Chrysler 2005 Annual Report Download - page 43

42 Reporton Operations Corporate Governance
01 Report on Operations
Corporate Governance
Introduction
The Fiat Group adopted and abides by the Corporate Governance
Code of Italian Listed Companies, supplemented and amended as
necessaryto ensure that the corporate governance system it
adopted is in line with the rules imposed for listing on the NYSE,
including the relevant sections of the Sarbanes-Oxley Act, and the
characteristics of the Group.
In accordance with the regulatory requirements of Borsa Italiana, an
“Annual Report on Corporate Governance” is prepared and made
available on the occasion of the annual stockholders meeting that
approves the financial statements. It is also available in the section
“Investor Relations” on the website www.fiatgroup.com, which also
contains documents regarding the Fiat Group corporate governance
system. In compliance with the guidelines issued byAssonime and
Emittenti Titoli S.p.A., this Report is composed of four sections: the
first containing a general description of the structure of corporate
governance, the second analysing in detail the implementation of the
provisions of the Corporate Governance Code, the third highlighting
certain of the more significant aspects of the applicable United States
law, and the fourth containing summary tables and the corporate
governance documents of the Fiat Group. The aspects of significance
for this Report on Operations are illustrated below.
Direction and Coordination Activities
Fiat S.p.A. is not subject to direction and coordination activities by
companies or entities. The companies that Fiat S.p.A. directly and
indirectly controls, with the exception of particular cases, have
identified Fiat S.p.A. itself as the entity that performs direction and
coordination activities, pursuant to Article 2497 bis of the Italian Civil
Code. This activity consists in indicating the general strategic and
operating guidelines of the Group and takes concrete form in the
definition and updating of the corporate governance and internal
control model, issuance of a Code of Conduct adopted by the
Group, and elaboration of the general policies for the management of
human and financial resources, purchasing of factorsof production,
and communication. Furthermore, coordination of the Group
envisages centralized management, through dedicated companies,
of cash management, corporate and administrative, internal audit, and
training services.
This allows the subsidiaries, which retain full management and
operating autonomy, to realize economies of scale by availing
themselves of professional and specialized services with improving
levels of quality and to concentrate their resources on the
management of their core business.
Boardof Directors
As envisaged in the Articles of Association, the number of members
of the Board of Directors ranges from nine to fifteen. In order to
have a majority of independent directors, the Stockholders Meeting
held on June 23, 2005 increased the number of membersof the
Board of Directorsfrom eleven to fifteen and they shall remain in
office until the date of the Stockholders Meeting that will be called
to approve the 2005 financial statements.
As envisaged in Article 16 of the Company’s Articles of Association,
the representation of the Company is vested, severally, in all executive
directors, and as envisaged in Article 12, the Vice Chairman, if
appointed, shall act as Chairman if the latter is absent or prevented
from acting. As in the past, the Board of Directors adopted a model
for delegation of broad operating powers to the Chairman and the
Chief ExecutiveOfficer, authorizing them to severally perform all
ordinary and extraordinary acts that are consistent with the
Company’spurpose and not reserved by law or otherwise delegated
or reserved to the Board of Directors itself. In practice, the
Chairman exercises coordination and strategic guidance within the
activities of the Board of Directors, while the Chief ExecutiveOfficer
is in charge of the operating management of the Group.
The Board defined the “Guidelines for Significant Transactions and
Transactions with Related Parties,” by which it reserved the right to
examine and approve in advance any transaction of significance in the
balance sheet, economic and financial figures, including the most
significant transactions with related parties, and subject all transactions
with related parties to special criteria of substantial and procedural
fairness.