Governance

Strong Corporate Governance Enhances Shareholder Value


We are committed to the principle that good corporate governance enhances shareholder value. Through strong market-leading corporate governance practices, we promote a culture of ethics and integrity, empowering leaders at all levels to do what is right for our customers, suppliers, employees and communities.


Board of Directors

Our deeply engaged and experienced board is central to our company’s culture of accountability and continuous improvement. It reflects a diverse and well-qualified group of business leaders and aerospace and defense industry experts, as well as financial and strategic advisers.

Other than our CEO, all of our directors are independent. Each of our board committees is chaired by an independent director. 

The General Dynamics corporate governance guidelines provide a framework for effective governance of the board and the company. The board’s commitment is demonstrated by key corporate governance practices, including:

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  • Strong board independence
  • An independent lead director
  • A majority voting standard for the election of directors, coupled with a director resignation policy
  • Shareholders’ right to call a special meeting
  • Shareholders’ right to act by written consent
  • Shareholders’ ability to nominate director candidates and have those nominees included in the company’s proxy statement, a process known as “proxy access”
  • Annual board and committee self-assessments
  • A robust shareholder engagement program
  • Disclosure of corporate political contributions

 

Our board includes directors who are or have:

  • Significant financial backgrounds or expertise
  • Experience in leading complex operating and manufacturing organizations
  • Prior top leadership posts in the military or U.S. Department of Defense
  • Women or other underrepresented groups
  • Current or former public company directors
  • Current or past CEOs of complex, global and/or public companies
  • Experience in corporate sustainability matters and reporting
  • Technology and cybersecurity knowledge and expertise

  

Board Oversight of Risk

Our comprehensive risk management program is conducted by senior management and overseen by the board of directors. In particular, the board oversees management’s identification and prioritization of risk, focusing on the most significant current and emerging risks facing the company that could have a substantive financial or strategic impact. Each year, the full board reviews and approves a corporate policy addressing the delegation of authority and assignment of management responsibility, allocating the most significant risks and decisions to senior management.

The following summarizes the key elements of the roles of the board, senior management and external advisers in our risk management program:

  • The board oversees risk management, focusing on the most significant risks facing the company, including strategic, operational, financial, legal, environmental, cybersecurity and reputational risks. 
  • Each board committee is integral to risk management and reports specific risk management matters as necessary to the full board.
  • The board’s Sustainability Committee oversees corporate sustainability practices and management, including those relating to environmental, health and safety, human rights, and social matters. 
  • Senior management is responsible for day-to-day risk management and conducts thorough assessments through internal management processes and controls.
  • The CEO and senior management team provide the board with a dedicated and comprehensive briefing of significant risks at least twice per year, and the board is briefed as needed throughout the year on specific risks as they arise, allowing the board to adjust its oversight strategy on a case-by-case basis as risk environments evolve.
  • External advisers provide independent advice about specific risks and review and comment on risk management processes and procedures as necessary.

Sustainability governance graphic

 

Board Oversight of Sustainability

The board maintains oversight of risks and opportunities, including those related to sustainability matters. It takes these risks and opportunities into account as it exercises its duties.

The fully independent Sustainability Committee is responsible for assisting the board in fulfilling its oversight duties. The Sustainability Committee provides oversight of corporate sustainability management and practices, including those related to environmental, health and safety, human rights, and social matters. It is chaired by an independent director with expertise and unique experience in the environmental, social and governance (ESG) field. Currently, the committee is chaired by a former board co-chair of the Value Reporting Foundation, now part of the International Financial Reporting Standards (IFRS) Foundation.

Climate-related related risks and opportunities are addressed at the board and committee levels. The Sustainability Committee receives briefings on the company’s approach and progress on greenhouse gas emissions. Business unit presidents also address specific climate-related risks or opportunities. 


Management

Accountable to the board, our management ensures the company’s business decisions recognize the economic, environmental and social considerations in our operational strategy. 

Our corporate headquarters is responsible for setting the overall strategic direction and governance of the company; allocating and deploying capital; and ensuring a culture of ethics and integrity that defines how we engage with our employees, communities, customers and suppliers. Our operating processes and activities incorporate initiatives to improve diversity, promote inclusion, reduce emissions and waste, and adhere to standards that lower risk and drive a healthier and safer workforce and community.

Each of our 10 business units (BUs) closely adheres to our corporate vision while maintaining individual responsibility for executing its operating plan. This model empowers our businesses to stay close to their customers while having the agility to make wise decisions quickly. It also allows our businesses to anticipate, adapt and react to our customers’ rapidly changing needs. 

 

Companywide Councils

We have companywide councils that share information and best practices throughout the enterprise. These councils are made up of senior operational executives from our BUs. Many are considered experts in their fields and, within their council duties, help address issues of shared importance, including those relating to climate. The chair of each council reports directly to the CEO on council matters, with mentorship from an assigned executive vice president.

Learn more about our councils in our Corporate Sustainability Report

 

companywide councils graphic

 

Business Model Resilience

Our businesses maintain and exercise plans to ensure continuity of operations in the event of a natural disaster, accident, cyber incident or other crisis. Our decentralized business model aims to minimize single points of failure, with decision-making authority delegated to the lowest competent level. We conduct drills and tabletop exercises with leaders to ensure we are able to respond quickly to crises.

