Chrysler 2007 Annual Report Download - page 336

Items on the Agenda and Related Reports and Motions 335
Stockholders,
On February 26, 2008 the Board of Directors resolved to submit
for your approval an incentive plan that will give Fiat the
flexibility to grant a maximum aggregate amount of 4 million
financial instruments either in the form of stock options or of
stock appreciation rights to be awarded periodically through
the end of 2010. The plan is intended for executives in key
positions who either are being recruited, promoted or were
hired since the November 3, 2006 plan assignment or others
who may warrant additional awards and is structured similarly
to the 2006 plan in terms of performance criteria, vesting
period and the period available for exercise.
This report has been prepared in accordance with the
requirements for the information document contained in the
schedule attached to the Issuers Regulation published by
Consob, the Italian securities market regulator.
Grantees
Grantees of this plan are executives, identified by the Chief
Executive Officer among employees of the Company or its
subsidiaries, who hold or will hold key positions with a
significant impact on business results, and who either are
being recruited, promoted or were hired since the November 3,
2006 stock option plan assignment. In addition, the grantees
may be executives who have taken on higher responsibilities
since the November 2006 grant and others who may warrant a
higher award. Terms and conditions of the plan are the same
for all grantees. Members of the Board of Directors, including
the Chief Executive, are excluded from this plan.
Reasons for the adoption of the Plan
The adoption of incentive plans based on the granting of
financial instruments enables the Company to attract and
retain executives that hold key positions in the business, while
at the same time involving them in pursuing objectives relating
to the Group’s operating performance. These plans also give
these individuals an economic incentive linked to increases in
the value of the Group. The definition of incentive policies for
key executives and related instruments are also a fundamental,
sound element of corporate governance and company
management in an increasingly competitive and mobile global
labour market.
With this aim, the Board of Directors, consistent with the
recommendations of the Compensation Committee and in view
of current capital market conditions, considers it essential
to strengthen retention of executives, while aligning their
interests with those of stockholders in order to increase
shareholder value in the medium and long-term through
incentives that, being based on the granting of financial
instruments reflecting the Company’s market value, contribute
to develop confidence in the growth of the Group’s value and
promote management’s identification with the Group.
This plan is consistent with the objectives set for executives
in the stock option plan of 3 November 2006 in terms of
timescale, achievement of pre-determined performance criteria,
vesting period and exercise period. In both cases profitability
objectives and the vesting and exercise periods are linked to
the consolidated results targets set out in the Group’s plan for
the period 2007 – 2010 that was announced to the financial
community during the Fiat Investors & Analysts Day held
at the end of 2006.
The tax effects of the benefits of the plan will be borne by
beneficiaries in accordance with the laws and regulations
prevailing at the time in the jurisdictions where the executives
reside.
Given its specific characteristics the incentive plan does not
have support from specific funds.
Approval process and timetable for granting the instruments
On February 26, 2008 the Board of Directors, on the basis of
the recommendation of the Compensation Committee that met
the day before, resolved to submit for approval to the
Stockholders Meeting an incentive plan pursuant to Article 114
bis of Legislative Decree no. 58/98. The plan will give Fiat the
flexibility to grant a maximum aggregate amount of 4 million
financial instruments either in the form of stock options or of
stock appreciation rights. The official price posted on the Italian
Stock Exchange for Fiat ordinary shares was equal to 14.053
euros and 14.335 euros on February 25 and on February 26,
2008, respectively.
Incentive Plan pursuant to Article 114 bis
of Legislative Decree no. 58/98