Chrysler 2004 Annual Report Download - page 218

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Stockholders,
The membership of independent members on the boards of
directors of listed companies is rightly considered to be an
essential element for protection of the interests of stockholders,
particularly minority stockholders, and third parties. Indeed, in
order to achieve this goal, the company must be effectively
supervised by individuals without any conflict of interest.
The Company also has a priority interest in assuring that its
Board of Directors represent a sufficiently diverse range of
knowledge, experience, and opinions of a general and
specialized nature acquired at both the national and
international levels, particularly in the industrial and financial
sectors.
The composition of the Board of Directors must also maintain a
proper balance between executive and non-executive directors
so that no individual or group of individuals can exert a
dominating influence on decision making.
Executive directors are those that have been granted power of
representation and operating authority by the Board of
Directors, as well as those that hold management functions in
the Company or its subsidiaries.
Independent directors are those who do not have potential
conflicts of interest because they do not have and during the
last several years have not had, either directly, indirectly or on
behalf of third parties, economic or other relationships with the
Company or other parties related to it in any way (details
appended hereto).
The currently growing focus by investors and market supervisory
authorities on the structure of corporate governance manifests a
clear preference for systems that guarantee a higher degree of
protection in the event that conflicts of interest arise, particularly
in the areas where a lower level of protection might be afforded
by the stockholders meeting. The most effective measure that
the Board of Directors can take to thwart this eventuality is to
establish dedicated advisory bodies for preventive analysis and
formulation of proposals in risky situations. The activity of
independent directors is essential in these situations.
With this aim in mind, we believe that your Company must
adjust to the more evolved and stringent rules of corporate
governance, and thus, before adopting the new
recommendations that will be introduced in the Corporate
Governance Code, which is currently being updated, we
propose that you implement one of the fundamental rules
issued by the NYSE for companies listed on that exchange –
even if its adoption is not mandatory for companies
headquartered outside the U.S. – and that is that the majority of
directors be independent.
The more selective requirements for independence that we
believe better satisfy the changes underway in corporate
governance are those detailed below. The Board of Directors
will assess candidates’ independence on the basis of these
requirements, and thus we ask that you consider them when
submitting your nominations.
In particular, since 15 is the maximum number of directors
envisaged by the Articles of Association, we propose that you
set the number of directors at least at 14 and submit the
nominations necessary for a majority of them to be
independent, remembering that the terms of 3 of the 11 current
directors (Andrea Agnelli, Tiberto Brandolini d’Adda, and
Pasquale Pistorio) expire at this Stockholders Meeting, as they
were co-opted by the Board of Directors pursuant to Article
2386 of the Italian Civil Code.
In this regard, we also remind you that the annual compensation
envisaged by the Stockholders Meeting for current members is
50,000 euros, in addition to 3,000 euros in compensation for
each board of directors or committee meeting that the director
attends. Furthermore, the Stockholders Meeting has granted
the directors authorization pursuant to Article 2390 of the Italian
Civil Code. We thus propose that you extend the
aforementioned conditions to the new nominees.
Turin, May 10, 2005
The Chairman of the Board of Directors
Luca Cordero di Montezemolo
RESOLUTIONS WITH RESPECT TO NUMBER, APPOINTMENT OF
MEMBERS TO THE BOARD OF DIRECTORS AND RELEVANT FEES
Other Items on the Agenda and Related Reports and Motions