Chrysler 2009 Annual Report Download - page 192

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a company may not purchase treasury shares for an amount exceeding the distributable profits and available reserves stated in its most recently approved
financial statements. Any purchase must be approved by shareholders in General Meeting and in no case may the nominal value of the shares acquired
exceed one-fifth of share capital.
The following matters is also relevant to the share capital of Fiat S.p.A. in a meeting held on 3 November 2006, the Board of Directors of Fiat S.p.A. exercised
its delegated powers pursuant to article 2443 of the Italian Civil Code to increase share capital reserved for employees of the company and/or its subsidiaries
up to a maximum of 1% of those shares, being฀€50 million, by taking a decision to issue a maximum of 10 million ordinary shares each of nominal value฀
€5, corresponding to 0.78% of share capital and 0.92% of ordinary share capital, at a price of฀€13.37 each, to service the new employee stock option plan
described in the following paragraph. The execution of this increase in capital is dependant on the conditions of the plan being satisfied.
In 2006 the Group introduced a dividend policy under which its intention is to distribute a total dividend to shareholders of 25% of consolidated profits.
Despite the fact that the Group’s consolidated profit in 2008 amounted to฀€1,721 million and that the net profit of Fiat S.p.A. was sufficient to enable a
dividend to be distributed in accordance with this policy, on the proposal of the Board of Directors, Shareholders decided at their meeting of 27 March 2009
that the distribution of dividends should be limited to savings shares alone (a total of฀€24.8 million, in accordance with the Company’s bylaws), with the aim
of strengthening the Group’s capital structure and maintaining its liquidity. Following the normalisation of the capital markets as a source of funding for the
Group and the belief that the Group will be able to continue to generate earnings even in a significantly different market, the Board of Directors is proposing
to shareholders at their Annual General Meeting the payment of a total dividend of฀€244 million (€237 million excluding the treasury shares currently owned
by the Group), equal to approximately 30% of 2008 consolidated net income less the 2009 consolidated net loss, based on the net income of Fiat S.p.A.
available for distribution. The dividend proposal may be summarised as follows:
€0.17 per ordinary share;
€0.31 per preference share;
€0.325 per saving shares.
The objectives identified by the Group for managing capital are to create value for shareholders as a whole, to safeguard business continuity and support
the growth of the Group. As a result the Group endeavours to maintain an adequate level of capital that at the same time enables it to obtain a satisfactory
economic return for its shareholders and guarantee economic access to external sources of funds, including in this by means of achieving an adequate
rating.
The Group constantly monitors the evolution of the ratio between debt and equity and in particular the level of net debt and the generation of cash from its
industrial activities.
In order to reach these objectives the Group aims at a continuous improvement in the profitability of the business in which it operates. Further, in general,
it may sell part of its assets to reduce the level of its debt, while the Board of Directors may make proposals to shareholders in General Meeting to reduce
or increase share capital or, where the law permits, to distribute reserves. In this context, the Group also makes purchases of treasury shares, without
exceeding the limits authorised by shareholders in General Meeting, under the same logic of creating value, compatible with the objectives of achieving
financial equilibrium and an improvement in its rating.
In this respect capital means both the value brought into Fiat S.p.A. by its shareholders for employment in the management of the Group (share capital plus
the additional paid-in capital reserve less treasury shares, equal to฀€7,261 million at 31 December 2009, unchanged compared to 31 December 2008),
and the value generated by the Group in terms of the results achieved in operations (retained earnings and other reserves, equal in total, before the result
for the year, to฀€2,945 million at 31 December 2009 and฀€3,802 million at 31 December 2008, excluding gains and losses recognised directly in equity and
non-controlling interests).