Chrysler 2012 Annual Report Download - page 331

330 Motions
for AGM
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, which can be 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 Business Plan. 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.
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.
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.
For information on the LTI Plan approved in 2012, please refer to the Report on such LTI Plan available on the Company’s website, www.fiatspa.com.
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.