Tag Archive | "Sergio Marchionne"

Chrysler’s CEO Could Get Stock Worth $2.9M


DETROIT – Chrysler CEO Sergio Marchionne will get stock valued at almost $2.9 million if the company repays the money it still owes the U.S. government, according to disclosure forms the company filed on Friday.

Marchionne, who also is CEO if Italy’s Fiat SpA, will get 361,446 shares for his service as a director on the Chrysler Group LLC board, reported Msnbc.com.

He’ll get the shares after Chrysler repays to the government, or on June 10, 2012, whichever is later, according to the filing with the U.S. Securities and Exchange Commission. As of Dec. 31, the shares were valued by the company at $7.95 each.

Chrysler nearly ran out of cash and needed a $12.5 billion U.S. government bailout to make it through a 2009 filing for bankruptcy protection. The company still owes the government $5.8 billion.

Chrysler’s eight other directors, including Chairman Robert Kidder, will get the same number of shares as Marchionne, in three annual increments that started in June of 2010 and run through June of 2012.

The value of the shares is likely to be much higher than $7.95 each when the company sells stock to the public, perhaps as early as the fourth quarter of this year. The filing said Chrysler has 1 million shares outstanding, so at $7.95, the company’s total market value would be only $7.95 million. By comparison, General Motors Co. shares closed Friday at $33.25, giving the company a market value of $49.88 billion.

Chrysler said it started filing financial disclosure forms with U.S. regulators as part of a 2009 agreement when the company emerged from bankruptcy protection.

Friday’s filing comes ahead of the planned stock sale, although Chrysler said in a statement that it was not related to an IPO.

The form filed Friday registers Chrysler’s stock with the SEC. Of the company’s 1 million shares, the largest holder is a United Auto Workers health care trust for retirees at 63.5 percent. Italy’s Fiat SpA, which is managing Chrysler, owns 25 percent, while the U.S. government holds 9.2 percent and the Canadian government owns 2.3 percent.

Chrysler said it now will file reports with the SEC on its business and financial conditions “disclosing material events as they emerge.”

Chrysler nearly ran out of cash and had to be rescued from liquidation with bailouts from the U.S. and Canadian governments. The governments got their stakes in the company in exchange for part of the money they provided.

In the 2009 bankruptcy, Chrysler pared its debt and labor costs so it can make money at a relatively low sales level. But the company has yet to post a net profit since emerging from bankruptcy protection, although it cut its losses last year to $652 million and promised to make $200 million to $500 million in 2011. The company lost about $8 billion in 2009.

Chrysler could repay its government loans by the end of March. Marchionne has said he hopes to refinance them with private lenders to get a lower interest rate. Chrysler now pays 11 to 12 percent interest on the $5.8 billion owed to the U.S. and $1.3 billion owed to Canada. The U.S. government originally provided $12.5 billion in bailout financing, while Canada provided $2.4 billion.

Marchionne, 58, gets no pay for his work at Chrysler CEO, which often includes long days and travel between Italy and the United States.

Friday’s filing also details Chrysler’s business plans, most of which have been disclosed previously by the company.

It said the company remains vulnerable to rising gasoline prices because its vehicle lineup is still weighted toward larger vehicles. Chrysler introduced 16 new or revamped models last year but still has few fuel-efficient models.

The company also disclosed that it spent $1.5 billion on research and development last year, compared with about $1.1 billion in 2009 and $1.525 billion in 2008.

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Chrysler’s CEO Received No Salary Last Year


Chrysler Group LLC Chief Executive Sergio Marchionne received no salary for running the Auburn Hills, Mich., auto maker last year despite his work to revive the auto maker.

Mr. Marchionne, who is also CEO of Fiat SpA, did receive shares worth $600,000 as a Chrysler director. This is the first time Mr. Marchionne’s decision not to receive a salary has been made public since he took over the day-to-day operations of Chrysler in June 2009, reported The Wall Street Journal.

The disclosure was part of a lengthy document Chrysler filed with the Securities and Exchange Commission on Friday. The filing, said spokeswoman Shawn Morgan, fulfills the company’s goal of providing more transparency although Chrysler is a private company.

Mr. Marchionne has said he hopes to take Chrysler public in the second half of this year. The filing was unrelated to any IPO, Ms. Morgan said. The company reported a 2010 loss of $652 million on revenue of $41.95 billion.

Chrysler’s fleet sales grew to 36% of the auto maker’s overall U.S. sales compared with 30% in 2006, the filing disclosed. Wall Street analysts have criticized the auto maker’s reliance on selling vehicles to fleet operators, such as rental car companies, since those sales dilute the brand name. Chrysler has vowed to reduce fleet sales this year and return to the industry norms of about 25%.

Chrysler’s U.S. market share finished at 9.2% in 2010 compared with 12.6% in 2007.

The auto maker also said its total employment in 2010 rose to 51,623 salaried and hourly employees compared with 47,326 in 2009. Mr. Marchionne added shifts and employees at Chrysler plants throughout last year as the auto maker upgraded and launched 16 models.

