Chrysler 2008 Annual Report Download - page 353

Agenda and related Reports and Motions352
time as a consequence of extraordinary transactions or
significant events.
Characteristics of the financial instruments
Each option granted under the 2004 Plan gives the beneficiary
the right to purchase one Fiat ordinary share at the exercise
price of €6.583, which corresponds to the average Official Price
published by Borsa Italiana for the month prior to the grant
date (26 July 2004).
Upon your approval of the proposed amendments, the options
would be subject to a new vesting period ending 31 December
2010 and exercise shall be subject to Mr. Marchionne remaining as
Chief Executive Director of Fiat S.p.A. until that date.
The options would therefore be exercisable from
1 January 2011 to 1 January 2016.
The 2009-2010 Plan is based on the granting of rights under
which beneficiaries would receive an aggregate total of 8
million Fiat ordinary shares, 2 million of which are to be
allocated to the Chief Executive Officer, Sergio Marchionne,
and a maximum of a further 6 million shares would be
available for allocation to executives holding key positions
which have a significant impact on business results.
The rights would be vested in a single tranche upon approval
of the 2010 consolidated financial statements by the Board of
Directors. If the 2009 targets are reached, the number of shares
granted would be equivalent to 25% of the rights assigned.
If the 2010 targets are reached, the number of shares granted
would be equivalent to 100% of the rights assigned. The
Company shall have the right to substitute, in whole or in part,
Fiat ordinary shares granted to plan beneficiaries with a cash
payment calculated on the Official Price of those shares
published by Borsa Italiana on the date of approval of the 2010
consolidated financial statements. Vesting of the rights is
subject to continuation of the employment relationship or
mandate with the Group until the date of approval of the 2010
consolidated financial statements. Specific rules apply to early
termination of the relationship, such as, for example, a change
of employer within the Group, retirement
or death of the beneficiary.
For both Plans, settlement is by delivery of Fiat ordinary
shares. The exercise price, payable in the case of stock options
only, must be paid in cash at the moment of acquisition of the
underlying shares.
Rights relating to the above Plans are granted to the
beneficiary only and are non-transferable, except by
inheritance, while the ordinary shares received will not be
subject to any restrictions other than legal restrictions relating
to the use of privileged information. In this respect, the Board
of Directors may set restrictions for periods immediately prior
to key dates on the corporate calendar.
The Plans are to be serviced through shares bought on the
market rather than through the issue of new shares and,
therefore, would have no dilutive effects. The Company
currently holds sufficient own shares to fully service existing
incentive plans as well as those being submitted for your
approval.
On 23 February, the preliminary estimate of the non-cash cost
of the proposed amendments to the 2004 Plan and adoption of
the 2009-2010 Plan was €24 million. Those costs will be
recalculated on the date that the proposals, if approved,
become effective, on the basis of the price of Fiat ordinary
shares and the vesting conditions. For the amendments to the
2004 Plan and granting of rights for 2 million Fiat ordinary
shares to the Chief Executive Officer, that date coincides with
the date approval is given by Shareholders. For the granting of
rights for a maximum of 6 million Fiat ordinary shares to
executives, that date coincides with the effective grant date.
For accounting purposes, the cost calculated on the grant date
is recognised on a pro rata basis over the vesting period.
Please note that, in addition to the amendments to the 2004
Plan and the adoption of the 2009-2010 Plan which you are
being asked to approve, the Company also has other incentive
plans in place for directors and executives, established during
or subsequent to 2001, with a total of 23,427,000 options
outstanding at 23 February 2009, of which 2,515,500 are
exercisable. A total of 10,000,000 of these options will be
serviced through the issue of new shares and the remainder
through shares purchased on the market. The shares required
to service the 2004 Plan, the 2009-2010 Plan and other plans