Chrysler 2008 Annual Report Download - page 352

Agenda and related Reports and Motions 351
results and be based on instruments of measurements of
performance consistent with the current market environment
and tied to key operating indicators for the Group.
The tax effects of benefits associated with the Plans are the
responsibility of the beneficiaries.
Given their characteristics, no special funds would support the
Plans.
Process for approval of amendments to the 2004 Plan and
adoption of the 2009-2010 Plan
Amendments to the 2004 Stock Option Plan were drafted by
the Compensation Committee, composed of the independent
directors R. Berger (Committee Chairman), L. Garavoglia and
M. Zibetti, which examined the matter over the course of two
meetings. The first meeting was held on 12 December 2008 and
the second, in which the proposal was formulated, was held on
22 January 2009.
At its meeting on 22 January 2009, the Board of Directors
resolved, with the interested party abstaining, to approve the
Compensation Committee’s proposal and to submit the
proposed amendments to the 2004 Stock Option Plan to
Shareholders for approval, pursuant to Article 114-
bis of
Legislative Decree 58/98.
Under the Plan, which was instituted on 26 July 2004, Mr.
Marchionne was granted options to purchase 10,670,000 Fiat
S.p.A. ordinary shares at €6.583 per share, exercisable from 1
June 2008 to 1 January 2011.
In each of the first three years following the grant date, Mr.
Marchionne acquired the right to purchase 2,370,000 shares
per year commencing 1 June 2008. As of 1 June 2008, he also
acquired the right to exercise the remaining options equal to
3,560,000 shares, having achieved the profit targets established
for the reference period.
The proposed amendments, which would become effective upon
your approval, consist of the reintroduction of a vesting period,
conditioned solely on the beneficiary remaining in office, which
would render the options unexercisable until after 31 December
2010, with a new exercise period beginning 1 January 2011 and
expiring 1 January 2016. All other conditions of the Plan,
including the number of options granted and the exercise price,
would remain unchanged. The Official Price published by Borsa
Italiana for Fiat ordinary shares on 12 December 2008 and 22
January 2009 was €5.138 and €4.039, respectively.
On 23 February 2009, the Board of Directors, having heard the
report of the Chairman of the Compensation Committee and
with Mr. Marchionne abstaining, resolved to submit a motion
to Shareholders, pursuant to Article 114-
bis of Legislative
Decree 58/98, for the adoption of a new 2009-2010 Incentive
Plan based on the granting of rights which, subject to the
achievement of predetermined performance targets for 2009
and 2010 and continuation of the professional relationship with
the Group, provides for the granting of an aggregate total of 8
million Fiat ordinary shares to plan beneficiaries.
The Chief Executive Officer of Fiat S.p.A. would be granted 2
million Fiat ordinary shares and a maximum of 6 million shares
would be available for granting, on one or more occasions, to
a maximum of 300 executives holding key positions which
have a significant impact on business results. Plan
beneficiaries are to be selected by the Chief Executive Officer
of Fiat S.p.A. in accordance with the organisational criteria
adopted for the 2006 and 2008 plans. The Chief Executive
Officer is also responsible for determining the number of rights
to be granted to each manager as well as the reassignment of
any rights forfeit pursuant to termination of the employment
relationship. The Official Price published by Borsa Italiana for
Fiat ordinary shares on 23 February 2009 was €3.67.
Should you approve these proposals, the grants to the Chief
Executive Officer of Fiat S.p.A. would have immediate effect
while, as required by law, information on the beneficiaries and
actual number of financial instruments granted in relation to
the 2009-2010 Plan for Group executives will be communicated
to the market on the grant date.
As with all existing incentive plans, both the Plans are
administered by the Board of Directors of Fiat S.p.A. which has
the power to modify the terms, conditions and targets at any