UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F



o	REGISTRATION STATEMENT PURSUANT TO SECTIONS 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, ~~2018~~2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-36675

Fiat Chrysler Automobiles N.V.

(Exact Name of Registrant as Specified in Its Charter)

The Netherlands

(Jurisdiction of Incorporation or Organization)

25 St. James's Street

London SW1A 1HA

United Kingdom

Tel. No.: +44 (0) 20 7766 0311

(Address of Principal Executive Offices)

Giorgio Fossati

25 St. James's Street

London SW1A 1HA

United Kingdom

Tel. No.: +44 (0) 20 7766 0311

general.counsel@fcagroup.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Shares, par value €0.01	FCAU	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: ~~1,550,617,563~~1,567,519,274 common shares, par value €0.01 per share, and 408,941,767 special voting shares, par value €0.01 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act of 1934. Yes o No þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o
Emerging growth company o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o International Financial Reporting Standards as issued by the International Accounting Standards Board þ Other o

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow: Item 17 o or Item 18 o.

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

Fiat Chrysler Automobiles N.V.

Annual Report and Form 20-F

For the year ended December 31, ~~2018~~2019

TABLE OF CONTENTS



		Page

Board of Directors and Auditor		5
BOARD REPORT		6
INTRODUCTION		6
MANAGEMENT REPORT		10
Selected Financial Data		10
Group Overview		1213
Our Business Plan		1520
Overview of Our Business		1621
Sales Overview		2430
Environmental and Other Regulatory Matters		3238
Financial Overview		4046
Results of Operations		4753
Liquidity and Capital Resources		6968
Risk Management		7972
Risk Factors		8376
CORPORATE GOVERNANCE		9995
Remuneration Report		~~134~~129
CONTROLS AND PROCEDURES		~~147~~144
Consolidated Financial Statements at December 31, ~~2018~~2019		~~149~~146
Consolidated Income Statement		~~151~~150
Consolidated Statement of Comprehensive Income/(Loss)		~~152~~151
Consolidated Statement of Financial Position		~~153~~152
Consolidated Statement of Cash Flows		~~154~~153
Consolidated Statement of Changes in Equity		~~155~~154
Notes to the Consolidated Financial Statements		~~156~~155
OTHER INFORMATION		~~256~~261
Additional information for Netherlands Corporate Governance		~~256~~261
Additional Information for U.S. Listing Purposes		~~259~~265
FORM 20-F CROSS REFERENCE		~~272~~280
SIGNATURES		~~275~~283

BOARD OF DIRECTORS

Chairman

John Elkann⁽³⁾⁽¹⁾

Chief Executive Officer

Michael Manley

Chief Financial Officer

Richard Palmer

Directors

John Abbott

Andrea Agnelli

Tiberto Brandolini d’Adda

Glenn Earle⁽¹⁾⁽²⁾

Valerie A. Mars^(1),(2)

~~Ruth J. Simmons~~^,(3)

Ronald L. Thompson⁽¹⁾⁽²⁾

Michelangelo A. Volpi⁽²⁾⁽³⁾

Patience Wheatcroft^(1),(3)(2)

Ermenegildo Zegna⁽²⁾⁽³⁾

INDEPENDENT AUDITOR

Ernst & Young Accountants LLP ~~(EU Annual Report~~(AFM annual report filing)⁽⁴⁾

~~Ernst & Young~~EY S.p.A (SEC Form 20-F filing)⁽⁴⁾

(1) ~~Member of the Audit Committee~~

~~(2) Member of the Compensation Committee~~

~~(3)~~ Member of the Governance and Sustainability Committee

(2) Member of the Audit Committee

(3) Member of the Compensation Committee

(4) Refer to “About this Report” for additional information relating to these regulatory filings.

BOARD REPORT

INTRODUCTION

About this Report

This document, referred to hereafter as the “Annual Report and Form 20-F”, constitutes both the Statutory annual report in accordance with Dutch legal requirements and the ~~Annual Report~~annual report on Form 20-F, ~~in accordance with the United States Securities and Exchange Act of 1934~~ applicable to Foreign Private Issuers, ~~(“FPI”)~~pursuant to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, for Fiat Chrysler Automobiles N.V. for the year ended December 31, ~~2018.~~2019, except as noted below. A table that cross-references the content of this report to the Form 20-F requirements is set out in the FORM 20-F CROSS REFERENCE section included elsewhere in this report.

The Annual Report and Form 20-F is filed with the Netherlands Authority for Financial Markets ~~(Autoriteit~~(Autoriteit Financiële Markten, the “AFM”) and unless otherwise stated, all references in this document to “Annual Report” refer to the AFM filing. The following sections have been removed for our Annual Report filing with the AFM:

FORM 20-F cover page;

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (EY S.p.A. in respect of Internal Control over Financial Reporting for the SEC filing);

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (EY S.p.A. in respect of the PCAOB audit of the financial statements for the SEC filing); and

SIGNATURES.

