Chrysler 2009 Annual Report Download - page 203

202 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
The fair value of the above mentioned rights at 31 December 2009 and at 31 December 2008 amounts to:
Fair value at 31 December 2009 Fair value at 31 December 2008
Fiat S.p.A. GM $1 Fiat S.p.A.
(€) ordinary share 2/3 share ordinary share
2002 Plan 0.02 0.03 0.11
2003 Plan 3.57 0.31 0.78
2004 Plan 5.23 0.51 1.23
The liability arising on this plan at 31 December 2009 amounted to €0.5 million (€0.2 million at 31 December 2008). The intrinsic value of these plans at 31
December 2009, amounted to €0.3 million (zero at 31 December 2008).
Provisions for employee benefits25.
Group companies provide post-employment benefits for their active employees and for retirees, either directly or by contributing to independently
administered funds. The way these benefits are provided varies according to the legal, fiscal and economic conditions of each country in which the Group
operates, the benefits generally being based on the employees’ remuneration and years of service.
Group companies provide post-employment benefits under defined contribution and/or defined benefit plans.
In the case of defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory,
contractual or voluntary basis. Once the contributions have been paid, the Group has no further payment obligations. The entity recognise the contribution
cost when the employee has rendered his service and includes this cost by destination in Cost of sales, Selling, general and administrative costs and
Research and development costs. In 2009, these expenses totalled €1,292 million (€1,366 million in 2008).
Defined benefit plans may be unfunded, or they may be wholly or partly funded by contributions by an entity, and sometimes by its employees, into an entity,
or fund, that is legally separate from the employer and from which the employee benefits are paid. Benefits are generally payable under these plans after the
completion of employment. The plans are classified by the Group on the basis of the type of benefit provided as follows: Reserve for employee severance
indemnity (TFR), Pension plans, Health care plans and Other.
Reserve for employee severance indemnity (“TFR”)
The TFR consists of the residual obligation for severance indemnities which was required until 31 December 2006 under Italian legislation to be paid to employees
of Italian companies with more than 50 employees when leaving the company, and accrued over the employee’s working life for other companies. This provision
is settled to retiree employees and may be partially paid in advance if certain conditions are met. This defined benefit post-employment plan is unfunded.
Pension plans
The item Pension plans consists principally of the obligations of Group companies operating in the United States (mainly to the CNH – Case New Holland
Sector) and in the United Kingdom towards certain employees and former employees of the Group.
Under these plans a contribution is generally made to a separate fund (trust) which independently administers the plan assets. The Group’s funding policy
is to contribute amounts to the plan equal to the amounts required to satisfy the minimum funding requirements prescribed by the laws and regulations of
each individual country. Prudently the Group makes discretionary contributions in addition to the funding requirements. If these funds are overfunded, that
is if they present a surplus compared to the requirements of law, the Group companies concerned may not be required to contribute to the plan in respect
of the minimum performance requirement as long as the fund is in surplus.
The investment strategy for these assets depends on the features of the plan and on the maturity of the obligations. Typically long-term plan benefit
obligations are funded by investing mainly in equity securities; short and medium-term plan benefit obligations are funded by investing in fixed income
securities, which are less volatile.
In the United Kingdom the Group participates in a plan financed by various entities belonging to the Group, called the “Fiat Group Pension Scheme”,
amongst others. Under this plan, participating employers make contributions on behalf of their active employees (active), retirees and employees who have
left the Group but have not yet retired (deferred).