Chrysler 2015 Annual Report Download - page 125

2015 | ANNUAL REPORT 125
Long-Term Incentives
Long-term incentive compensation is a critical component of our executive compensation program. This
compensation component is designed to motivate and reward long-term stockholder value creation and the
attainment of Company performance goals, to retain top talent and create an ownership alignment with shareholders.
Long-term incentives are an important retention tool that management and the Compensation Committee use to align
the financial interests of executives and other key contributors with sustained shareholder value creation. We believe
the compensation for Executive Directors should be aligned with the interests of our 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. These awards increase the link between behavior, realized compensation and shareholder interests, by
delivering greater value to the CEO as shareholder value increases. Long term incentive awards are intended to
motivate our executives to achieve significant returns for our shareholders over the long-term.
Equity Incentive Plan
On October 29, 2014, in connection with the formation of FCA and the presentation of the 2014-2018 business plan,
the Board of Directors approved a new Long Term Incentive (“LTI”) program, covering the five year performance
period, under the Fiat Chrysler Automobiles N.V. Equity Incentive Plan (“EIP”), 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, Adjusted net profit and Relative TSR weighted equally at target. The
awards have three vesting opportunities, one-third after 2014-2016 results, one-third after 2014-2017 results, and the
final third after the full 2014-2018 results. The Adjusted net profit component payout begins at 80 percent of target
achievement and has a maximum payout at 100 percent of target.
The Relative TSR component has partial vesting if ranked seventh or better among an industry specific peer group of
eleven, including the Company, and a maximum pay-out of 150 percent, if ranked first among the eleven peers. Listed
below is the Relative TSR peer group.
2014-2018 Performance Cycle Relative TSR Metric Peers
Volkswagen AG Toyota Motor Daimler AG General Motors
Ford Motor Honda Motor BMW AG Hyundai Motor
PSA Peugeot Citroen Renault SA
The Company’s target setting process for the incentive plans is built on the foundation of our rigorous business
planning process which is determined by the overall business environment, industry and competitive market factors,
and Company-wide business goals. Moreover, the targets are in line with the external forward looking guidance that
we provide to analysts and investors.
Performance Cycle: 2014 - 2018 (Five Year Performance Period)
Performance Metric Weight Vesting Threshold Achievement Target Achievement
Adjusted net profit 50%
1/3, 1/3, 1/3 after 3,4,5 years’
cumulative results 80% of target 100% of target
Relative TSR 50%
1/3, 1/3, 1/3 after 3,4,5 years’
cumulative results
Rank seventh or better among
11 peers Rank fourth among 11 peers