual Meeting of Stockholders. General Motors intends to omit the proposal Rule 14a-8(i)(2) on the grounds that if adopted by GM's stockholders, it would cause GM to violate Delaware law.

Mr. Parks submitted the following proposal:

SUPPORTING STATEMENT:

Board Chairman Rick Wagoner needs high level, non-biased, independent thinking to help run the business. The current system has not provided acceptable results and the entire Board of Directors must share the blame. This proposal will make all Directors directly responsible for critical business functions.

Accountability of all Directors will insure that the right people are involved and that the critical functional aspects of the business are being independently monitored, advised and evaluated. It will insure that all Directors take an active role in improving the corporate health of General Motors.

[Your consideration and the consideration of the Board of Directors is appreciated in support of the survival and "Return to Greatness" of General Motors Corporation. Please acknowledge receipt of this proposal by email to laparksx@gmail.com]

Following is a proposed amendment to the GM Bylaws, Article II, Section 2.1. It is proposed that a section titled "Specific Duties and Responsibilities" for all board directors be added, as follows:

2.1 Specific Duties and Responsibilities of Directors

a) Each director shall be required to, [sic] oversee, evaluate and advise one of the following functional groups regarding corporate operations. Each director will be held directly accountable for the performance of their functional group.

b) Critical functional groups shall include the following operational functions. Specific definitions of each activity and/or additional groups are to be formulated by the board.

1. Financial Results and Audits

2. Activity Based Cost Accounting Procedures

3. Marketing and Advertising

4. Product Development and Styling

5. Manufacturing Operations and Quality

6. Dealer Relations and Sales

7. UAW and Labor Relations

8. Public and Government Relations

9. Retiree Relations

10. Customer Relations and Service

11. Health Care Programs

12. Executive Evaluation

c) Annual evaluation of each director's performance shall be required. Each director shall be required to submit a list of goals and objectives within 3 months of their election. They shall define metrics for evaluation that are measurable. They shall report results to the board and stockholders quarterly and at the annual meeting.

d) All directors will be subject [sic] recall if the functional operation to which they are assigned fails to meet or exceed the written goals presented as stated above, Article II, Section 2.1 c.

c) Ten percent of all stockholders can present a recall petition that must be acted on by the Board within three months after the stockholder request is authenticated.

(We believe that the third paragraph under "SUPPORTING STATEMENT" above, which we have bracketed, was not intended to be part of the supporting statement or proposal.)

As explained in the legal opinion of Richards, Layton & Finger that is quoted in full at the end of this letter (Exhibit A), the proposal would violate Delaware law. Section 141(a) of the General Corporation Law of Delaware provides that all directors have the same duties of oversight and directing the management of a corporation, unless provided otherwise in the certificate of incorporation. A bylaw that purports to assign different additional responsibilities to individual directors would not be valid under Section 141. Significantly, section 102(b)(1) of the General Corporation Law permits the certificate of incorporation to include provisions "creating, defining, limiting and regulating" the directors' authority; section 109(b), which governs bylaws, does not provide for similar restrictions on directors' powers and responsibilities.

In addition, the "recall" provision of the bylaw set forth in the proposal would violate Section 141(k) of the General Corporation Law. Under the proposal, if the functional unit associated with a specific director fails to meet its stated goals, 10% of the stockholders could present a "recall petition" to the Board, who would be required to "act on" the petition within three months. The use of the term "recall" indicates that the Board would have the authority under the bylaw to remove a director from office by acting on such a petition. Under Section 141(k) of the General Corporation Law, however, a director may be removed from office only by a majority of stockholders, so that the provision in subsection (e) permitting the Board to "act on" a recall petition would violate Delaware law.

Finally, it appears that the effect of the proposed bylaw would be to create 12 separate committees of the Board, each responsible for a different "functional operation". As explained in the opinion of Richards, Layton & Finger below, board committees may be constituted only by the resolution of a board and not by a bylaw, under section 141(c)(1) of the General Corporation Law. Accordingly, the bylaw provision establishing the various committees (the only way in which different members of a board can ordinarily have different duties and responsibilities) would also violate Delaware law.

Please inform us whether the Staff will recommend any enforcement action if this proposal is omitted from the proxy materials for General Motors' 2007 Annual Meeting of Stockholders. If you would like to receive a faxed or hard copy of Mr. Parks' proposal or the Richards, Layton & Finger opinion, please let me know. My e-mail address is anne.t.larin@gm.com, and my telephone number is 313-665-4927.