The Annual Report and Form 20-F and ~~other~~ related ~~documents~~exhibits are filed with the ~~United States~~U.S. Securities and Exchange Commission (“SEC”).

and unless otherwise stated, all references in this document to “Form 20-F” refer to the SEC filing. The following sections have been removed for our Form 20-F filing with the SEC:

MESSAGE FROM THE CHAIRMAN AND THE CEO;

CORPORATE GOVERNANCE - Responsibilities in Respect to the Annual Report;

NON-FINANCIAL INFORMATION;

CONTROLS AND PROCEDURES - Statement by the Board of Directors;

2020 GUIDANCE;

~~2019 GUIDANCE~~

FCA N.V. COMPANY FINANCIAL STATEMENTS; and

Independent auditor’s report (Ernst & Young Accountants LLP in respect of the AFM filing).

~~Without the sections referred to above, the Form 20-F filing with the SEC does not constitute a Statutory annual report in accordance with Dutch legal requirements.~~

Documents on Display

~~You may read and copy any document we file with or furnish to the~~The SEC ~~at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain documents we file with or furnish to the SEC on the SEC's website~~maintains an internet site at http://www.sec.gov. that contains reports, information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s website is provided solely for information purposes and is not intended to be an active link. ~~You may visit the website or call the SEC at 1-800-732-0330 for further information about its public reference room.~~ Reports and other information concerning ~~the~~our business ~~of FCA~~ may also be inspected at the offices of the New York Stock Exchange, 11 Wall Street, New York, New York 10005.

We also make our periodic reports, as well as other information filed with or furnished to the SEC, available free of charge through our website, at www.fcagroup.com, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. The information on our website is not incorporated by reference in this report.

Certain Defined Terms

In this report, unless otherwise specified, the terms “we”, “our”, “us”, the “Group”, the “Company” and “FCA” refer to Fiat Chrysler Automobiles N.V., together with its subsidiaries and its predecessor prior to the completion of the merger of Fiat S.p.A. with and into Fiat Investments N.V. on October 12, 2014 ~~(at~~(the “2014 Merger”, at which time Fiat Investments N.V. was renamed Fiat Chrysler Automobiles N.V., or “FCA NV”), ~~the “Merger”~~ or any one or more of them, as the context may require. References to “Fiat” refer solely to the Fiat brand and “Fiat S.p.A.” refer to Fiat S.p.A., the predecessor of FCA NV prior to the 2014 Merger. References to “FCA US” refer to FCA US LLC, formerly known as Chrysler Group LLC, together with its direct and indirect subsidiaries.

Presentation of Financial and Other Data

This report includes the consolidated financial statements of the Group as of December 31, ~~2018~~2019 and ~~2017~~2018 and for the years ended December 31, 2019, 2018 ~~2017~~ and ~~2016~~2017 prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), as well as IFRS as adopted by the European Union. There is no effect on these consolidated financial statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union. We refer to the consolidated financial statements and the notes to the consolidated financial statements collectively as the “Consolidated Financial Statements”.

All references in this report to “Euro” and “€” refer to the currency issued by the European Central Bank. The Group’s financial information is presented in Euro. All references to “U.S. Dollars”, “U.S. Dollar”, “U.S.$” and “$” refer to the currency of the United States of America ~~(or “U.S.~~(“U.S.”).

The language of this report is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.

Certain totals in the tables included in this report may not add due to rounding.

Except as otherwise disclosed within this report, no significant changes have occurred since the date of the audited Consolidated Financial Statements included elsewhere in this report.

Market and Industry Information

In this report, we include and refer to industry and market data, including market share, ranking and other data, derived from or based upon a variety of official, non-official and internal sources, such as internal surveys and management estimates, market research, publicly available information and industry publications. Market share, ranking and other data contained in this report may also be based on our good faith estimates, our own knowledge and experience and such other sources as may be available. Market share data may change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data-gathering process, different methods used by different sources to collect, assemble, analyze or compute market data, including different definitions of vehicle segments and descriptions and other limitations and uncertainties inherent in any statistical survey of market shares or size. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Although we believe that this information is reliable, we have not independently verified the data from third-party sources. In addition, we typically estimate our market share for automobiles and commercial vehicles based on registration data.

In markets where registration data are not available, we calculate our market share based on estimates relating to sales to final customers. Such data may differ from data relating to shipments to our dealers and distributors. While we believe our internal estimates with respect to our industry are reliable, our internal company surveys and management estimates have not been verified by an independent expert, and we cannot guarantee that a third party using different methods to assemble, analyze or compute market data would obtain or generate the same result. The market share data presented in this report represents the best estimates available from the sources indicated as of the date hereof but, in particular as they relate to market share and our future expectations, involve risks and uncertainties and are subject to change based on various factors, including those discussed in the section Risk Factors in this report.

Forward-Looking Statements

Statements contained in this report, particularly those regarding possible or assumed future performance, competitive strengths, costs, dividends, reserves and growth of FCA, industry growth and other trends and projections and estimated company earnings are “forward-looking statements” that contain risks and uncertainties. In some cases, words such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “remain”, “on track”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “outlook”, “prospects”, “plan”, or similar terms are used to identify forward-looking statements. These forward-looking statements reflect the respective current views of the Group with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially.

