Chrysler 2015 Annual Report Download - page 199

2015 | ANNUAL REPORT 199
Changes in the Retention LTI Plan during the year ended December31, 2015 were as follows:
2015 2014 2013
Number
of FCA
shares
Average
fair value
at the grant
date (€)
Number
of FCA
shares
Average
fair value
at the grant
date (€)
Number
ofFiat
shares
Average
fair value
at the grant
date (€)
Outstanding shares unvested at the
beginning of the year 2,333,334 4.205 4,666,667 4.205 7,000,000 4.205
Vested (2,333,334) 4.205 (2,333,333) 4.205 (2,333,333) 4.205
Outstanding shares unvested at the end
of the year — 4.205 2,333,334 4.205 4,666,667 4.205
Nominal costs for this plan of €0.3 million, €2 million and €6 million were recognized during the years ended
December31, 2015, 2014 and 2013, respectively.
Share-Based Compensation Plans Issued by FCA US
As of December 31, 2015, FCA US has units outstanding under two legacy share-based compensation plans: the
Amended and Restated FCA US Directors’ Restricted Stock Unit Plan (“FCA US Directors’ RSU Plan”) and the FCA US
2012 Long-Term Incentive Plan (“2012 LTIP Plan”). There are no units outstanding under the FCA US Restricted Stock
Unit Plan or the FCA US Deferred Phantom Share Plan. Compensation expense for those plans during the years ended
December 31, 2015, 2014 and 2013 and cash payments made under those plans during those periods were not material.
The fair value of each unit issued under the FCA US share-based compensation plans is based on the fair value of FCA
US’s membership interests. Each unit represents a “FCA US Unit,” which is equal to 1/600th of the value of a FCA US
membership interest. Since there is no publicly observable trading price for FCA US membership interests, fair value was
determined using a discounted cash flow methodology. This approach, which is based on projected cash flows of FCA US,
is used to estimate the enterprise value of FCA US. The fair value of FCA US’s outstanding interest bearing debt as of the
measurement date is deducted from the enterprise value of FCA US to arrive at the fair value of equity. This amount is then
divided by the total number of FCA US Units, as determined above, to estimate the fair value of a single FCA US Unit.
Anti-Dilution adjustments
The documents governing FCA US’s share-based compensation plans contain anti-dilution provisions which provide
for an adjustment to the number of FCA US Units granted under the plans in order to preserve, or alternatively prevent
the enlargement of, the benefits intended to be made available to the holders of the awards should an event occur that
impacts the capital structure of FCA US.
On February 3, 2015, FCA US made a special distribution to FCA in the amount of $1,338 million (€1,176 million),
which reduced the fair value of FCA US’s equity. As a result of this dilutive event and pursuant to the anti-dilution
provisions, the FCA US Board of Directors approved an anti-dilution adjustment factor to increase the number of
outstanding FCA US Units in order to preserve the economic benefit intended to be provided to each participant. The
value of the outstanding awards immediately prior to the dilutive event was equal to the value of the adjusted awards
subsequent to the dilutive event. No additional expense was recognized as a result of this modification during 2015.
For comparative purposes, the number of FCA US Units and all December 31, 2014 and 2013 fair value references
have been adjusted to reflect the impact of the dilutive transaction and the anti-dilution adjustment.
During the year ended December 31, 2014, two transactions occurred that diluted the fair value of FCA US’s equity
and the per unit fair value of a FCA US Unit. These transactions were:
the U.S.$1,900 million (€1,404 million) distribution paid on January 21, 2014, which served to fund a portion of the
transaction whereby Fiat acquired the VEBA Trust’s remaining ownership interest in FCA US (as described above in
the section —Acquisition of the Remaining Ownership Interest in FCA US); and
the prepayment of the VEBA Trust Note on February 7, 2014 that accelerated tax deductions that were being
passed through to the FCA US’s members.