Fiat S.p.A. has established incentive plans based on financial instruments for more than 900 Group employees, in Italy and abroad, whose activities and leadership have a significant impact on the Group.
Five plans are currently in place, approved by Fiat S.p.A. between 2002 and 2009, which in certain cases allow shares to be purchased at a predetermined price (stock options) and in other cases provide for the granting of Fiat ordinary shares (stock grants).
In addition, the subsidiaries CNH Global N.V. and Ferrari S.p.A. have stock option and/or stock grant plans based on their ordinary shares. Ferrari S.p.A. granted options for 184,000 Ferrari shares to its Chairman, Luca Cordero di Montezemolo. Mr. Montezemolo still holds 80,000 of those options to purchase an equivalent number of newly issued shares, subject to Ferrari shares being listed, at a price of €175 per share and exercisable until 31 December 2010. Other companies had, prior to coming under the Group’s control, approved cash-settled share-based payment plans referred to as Stock Appreciation Rights (SARs).
Following is a description of the principal characteristics of incentive plans based on financial instruments issued by Fiat S.p.A.
These plans were established to incentivize individuals in key positions toward the achievement of Company and Group performance targets and align those incentive plans to the long-term value created for shareholders. The level of commitment is further strengthened where, as has generally been the practice since 2004, vesting is subject to achievement of specific profitability targets during the reference period.
At the same time, motivating management by granting instruments which reflect the Company’s market value contributes to the alignment of management’s interests with those of shareholders, promoting management’s sense of identification with the Group and significantly enhancing retention.
Plan beneficiaries are selected using objective criteria which take into account the impact of their role on business objectives. The number of options/shares actually granted is determined on the basis of individual leadership qualities.
The stock option plans established by Fiat S.p.A. grant beneficiaries the option to purchase one Fiat ordinary share for each option exercised at a predetermined price.
The options are subject to a predetermined exercise period beginning from the vesting date until the plan expiry date.
For all stock option plans, the strike price is based on the average daily market price for the month prior to the grant date and may be subject to adjustment as a result of transactions affecting the Company’s share capital, with any adjustment factor being determined by the AIAF. The exercise price is payable in cash at the moment of exercise.