GM plans to begin printing its proxy material at the beginning of April. We would appreciate any assistance you can give us in meeting our schedule.

(Exhibit A)

Letter of Richards, Layton & Finger:

February 5, 2007

General Motors Corporation
300 Renaissance Center
P.O. Box 300
Detroit, Michigan 48265-3000

Ladies and Gentlemen:

We have acted as special Delaware counsel to General Motors Corporation, a Delaware corporation (the "Company"), in connection with a proposal (the "2007 Proposal") submitted by Lawrence Parks (the "Proponent") which the Proponent intends to present at the Company's 2007 annual meeting of stockholders (the "2007 Annual Meeting"). In this connection, you have requested our opinions as to certain matters of Delaware law.

For the purpose of rendering our opinions as expressed herein, we have been furnished and have reviewed the following documents:

(i) the Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on March 1, 2004 (the "Certificate of Incorporation");

(ii) the Bylaws of the Company, as of October 3, 2006 (the "Bylaws"); and

(iii) the letter, dated December 28, 2006, from the Proponent, attaching the 2007 Proposal.

With respect to the foregoing documents, we have assumed: (a) the genuineness of all signatures, and the incumbency, authority, legal right and power and legal capacity under all applicable laws and regulations, of each of the officers and other persons and entities signing or whose signatures appear upon each of said documents as or on behalf of the parties thereto; (b) the conformity to authentic originals of all documents submitted to us as certified, conformed, photostatie, electronic or other copies; and (c) that the foregoing documents, in the forms submitted to us for our review, have not been and will not be altered or amended in any respect material to our opinions as expressed herein. For the purpose of rendering our opinions as expressed herein, we have not reviewed any document other than the documents set forth above, and we assume there exists no provision of any such other document that bears upon or is inconsistent with our opinions as expressed herein. We have conducted no independent factual investigation of our own, but rather have relied solely upon the foregoing documents, the statements and information set forth therein, and the additional matters recited or assumed herein, all of which we assume to be true, complete and accurate in all material respects.

BACKGROUND

The Proponent has submitted the 2007 Proposal for inclusion in the 2007 Proxy Statement of the Company (the "2007 Proxy Statement") for the 2007 Annual Meeting. The 2007 Proposal proposes that ARTICLE II, Section

2.1 of the Bylaws be amended as follows:

2.1 Specific Duties and Responsibilities of Directors

a) Each director shall be required to, [sic] oversee, evaluate and advise one of the following functional groups regarding corporate operations. Each director will be held directly accountable for the performance of their functional group.

b) Critical functional groups shall include the following operational functions. Specific definitions of each activity and/or additional groups are to be formulated by the board.

1. Financial Results and Audits

2. Activity Based Cost Accounting Procedures

3. Marketing and Advertising

4. Product Development and Styling

5. Manufacturing Operations and Quality

6. Dealer Relations and Sales

7. UAW and Labor Relations

8. Public and Government Relations

9. Retiree Relations

10. Customer Relations and Service

11. Health Care Programs

12. Executive Evaluation

c) Annual evaluation of each director's performance shall be required. Each director shall be required to submit a list of goals and objectives within 3 months of their election. They shall define metrics for evaluation that are measurable. They shall report results to the board and stockholders quarterly and at the annual meeting.

d) All directors will be subject [sic] recall if the functional operation to which they are assigned fails to meet or exceed the written goals presented as stated above, Article II, Section 2.1 c.

c) Ten percent of all stockholders can present a recall petition that must be acted on by the Board within three months after the stockholder request is authenticated.

The bylaw proposed for adoption pursuant to the 2007 Proposal (the "Proposed Bylaw") would define, as discussed below, how the Board of Directors of the Company (the "Board") shall manage the business and affairs of the Company.

The Company is considering excluding the 2007 Proposal from the 2007 Proxy Statement for the 2007 Annual Meeting under Rules 14a-8(i)(1) and 14a-8(i)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Rule 14a-8(i)(1) of the Exchange Act provides that a corporation may exclude a stockholder proposal that is not a proper subject for action by the corporation's stockholders under the laws of the jurisdiction of the corporation's organization. Rule 14a-8(i)(2) of the Exchange Act provides that a corporation may exclude a stockholder proposal that, if adopted by the stockholders, would cause the corporation to violate applicable state, federal or foreign law. In this connection, you have requested our opinion as to (i) whether the 2007 Proposal, if adopted by the Company's stockholders, would violate the General Corporation Law of the State of Delaware (the "General Corporation Law"), and (ii) whether the 2007 Proposal is a proper subject for action by the Company's stockholders at the 2007 Annual Meeting under Delaware law.

