(FORTUNE Magazine) – When Chairman Roger Smith learned of Ross Perot's indictment of GM management, he asked for an opportunity to reply. Highlights of the rebuttal he presented in a 1 1/2-hour phone interview with writer Myron Magnet: On Perot's charge that the GM system squelches the talents of employees: The reason we went through our reorganization was to give those people more authority, to get people closer to the market. Three years of streamlining the organization, of putting in new systems with the help of EDS -- all this is aimed right at that issue. Now we have decentralized responsibility. We wanted a participative structure. Delegation is more prevalent. But General Motors is too big to run without a coordinated plan. You can't run it by the seat of your pants. On whether GM is so bureaucratic that managers can't make decisions: We make decisions every minute of every day. We use our committee structure to review decisions, not to make them. We pushed responsibility down, so you can't just sit there. You have responsibility for your unit, your car platform, your components. You are measured against your targets under the strategic plans that all managers buy into. I don't tell a guy to jump six feet high; by the end of the year, he clears the six-foot hurdle. On whether GM listens to its dealers: I've never met a bashful dealer. We have councils that dealers come to. They discuss the dealer sales agreement, for instance, or styling problems. ((GM President Robert)) Stemple and I are there, and all the division people ((Chevrolet, Buick, etc.)), sitting in a room with our coats off. The dealers don't come to congratulate us but to discuss problems. And we've been having surveys as long as I can remember. On handling customer complaints: We don't send out form letters. I often pick up the phone and call customers. Everybody here does that -- that's how you learn what customers are thinking. When Perot did it, it didn't cause any trauma. Stempel always takes a certain number of customer complaints every day he's in his office. Nobody wants to get legalistic with his customer. On Cadillac gaskets: I can't remember the gasket failure rate on Cadillacs being anything remarkable. We have world-class suppliers. And accountants don't specify gasket materials; engineers do. On why the brass got a bonus in 1986 when the troops didn't: General Motors, Ford, and Chrysler have a negotiated profit-sharing plan with the United Auto Workers -- an add-on to the worker's base salary if company profits pass a certain threshold. For managers GM has had a bonus plan since 1918. The GM philosophy has been a relatively low salary and high performance bonus; if you took comparable levels at Ford and Chrysler, our base salaries were always lower because we had more at risk. But the threshold for the bonus plan was different from the profit-sharing plan. And paying bonuses while skipping the profit sharing created a gulf we couldn't tolerate. So we said, all right, we won't have a bonus formula. Because the bonus plan was authorized by the stockholders, we did not have the right to tamper with it that year. In 1987 we switched to a restricted stock incentive plan, not based on the company's overall performance but on the individual's performance. On whether GM fails to tap the full potential of its resources: That might have been true some years ago, but we have made great strides -- a tremendous turnaround in product quality, in our plants, in turning people around. And when you see the 1987 profits, you will be pleasantly surprised. On the charge that the finance staff sabotages product planners: I don't know of a company that likes accountants. They usually come with numbers that show that something won't work, and the guy usually gets mad at the message bearer. But there is no guerrilla warfare at GM. Our people are working together more as we reorganize.

On choosing a board: When you go out and pick a director, you don't want necessarily the guy with the most shares. You want the most capable guy to represent the shareholders. We have bankers, scientists, retailers, educators. Our board is one of the hardest working. On whether management was scandalized when Perot suggested giving up the boardroom floor in New York: Ross Perot never suggested that to me or to anyone else I know. On labor relations: We have the best cooperation between management and the union in the corporation's history right today. When we negotiated a contract in 1987, there was not even a strike deadline. The contract guarantees that the work force is pitching in to help us. I give credit to the Japanese for pushing us closer together than before. On the charge that GM management doesn't lead: Where is the great lack of leadership that brought in the new reorganization, that bought EDS, that bought Hughes, that sells more cars and trucks than any company in the world? And we are going to increase that leadership. What the hell do you think we're doing? On the $7 million penalty Perot is liable for if he speaks out against GM: That was something that the lawyers worked out. I just talked to Ross. I have great admiration for Ross. He said he has no problems with the people at GM; there is nobody here he doesn't like. His goals and mine are the same. We both want to put the Perot-vs.-Smith stuff behind us and march on. That is ancient history. A fundamental difference, and it is fine with me: He would tell you his timetable is a lot faster. He is more impatient than anyone else in the world, and that applies not just to GM but to everything. We agree on the target, but not on how to get there or the speed to get there. I get impatient too, but I am stuck with reality -- with the National Highway Traffic Safety Administration, with the fundamental problems of a manufacturing concern. Our products take longer to develop. On Roger Smith: I've always said I hope they never write the story of me until I've been gone for ten years, because a lot of stuff I'm doing now, all you are ever going to see, is the negative side of it. But we are shooting for the long pull. I have confidence, and so does our board. We need to look more than a day or a day and a half out.