Fiat S.p.A. has approved stock option plans offered to over 900 employees at Group companies inside and outside Italy whose roles have a significant impact on activities and leadership.
There are currently eight stock option plans resolved by Fiat S.p.A. between 2001 and 2008 whereby the beneficiaries are entitled to the purchase of ordinary Fiat shares. One of these plans is made available exclusively to the Chief Executive Officer of Fiat S.p.A., one is made available jointly to the Chief Executive Officer and managers of the Group, two are made available exclusively to the former Chairman of Fiat S.p.A., Mr. Paolo Fresco, in office until February 28 2003, and another four plans are made available to Group managers.
Furthermore, the subsidiaries CNH Global N.V. and Ferrari S.p.A. approved stock option plans that grant the right to purchase ordinary shares of those subsidiaries. In particular, Ferrari S.p.A. had granted its Chairman, Mr. Luca Cordero di Montezemolo, options for the purchase of 184,000 Ferrari shares. Of these, 80,000 options linked to an equal number of newly-issued shares remain unexercised and may be subscribed, at a price of 175 euros per share and until December 31, 2010, upon placement of Ferrari shares on the stock market. Certain subsidiaries approved, when they were not under control of the Fiat Group, cash-settled share-based payment plans defined Stock Appreciation Rights (SAR). Below is a description of the main features of the Plans issued by Fiat S.p.A.
The stock option plans were adopted in view of further strengthening the involvement of the persons who hold key positions in pursuing objectives relating to the Company’s and Group’s operating performance. In the long term, these plans give these individuals an economic incentive linked to improvements in the value of the Company for stockholders. Their involvement is further increased when, as has generally been the case since 2004, vesting of the options is subject to the achievement of specific profitability targets in the reference period.
At the same time, the motivation of management through the granting of financial instruments reflecting the Company’s market value contributes to develop confidence in the Company’s growth, by aligning the interests of management with those of stockholders and promoting management’s identification with the Group, with significant effects in terms of retention.
The recipients were identified, on the basis of objective criteria, by considering the impact of each role on business objectives, while the number of options to be granted was determined according to individual leadership qualities.
The stock option plans approved by Fiat S.p.A. provide its recipients with the right to purchase one Fiat ordinary share for each exercised option at a fixed price (strike price). The transaction is settled through physical delivery of the shares. These rights are exercisable over a limited period of time from the vesting date to the expiry date of the plan.
With regard to all plans, the exercise price of the options was determined on the basis of the average stock market price for the month preceding the option grant and it can vary as a result of transactions affecting the Company’s capital stock through the use of the adjustment factor determined by the Aiaf. The price must be paid in cash upon the purchase of the underlying shares.