As part of those model introductions, Chrysler invested $155 million to upgrade its plants with new equipment.

Mr. Marchionne intends to introduce the Alfa Romeo brand in Mexico this year followed by the U.S. in 2012. As chief executive of Fiat, Mr. Marchionne earned $4.8 million last year.

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Pay For Fiat’s Marchionne Down In 2010 To $4.8M


Fiat SpA Chief Executive Officer Sergio Marchionne received $4.77 million (3.47 million euro) in total compensation last year, according to the Italian automaker’s annual report.

Marchionne is also CEO of partner Chrysler Group LLC, which, as a private company, is not required to disclose executive salaries. Spokesman Gualberto Ranieri said Marchionne gets a small stipend as a member of Chrysler’s board but does not draw a salary as chief executive.

“The man works exceptionally hard, crisscrossing the globe, managing two companies,” said analyst James Bell of Kelley Blue Book in Irvine, Calif. “He is pushing his philosophies and work ethic into Chrysler and employees speak highly of him.”

Ranieri noted Marchionne’s pay from Fiat will likely continue to lag those of top executives at Ford Motor Co. and General Motors Co., which have yet to disclose 2010 compensation figures, reported The Detroit News.

In 2009, Ford CEO Alan Mulally’s compensation totaled $17.9 million, and Marchionne earned about $6 million from Fiat.

GM has said CEO Dan Akerson will be paid about $9 million annually in total compensation, the same as his predecessor, Ed Whitacre Jr.

There is a $500,000 salary cap on Chrysler’s top 25 executives as one of the conditions of its government bailout. Fiat executives who have a management role with Chrysler as well can continue to be paid by Fiat.

In Italy, Marchionne earned a base salary of $4.2 million (3.05 million euro) last year, unchanged from 2009. But his compensation declined overall, in part because he earned a $1.87 million bonus in 2009, but was not paid a bonus in 2010.

In 2006, the Fiat board approved an eight-year stock option plan for Marchionne, including 5 million in options that could be redeemed over four years at 13.37 euro if performance targets were met.

Marchionne started 2010 with 19.42 million options, but many expired and he ended the year with 16.82 million. He has until November 2016 to exercise them at an average price of 9.09 euro, higher than today’s trading price of about 7 euro.

Marchionne’s term as CEO of Fiat expires in 2012. He has said he will not continue to hold the top job at both automakers indefinitely but has not said which set of responsibilities he plans to give up.

Chrysler recently provided performance awards to its workforce: $750 on average for unionized hourly employees and $10,000 on average to salaried employees. The top 50 earners did not receive a bonus.

Chrysler lost $652 million in 2010, but made $763 million on an operating basis.

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Chrysler’s Marchionne Says New Minivans Planned in Windsor For 2013, 2014


Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, will begin selling hybrid versions of its 300 sedan next year as well as of its next- generation minivan later, the companies’ top executive said.

Chrysler Chief Executive Officer Sergio Marchionne spoke today during an event at the company’s plant in Windsor, Ontario, celebrating the production of the 2011 Dodge Grand Caravan and Chrysler Town & Country minivans, Bloomberg reported. He told the workers that the future of the plant was “guaranteed” and that the next-generation minivan would come in 2013 or 2014.

The next minivan design may have mechanical underpinnings that could be used for a full-size car, Marchionne said. The plant could also produce Fiat models, he said, as he stressed the flexibility of the engineering in the future vehicles.

“You’re going to see a new architecture on the line, a completely different architecture, completely re-thought,” he told reporters after the event. “We’ve learned a lot in making this minivan over the last 20 plus years. We need to upgrade this and make it a much more versatile platform, one that will allow us to make more than just minivans.”

Being able to build the next-generation minivan and other vehicles on the same platform is part of Marchionne’s plans to reduce the complexity of the company’s plans.

“I’d like to get 80 percent of the volume on four or five architectures,” he said.

Marchionne’s comments during the Detroit auto show last week, in which he indicated the company was considering replacing one of its duplicate minivan brands with a different kind of vehicle such as a mini-minivan, revealed that the automaker is reviewing its people-mover strategy.

“We’re looking at a hybrid as being an integral solution going forward,” he said.

The full-sized Chrysler 300 sedan will come with a hybrid system in 2012, he said.

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A Resurgent Chrysler Says It Is Here to Stay


DETROIT — A year ago, Chrysler didn’t have a single new vehicle to display at its hometown auto show, and rival executives were taking bets on how long the smallest and most troubled of Detroit’s three automakers would last.

Now it is looking like the obituaries were premature. After stabilizing sales in the United States last year, Chrysler is in the midst of a product blitz that company executives and industry analysts say should help it pay off its government loans and re-emerge as a public company this year, reported The New York Times.

Chrysler’s chief executive, Sergio Marchionne, said Monday that the company was gaining traction with new products after subsisting on older models in the aftermath of its government-financed bankruptcy in 2009.