These factors include, without limitation:

our ability to launch products successfully and to maintain vehicle shipment volumes;

changes in the global financial markets, general economic environment and changes in demand for automotive products, which is subject to cyclicality;

changes in local economic and political conditions, changes in trade policy and the imposition of global and regional tariffs or tariffs targeted to the automotive industry, the enactment of tax reforms or other changes in tax laws and regulations;

our ability to expand certain of our brands globally;

our ability to offer innovative, attractive products;

our ability to develop, manufacture and sell vehicles with advanced features, including enhanced electrification, connectivity and ~~autonomous-driving~~automated-driving characteristics;

various types of claims, lawsuits, governmental investigations and other contingencies affecting us, including product liability and warranty claims and environmental claims, investigations and lawsuits;

material operating expenditures in relation to compliance with environmental, health and safety regulations;

the intense level of competition in the automotive industry, which may increase due to consolidation;

our ability to complete, and realize expected synergies following completion of, our proposed merger with Peugeot S.A., including the expected cumulative implementation costs;

exposure to shortfalls in the funding of our defined benefit pension plans;

our ability to provide or arrange for access to adequate financing for our dealers and retail customers, and associated risks related to the establishment and operations of financial services companies, including capital required to be deployed to financial services;

our ability to access funding to execute our business plan and improve our business, financial condition and results of operations;

a significant malfunction, disruption or security breach compromising our information technology systems or the electronic control systems contained in our vehicles;

our ability to realize anticipated benefits from joint venture ~~arrangements;~~arrangements in certain emerging markets;

our ability to successfully implement and execute strategic initiatives and transactions, including our plans to separate certain businesses;

disruptions arising from political, social and economic instability;

risks associated with our relationships with employees, dealers and suppliers;

increases in costs, disruptions of supply or shortages of raw materials;

developments in labor and industrial relations, including any work stoppages, and developments in applicable labor laws;

exchange rate fluctuations, interest rate changes, credit risk and other market risks;

political and civil unrest;

earthquakes or other disasters; and

other factors discussed elsewhere in this report.

Furthermore, in light of the inherent difficulty in forecasting future results, any estimates or forecasts of particular periods that are provided in this report are uncertain. We expressly disclaim and do not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this report or in connection with any use by any third party of such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements. We do not undertake an obligation to update or revise publicly any forward-looking statements.

Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking statements are included in the section Risk Factorsin this report.

MANAGEMENT REPORT

SELECTED FINANCIAL DATA

The following tables set forth selected historical consolidated financial and other data of FCA and have been derived, in part, from:

the Consolidated Financial Statements of FCA as of December 31, ~~2018~~2019 and ~~2017~~2018 and for the years ended December 31, 2019, 2018 ~~2017~~ and ~~2016,~~2017, included elsewhere in this report; and

the Consolidated Financial Statements of FCA as of December 31, 2017, 2016 ~~2015~~ and ~~2014,~~2015, for the years ended December 31, 2016 and 2015, ~~and 2014,~~except for the classification of Magneti Marelli as a discontinued operation as noted below, which are not included in this report.

This data should be read in conjunction with Presentation of Financial and Other Data, Risk Factors, the FINANCIAL OVERVIEW section and the Consolidated Financial Statements and related notes included elsewhere in this report.

Consolidated Income Statement Data


	Years ended December 31,											Years ended December 31,
	2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2015^(1,2)			2014^(1,2)		2019⁽¹⁾		2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2015^(1,2)
	(€ million, except per share amounts)											(€ million, except per share amounts)
Net revenues	€	110,412	€	105,730	€	105,798	€	105,859		€	89,350	€	108,187	€	110,412	€	105,730	€	105,798	€	105,859
Profit before taxes	€	4,108	€	5,879	€	2,950	€	99		€	719	€	4,021	€	4,108	€	5,879	€	2,950	€	99
Net profit/(loss) from continuing operations	€	3,330	€	3,291	€	1,713	€	(15	)	€	269	€	2,700	€	3,330	€	3,291	€	1,713	€	(15	)
Profit from discontinued operations, net of tax	€	302	€	219	€	101	€	392		€	363	€	3,930	€	302	€	219	€	101	€	392
Net profit	€	3,632	€	3,510	€	1,814	€	377		€	632	€	6,630	€	3,632	€	3,510	€	1,814	€	377

Net profit attributable to:
Owners of the parent	€	3,608	€	3,491	€	1,803	€	334		€	568	€	6,622	€	3,608	€	3,491	€	1,803	€	334
Non-controlling interests	€	24	€	19	€	11	€	43		€	64	€	8	€	24	€	19	€	11	€	43

Earnings/(Loss) per share from continuing operations
Basic earnings/(loss) per share	€	2.15	€	2.14	€	1.13	€	(0.01	)	€	0.20	€	1.72	€	2.15	€	2.14	€	1.13	€	(0.01	)
Diluted earnings/(loss) per share	€	2.12	€	2.11	€	1.12	€	(0.01	)	€	0.20	€	1.71	€	2.12	€	2.11	€	1.12	€	(0.01	)

Earnings per share from discontinued operations
Basic earnings per share	€	0.18	€	0.14	€	0.06	€	0.23		€	0.27	€	2.51	€	0.18	€	0.14	€	0.06	€	0.23
Diluted earnings per share	€	0.18	€	0.13	€	0.06	€	0.23		€	0.26	€	2.50	€	0.18	€	0.13	€	0.06	€	0.23

