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Chrysler's CEO Could Get Stock Worth $2.9M

February 25, 2011
3 min to read


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.

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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.

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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.

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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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