DISCUSSION

There is no Delaware case that specifically addresses the validity of the Proposed Bylaw or a similar bylaw. Accordingly, we start from the proposition that the stockholders of a Delaware corporation generally have the power to adopt bylaws. Such power, however, is not unlimited and is subject to the express limitations set forth in Section 109(b) of the General Corporation Law (sometimes referred to hereinafter as "Section 109(b)"), which reads:

The bylaws may contain any provision, not inconsistent with law or with the certificate of incorporation, relating to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its stockholders, directors, officers or employees.

8 Del. C. 109(b). Therefore, we turn to consider whether the 2007 Proposal contemplating the adoption of the Proposed Bylaw is "inconsistent with law or with the certificate of incorporation."

A. The 2007 Proposal, If Adopted, Would Violate Section 141(a) of the General Corporation Law

In our view, the 2007 Proposal, if adopted, would violate Section 141(a) of the General Corporation Law (sometimes referred to hereinafter as "Section 141(a)") because the Bylaws rather than the Certificate of Incorporation would modify the oversight duties of the Board by assigning to the directors additional, discrete responsibilities of the Board in managing the business and affairs of the Company. Because it is our view that the 2007 Proposal, if adopted, would violate Section 141(a), it is also our view that the 2007 Proposal is not a proper subject for action by the Company's stockholders at the 2007 Annual Meeting under Delaware law.

Directors have a duty of supervision in their role of directing the management of a corporation. In re Caremark Int'l, Inc. Deriv. Litig., 698 A.2d 959, 968-70 (Del. Ch. 1996) (stating that the duty of oversight requires directors "to attempt in good faith to assure that a corporate information and reporting system, which the board concludes is adequate, exists"). In particular, the duty of oversight requires directors to take steps to see that the officers of a corporation are properly managing the corporation's daily operations. See Graham v. Allis-Chalmers Mfg. Co., 188 A.2d 125, 129 (Del. 1963). Such duty of oversight is part of a director's duty of care. See Ash v. McCall, 2000 WL 1370341, at *5-6 (Del. Ch. Sept. 15, 2000). Although directors are charged with overseeing the officers' management of the corporation's operations, they are not required, under the duty of oversight or any other duty, to manage or evaluate the daily operations of a corporation directly. Instead, the officers of the corporation are charged generally with directly managing and evaluating such operations. See In re Walt Disney Co. Deriv. Litig., 907 A.2d 693, 762 n.40 (Del. Ch. 2005) (stating that, because directors cannot themselves manage the operations of a corporation, they generally appoint officers to do so).

Section 141(a) requires a board of directors to manage, or oversee the management of, the general business and affairs of the corporation. Section 141(a) specifically provides:

The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation. If any such provision is made in the certificate of incorporation, the powers and duties conferred or imposed upon the board of directors by this chapter shall be exercised or performed to such extent and by such person or persons as shall be provided in the certificate of incorporation.

8 Del. C. 141(a) (emphasis added). Accordingly, Section 141(a) mandates that deviations from the general rule that directors all have the same oversight duties must be contained in the certificate of incorporation. We note that the Certificate of Incorporation does not provide for the management of the Company by persons other than the members of the Board. It also does not create any additional responsibilities of the Board in managing the Company's business and affairs. Therefore, the Board possesses, without any discrete responsibilities, the full power and authority to manage the business and affairs of the Company under the General Corporation Law Section 141(a) does not permit the bylaws to define any discrete responsibilities of a board in managing a corporation's business and affairs. Subsection (a) of Section 141 is unlike other subsections thereof in that the other subsections expressly state that the bylaws or the certificate of incorporation may provide specific provisions regarding the qualifications, powers and restrictions of the board of directors. See, e.g., 8 Del. C. 141(b) ("The certificate of incorporation or bylaws may prescribe other qualifications for directors."); 8 Del. C. 141(d) ("The directors ... may, by the certificate of incorporation or by an initial bylaw, or by a bylaw adopted by a vote of the stockholders, be divided into 1, 2 or 3 classes,"); 8 Del. C. 141(e)(stating that [u]nless otherwise restricted by the certificate of incorporation or bylaws," the board of directors may act by written consent). Indeed, "bylaws" is nowhere mentioned in Section 141(a). It is well-settled under Delaware law that words excluded from a statute must be presumed to have been excluded for a purpose. See In re Adoption of Swanson, 623 A.2d 1095, 11097 (Del. 1993).