Earnings per share from continuing and discontinued operations
Basic earnings per share	€	2.33	€	2.27	€	1.19	€	0.22		€	0.46	€	4.23	€	2.33	€	2.27	€	1.19	€	0.22
Diluted earnings per share	€	2.30	€	2.24	€	1.18	€	0.22		€	0.46	€	4.22	€	2.30	€	2.24	€	1.18	€	0.22

Other Statistical Information (unaudited):
Combined shipments (in thousands of units)⁽³⁾	4,842		4,740		4,720		4,738			4.743		4,418		4,842		4,740		4,720		4,738
Consolidated shipments (in thousands of units)⁽⁴⁾	4,655		4,423		4,482		4,602			4.601		4,272		4,655		4,423		4,482		4,602

(1) The operating results of FCA for the years ended December 31, 2019, 2018, 2017, 2016 ~~2015~~ and ~~2014~~2015 exclude Magneti Marelli following the classification of Magneti Marelli as a discontinued operation for the year ended December 31, ~~2018;~~2018, and until its deconsolidation on completion of the sale transaction on May 2, 2019; Magneti Marelli operating results were excluded from the Group's continuing operations and are presented as a single line within the Consolidated Income Statement data for the years ended December 31, 2019, 2018, 2017, 2016, and 2015 presented above, and ~~2014 presented above.~~until its deconsolidation on completion of the sale transaction on May 2, 2019.

(2) The operating results of FCA for the ~~years~~year ended December 31, 2015 ~~and 2014~~ exclude Ferrari following the classification of Ferrari as a discontinued operation for the year ended December 31, 2015; Ferrari operating results were excluded from the Group's continuing operations and are presented as a single line item within the Consolidated Income Statements for ~~each of~~ the ~~years~~year ended December 31, ~~2015 and 2014.~~2015.

(3) Combined shipments include shipments by the Group's consolidated subsidiaries and unconsolidated joint ventures.

(4) Consolidated shipments only include shipments by the Group's consolidated subsidiaries.

Consolidated Statement of Financial Position Data


	At December 31,										At December 31,
	2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2015^(1,2)		2014 ^(1,2)		2019^(1),(2)		2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2015^(1,3)
	(€ million, except shares issued data)										(€ million, except shares issued data)
Cash and cash equivalents	€	12,450	€	12,638	€	17,318	€	20,662	€	22,840	€	15,014	€	12,450	€	12,638	€	17,318	€	20,662
Total assets(4)	€	96,873	€	96,299	€	104,343	€	105,753	€	101,149	€	98,044	€	96,873	€	96,299	€	104,343	€	105,753
Debt(4)	€	14,528	€	17,971	€	24,048	€	27,786	€	33,724	€	12,901	€	14,528	€	17,971	€	24,048	€	27,786
Total equity	€	24,903	€	20,987	€	19,353	€	16,968	€	14,377	€	28,675	€	24,903	€	20,987	€	19,353	€	16,968
Equity attributable to owners of the parent	€	24,702	€	20,819	€	19,168	€	16,805	€	14,064	€	28,537	€	24,702	€	20,819	€	19,168	€	16,805
Non-controlling interests	€	201	€	168	€	185	€	163	€	313	€	138	€	201	€	168	€	185	€	163

Share capital	€	19	€	19	€	19	€	17	€	17	€	20	€	19	€	19	€	19	€	17

Shares issued (in thousands):
Shares issued (in thousands)
Common⁽⁴⁾⁽⁵⁾	1,550,618		1,540,090		1,527,966		1,288,956		1,284,919		1,567,519		1,550,618		1,540,090		1,527,966		1,288,956
Special Voting⁽⁴⁾⁽⁵⁾	408,942		408,942		408,942		408,942		408,942		408,942		408,942		408,942		408,942		408,942

Dividends paid, per share⁽⁶⁾
Ordinary dividends paid, per share											€	0.65	€		€		€		€
Extraordinary dividends paid, per share											€	1.30	€		€		€		€

(1) The assets and liabilities of Magneti Marelli were classified as Assets held for sale and Liabilities held for sale within the Consolidated Statement of Financial Position at December 31, 2018, while the assets and liabilities of Magneti Marelli have not been classified as such within the comparative Consolidated Statements of Financial Position at December 31, 2017, 2016, ~~2015~~ and ~~2014.~~2015.

(2) The assets and liabilities of the cast iron automotive components business of Teksid were classified as Assets held for sale and Liabilities held for sale within the Consolidated Statement of Financial Position at December 31, 2019, while the assets and liabilities of the cast iron automotive components business of Teksid have not been classified as such within the comparative Consolidated Statements of Financial Position at December 31, 2018, 2017, 2016, and 2015. Refer to Note 3, Scope of consolidation within our Consolidated Financial Statements included elsewhere in this report.

(3) The assets and liabilities of Ferrari were classified as Assets held for distribution and Liabilities held for distribution within the Consolidated Statement of Financial Position at December 31, ~~2015, while~~2015.

