Chrysler 2008 Annual Report Download - page 351

Agenda and related Reports and Motions350
Dear Shareholders,
Pursuant to Article 114-
bis of Legislative Decree 58/98, we are
submitting the motions approved by the Board of Directors on
22 January 2009 and 23 February 2009 to you for approval.
More specifically, these motions relate to the adoption of
amendments to the Stock Option Plan under which, on 26 July
2004, Sergio Marchionne was granted 10,670,000 options to
acquire an equivalent number of Fiat S.p.A. ordinary shares
and the approval of a new 2009-2010 incentive plan taking the
form of stock grants which provides for the granting of an
aggregate total of 8 million Fiat ordinary shares to plan
beneficiaries.
This report was prepared in conformity with the instructions
for disclosure provided as a schedule to the Issuer Regulations
issued by Consob.
Beneficiaries
The beneficiary of the 2004 Stock Option Plan, to which the
following proposed amendments relate, is the Chief Executive
Officer of Fiat S.p.A., Sergio Marchionne.
The beneficiaries of the 2009-2010 Incentive Plan will be Sergio
Marchionne and a maximum of three hundred executives
holding key positions which have a significant impact on
business results. Executives will be selected by the Chief
Executive Officer of Fiat S.p.A. from among employees of the
Company and/or its subsidiaries, consistent with the
organisational criteria adopted for the 2006 and 2008 plans.
Reasons for amendments to the 2004 Plan and adoption of the
2009-2010 Plan
In general, incentive plans based on financial instruments
enable incentivization of individuals in key positions toward
the achievement of Company and Group performance targets
which is correlated to the long-term value created for
shareholders. The level of commitment is further strengthened
when vesting of rights is subject to the achievement of specific
profit targets over an established reference period.
At the same time, motivating management by granting
instruments which reflect the Company’s value contributes to
the alignment of the interests of management with those of
shareholders, promoting management’s sense of identification
with the Group and significantly enhancing retention.
Over the course of several meetings and with the contribution
of the Compensation Committee, the Board of Directors
reviewed the effectiveness of existing incentive schemes in
light of the current condition of the real economy and financial
markets and the particularly uncertain period being faced by
the automotive sector globally. Following a review of the
position of both the Chief Executive Officer of Fiat S.p.A. and
other Group executives, the Board, noting that the current
situation was attributable to various global factors rather than
to management’s performance, acknowledged the need for
incentives which were both appropriate and correlated to
ambitious targets and resolved to submit a comprehensive
package of measures for your approval.
At the meeting held on 22 January 2009, the Board reviewed
the 2004 Stock Option Plan for the Chief Executive Officer of
Fiat S.p.A. whose conditions relating to performance targets
and duration in office have already been fully satisfied. As
such, the options are exercisable from 1 June 2008 to 1
January 2011. For the reasons stated above and at the proposal
of the Compensation Committee, the Board determined that it
is significantly in the Company’s and Group’s interests to
restore the retention capability of the 2004 Plan - which has
been diminished by the recent extraordinary events which are
wholly independent of actual performance - through the
reintroduction of vesting restrictions (under which the options
would not be exercisable until after 31 December 2010) and
extension of the exercise period.
In addition, at the meeting held on 23 February 2009, the Board
resolved to propose establishment of a new Plan for the 2009-
2010 financial years specifically tailored to the current
condition of the economy and financial markets. In line with
latest international best practice, this Plan would take the form
of stock grants to the Chief Executive Officer of Fiat S.p.A. and
other executives having a significant impact on business
Resolutions pursuant to Article 114-bis
of Legislative Decree 58/98