annual report - FIAT SpA

At 31 December 2010 the features of the stock option plan are as follows:
Strike
price N° of options
Vesting
Plan Beneficiary Date of amendment Expiry date (€) granted Vesting date portion
Stock Options Chief 27 March 2009 1 January 2016 6.583 10,670,000 31 December 2010 100%
July 2004 Executive
(modified) Officer
On 3 November 2006 the Board of Directors of Fiat S.p.A. approved (subject to the subsequent approval of
Shareholders in general meeting, which was given on 5 April 2007) an eight year stock option plan, which granted
certain managers of the Group and the Chief Executive Officer of Fiat S.p.A. the right to purchase a specific number
of Fiat S.p.A. ordinary shares at a fixed price of €13.37 each. More specifically, the 10,000,000 options granted to
employees and the 5,000,000 options granted to the Chief Executive Officer had a vesting period of four years, with
an equal number vesting each year, were subject to achieving certain predetermined profitability targets (Non-Market
Conditions or “NMC”) in the reference period and may be exercised from the date on which the 2010 financial
statements are approved. The remaining 5,000,000 options granted to the Chief Executive Officer of Fiat S.p.A. also
had a vesting period of four years with an equal number vesting each year and may be exercised from November
2010. The ability to exercise the options is additionally subject to specific restrictions regarding the duration of the
employment relationship or the continuation of the position held.
The contractual terms of the 2006 plan are as follows:
Strike
price N° of options
Plan Beneficiary Expiry date (€) granted Vesting date Vesting portion
Stock Option Chief Executive Officer 3 November 2014 13.37 5,000,000 November 2007
25%
November 2006
November 2008
25%
November 2009
25%
November 2010
25%
Stock Option Chief Executive Officer 3 November 2014 13.37 5,000,000 1st Quarter 2008 (*)
25%*NMC
November 2006
1st Quarter 2009 (*)
25%*NMC
1st Quarter 2010 (*)
25%*NMC
1st Quarter 2011 (*)
25%*NMC
Stock Option Managers 3 November 2014 13.37 10,000,000 1st Quarter 2008 (*)
25%*NMC
November 2006
1st Quarter 2009 (*)
25%*NMC
1st Quarter 2010 (*)
25%*NMC
1st Quarter 2011 (*)
25%*NMC
(*) On approval of the prior year’s consolidated financial statements; subject to continuation of the professional relationship.
As explained in greater detail in the section Amendments to the stock option plans and stock grant plans of Fiat S.p.A.
arising from the Demerger which follows, vesting conditions for each plan, whether they consisted in the continuation
of a professional relationship with the Fiat Group or in the achievement of specific performance objectives, expired on
31 December 2010. With specific reference to options granted under the 2006 Stock Option Plan, for which vesting
was subject to the achievement of pre-established profitability targets, only the first tranche (i.e. 25%) of those rights
have vested as the profitability targets established in 2006 for the 3-year period 2008-2010 were not met. As a result,
the remaining 75% did not vest.
On 26 February 2008, the Board of Directors of Fiat S.p.A. passed an incentive plan which was subsequently
approved by Shareholders in their annual general meeting on 31 March 2008, by which an overall maximum of
4 million financial instruments could be assigned on a periodic basis until 2010 in the form of stock options and/or
stock appreciation rights. The plan had the aim of attracting and retaining managers in key roles who had been hired
or promoted following the granting of the stock option plan of 3 November 2006 or who had assumed greater
responsibilities since the granting of the 2006 plan, and has the features of that plan in terms of performance, vesting
and exercise rights. Implementing the first grant under this program on 23 July 2008, the Board of Directors assigned
1,418,500 stock options having an exercise price of €10.24 and a vesting period of three years that was subject to
achieving certain predetermined profitability targets (Non-Market Conditions or “NMC”) in the reference period and
together with rights exercisable from the date on which the 2010 financial statements are approved. As these
profitability targets had not been met at 31 December 2010, none of the rights granted to employees vested.
The contractual terms of the 2008 plan were as follows:
Strike
price
(€)
N° of options
Managers 3 November 2014 10.24 1,418,500 1st Quarter 2009 (*)
1st Quarter 2010 (*)
1st Quarter 2011 (*)
Plan Beneficiary Expiry date
Stock Option
July 2008
(forfeited)
granted Vesting date Vesting portion
(*) On approval of the prior year’s consolidated financial statements; subject to continuation of the professional relationship.
18%*NMC
41%*NMC
41%*NMC
Fiat Group Consolidated Financial Statements at 31 December 2010 175