(4) Refer to Note 2, Basis of preparation within our Consolidated Financial Statements included elsewhere in this report for detail on the ~~assets and liabilities~~adoption of ~~Ferrari have not been classified as such within the comparative Consolidated Statement of Financial Position at December 31, 2014.~~

~~(3) Book value per common share at December 31, 2018 was €15.93.~~IFRS 16, Leases.

~~(4)~~(5) Refer to Note 26, Equity, within our Consolidated Financial Statements included elsewhere in this report.

(6) The Board of Directors intend to recommend to the Annual General Meeting of Shareholders an annual ordinary dividend distribution to holders of FCA common shares of €0.70 (approximately US$0.79, based on the closing spot rate at December 31, 2019) per common share. The distribution, from the Company's 2019 profits, will be subject to the approval by the Annual General Meeting of Shareholders, which is scheduled to be held on April 16, 2020. Refer to Note 26, Equity, within our Consolidated Financial Statements included elsewhere in this report, for further details.

GROUP OVERVIEW

We are a global automotive group engaged in designing, engineering, manufacturing, distributing and selling vehicles, components and production systems worldwide through ~~102~~over a hundred manufacturing facilities and 46over forty research and development centers.⁽¹⁾ We have operations in more than 40forty countries and sell our vehicles directly or through distributors and dealers in more than ~~135~~a hundred and thirty countries. We design, engineer, manufacture, distribute and sell vehicles for the mass-market under the Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia and Ram brands and the SRT performance vehicle designation. For our mass-market vehicle brands, we have centralized design, engineering, development and manufacturing operations, which allow us to efficiently operate on a global scale. We support our vehicle shipments with the sale of related service parts and accessories, as well as service contracts, worldwide under the Mopar brand name for mass-market vehicles. In addition, we design, engineer, manufacture, distribute and sell luxury vehicles under the Maserati brand. We make available retail and dealer financing, leasing and rental services through our subsidiaries, joint ventures and commercial arrangements with third party financial institutions. In addition, we operate in the components and production systems sectors under the Teksid and Comau brands. Refer to Note 3, Scope of consolidation in the Consolidated Financial Statements included elsewhere in this report for detail on the announced sale of Teksid's cast iron automotive components business. As announced in December 2019, FCA will continue work on the separation of its holding in Comau, which will be separated promptly following closing of the proposed merger with Groupe PSA.

In ~~2018,~~2019, we shipped ~~4.8~~4.4 million vehicles (including the group's unconsolidated joint ventures), resulting in Net revenues of ~~€110.4~~€108.2 billion and Net profit of ~~€3.6~~€6.6 billion, of which ~~€3.3~~€2.7 billion was attributable to continuing ~~operations.~~operations, and generated €2.1 billion of Industrial free cash flows (See Non-GAAP Financial Measures). At December 31, ~~2018, including Magneti Marelli,~~2019 our available liquidity was ~~€21.1~~€23.1 billion (including ~~€7.7~~€7.6 billion available under undrawn committed credit lines) ~~and our Net industrial cash was €1.9 billion (See~~ ~~Non-GAAP Financial Measures~~).

History of FCA

Fiat Chrysler Automobiles N.V. was incorporated as a public limited liability company (naamloze vennootschap) under the laws of the Netherlands on April 1, 2014 and became the parent company of the Group on October 12, 2014. Its principal office is located at 25 St. James's Street, London SW1A 1HA, United Kingdom (telephone number: +44 (0) 20 7766 0311). Its agent for U.S. federal securities law purposes is Christopher J. Pardi, c/o FCA US LLC, 1000 Chrysler Drive, Auburn Hills, Michigan 48326.

Fiat S.p.A., the predecessor to FCA, was founded as Fabbrica Italiana Automobili Torino on July 11, 1899 in Turin, Italy as an automobile manufacturer. In 1902, Giovanni Agnelli, ~~Fiat’s~~Fiat S.p.A.’s founder, became the Managing Director of the company.

~~In April 2009, Fiat and Old Carco LLC, formerly known as Chrysler LLC (“Old Carco”) entered into an agreement, pursuant to which~~ FCA US LLC, then known as Chrysler Group LLC, (“FCA US”) ~~agreed to purchase~~acquired the principal operating assets of ~~Old Carco~~the former Chrysler LLC in 2009 as part of a government-sponsored restructuring of the North American automotive industry. Between 2009 and ~~to assume certain Old Carco liabilities. Following the closing of that transaction,~~2014, Fiat ~~held an~~S.p.A. expanded its initial 20 percent ownership interest ~~in FCA US. Old Carco traced its roots~~ to 100 percent of the ~~company originally founded by Walter P. Chrysler in 1925.~~

~~Over the following years, Fiat acquired additional~~ ownership ~~interests in~~of FCA US and ~~in January 2014, Fiat purchased all of the equity interests in FCA US that it did not then hold, resulting in FCA US becoming a 100 percent owned subsidiary.~~

~~In January 2011, the separation of Fiat's non-automotive capital goods businesses was completed with the creation of Fiat Industrial, now known as CNH Industrial N.V. (“CNHI”).~~

~~Corporate Reorganization~~

Onon October 12, 2014, Fiat S.p.A. completed a corporate reorganization resulting in the establishment ~~in the Netherlands~~ of FCA NV as the parent company of the Group, with its principal executive offices in the United Kingdom.

