Chrysler 2000 Annual Report Download - page 80

Report on Operations – Stock Option Plans
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In keeping with what has become an established international
practice, the Board of Directors agreed that stock options
provide the best means of strengthening management’s
loyalty, because they give executives a stake in the Company’s
operating success and in its ability to create growing value for
the stockholders. Consequently, as allowed under a resolution
adopted by the Extraordinary Stockholders’ Meeting on June
22, 1998, the Board approved three Stock Option Plans
offered to about 900 managers of the Group’s Italian and
foreign companies who are qualified as “Direttore” or have
been included in the Management Development Program
for high-potential managers. These Plans share the following
common features:
❚Options are awarded to individual managers on the basis
of objective parameters that take into account the level
of responsibility assigned to each person and his or her
performance.
❚If employment is terminated or an employee’s relationship
with the Group is otherwise severed, options that are not
exercisable shall become null and void. However, vested
options may be exercised within 30 days from the date
of termination, with certain exceptions.
❚The option exercise price, which is determined based on
the average stock market price for the month preceding the
option award, can vary as a result of transactions affecting
the Company’s capital stock and shall be paid in cash upon
the purchase of the underlying shares.
A total of 1,248,000 options, giving the holder the right to
purchase ordinary Fiat shares at a price of 28.45 euros per
share, were awarded in March 1999. Half of these options
may be exercised on or after April 1, 2001, with the remaining
50% exercisable on or after April 1, 2002. All options expire
on March 31, 2007.
A total of 5,158,000 options, giving the holder the right to
purchase ordinary Fiat shares at a price of 30.63 euros per
share, were awarded in February 2000. These options may
be exercised between February 18, 2001 and February 18,
2008. However, during the first four years, the options may
only be exercised in cumulative annual tranches not exceeding
25% of the total number awarded.
A total of 755,000 options, giving the holder the right to
purchase ordinary Fiat shares at a price of 27.07 euros per
share, were awarded in February 2001. These options, which
were reserved for the Group’s top management, may be
exercised between February 27, 2002 and February 27, 2009.
However, during the first four years, the options may only be
exercised in cumulative annual tranches not exceeding 25%
of the total number awarded.
Pursuant to these plans, a total of 5,506,000 shares,
equivalent to 1% of the Company’s total capital stock and
about 1.5% of its ordinary shares, will be issued through
a special dedicated capital increase, which the Board has
already approved, while 1,655,000 treasury shares will be
sold to option holders in accordance with the provisions
of the applicable Regulations.
On several occasion, the Board of Directors further awarded
the Chairman and the Chief Executive Officer options to
purchase ordinary Fiat shares. Detailed information on these
transactions is provided in the Notes to the Financial
Statements.
The table below summarizes the data for the options
outstanding at December 31, 2000:
Stock Option Plans
1999 2000
Number Average Market Number Average Market
of shares exercise price (*) price of shares exercise price (*) price
Options outstanding on 1/1 – – – 1,248,000 28.45 30.09
Options awarded during the year 1,248,000 28.45 28.45 5,158,000 30.63 30.63
Options outstanding on 12/31 1,248,000 28.45 30.09 6,406,000 30.20 26.34
Of which exercisable on 12/31 – – – –––
(*) Average exercise price of options.