Chrysler 2004 Annual Report Download - page 56

REPORT ON
OPERATIONS
01
54
Thus far, the Board has approved Stock Option Plans offered
to about 900 managers of the Group’s Italian and foreign
companies who are qualified as “Direttore” or have been
included in the Management Development Program for
high-potential managers. Plan regulations share these
common features:
■Options are granted to individual managers on the basis
of objective parameters that take into account the level
of responsibility assigned to each person and his or her
performance.
■If employment is terminated or an employee’s relationship
with the Group is otherwise severed, options that are not
exercisable become null and void. However, vested options
may be exercised within 30 days from the date of termination,
with certain exceptions.
■The option exercise price, which is determined based
on the average stock market price for the month preceding
the option grant, can vary as a result of transactions affecting
the Company’s capital stock. It must be paid in cash upon
the purchase of the underlying shares.
■The options are normally exercisable starting one year after
they are granted and for the following eight years, but during
the first four years, exercise is limited to annual tranches,
which may be accumulated, of no more than 25% of the total
granted.
In consideration of the options previously granted under the
aforesaid plans and that have since expired upon termination of
employment, a total of 10,502,543 option rights corresponding
to the same number of shares represent treasury stock to be
assigned to the holders of options pursuant to the conditions
envisaged in the specific Regulations.
In addition, the Board of Directors resolved to grant Mr. Sergio
Marchionne, as a portion of his variable compensation as Chief
Executive Officer, options for the purchase of 10,670,000 Fiat
ordinary shares at the price of 6.583 euros per share, exercisable
from June 1, 2008 to January 1, 2011. In each of the first three
years, he accrues the right to purchase, from June 1, 2008, a
maximum of 2,370,000 shares per year and on June 1, 2008 he
accrues the right to purchase, effective that date, the residual
portion amounting to 3,560,000 shares. The right to exercise
the options related to this latest portion of shares is subject
to certain predetermined profitability targets that should be
reached during the reference period.
The table below summarizes the information on options granted
outstanding at December 31, 2004. They are part of Stock
Options Plans, with the exception of options granted to Board
Members as shown in the specific table in the Notes to the
Financial Statements.
STOCK OPTIONS PLANS
2004 2003
Number of Average exercise Number of Average exercise
shares price (*) Market price shares price (*) Market price
Options outstanding on 1/1 12,697,743 16.46 6.14 15,791,700 18.8 7.7
Options granted during the year –––1,045,943 6.69 6.69
Expired options 2,195,200 – – 4,139,900 – –
Options outstanding on 12/31 10,502,543 16.38 5.9 12,697,743 16.46 6.14
Options exercisable on 12/31 7,144,748 18.8 5.9 5,537,925 20.45 6.14
(*) Following the capital increases in January 2002 and July 2003, the exercise prices were adjusted by applying the factors calculated by Borsa Italiana, in the amount of 0.98543607
and 0.93167321, respectively.