~~On October 13, 2014,~~ FCA common shares commenced trading on the Milan Mercato Telematico Azionario (“MTA”) and the New York Stock Exchange (“NYSE”). on October 13, 2014. As a result, FCA NV, as successor of Fiat S.p.A., is the parent company of the Group.

~~(1) Excluding facilities relating to Magneti Marelli.~~

~~Ferrari Spin-off~~

~~The spin-off~~In January 2011, the separation of ~~Ferrari N.V.~~Fiat S.p.A.'s non-automotive capital goods business was approved on December 3, 2015 at the extraordinary general meeting of FCA shareholders. The Group classified the Ferrari segment as a discontinued operation for the year ended December 31, 2015 and, consequently, the results of Ferrari were excluded from the Group's continuing operations,completed with the ~~after-tax result~~creation of ~~Ferrari's operations shown~~Fiat Industrial, now known as ~~a single line item within the Consolidated Income Statement for the year ended December 31, 2015.~~CNH Industrial N.V.

The spin-off of Ferrari N.V. from the Group was completed onin January 3, 2016. The assets and liabilities of the Ferrari segment were distributed to holders of FCA shares and mandatory convertible securities. Since Exor N.V., which controls and consolidates FCA, continued to control and consolidate Ferrari N.V., the spin-off of Ferrari N.V. was accounted for at book value without any gain or loss on the distribution.

Magneti Marelli Sale

~~On April 5, 2018, the FCA Board of Directors announced that it had authorized FCA management to develop and implement a plan to separate the Magneti Marelli business from the Group.~~

At September 30, 2018, the separation within the next twelve months became highly probable and Magneti Marelli operations met the criteria to be classified as a disposal group held for sale. It also met the criteria to be classified as a discontinued operation pursuant to IFRS 5 - ~~Non-current Assets Held for Sale and Discontinued Operations.~~

On October, 22, 2018, ~~FCA~~we announced ~~that it has entered into~~ a definitive agreement to sell ~~its~~our Magneti Marelli business to CK Holdings ~~Ltd.~~ Co., Ltd, completing the sale on May 2, 2019. Refer to Note 3, Scope of consolidation within the Consolidated Financial Statements included elsewhere within this report for additional information.

FCA-PSA Merger

On December 17, 2019, FCA and PSA entered into a combination agreement (the “combination agreement”) providing for a merger of their businesses (the “merger”). In addition, certain shareholders of FCA and PSA have made undertakings to support the merger and, among other things, vote their shares in favor of the merger at their respective extraordinary general meetings of shareholders. Below is a summary of the transaction and the main provisions of the combination agreement and the shareholders’ undertakings.

The following summary is qualified in all respects by reference to the complete text of the combination agreement and the shareholders’ undertakings, attached hereto as exhibits. You should read the combination agreement and the shareholders’ undertakings carefully as they are the legal documents that govern the terms of the merger.

Transaction Structure and Merger Consideration

If the merger is approved by the requisite votes of the FCA shareholders and the PSA shareholders and the other conditions precedent to the merger are satisfied or, to the extent permitted under the combination agreement and by applicable law, waived, PSA will be merged with and into FCA. The combined company (“DutchCo”) will be named by mutual agreement of FCA and PSA with effect from the day immediately following completion of the merger.

The closing of the merger shall take place on the second Friday after satisfaction or (to the extent permitted under the combination agreement and by applicable law) waiver of the closing conditions and the merger shall be effective at midnight (Central European Time) following the signing of the merger deed (the “Effective Time”), at which time, the separate corporate existence of PSA shall cease, and DutchCo shall continue as the sole surviving corporation, and, by operation of law, DutchCo, as successor, shall succeed to and assume all of the rights and obligations, as well as the assets and liabilities, of PSA in accordance with Dutch law and French law.

At the Effective Time, by virtue of the merger and without any action on the part of any holder of PSA ordinary shares or FCA common shares, PSA shareholders will have the right to receive 1.742 DutchCo common shares for each PSA ordinary share that they hold and each issued and outstanding common share of FCA shall remain unchanged as one (1) common share in DutchCo. There will be no carryover of the existing double voting rights currently held by Exor in FCA pursuant to the existing FCA loyalty voting structure. To that end, the combination agreement provides that at the Effective Time all special voting shares of FCA held by Exor will be reacquired by DutchCo for no consideration.

Governance of DutchCo

The combination agreement provides for certain arrangements relating to the governance of DutchCo, including causing DutchCo to adopt, immediately following the Effective Date, new articles of association, board regulations and a loyalty voting program in the agreed form. The principal terms of such governance arrangements are summarized below.

DutchCo Board Composition

The combination agreement provides that after closing of the merger the board of directors of DutchCo (the “DutchCo Board”) shall be a single tier board initially composed of 11 members, including the following initial directors:

the CEO of DutchCo;

two (2) Independent Directors nominated by FCA;

two (2) Independent Directors nominated by PSA;

two (2) directors nominated by Exor;

one (1) director nominated by Bpifrance (Bpifrance shall include jointly Bpifrance Participations S.A. and its wholly-owned subsidiary Lion Participations SAS. (or EPF/FFP, as further described below));

one (1) director nominated by EPF/FFP; and

two (2) employee representatives.

