Chrysler 2013 Annual Report Download - page 358

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Auditors’ Reports and
Motions for AGM
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 yearly 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.
Following to the shareholders’ approval of the LTI Plan on April 4, 2012, 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. The
selection of the beneficiaries is attributed to the CEO. For more information on the LTI Plan, please refer to the ad hoc Resolution published
pursuant to Article 114-bis of the Financial Act.
Given the changing organization and business environment since the approval of the LTI Plan, in 2013 the Company elected not to utilize the
authorization contemplated by the LTI Plan regarding senior managers including Executives with Strategic Responsibilities and no LTI Plan
awards were granted. The Group intends to propose an integrated Fiat-Chrysler long term incentive program applicable also to employees of
Chrysler Group LLC and its subsidiaries, which would replace the LTI Plan (the LTI Plan is not applicable to the employees of Chrysler Group
and its subsidiaries). At the appropriate time, the Company will submit such new plan for requisite approvals.
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 the
share-based incentives contemplated by the LTI Plan approved by the shareholders on April 4, 2012).
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.
In addition, the CEO may grant discretionary bonuses to these managers for specific transactions that are deemed exceptional in terms of
strategic importance and effects on the results of the Company and/or the Group.
When setting the compensation of Executives with Strategic Responsibilities, the CEO, on the basis of international benchmarking, considers
the following indicative criteria:
(a) the fixed component generally represents no more than 50% of the targeted Annual Total Direct Compensation;
(b) the annual targeted incentive for Executives with Strategic Responsibilities represents not less than 40% of their fixed gross annual salary;
(c) the medium/long term, variable, target-based annualized component (Long Term Incentive Plans) generally represents at least 50% of the
total variable component of the target-based Annual Total Direct Compensation.