annual report - FIAT SpA

the Company's purpose and not reserved by law for, or otherwise delegated or assumed by, the Board of Directors
itself. In practice, the Chairman has the role of coordination and strategic direction for the activities of the Board of
Directors, while the Chief Executive Officer is responsible for the operational management of the Group. From an
operational perspective, the Chief Executive is supported by the Group Executive Council (GEC), a decision-making
body led by the Chief Executive and composed of the heads of the operating sectors and certain central functions.
In accordance with Consob Regulation 17221 of 12 March 2010, the Company has adopted, effective 1 January 2011,
"Procedures for Transactions with Related Parties" (the "Procedures") to ensure full transparency and substantial
and procedural fairness in transactions with related parties, as defined under IAS 24.
The Procedures define "significant transactions" that require the prior approval of the Board, subject to the binding
opinion of the Internal Control Committee (which serves as the committee responsible for related-party transactions,
except for matters relating to remuneration, for which the Compensation Committee is responsible), and that must be
publicly disclosed in the form of an information document.
Other transactions, except those falling within the residual category of minor transactions – i.e., transactions less than
€200,000 in value or, for transactions with legal entities having consolidated annual revenues in excess of €200 million
only, transactions less than €10 million in value – are defined as "non-significant" and may be entered into with the
prior non-binding opinion of the abovementioned committee.
The Procedures also establish exemptions, including transactions taking place in the ordinary course of business and
entered into at standard or market terms, and transactions with or between subsidiaries and associates, provided that
no other parties related to the Company have a significant interest.
The task of implementing the Procedures and disseminating them to Group companies is assigned to the managers
responsible for the Company's financial reporting, who must also ensure coordination with the administrative and
accounting procedures required under Article 154-bis of Legislative Decree 58/98.
With regard to significant transactions, the "Guidelines for Significant Transactions and Transactions with Related
Parties" shall also continue to apply (subsequently renamed “Guidelines for Significant Transactions”), under which
transactions having a significant impact on the Company’s earnings and financial position are subject to the prior
examination and approval of the Board.
As such, the powers conferred on executive directors specifically exclude decisions relating to significant transactions
that, in and of themselves, the company is required to disclose to the market in accordance with specific rules
established by regulatory authorities.
When the Company has the need to undertake a significant transaction, the executive directors are to provide the
Board of Directors with a summary analysis of the strategic compatibility, economic feasibility and expected return for
the Company a reasonable time in advance.
Pursuant to Article 12 of the By-laws, after an opinion has been expressed by the Board of Statutory Auditors, the
Board of Directors shall appoint the executive officer responsible for the Company’s financial reporting. The
Board may vest more than one individual with the relevant functions provided that those individuals perform such
functions jointly and with joint responsibility. Only individuals who have acquired several years of experience in the
accounting and financial affairs of large companies may be appointed. In execution of this provision of the By-laws, the
Board of Directors appointed the heads of the Group Control and Treasury and Financial Services functions as jointly
responsible for preparing the Company’s financial reporting, vesting them with the relevant powers.
At 31 December 2010, the Board of Directors was composed of three executive directors and twelve non-executive
directors, who have not been delegated specific authorities or executive responsibilities at the Company or the Group,
eight of whom (representing a majority) qualified as independent on the basis of the criteria approved by Shareholders
on 27 March 2009, which were equivalent to those adopted previously. As required by law and the By-laws, two of the
directors (Gian Maria Gros-Pietro and Mario Zibetti) also meet the requirements of independence as stipulated in
Legislative Decree 58/98.
The Chairman and Chief Executive Officer are executive directors. They also hold executive responsibilities at
subsidiary companies: John Elkann is Chairman of Itedi S.p.A. and Sergio Marchionne, in addition to being Chairman
of the principal subsidiaries, is also Chief Executive Officer of Fiat Group Automobiles S.p.A. Luca Cordero di
Montezemolo also qualifies as an executive director by virtue of his position as Chairman of Ferrari S.p.A.
An adequate number of independent directors is essential to protect the interests of shareholders, particularly minority
shareholders, and third parties. For this reason, and believing it to be significantly in the Company’s interests to
maintain a high level of guarantees and protection against potential conflicts of interest, the Board of Directors
proposed that for the elections held on 27 March 2009, Shareholders elect - in addition to the two independent
directors required by law - an appropriate number of independent directors and confirm the criteria for determining
independence adopted for previous elections.
The independence of directors is assessed annually and is based on the absence or non-relevance, during the
previous three years, of economic or shareholding relationships or other relationships, whether direct, indirect or on
Report on Operations Corporate Governance 61