Chrysler 2011 Annual Report Download - page 366

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Auditors’ Reports
Motions for AGM
Beneficiaries
The Beneficiaries of the Plan will be approximately three hundred executives holding key positions which have a significant impact on business results,
excluding employees of Chrysler Group LLC who are covered by a separate plan.
A minor percentage of the Beneficiaries of the Retention LTI would be selected on a discretionary basis in order to provide incentive to individuals (i) whose
particular performance is critical to the success of the Group, or (ii) who hold exceptional leadership requisites.
The other executives will be selected in accordance with criteria approved by the Compensation Committee, among employees of the Company and/or
its subsidiaries, consistent with organizational criteria and contribution of such beneficiaries to the economic and financial results of the Company and or
its subsidiaries.
The CEO of the Company, Mr. Sergio Marchionne, is a Beneficiary of the Retention LTI. Other Beneficiaries will be selected by the CEO of the Company
in accordance with the above mentioned criteria.
Should the Beneficiaries fall under the provisions of Scheme 7 of Annex 3A of the Issuers’ Regulation regarding identification on a named basis, the
Company will provide the market with the information prescribed by Article 84-bis, paragraph 5 of the Issuers’ Regulation.
Reasons for the Plan
In general, incentive plans based on financial instruments motivate individuals in key positions to achieve the Company’s and Group’s financial performance
targets, correlating that incentive to the medium-to long-term value created for shareholders. The level of commitment is further strengthened when
vesting of rights is subject to the achievement of specific financial performance targets over a predetermined reference period.
At the same time, motivating management by granting instruments that are representative of the Company’s value contributes to the alignment of the
interests of management with those of shareholders, promoting a sense of identification with the Group and significantly enhancing retention as a result.
Retention is also sought through the use of incentives, which are subject to continued professional relationship with the Group.
As anticipated above, the Plan is aimed at providing the Group with an instrument that is more closely aligned to the current competitive environment
in the automotive sector globally and to the specific needs of the Group and medium to long term shareholder interests. In particular, medium to long-
term incentive schemes incentivize individuals in key positions towards the achievement of the Company’s and Group’s performance targets through the
alignment of medium to long-term incentives to value creation for shareholders.
Finally, with reference to the criteria used to determine the time frame of the Plan, it should be noted that the Plan will be executed over a time period
of three years, which is generally considered to be the most appropriate to get a grounded and meaningful measure of the Company’s and Group’s
performance. With these objectives, the Board of Directors, advised by the Compensation Committee, constantly monitors the effectiveness of existing
incentive schemes in relation to the global market and, in particular, the industry in which the Group operates.
The importance of management and the stability of that management in a period of significant volatility have been key factors in the success of the Group’s
companies since 2004 and will have increasing importance in the future. Having effective tools for motivation and retention, therefore, is an essential
competitive factor.
For the reasons stated above and upon proposal by the Compensation Committee, the Board determined that it is significantly in the Company’s and
Group’s interests to increase the incentive and retention capability through the adoption of a medium to long term incentive plan.