GENERAL DYNAMICS CORPORATION | Independent board chairman at GENERAL DYNAMICS CORPORATION

Status
39.51% votes in favour
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
GD
Lead filer
Individual
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • CEO / chair duality
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Industrials
Company HQ country
United States
Resolved clause
Shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO as follows:
- Whenever possible, the Chairman of the Board shall be an Independent Director.
- The Board has the discretion to select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board.
- This policy could be phased in when there is a leadership transition.

This proposal topic won 52% support at Boeing and 54% support at Baxter International. Boeing then adopted this proposal topic in June 2020. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.
General Dynamics is Exhibit A in why the Lead Director role is an empty suit compared to an independent Board Chairman.
Supporting statement
Our Lead Director, Mr. James Crown violates the most important attribute of a Lead Director – independence. As director tenure goes up director independence goes down. Mr. Crown has 36-years director tenure and 13-years Lead Director tenure. Mr. Crown’s long tenure makes him a prime candidate to retire. It is time for a change.

Mr. James Crown received the second highest number of negative votes of any GD director in 2022. With the current CEO serving as Chair this means giving up a substantial check and balance safeguard that can only occur with an independent Board Chairman.
A lead director is no substitute for an independent board chairman. A lead director cannot call a special shareholder meeting and cannot even call a special meeting of the entire board.
A lead director can delegate many details of his lead director duties to management and then simply rubber-stamp it. Management has not explained how shareholders can be sure of what goes on in regard to lead director delegation.
A lead director with long tenure can also give excessive deference to the General Dynamics CEO. The 2022 GD proxy listed a few “responsibilities” of the GD Lead Director but did not give one concrete example of the Lead Director actually carrying out these “responsibilities” or advise whether the Lead Director is the only person who can carry out these “responsibilities.”
The support for this proposal topic at General Dynamics increased from 23% in 2019 to 40% in 2022. The increased complexities of companies of more than $50 Billion in market capitalization, like General Dynamics, demand that 2 persons fill the 2 most important jobs in the company.

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