 

Executive Compensation

Our compensation program, which covers named executive officers, BU presidents and other key executives, can include strategic and operating goals that specifically encompass sustainability topics where appropriate for the executive’s role. For example, each of our named executive officers has sustainability efforts included in the goals used to assess their performance. The sustainability goals vary depending on the officer’s role and responsibilities, but encompass efforts to reduce greenhouse gas emissions, initiatives to promote environmental conservation and programs targeted to bring new technologies to market. 

Our executive compensation program is rooted in a longstanding pay-for-performance philosophy. To incentivize this focus on creating long-term value, our executive compensation is tied to defined financial and nonfinancial performance metrics that align with creating shareholder value. These metrics also include a stakeholder-centric strategic and operational component, which incorporates environmental, human and social capital sustainability objectives.

More information about executive compensation is available in our proxy statement.


Bath Iron Works employeesProduct Safety

Our customers use our products — from nuclear-powered submarines to high-speed, long-range business jets — to perform no-fail missions. We never compromise on safety. True to our Ethos, we commit to providing our customers with products that raise the bar for safety, performance and quality. Our purposeful investment in research and development propels superior design that incorporates the latest in safety solutions and includes technological advances to create a competitive edge.

 

Human Rights 

We recognize the fundamental human dignity of all people. As a company with operations and suppliers around the world, we appreciate the importance of ensuring that basic human rights are respected in our business activities. This core value is embedded at all levels of our business.

Our corporate Ethos is the single most important element of our culture. It undergirds all of our actions. Through our Ethos, we commit ourselves to transparency, trust, alignment and honesty in all things, at all times: between fellow employees, with our customers and toward anyone with whom we interact. It is our fundamental moral character. These fundamental values demand responsible and ethical practices, and an unshakable commitment to human rights, as reflected in our human rights policy.

See our full statement on Human Rights 


Global Supply Chain

Our suppliers are critical to our ability to deliver high-quality products and services to our customers. We expect them to uphold the same high standards that we uphold ourselves. Our suppliers are expected to act as good corporate citizens with sustainable business practices, to treat employees and customers with respect, and to act with integrity and honesty.

Learn more about our supplier collaboration, diversity, quality-control processes and responsible sourcing efforts. 

 

Supply Chain Excellence


Political Engagement

General Dynamics Corporation does not make political contributions.

We offer eligible employees in the U.S. the opportunity to make voluntary political contributions through a political action committee (PAC). The General Dynamics Employee PAC is organized and operated on a strictly voluntary, nonpartisan basis and is registered with the Federal Election Commission. The PAC’s political contributions are reported to the Federal Election Commission, where they become a matter of public record and are available for review online. PAC contributions are subject to a robust internal review process to ensure they represent the best interests of General Dynamics employees. In addition, internal financial controls exist to ensure compliance with federally mandated contribution limits.

Our employee PAC invests contributions in candidates based on:

  • Support for national security and aerospace
  • Representation in districts and states where General Dynamics facilities, suppliers or employees are located
  • Membership on key committees legislating on issues of importance to General Dynamics
  • Leadership positions
  • Prior military or aerospace industry experience

As a foundational principle, our employee PAC refrains from partisan politics, remaining focused on national security and advocating for the success of GD and its employees. That means we give to members of both parties, and we delink our support from issues unrelated to our core business. We do not contribute to presidential campaigns, “super PACs,” other 527s not focused on direct candidate support or 501(c) (4) organizations. Our employee PAC will not support Members of Congress who provoke or incite violence or engage in similar unlawful conduct.

To ensure compliance with all applicable laws relating to political activities and effective corporate governance, we follow a strict policy governing lobbying practices. This includes tracking and reporting lobbying costs and expenses as nondeductible for tax purposes and unallowable for purposes of U.S. government contracts.


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Information Security

We are committed to safeguarding employee, customer, national security and third-party information entrusted to our care. To that end, we have a proactive and robust information security program to protect sensitive information from potential internal and external threats targeting our systems and data. We are committed to disclosing cyber incidents as appropriate and required under applicable law. 

The GD Cyber Council, which reports directly to the chairman and CEO, leverages the expertise of our senior cybersecurity leaders, recommends policy updates and addresses strategic cyber matters related to our business.

 

Data Privacy and Protection.

Like all businesses, we handle data that may include personal and sensitive information about our employees, our customers and third parties. Safeguarding this information is a responsibility we take seriously. 

Our data privacy programs are designed to address the challenges of expanding national and global privacy regulation, the growth in volume and sensitivity of privacy data, and the increased use of third-party vendors. Core tenets of our program include collecting minimum amounts of information necessary to meet our business needs and seeking to ensure that the information we have is used exclusively for valid business purposes in accordance with written policies and procedures.

We collaborate and share intelligence with government, suppliers and industry peers through a central hub that monitors threat activity. We report cyber incidents to our customers and in accordance with regulatory or legal requirements.

We regularly monitor and update our policies to maintain compliance with national and global data privacy laws and regulations. We also leverage the maturity of our general cybersecurity program with additional targeted privacy controls to protect private information against unauthorized access, use or disclosure.

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