Chrysler 2014 Annual Report Download - page 220

218 2014 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
2012 Long-Term Incentive Plan of FCA US
In February 2012, the Compensation Committee of FCA US adopted the 2012 LTIP Plan. The 2012 LTIP Plan covers
senior FCA US executives (other than the Chief Executive Officer). It is designed to retain talented professionals and
reward their performance through grants of phantom equity in the form of restricted share units (“LTIP RSUs”) and
LTIP PSUs. LTIP RSUs may be granted annually, while LTIP PSUs are generally granted at the beginning of a three-
year performance period. The Compensation Committee of FCA US also has authority to grant additional LTIP PSUs
awards during the three-year performance period. The LTIP RSUs vest over three years in one-third increments on
the anniversary of their grant date, while the LTIP PSUs vest at the end of the three-year performance period only if
FCA US meets or exceeds certain three-year cumulative financial performance targets. Concurrent with the adoption
of the 2012 LTIP Plan, the Compensation Committee of FCA US established financial performance targets based on
FCA US’s consolidated financial results for the three-year performance period, ending December 31, 2014. If FCA US
does not fully achieve these targets, the LTIP PSUs will be deemed forfeited. LTIP RSUs and LTIP PSUs represent a
contractual right to receive a payment in an amount equal to the fair value of one FCA US Unit, as defined in the LTIP
Plan. Once vested, LTIP RSUs and LTIP PSUs will be settled in cash or, in the event FCA US conducts an IPO, in cash
or shares of publicly traded stock, at the Compensation Committee’s discretion. Settlement will be made as soon as
practicable after vesting, however in any case no later than March 15 of the year following vesting. Vesting of the LTIP
RSUs and LTIP PSUs may be accelerated in certain circumstances, including upon the participant’s death, disability
or in the event of a change of control.
In light of the May 6, 2014 publication of the 2014-2018 FCA Business Plan and in recognition of FCA US’s
performance for the 2012 and 2013 performance years, the Compensation Committee, on May 12, 2014, approved
an amendment to outstanding LTIP PSU award agreements, subject to participant consent, to modify outstanding
LTIP PSUs by closing the performance period for such awards as of December 31, 2013. Participants were notified
of this modification on or about May 30, 2014, and all plan participants subsequently consented to the amendment.
The modification provides for a payment of the LTIP PSUs granted under the 2012 LTIP Plan representing two-thirds
of the original LTIP PSU award based on the unadjusted December 31, 2013 per unit fair value of €7.62 ($10.47). To
receive the LTIP PSU payment, a participant must remain an employee up to the date the LTIP PSUs are paid, which
is expected to occur on or before March 15, 2015. As a result, compensation expense was reduced by approximately
€16 million ($21 million) during the year ended December 31, 2014.