Chrysler 2011 Annual Report Download - page 360

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Auditors’ Reports
Motions for AGM
D.3 Changes to the previous Compensation Policy
The compensation policy described in this Report does not materially modify the practices applied in 2011, with the exception of the LTI Plan.
E. Fixed and variable Components of the Compensation
E.1 Members of the Board of Directors
With reference to the policies relating to fixed and variable components of the compensation, the Company distinguishes between Executive and non-
Executive Directors.
With regard to non-Executive Directors with no specific additional responsibilities (including independent directors), the compensation consists of a fixed
fee set by shareholders. In addition, non-Executive Directors are also refunded for expenses incurred in for the exercise of their office.
In accordance with EU Recommendations and article 6 of the Corporate Governance Code, non-Executive Directors are not eligible for any form of
compensation tied to the achievement of financial targets or participation in any share-based compensation scheme of the Company.
As per Group policy, which reflected the common practice of the Italian market, the non-Executive Directors are not granted with any variable compensation.
With reference to Executive Directors, in addition to the compensation set by shareholders, they are granted individual compensation plans. In particular,
at the time of their appointment or thereafter, the Compensation Committee proposes to the Board of Directors the remuneration package for Executive
Directors or for directors holding special offices. On the basis of the above, the Board of Directors establishes – pursuant to article 2389, third paragraph, of
the Italian Civil Code upon proposal of the Compensation Committee and following consultation with the Board of Statutory Auditors – fixed compensation
for the Chairman and the CEO, and, in the case of Directors holding special offices in subsidiaries, approves the proposal to be submitted to the board
of directors of the relevant subsidiary.
The model of delegation adopted by the Board, contemplates broad operating powers to the Chairman and the Chief Executive Officer by which they are
authorized, separately and individually, to perform all ordinary and extraordinary acts that are consistent with the Company’s purpose and not reserved by
law for, or otherwise delegated or assumed by, the Board of Directors itself. In practice, the Chairman has the role of coordination and strategic direction
for the activities of the Board of Directors, while the Chief Executive Officer is responsible for the operational management of the Group.
Consistent with the above, the individual compensation plan applicable to the Chairman does not contemplate a variable compensation, while the CEO is
also granted with variable compensation, both monetary and equity based.
As a general principle, the remuneration package of the CEO consists, inter alia, of the following elements: (i) a gross annual fixed component; (ii) an annual
variable cash component that is based on the achievement of pre-set business objectives; (iii) a medium-long term, variable equity component.
With regard to Directors holding special offices (such as Mr. Montezemolo, Chairman of Ferrari S.p.A.) the individual compensation plan contemplates (i)
a gross annual fixed component; (ii) an annual variable cash component that is based on the achievement of pre-set business objectives.
In addition, upon proposal of the Compensation Committee, the Board of Directors retains authority to grant bonuses for specific transactions that
are deemed exceptional in terms of strategic importance and effects on the results of the Company and/or the Group as well as to consider special
circumstances in resolving on the variable component of the remuneration. The Compensation Committee and the Board of Directors evaluate and
approve in advance, respectively, any further remuneration elements awarded to Directors for any other special offices granted thereto within the Boards
of Directors of the Company’s subsidiaries.
Payment of short-term variable compensation is subject to the level of achievement of specific Group performance targets established annually by the
Board of Directors, based on the proposal of the Compensation Committee, that are concretely measurable and consistent with the targets provided
for in the budget. The variable component is subject to a maximum established with reference to gross annual fixed compensation. The Compensation
Committee verifies – on a yearly basis – the Group’s performance achievement of the performance objectives established for the previous year and makes
its consequent recommendation to the Board of Directors. On such basis, the Board of Directors, after consultation with the Board of the Statutory
Auditors, resolves on the variable compensation of Executive Directors.