Additional Information & Disclosure

This section contains additional information and disclosure on a series of topics related to General Dynamics.

Please also reference the Responsibility section of our website for additional background on how we conduct ourselves and our business.

Political Contributions

General Dynamics participates in the U.S. political process when it is in the best interests of its shareholders, businesses and employees to do so. Participation in this process ensures that the company's interests as a leading member of the defense and aerospace industries, as well as a large employer, are well represented.

Process and Oversight

The company has a comprehensive oversight process to ensure that political contributions are made in a legal, ethical and transparent manner that best represents the interests of our shareholders.

Corporate political contributions are made pursuant to the company's Delegation of Authority, as established by the Board of Directors, which requires that all corporate political contributions be approved by the Senior Vice President, Planning and Development who oversees the company's government relations. The company's Board of Directors receives annual briefings on prior-year corporate-wide political spending.

As part of an effort to ensure compliance with all applicable laws relating to political activities and effective corporate governance, we have a written policy governing lobbying practices. This policy covers compliance with laws and regulations regarding the lobbying of government officials, the duty to track and report lobbying costs and expenses as nondeductible for tax purposes and unallowable for purposes of U.S. Government contracts. It requires that all lobbying contacts with covered government officials be coordinated with and approved by the Senior Vice President, Planning and Development.

Political Contributions Summary

Lobbying Contributions. Each quarter we file a publicly available federal Lobbying Disclosure Act report that provides specific information on all General Dynamics lobbying activities. This report captures all of the company's lobbying expenditures, including all federal and state direct, indirect and grassroots lobbying.

Our quarterly lobbying report, which can be found at the U.S. House of Representatives Office of the Clerk website, describes the specific pieces of legislation that were the subject of our lobbying efforts and identifies the individuals who lobbied on behalf of our company. Outside consultants who lobby on our behalf also file reports detailing their efforts on the company's behalf, and any sums we expend on those consultants are included in our own report.

In 2015, our total lobbying expenditures were $10.3 million; in 2014, $10.7 million; and in 2013, $11.1 million. State lobbying expenditures and grassroots lobbying represent a very small portion of our annual spend.

State & Local Contributions. The company makes contributions to state and local candidates, where permissible and in accordance with all laws and regulations. In 2015, our total State & Local contributions were $311,727.

In April 2014, the company instituted a policy to no longer make contributions to 501(c)(4) and Section 527 organizations.

Tax-exempt organizations that Write and Endorse Model Legislation. General Dynamics has not been a member of or made payments to any organization that writes and endorses model legislation, such as the American Legislative Exchange Council. If this policy changes, we will disclose this development.

Employee Political Contributions Summary

General Dynamics offers certain eligible employees (as determined by federal election laws) an opportunity to make political contributions through a company-sponsored Political Action Committee (PAC), called the General Dynamics Corporation Political Action Committee (GDC 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 monthly to the Federal Election Commission. Detailed information about the PAC's donations can be accessed on the U.S. Federal Election Commission website.

PAC Process and Oversight

A committee of senior management employees administers the company's employee PAC. In conjunction with this committee's oversight, the PAC contributions are subject to a robust internal review process. PAC expenditures are reviewed to ensure they represent the best interests of the company, its employees and its shareholders. Additionally, internal financial controls exist to ensure company compliance with federally mandated contribution limits.

Trade Associations

General Dynamics belongs to trade associations that represent a broad array of professional and industrial interests. These trade associations engage in promoting industry-friendly positions on legislative and policy issues.

Process and Oversight

Decisions by the company to join trade associations are based on an evaluation of several factors, including:

  • the degree to which membership in the association provides opportunities for continuing education and professional development of the company's employees;
  • whether membership is necessary to qualify for participation in association-sponsored professional opportunities such as development of industry standards that affect the company's products, trade shows, conferences and other industry events; and
  • whether the trade association supports strong national security policies which the company believes are in the best interests of the United States as well as General Dynamics shareholders.

Senior management reviews trade memberships annually to assess the company's return on investment and subsequently decides if continued membership is appropriate.

The company's Board of Directors is briefed annually on trade association expenditures.

Trade Association Contributions Summary

In 2015, the total amount spent on trade association dues greater than $5,000 was $2.25M.

The majority of the company's trade association expenditures occur in several large associations including the Aerospace Industries Association (AIA) and the General Aviation Manufacturers Association (GAMA). We, along with senior executives of other aerospace and defense companies, sit on the executive committee of both of these associations and oversee their activities.

Other U.S. trade association contributions over $50,000 in 2015 were the Savannah Area Chamber of Commerce, Munitions Industrial Task Force, National Shooting Sports Foundation, Sporting Arms & Ammunition Manufacturer’s Institute, and the Shipbuilders Council of America.

For all of these large associations, the portions of dues we pay which are attributable to lobbying did not exceed 30% of our 2015 dues.

2015 Trade Association Dues: $2.25M*

* Business Development/Customer-related dues greater than $5,000

Pie Chart - Defense/Industry 45%, Aviation/Space 35%, Chambers of Commerce 12%, Customer Support 5%, International 3%

Landmines and Cluster Munitions

General Dynamics is not, to the best of our knowledge, involved in activities prohibited by the provisions of the two principal international accords related to landmines and cluster munitions, the Convention on Cluster Munitions (“CCM”) and the Convention On The Prohibition Of The Use, Stockpiling, Production, And Transfer Of Anti-Personnel Mines And Of Their Destruction of September 18, 1997 (“Mine Ban Treaty”).

Our responsibility is to conduct business ethically, to provide our shareholders with a fair return and to fulfill our commitments to our customers.

Our primary customer is the U.S. government. We believe decisions about what types of weapons to buy, where to sell them and how to use them are inherently governmental responsibilities.

In the past decade, the U.S. government has significantly altered its requirements away from weapons which may be characterized as land mines and cluster munitions. In 2004, for example, the U.S. government adopted a landmine policy that eliminated persistent landmines from the U.S. arsenal. This policy can be found at www.state.gov/t/pm/wra/c11735.htm. In 2008, the Defense Department adopted a policy that says “by the end of 2018, it will no longer use cluster munitions which, after arming, result in more than one percent unexploded ordnance across the range of intended operational environments.”

Conflict Minerals

We work with our supply chain to trace potential sources of conflict minerals. Since [January] 2013, we have conducted more than 31,000 supplier inquiries relating to conflict minerals.

Every year, in line with U.S. Securities and Exchange Commission (SEC) regulations, we submit a Conflict Minerals Report and a Specialized Disclosure Report. Minerals, including tin, tantalum, tungsten and gold, originating from the Democratic Republic of Congo and surrounding countries are often referred to as conflict minerals because armed groups are known to exploit illegally the minerals’ trade to fund their activities, furthering conflict in the region.

In our report to the SEC, we address our efforts to understand the presence of these minerals in our supply chain, including:

  • Surveying and working with our suppliers to identify the presence of conflict minerals in products that are supplied to us.
  • Engaging with many of our suppliers about the potential presence of conflict minerals in materials.
  • Introducing contractual terms and conditions as appropriate to urge suppliers to report responsibly.

Our most recent SEC disclosure and filing can be found here.