The foregoing analysis regarding Section 141(a) is consistent with Section 102(b)(1) of the General Corporation Law (sometimes referred to hereinafter as "Section 102(b)(1)"), which expressly provides that a corporation's certificate of incorporation may contain provisions defining a board's power. Section 102(b)(1) provides, in pertinent part:

[T]he certificate of incorporation may ... contain ... [a]ny provision for the management of the business and for the conduct of the affairs of the corporation, and any provision creating, defining, limiting and regulating the powers of ... the directors ... if such provisions are not contrary to the laws of this State.

8 Del. C. 102(b)(1) (emphasis added); cf. 8 Del. C. 109(b) (permits bylaws to contain a provision "relating to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its ... directors," not a provision creating, defining, limiting and regulating powers of directors).

The 2007 Proposal provides additional, discrete responsibilities of the Board in managing the business and affairs of the Company. In particular, it provides that each director will be obligated to oversee, evaluate and advise one of twelve functional groups regarding corporate operations and to submit goals and objectives for which they would be responsible. Moreover, the 2007 Proposal extends the Board's existing obligation to oversee the Company's management so far that the members of the Board essentially would become officers, rather than directors, of the Company. Defining such additional, discrete responsibilities of the Board in managing the Company's business and affairs must be implemented as an amendment to the Certificate of Incorporation to be valid. Because the 2007 Proposal contemplates delineating additional, discrete responsibilities of the Board in managing the Company's business and affairs limiting via a bylaw, the 2007 Proposal, if adopted, would violate Section 141(a).

B. The 2007 Proposal, If Adopted, Would Violate Section 141(k) of the General Corporation Law

In our view, the 2007 Proposal, if adopted, also would violate Section 141(k) of the General Corporation Law (sometimes referred to hereinafter as "Section 141(k)") because the Proposed Bylaw set forth in the 2007 Proposal can be read to require the Board to remove directors from office. Because it is our view that the 2007 Proposal, if adopted, would violate Section 141(k), it is also our view that the 2007 Proposal is not a proper subject for action by the Company's stockholders at the 2007 Annual Meeting under Delaware law.

The 2007 Proposal states that, under certain circumstances, the directors of the Company may be subject to "recall" and that stockholders can present a "recall" petition. Under Delaware law, a director holds office until his or her successor is duly elected and qualified or until such director's earlier resignation or removal. ARTICLE II, Section 2.2 of the Bylaws currently provides that members of the Board shall hold office until "his successor is elected and qualified or until such director's earlier resignation or removal." See 8 Del. C. 141(b). To give the word "recall" any meaning under Delaware law, it must mean either "resignation" or "removal." Because "recall" as used in the 2007 Proposal is akin to "removal" not "resignation," we that assume "recall" means "removal."

Section 141(k) governs the removal of directors from office. Such section provides, in pertinent part, that "any director of the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors." 8 Del. C. 141(k). See also, Ross Sys. Corp. v. Ross, 1993 WL 49778, at *17 (Del. Ch. Feb. 29, 1993) ("The only persons empowered to remove a director are the corporation's shareholders."); Bruch v. Nat'l Guar. Credit Corp., 116 A. 738, 742 (Del. Ch. 1922) (holding that a board of directors has no statutory power to remove one of its own). Accordingly, stockholders of a corporation are the only persons who may remove directors from office.

The Proposed Bylaw set forth in the 2007 Proposal appears to require the Board to remove members of the Board from office upon a petition being presented by only 10% of stockholders. The Proposed Bylaw violates Section 141(k) in two ways. First, the Proposed Bylaw provides too low of a percentage (10%) of stockholder approval for removal of a director. Ten percent of the Company's stockholders cannot remove a director from office because Section 141(k) requires holders of a majority of the outstanding shares entitled to vote at an election of directors to effect such removal. See 8 Del. C. 141(k). Second, the Proposed Bylaw provides that a stockholder-recall petition must be "acted on by the Board." It is unclear what "acted on by the Board" means, but it appears to require the Board to remove directors in certain situations. "[A]cted on by the Board" also could mean that the Board is required to call a special meeting of the stockholders for the stockholders to vote on the removal of a director. We note that, if a Delaware court is called upon to interpret such language, it would construe such language against the drafter, i.e., the Proponent, and in favor of the Company. See Scharf v Edgcomb Corp., 2004 WL 718923, at *15 (Del. Ch. Mar. 24, 2004), rev'd on other grounds, 864 A.2d 909 (Del. 2004) (stating that Delaware courts construe ambiguous bylaws against the drafter). Therefore, if a Delaware court were called upon to determine the meaning of such language and were to adopt the foregoing meaning, the Proposed Bylaw would violate Section 141(k) because the Board would be required to remove directors from office.

