Chrysler 1999 Annual Report Download - page 56

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Report on Operations – Stock Option Plans
Consistently with what has become common international
practice, the Board of Directors agreed that stock options
provide the best means of strengthening management’s
loyalty, since they give executives a stake in the Company’s
operating success and in its ability to create growing value
for the stockholders. Consequently, as allowed under the
respective resolution adopted by the Extraordinary
Stockholders’ Meeting on June 22, 1998, the Board approved
two Stock Option Plans, which will be offered to about 900
managers of the Group’s Italian and foreign subsidiaries
who are qualified as “Direttore” or have been included in
the Management Development Program for high-potential
managers. Both Plans share these common features:
❚Options are awarded to individual managers on the basis
of objective parameters that take into account the level of
responsibility assigned to each person and the assessment
of his or her performance.
❚If employment is terminated or an employee’s relationship
with the Group is otherwise severed, options that are not
exercisable shall become null and void. However, vested
options may be exercised within 30 days from the date of
termination, with certain exceptions.
❚The predetermined option exercise price, which may vary
as a result of transactions affecting the Company’s capital
stock, shall be paid in cash upon purchase of the underlying
shares.
The Plan approved in March 1999 awarded 1,248,000
options, giving the right to purchase ordinary Fiat shares at
a price of 28.45 euros per share. This figure corresponds to
the average price for the last 20 trading days prior to the date
of the award. 50% of these options may be exercised on or
after April 1, 2001, with the remaining 50% exercisable on
or after April 1, 2002. All options expire on March 31, 2007.
The Plan approved in February 2000 awarded 5,158,000
options, giving the right to purchase ordinary Fiat shares at a
price of 30.63 euros per share. This figure corresponds to
the average price for the last 20 trading days prior to the date
of the award. These options may be exercised between
February 18, 2001 and February 18, 2008. However, during
the first four years, the options may only be exercised in
cumulative annual tranches not exceeding 25% of the total
number awarded.
Pursuant to these plans, a total of 5,506,000 shares,
equivalent to 1% of the Company’s total capital stock and
1.5% of its ordinary shares, will be issued through a special
dedicated capital increase, which the Board has already
approved. In addition, 900,000 treasury shares will be sold
to option holders in accordance with the provisions of
the respective Regulations.
The table below summarizes the data for the options
outstanding at December 31, 1999:
Options awarded in 1999 that were outstanding,
but not yet exercisable, at December 31, 1999 1,248,000
Average exercise price (euros per share) 28.45
Market price on the award date (euros per share) 28.45
Market price at December 31, 1999 30.09
Exercise period:
624,000 options exercisable between April 1, 2001 and March 31, 2007
624,000 options exercisable between April 1, 2002 and March 31, 2007
STOCK OPTION PLANS