Chrysler 2010 Annual Report Download - page 342

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On 26 July 2004, the Board of Directors granted Sergio Marchionne, as a part of his variable compensation as Chief Executive Officer, options to purchase
10,670,000 Fiat S.p.A. ordinary shares at a price of €6.583 per share, exercisable from 1 June 2008 to 1 January 2011. In each of the first three years
following the grant date, the CEO acquired the right to purchase, beginning 1 June 2008, a maximum of 2,370,000 shares annually. As of 1 June 2008,
he also acquired the right to exercise, effective from that date, the remaining options on 3,560,000 shares as predetermined performance objectives for
the reference period had been met. On 27 March 2009, Shareholders considered it to be a priority interest for the Group to adopt changes to the plan
which would reinstate its retention capability and approved a new vesting period which depended solely on the requirement for the CEO to remain in office,
deferring the exercise of these options until 1 January 2011 and extending the exercise period until 1 January 2016, with all the other conditions remaining
unaltered.
At 31 December 2010 the features of the stock option plan are as follows:
Strike price Number of Vesting
Plan Beneficiary Date of amendment Expiry date (€) options granted Vesting date portion
Stock Options Chief Executive 27 March 2009 1 January 2016 6.583 10,670,000 31 December 2010 100%
July 2004 (modified) Officer
On 3 November 2006 the Board of Directors of Fiat S.p.A. approved (subject to the subsequent approval of Shareholders in general meeting, which was
given on 5 April 2007) an eight year stock option plan, which granted certain managers of the Group and the Chief Executive Officer of Fiat S.p.A. the right to
purchase a specific number of Fiat S.p.A. ordinary shares at a fixed price of €13.37 each. More specifically, the 10,000,000 options granted to employees
and the 5,000,000 options granted to the Chief Executive Officer had a vesting period of four years, with an equal number vesting each year, were subject
to achieving certain predetermined profitability targets (Non-Market Conditions or “NMC”) in the reference period and may be exercised from the date on
which the 2010 financial statements are approved. The remaining 5,000,000 options granted to the Chief Executive Officer of Fiat S.p.A. also had a vesting
period of four years with an equal number vesting each year and may be exercised from November 2010. The ability to exercise the options is additionally
subject to specific restrictions regarding the duration of the employment relationship or the continuation of the position held.
The contractual terms of the 2006 plan are as follows:
Strike price Number of Vesting
Plan Beneficiary Expiry date (€) options granted Vesting date portion
Stock Option Chief Executive Officer 3 November 2014 13.37 5,000,000 November 2007 25%
November 2006 November 2008 25%
November 2009 25%
November 2010 25%
Stock Option Chief Executive Officer 3 November 2014 13.37 5,000,000 1st Quarter 2008 (*) 25%*NMC
November 2006 1st Quarter 2009 (*) 25%*NMC
1st Quarter 2010 (*) 25%*NMC
1st Quarter 2011 (*) 25%*NMC
Stock Option Managers 3 November 2014 13.37 10,000,000 1st Quarter 2008 (*) 25%*NMC
November 2006 1st Quarter 2009 (*) 25%*NMC
1st Quarter 2010 (*) 25%*NMC
1st Quarter 2011 (*) 25%*NMC
(*) On approval of the prior year’s consolidated financial statements; subject to continuation of the professional relationship.
As explained in greater detail in the section Amendments to the stock option plans and stock grant plans of Fiat S.p.A. arising from the Demerger which
follows, vesting conditions for each plan, whether they consisted in the continuation of a professional relationship with the Fiat Group or in the achievement
of specific performance objectives, expired on 31 December 2010. With specific reference to options granted under the 2006 Stock Option Plan, for which
vesting was subject to the achievement of pre-established profitability targets, only the first tranche (i.e. 25%) of those rights have vested as the profitability
targets established in 2006 for the 3-year period 2008-2010 were not met. As a result, the remaining 75% did not vest.