28.02.2008 NEW FIAT INCENTIVE PLAN

FIAT

The Board of Directors of Fiat S.p.A. met this week to discuss a new incentive plan to address attraction and retention of key employees to be authorised by the Stockholders Meeting next month.

The Board of Directors of Fiat S.p.A. met this week to discuss a new incentive plan to be authorised by the Stockholders Meeting of March 31, 2008. On the basis of the recommendation of the Compensation Committee and in view of current capital market conditions, the Board approved an Incentive Plan to address attraction and retention of key employees.

The plan – which will be submitted, pursuant to Article 114bis of the Consolidated Financial Act to the next Stockholders’ Meeting – will be fashioned similarly to the November 3, 2006 stock option grant in terms of achievement of predetermined performance criteria, vesting period, and the period available to exercise (from 2011 through 2014).

The plan, if approved, will give Fiat the flexibility to grant a maximum aggregate amount of 4 million financial instruments either in the form of stock options or of Stock Appreciation Rights (SARs) to be awarded periodically through the end of 2010.

SARs, subject to the vesting condition being satisfied, entitle the beneficiaries to a cash compensation based on the increase in the company’s ordinary stock price. Each SAR will give right to a compensation (to be settled either in cash or in ordinary shares) equal the difference between the company’s ordinary stock official price at the exercise date and the strike price at the granting date. Such SAR strike price will be equal to the arithmetical average of the official prices posted on the Italian Stock Exchange in the thirty calendar days prior to the grant date.

Similarly, under the plan the Company will be authorized to grant up to a maximum of 4 million stock options on a maximum 4 million of underlying ordinary shares (in the event no SARs are granted) or a number which together with the number of SARs issued will not exceed 4 million. Such stock options will be offered at a strike price equal to the arithmetical average of the official prices posted on the Italian Stock Exchange in the thirty calendar days prior to the grant date. The Plan will be serviced through treasury shares without issuance of new shares.
 

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