For these purposes, “Independent Director” means a director meeting the independence requirements under the Dutch Corporate Governance Code and, with respect to members of the Audit Committee, also meeting the independence requirements of Rule 10A-3 under the Exchange Act, and the NYSE listing requirements.

Nomination Rights

The rights of Exor, EPF/FFP and Bpifrance to nominate the number of directors mentioned above also apply to future terms of office of the DutchCo Board; providedthat:

if the number of DutchCo common shares held by Bpifrance, and/or any of its affiliates, or EPF/FFP, and/or any of its affiliates, falls below 5% of the issued and outstanding DutchCo common shares, such shareholder shall no longer be entitled to nominate a director (in which case, any director nominated by Bpifrance or EPF/FFP, as the case may be, shall be required to promptly resign); and

•

if, at the Effective Time, at any time within the six (6) years following the closing of the merger or on the sixth (6^th) anniversary of the closing of the merger, both (i) the number of DutchCo common shares held by EPF/FFP and/or their affiliates increases to 8% or more of the issued and outstanding DutchCo common shares and (ii) the number of DutchCo common shares held by Bpifrance and/or its affiliates falls below 5% of the issued and outstanding DutchCo common shares, then EPF/FFP shall be entitled to nominate a second director to the DutchCo Board to replace the Bpifrance nominee (the “EPF/FFP Additional Director”),

As an exception to the foregoing, if, at the Effective Time or within six (6) years of the Effective Time:

the number of DutchCo common shares held by Bpifrance and its affiliates, on the one hand, or EPF/FFP and its affiliates, on the other hand, represents between 4% and 5% of the issued and outstanding DutchCo common shares (the “Threshold Stake”);

either Bpifrance or EPF/FFP has not lost its right to nominate a ~~transaction value~~director in accordance with the preceding paragraph; and

the number of ~~€6.2 billion,~~DutchCo common shares held by Bpifrance, EPF/FFP and their respective affiliates represents, in aggregate, 8% or more of the issued and outstanding DutchCo common shares,

the shareholder which holds the Threshold Stake will maintain its right to nominate a director to the DutchCo Board until the sixth (6^th) anniversary of the closing of the merger (it being understood that while Bpifrance is entitled to nominate a director pursuant to this proviso, EPF/FFP shall not be entitled to nominate the EPF/FFP Additional Director).

Additionally, Exor’s right to nominate directors will decrease in the event Exor and/or its affiliates reduce their equity ownership in DutchCo as follows:

if the number of shares held by Exor and/or its affiliates falls below the number of shares corresponding to 8% of the issued and outstanding DutchCo common shares, Exor will be entitled to nominate one (1) director instead of two (2); and

if the number of shares held by Exor and/or its affiliates falls below the number of shares corresponding to 5% of the issued and outstanding DutchCo common shares, Exor will no longer be entitled to nominate a director;

In such cases, the director designated by Exor for resignation from among the directors nominated by Exor shall be required to resign as promptly as reasonably practicable after the number of DutchCo common shares held by Exor and/or its affiliates falls below the applicable threshold.

Any event or series of events (including any issue of new shares) other than a transfer (including transfer under universal title) of PSA shares or DutchCo shares shall be disregarded for the purpose of determining whether the applicable shareholder reaches the relevant threshold(s).

Initial Management of DutchCo

The combination agreement provides that the following positions shall be filled by the following individuals from the day immediately after the closing of the merger:

Chairman: John Elkann;

CEO: Carlos Tavares;

Vice Chairman: a director nominated by EPF/FFP; and

Senior Independent Director: an Independent Director nominated by PSA.

The initial term of office of each of the Chairman, CEO, Senior Independent Director and Vice Chairman shall be five (5) years, in each case beginning at the day immediately after the closing of the merger. The initial term of office for each of the other directors shall be four (4) years. Mr. Elkann and Mr. Tavares will be the only executive directors.

The board regulations provide that in addition to the Chairman’s other powers set out in the board regulations, if the Chairman is an executive director, he or she will be consulted and work together with the CEO on that basis on important strategic matters affecting DutchCo as set forth in the board regulations.

In addition to his/her powers set out in the DutchCo Articles of Association and board regulations, the CEO will be responsible for the management of DutchCo in accordance with the Dutch Civil Code and will be vested with full authority to represent DutchCo individually.

The Senior Independent Director (acting as the voorzitter under Dutch Law) shall preside over the meetings of the DutchCo Board and shall be vested with the powers to convene the board and the general meetings of shareholders of DutchCo.

