Chrysler 2003 Annual Report Download - page 196

195
COVERAGE OF DIRECTORS’ CIVIL LIABILITY
Dear Stockholders,
In furtherance of the resolution adopted by the Stockholders’
Meeting last year, the Company has taken out insurance
policies, which come due next June, to cover the civil liability
of its Directors for inadvertent failure to comply with the
statutory and/or contractual requirements inherent in their
office. The maximum total coverage is 50 million euros.
In this area, it is important to keep in mind that the level of
responsibility that goes with the office of Director is expanding
steadily. This is occurring primarily as a result of recent changes
to corporate law, both in Italy and abroad. Consider, for example,
the demands entailed by directing and coordinating an
organization such as the Fiat Group and the increased burdens
that the Sarbanes Oxley Act places on the officers of companies
that, like your own, are listed in the United States.
The Company has responded to the rising level of risk
inherent in the responsibilities that Directors are being
required to shoulder by pursuing increasingly incisive corporate
risk prevention strategies, which it implements by improving
and updating its structures, monitoring the effectiveness of its
internal control systems and adopting compliance programs
designed to minimize risk. Nevertheless, since Directors must
continue to play a pivotal role in the Company’s management
and administration, it has become necessary to create the
conditions needed to allow Directors to serve with peace
of mind and without being hindered by the concern of
subsequent monetary repercussions.
Clearly, the Company has many reasons for wanting to provide
its Directors with insurance coverage. First of all, such coverage
strengthens its ability to attract and retain highly respected
Other Items on the Agenda and Related Reports and Motions
independent Directors. Moreover, it enables the Company to
provide its Directors with the emotional tranquility needed to
make the many difficult choices that are incumbent upon them
without the concern of facing excessive risk. Lastly, the same
insurance coverage enhances the ability to satisfy possible
claims.
Consequently, the Board of Directors has decided to submit to
the Stockholders’ Meeting a motion to provide coverage and
surety for the risks and costs that might result from civil actions
filed for inadvertent failure to comply with the requirements
inherent in their office, but not for those acts that are criminal
or fraudulent or for those instances in which the insured
parties received personal profit or advantages or were
awarded compensation to which they were not entitled.
Since it is becoming increasingly costly and difficult to obtain
coverage in the insurance market for the risks mentioned above,
particularly in view of the increased level of liability entailed by
the office of Director, there are several complementary avenues
for securing the desired coverage that should be considered.
One option, which is the method currently used, is to take
out multiple insurance policies with a maximum total coverage
of 50 million euros, which can be combined with Company
risk-sharing and self-insurance strategies that are used to
minimize insurance premium costs.
Insurance policies should be supplemented with complementary
self-insurance by the Company that is designed to hold the
Directors harmless and to offer supplemental coverage, in
addition to the protection provided by the insurance policies, up
to a maximum limit (including the insurance policies) that, based
on the size of the Fiat Group, should be set at 100 million euros.
If you approve this motion, the Company’s legal representatives
will provide for the execution of the relevant contracts.
March 26, 2004
The Board of Directors
By:
Umberto Agnelli
Chairman