“I haven’t gotten any questions yet today like, ‘Will you be here next year?’ ” Mr. Marchionne said on the opening day of media previews at the North American International Auto Show here. “There were some severe doubts that we could execute what we promised.”

It has been a difficult road back so far for the company, which has lagged General Motorsand Ford in its comeback. But the addition of several new and revamped models helped increase Chrysler’s sales in the United States by 16 percent in 2010, and now the company appears to be positioned to gain market share for the first time in several years.

Chrysler still trails G.M. and Ford, both of which are expected to report substantial profits for 2010 later this month. But it has gotten a big boost from the introduction of the redesigned version of its Jeep Grand Cherokee sport utility.

Industry analysts had been skeptical that the S.U.V. would do well in a market more and more dominated by lighter-weight crossover vehicles. Sales of the Grand Cherokee, however, increased 68 percent last year and helped the overall Jeep brand improve sales by 25 percent. On Monday, the company also unveiled a new version of its flagship sedan, the Chrysler 300. It is an unapologetically large car that Mr. Marchionne predicted would appeal to consumers not interested in downsizing.

With its big grille and spacious interior, the 300 stands out from the compact and hybrid cars that most automakers are highlighting in Detroit. At a base price around $30,000 and with fuel economy estimated at 27 miles per gallon on the highway, the car is a critical building block in restoring Chrysler’s reputation.

“I think this company is slowly proving it can come back,” said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. “They have been helped quite a bit by relatively stable fuel prices.”

Most of Chrysler’s new vehicles have been produced in collaboration with its Italian partner, Fiat. The Obama administration gave Fiat a 20 percent stake in Chrysler in exchange for providing new technology to the company, and set benchmarks for it to increase its ownership position.

On Monday, Fiat increased its stake to 25 percent because it had met the guideline of producing a new fuel-efficient engine in the United States. Fiat can raise its ownership to 35 percent by building a new small car in the United States and increasing its international sales.

Mr. Marchionne said Fiat might raise its stake as high as 51 percent once Chrysler repays the $7.1 billion in loans it still owes to the United States and Canadian governments.

He said Chrysler was planning to pay off the loans this year and then pursue an initial public stock offering to reduce the majority ownership position of the United Automobile Workers health care trust — currently 63 percent — and smaller stakes held by the American and Canadian governments.

“We are going to repay one hundred cents on every dollar of loans we received,” said Mr. Marchionne. He said it was unlikely that Chrysler would attempt a stock offering until its loans were repaid.

“I think it would be advantageous for us to repay it all before we do an I.P.O.,” he said.

Chrysler has yet to post a quarterly profit since emerging from bankruptcy, but Mr. Marchionne indicated that it was getting close. “We should see in the first or second quarter how far we’ve come,” he said.

Chrysler’s long-term outlook is heavily dependent on a series of smaller, fuel-efficient models it will get from Fiat, the first of which is the tiny Fiat 500 micro-car that is to arrive in this country later this year.

But in the interim, Chrysler is hewing to its previously successful formula of stylish, affordable cars and rugged sport utility vehicles — albeit with better mileage than previous products.

Mr. Marchionne said there was no question the company would meet the new federal fuel economy guidelines of 36 miles per gallon, which go into effect in 2016.

But he said that most of Chrysler’s fuel-economy improvements would come from improving its internal combustion engines rather than introducing a large number of electric or hybrid vehicles.

“The downsizing of our engines is continuing,” he said.

Still, Chrysler is the most vulnerable of the Detroit auto companies to a rise in fuel prices. About 80 percent of its sales in the United States are light trucks rather than cars, and that won’t change until the Fiat-based models go on sale. But even its competitors are impressed by the early stages of its turnaround.

“You have to give them credit for the product freshening they’ve done this year,” said James Farley, Ford’s head of global sales and marketing. “You have to respect that they are executing their plan.”

The arrival of the new Chrysler 300 is a big turning point for the company. The statuesque sedan is the linchpin of the brand’s promise of “affordable luxury” and aggressive styling. Mr. Marchionne said the car’s size and fuel economy would not deter consumers looking for stylish alternatives to an S.U.V. or crossover vehicle.

“You want a full-size car, this is the best fuel economy you can get,” he said. “If you want 37 miles per gallon, go get a Fiat 500.”

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Fiat’s Italian Business Still Unprofitable in 2010, CEO Marchionne Says


Fiat SpA Chief Executive Officer Sergio Marchionne said the Italian carmaker’s domestic business will still be unprofitable this year.

Fiat on Oct. 21 raised its target for 2010 earnings before interest, taxes and one-time items to at least 2 billion euros, reported Bloomberg.

“None of those earnings will be made in Italy,” Marchionne said in Milan in an interview with state television RAI. “We still have a loss.”

Marchionne was commenting on the carmaker’s measures to raise productivity at Italian plants. Fiat plans to invest 20 billion euros through 2014 in Italy to improve plants and vehicle development if unions agree to curb strikes and add shifts.

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