Chrysler 2005 Annual Report Download - page 270

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Other Items on the Agenda and Related Reports and Motions
Stockholders,
The term of the Board of Directors expires on the date of the
Stockholders Meeting that approves the financial statements at
December 31, 2005.
The Stockholders Meeting is accordingly asked to:
determine the number of members of the Board of Directors,
from a minimum of nine to a maximum of fifteen, as envisaged
in Article 11 of the Articles of Association,
appoint the directors for a new term, considering that the Articles
of Association prohibits appointing individuals who are 75 or older,
set the compensation to be paid to the Directors or define the
procedures for determining it.
Accepting the motions made by the Board of Directors with the aim
of obtaining a majority of independent directors, the Stockholders
Meeting held on June 23, 2005 resolved, with reference to the
residual term of office that expires today, to increase the number
of directors to the maximum limit allowed by the Articles of
Association.
The dimensions of the Company and the growing complexity and
specialization of the sectors in which it operates require that the
Board of Directors itself represent a diversity of knowledge,
experience, and opinions, comprising both generalists and specialists,
accumulated at the international level, relating to macroeconomic
scenarios and the globalization of markets, particularly the industrial
and financial sectors. An adequate range of skills and professional
backgrounds is the fundamental premise for a Board to meet the
challenges it will face.
The composition of the Board must also strike the right balance
amongst executive directors (i.e. those delegated to represent
and operate the company) and non-executive directors, so that
no individual or group of individuals can exert a dominating influence
on the decision-making process.
Finally, the presence of independent directors is essential to protect
the interests of stockholders, particularly minority stockholders, and
third parties. The contribution of independent directors is also
fundamental to the composition and functioning of advisory
committees dedicated to the preliminary examination and formulation
of proposals regarding risks. These committees are one of the most
effective means for combating eventual conflicts of interest.
Since we believe that enhancing protection against potential conflicts of
interest is a priority for the Company, particularly in those areas less
prone to control by the Stockholders Meeting, we propose that you
confirm the principle of maintaining a majority of independent directors.
This would implement a fundamental rule issued by the NYSE, although
not binding on non-U.S. issuers, while confirming the more selective
criteria for determination of independence adopted last year.
These criteria, which are more rigorous than those recently
approved upon revision of the Corporate Governance Code of
Italian listed companies, are illustrated below. They are based on
the absence or insignificance, during the previous three years, of
investment in or economic relationships with the Company, its
executive directors and managers with strategic responsibilities, its
controlling companies or subsidiaries, or kinship ties to the executive
directors of these companies.
They also prohibit determination of directors as independent if they
were stockholders or directors of leading competitors, rating
companies or external auditors engaged by the Company or Group
companies in the last three years, or are executive directors at other
companies where the Company directors are non-executive directors.
Thus, we propose that you set at fifteen the number of members to
the Board of Directors – a number that has proven to be adequate
for effective satisfaction of Board duties and diversified composition
of the various committees - most of whom satisfy the requirements
for independent directors. We also propose that you set the annual
compensation for each director in the amount of 50,000 euros, plus
an attendance fee of 3,000 euros for each Board or committee
meeting that the directors, excluding executive directors, attend.
Finally, we propose that the elected directors not be subject to
the prohibition envisaged in Article 2390 of the Italian Civil Code.
Turin, March 24, 2006
Board of Directors
By:
Luca Cordero di Montezemolo
Chairman
Appointment of the Board of Directors
after determining the number of its
members and their fees