Chrysler 2012 Annual Report Download - page 187

Notes
186 Consolidated
Financial
Statements
at 31 December
2012
Health care and life insurance plans
Liabilities arising from these plans comprise obligations for health care and life insurance plans granted to employees and to retirees of the Group working
in the United States and Canada (relating to Chrysler). These plans are unfunded.
Reserve for Employee leaving entitlements in Italy (“TFR”)
Until 31 December 2006, the scheme underlying the Employee leaving entitlements in Italy (TFR) of the Italian Group companies was classified as a defined
benefit plan. The legislation regarding this scheme was amended by Law 296 of 27 December 2006 (the “2007 Finance Law”) and subsequent decrees and
regulations issued in the first part of 2007. In view of these changes, and with specific reference to those regarding companies with at least 50 employees,
this scheme only continues to be classified as a defined benefit plan for those benefits accruing prior to 1 January 2007 (and not yet settled by the balance
sheet date), while after that date the scheme is classified as a defined contribution plan.
The provision for Employee leaving entitlements in Italy consists of the residual obligation for the benefit due to employees of Italian companies until
31 December 2006, having more than 50 employees and accrued over the employee’s working life for the others and settled when an employee leaves.
Under certain conditions the entitlement may be partially advanced to an employee during its working life. This is an unfunded defined benefit plan.
Other post-employment benefits
Other post-employment benefits includes loyalty bonuses, which are due to employees who reach a specified period of service and are generally settled
when an employee leaves the company; for French entities, there is the Indemnité de depart à la retraite, a plan similar to the Italian TFR. These schemes
are unfunded.
Other provisions for employees and liabilities for share based payments
Other provisions for employees and liabilities for share based payments consist of the best estimate at the balance sheet date of other employee benefits.
At 31 December 2012, liabilities for share-based payments include €125 million relating to the underlying portion of the stock option and stock grant plans
to be serviced with Fiat Industrial shares as resulting from the Demerger and discussed in Note 24 and 25. In accordance with IFRS 2 and IAS 39, the
component of the plans which will be serviced by Fiat Industrial S.p.A. shares was initially reclassified from the reserve for share-based payments in equity
and measured on the basis of the pro-rata proportion of the book value of that reserve, calculated by taking into account the weighting of the stock market
prices of Fiat and Fiat Industrial shares on the day on which the Fiat Industrial S.p.A. shares were first quoted. At the same time, the liability was adjusted
to fair value with a corresponding entry made to Earning reserves. For the stock grant plan, the fair value of the liability is equal to the market price (stock
exchange price) of the Fiat Industrial shares. For the stock option plans it was considered appropriate to calculate this amount by allocating a strike price
to the options equal to the nominal value of the Fiat Industrial shares. After initial recognition, any changes in the fair value of this liability and the notional
charge still to vest for the stock grants are recognised in profit or loss.
Other long-term employee benefits
Other long-term employee benefits represent the obligation for those benefits paid during employment generally after providing a certain period of service in
the company or when a specified event occurs; the liability incorporates the probability of payment and the time period over which the payment will be made.