C. The 2007 Proposal, If Adopted, Would Violate Section 141(c)(1) of the General Corporation Law

Additionally, in our view, the 2007 Proposal, if adopted, would violate Section 141(c)(1) of the General Corporation Law Section 141(c)(2) of the General Corporation Law, which also relates to board committees, does not apply to the Company because the Company was incorporated prior to July 1, 1996 and has not opted into such section. Therefore, Section 141(c)(1) is the applicable section. (sometimes referred to hereinafter as "Section 141(c)(1)") because the Proposed Bylaw set forth in the 2007 Proposal, by its own terms, designates committees of the Board rather than requiring the Board to designate such committees. Because it is our view that the 2007 Proposal, if adopted, would violate Section 141(c)(1), it is also our view that the 2007 Proposal is not a proper subject for action by the Company's stockholders at the 2007 Annual Meeting under Delaware law.

The Proposed Bylaw designates twelve "functional groups" of the Board. Under Delaware law, a board of directors can only act as a full board or as a committee. See 8 Del. C. 141(a), (c); 2 William Meade Fletcher, Cyclopedia of the Law of Private Corporations 392 (perm. ed. rev. vol. 2006). To give effect to "functional groups," "functional groups" must mean either the full board or board committees. Because "functional groups" are akin to board committees, we assume that "functional groups" mean board committees.

Section 141(c)(1) governs the designation of board committees. Section 141(c)(1) provides, in pertinent part: "The board of directors may, by resolution passed by a majority of the whole board, designate 1 or more committees, each committee to consist of 1 or more of the directors of the corporation." 8 Del. C. 141(c)(1). Accordingly, the only way a board committee may be designated is by board action. See 1 R. Franklin Balotti & Jesse A. Finkelstein, The Delaware Law of Corporations and Business Organizations 4.14, at 4-27 n.133 (stating that board committees may be constituted only by a board resolution); cf. Hollinger Int'l., Inc. v. Black, 844 A.2d 1022, 1079-80 (explaining that a bylaw, by its terms, may terminate a committee but only the board may establish a committee). A bylaw, by its own terms, cannot designate a board committee. Therefore, because the Proposed Bylaw, by its own terms, designates committees of the Board (rather than authorizing the Board to designate such committees), the 2007 Proposal, if adopted, would violate Section 141(c)(1).

CONCLUSION

Based upon and subject to the foregoing, and subject to the limitations stated hereinbelow, it is our opinion that (i) the 2007 Proposal, if adopted by the Company's stockholders, would violate the General Corporation Law and, therefore, (ii) the 2007 Proposal is not a proper subject for action by the Company's stockholders at the 2007 Annual Meeting under Delaware law.

The foregoing opinions are limited to the General Corporation Law. We have not considered and express no opinion on any other laws or the laws of any other state or jurisdiction, including federal laws regulating securities or any other federal laws, or the rules and regulations of stock exchanges or of any other regulatory body.

The foregoing opinions are rendered solely for your benefit in connection with the matters addressed herein. We understand that you may furnish a copy of this opinion letter to the Securities and Exchange Commission in connection with the matters addressed herein, and we consent to your doing so. Except as stated in this paragraph, this opinion letter may not be furnished or quoted to, nor may the foregoing opinions be relied upon by, any other person or entity for any purpose without our prior written consent.

Very truly yours,

/s/RICHARDS, LAYTON & FINGER

Anne T. Larin
GM Legal Staff
Phone: 313-665-4927
Fax: 313-665-4979

[STAFF REPLY LETTER]

April 19, 2007

Response of the Office of Chief Counsel Division of Corporation Finance

Re: General Motors Corporation Incoming letter dated February 6, 2007

The proposal would amend the bylaws to require each director to oversee, evaluate, and advise certain functional groups.

There appears to be some basis for your view that General Motors may exclude the proposal under rule 14a-8(i)(2). We note that in the opinion of your counsel, implementation of the proposal would cause General Motors to violate state law. Accordingly, we will not recommend enforcement action to the Commission if General Motors omits the proposal from its proxy materials in reliance on rule 14a-8(i)(2). In reaching this position, we have not found it necessary to address the alternative basis for omission upon which General Motor relies.

Sincerely,

/s/

Ted Yu
Special Counsel