Chrysler 2011 Annual Report Download - page 361

Motions
for AGM
360
With regard to the weight of fixed and variable components of the compensation package, it should be noted that, on the basis of an international
benchmarking, the individual compensation plan of the CEO is set on the basis of the following indicative criteria:
(a) the fixed component generally represents no more than 25-35% of the targeted Annual Total Direct Compensation;
(b) the annual incentive is determined as a percentage of the fixed salary (inclusive of remuneration received for other offices in other Group companies)
depending on the level of achievement or over achievement of pre-set targets and represents generally not less than 100% of the fixed component
in case of achievement of the targets. In any case, the maximum incentive cannot be 2.5 times greater than the gross annual fixed component;
(c) the medium/long term, variable, target-based annualized component generally represents at least 60% to 70% of the total variable component
(targeted annual performance bonus and annualized value of LTI awards) of the targeted Annual Total Direct Compensation. Special retention
awards of equity may make the annualized component even greater.
The current individual compensation plan of Executive Directors holding special offices does not contemplate the equity based component of the
remuneration.
In addition in the past the Company granted to the CEO and certain Executives with Strategic Responsibilities stock options in accordance with the
terms of certain share-based incentive plans approved between 2004 and 2010, which in certain cases allow shares to be purchased at a predetermined
price (stock options) and in other cases provide for the granting of Fiat ordinary shares (stock grants). Details concerning such plans are available at the
Company’s website.
With regard to allowances in the event of resignation or termination as well as health and welfare benefits, including supplementary pension benefits,
please refer to Paragraphs L and M below, respectively.
E.2 Statutory Auditors
Members of the Board of Statutory Auditors receive a fixed compensation, as established by Shareholders. They are also entitled to reimbursement for
any expenses occurred in relation to exercise of their office.
E.3 Executives with Strategic Responsibilites
The same principles and criteria described above are applied to compensation for Executives with Strategic Responsibilities for the purpose of attracting,
incentivizing and retaining highly-qualified personnel through compensation packages that are competitive with the market and recognize key attributes
such as merit, demonstrated leadership and the impact of an individual’s role on the achievement of Group financial targets.
The standard compensation structure for Executives with Strategic Responsibilities provides a fixed component as well as short and long-term variable
components. As stated above, the fixed compensation component adequately compensates individuals for services performed even if the variable
components are not received as a result of performance targets not being met.
The short-term variable component is subject to the achievement of financial targets established in the annual budget and the amount determined in
relation to the level of achievement or over-achievement of those targets, up to a maximum established in relation to the fixed component.
Subject to the Shareholders’ approval of the LTI Plan, the long-term variable component consists of share-based incentive plans that link an appropriate
portion of the variable component to the achievement of pre-established performance targets, that are concretely measurable and correlated to value
creation for shareholders over the medium to long term. Payment of this compensation is deferred through the cliff vesting mechanism following the
achievement of the established targets and satisfaction of the conditions for continued service. Another component is the Retention LTI, which is linked
to the beneficiary’s continuing professional relationship with the Group.
For more information on the LTI Plan, please refer to the ad hoc Resolution published pursuant to Article 114bis of the Financial Act.
As a general principle, the remuneration package of Executives with Strategic Responsibilities 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
equity based variable component (which includes stock options mentioned in Paragraph E.1 above and will include, subject to shareholders approval, the
so-called LTI).