Chrysler 2014 Annual Report Download - page 138

136 2014 | ANNUAL REPORT
Remuneration of Directors
In regards to the CEO’s annual performance bonus determination, the Compensation Committee and the non-
executive directors:
approve the executive directors’ target and maximum allowable bonus,
select the choice and weighting of metrics,
set the stretch objectives,
review any unusual items that occurred in the performance year to determine the appropriate overall measurement
of achievement, and approve the final bonus determination
The annual objectives for the CEO are comprised of three equally weighted metrics, Trading Profit, Net Income, and
Net Industrial Debt. The target achievement for target incentive (which is 100% of base salary) corresponds to the
Board approved targets each year and is consistent with the Company’s five year business plan and external guidance
to investors. The threshold for any incentive earned is 90% of target and maximum payout of 2.5 x base salary is set at
achieving 150% of the objectives or greater. Results and achievement are reviewed by the Compensation Committee
each year typically in the January Board meeting.
Long-Term Incentives
The primary objective of the performance based long-term variable equity based incentives is to reward and retain well
qualified senior executives over the longer term while aligning their interests with those of shareholders.
FCA’s long-term variable incentives consists of a share-based incentive plan that links a portion of the variable
component to the achievement of pre-established performance targets consistent with the Company’s strategic
horizon.
As typical with the objective of using equity based awards, these awards help align the executive directors’ interests
with shareholder interests by delivering greater value to the executive director as shareholder value increases.
On 4 April 2012, Fiat S.p.A. General Shareholders Meeting adopted a Long Term Incentive Plan (the “Retention
LTI”), in the form of stock grants. As a result of the Shareholders’ resolution the Group attributed the Chief Executive
Officer with 7 million rights, representative of an equal number of Fiat S.p.A. ordinary shares. The rights vested ratably,
one third on 22 February 2013, one third on 22 February 2014 and one third on 22 February 2015, subject to the
requirement that the Chief Executive Officer remained in office.
On October 29, 2014, in connection with the formation of FCA and the presentation of the new five year business
plan, the Board of Directors of FCA approved an equity incentive plan (“EIP”) and a new long term incentive program,
covering a five year performance period, 2014-2018, consistent with the Company’s strategic horizon and under
which equity awards can be granted to eligible individuals. The award vesting under the program is conditional on
meeting two independent metrics, Net Income and Relative Total Shareholder Return weighted 50/50 at target. The
awards have three (3) vesting opportunities, one-third after three years’ cumulative results, one-third after four years’
cumulative results and the final third after the full five years’ results. Half of the target award that is subject to the Net
Income metric’s performance begins a payout at 80% of the target achieved and the maximum payout is at 100%
of target. With respect to the other half of the award, the Relative Shareholder Return metric has a partial vesting
if ranked 7th or better among an industry specific peer group of 11 and a maximum pay-out of 150% if ranked 1st
among the 11 peers. The peer group includes FCA, Volkswagen AG, Toyota Motor, Daimler AG, General Motors,
Ford Motor, Honda Motor, BMW AG, Hyundai Motor, PSA Peugeot Citroen, and Renault SA. Awards to the CEO
of performance share units under this program are subject to the approval of the shareholders at the next general
meeting of shareholders and are described in the relevant materials.
Extraordinary Incentives
In addition, upon proposal of the Compensation Committee, the non-executive directors retain authority to grant
periodic bonuses for specific transactions that are deemed exceptional in terms of strategic importance and effect
on the Company’s results, with the form of any such bonus (cash, common shares of the Company or options to
purchase common shares) to be determined by the non-executive directors.