Voting Limitations

The combination agreement provides that under the DutchCo articles of association no shareholder, acting alone or in concert, together with votes exercised by affiliates of such shareholder or pursuant to proxies or other arrangements conferring the right to vote, may cast 30% (the “Voting Threshold”) or more of the votes cast at any general meeting of shareholders of DutchCo, including after giving effect to any voting rights exercisable through DutchCo special voting shares. Any voting right in excess of the Voting Threshold will be suspended. Furthermore, the DutchCo articles of association will provide that, before each shareholders’ meeting, any shareholder holding voting rights in excess of the Voting Threshold shall notify DutchCo of its shareholding and total voting rights in DutchCo and provide, upon request by DutchCo, any information necessary to ascertain the composition, nature and size of the equity interest of that person and any other person acting in concert with it. This restriction (i) may be removed by the affirmative vote of the holders of two-thirds of the issued and outstanding DutchCo common shares (for the avoidance of doubt, without giving effect to any voting rights exercisable through DutchCo special voting shares, and subject to ~~certain adjustments. The transaction~~the aforementioned 30% voting cap) and (ii) shall lapse upon any person holding more than 50% of the issued and outstanding DutchCo common shares (other than DutchCo special voting shares) as a result of a tender offer for DutchCo common shares.

Shareholders Matters

Each of Exor, Bpifrance, EPF/FFP and Dongfeng (the “Reference Shareholders”), in its capacity as shareholder of PSA or FCA, as applicable, has entered into a letter agreement (a “Letter Agreement”) with PSA or FCA, as applicable, setting forth, among other things, the following undertakings relating to the merger and the future governance of DutchCo:

Support of the merger - Each Reference Shareholder has undertaken to vote or cause to be voted all shares owned or controlled by it or as to which it has the power to vote in favor of any decision in furtherance of the approval of the transactions contemplated by the combination agreement that is ~~expected~~submitted to ~~close~~the shareholders;

Standstill - Each Reference Shareholder shall be restricted from buying shares to increase its interest in PSA, FCA (before the merger) or DutchCo for a period ending seven years following the Effective Time, except that EPF/FFP may increase its shareholding by up to a maximum of 2.5% in DutchCo (or 5% in PSA) by acquiring shares from Bpifrance and/or Dongfeng and/or on the market, provided that market acquisitions may not represent more than 1% of the DutchCo common shares or 2% of the PSA ordinary shares plus, if applicable, the percentage of DutchCo common shares (or PSA ordinary shares) sold by Bpifrance to buyers other than EPF/FFP or any of its affiliates;

Lock-up - From the date of the combination agreement until 3 years after closing of the merger Exor, Bpifrance and EPF/FFP will be subject to a lock-up in respect of their shareholdings in the ~~second quarter~~relevant company before closing of ~~2019,~~the merger and in DutchCo thereafter, except that Bpifrance will be permitted to reduce its shareholdings by 5% in PSA or 2.5% in DutchCo; and

Dongfeng Buy-back - Dongfeng has agreed to sell, and PSA has agreed to buy, 30.7 million PSA ordinary shares prior to closing of the merger (the ordinary shares repurchased by PSA will be cancelled). Notwithstanding the above, Dongfeng may sell all or or part of such shares to third parties prior to the closing of the merger, in which case the purchase by PSA described in the prior sentence will apply to the balance of such 30.7 million PSA ordinary shares not otherwise sold by Dongfeng. Dongfeng is subject to a lock up until the Effective Time for the balance of its participation in PSA, resulting in an ownership of 4.5% in DutchCo immediately after the Effective Time.

Certain Covenants

In addition to making reciprocal customary representation and warranties and agreeing to customary restrictions on their respective operations as from the time of the combination agreement until the Effective Time, FCA and PSA each have agreed to take certain actions between the date of the combination agreement and the Effective Time, such as the seeking of competition law and other regulatory approvals, the making of stock exchange and securities filings, and the application for listing of the DutchCo common shares issued in connection with the merger on the NYSE, Euronext Paris and the MTA prior to the closing date of the merger.

Pre-merger Distributions

Prior to the Effective Time (i) an extraordinary cash distribution of €5.5 billion may be paid by FCA to its shareholders, (ii) an ordinary dividend for an amount of €1.1 billion in respect of the fiscal year ending December 31, 2019 may be paid by each of FCA and PSA and (iii) if the closing of the merger has not occurred before the 2021 annual general meetings of PSA and FCA, an ordinary dividend in respect of the fiscal year ending December 31, 2020 for an amount to be agreed by FCA and PSA on the basis of their respective distributable amounts shall be paid by each of PSA and FCA, in the case of (ii) and (iii) subject to the availability of sufficient distributable amounts.

Faurecia Distribution

PSA is permitted to distribute to its shareholders by special or interim dividend all of the shares held by PSA in Faurecia prior to the Effective Time with no material changes in any currently existing commercial arrangements between PSA and Faurecia, other than amendments in the ordinary course.

Comau Separation

Promptly following the Effective Time, DutchCo is permitted to allocate to its shareholders through a demerger or similar transaction all the shares held by DutchCo in Comau or implement other value-creating alternative structures, including the sale of all the shares held by DutchCo in Comau (each of such transactions, the “Comau Separation”). FCA shall, prior to the closing of the merger, work diligently to prepare for the Comau Separation to enable the Comau Separation to be completed promptly following the closing of the merger, including by establishing the perimeter, capital structure and governance of Comau in consultation with PSA and, if applicable, preparing all necessary documentation for the listing of Comau shares on the appropriate securities exchange.

Other Provisions

The combination agreement contains customary exclusivity provisions requiring the parties to refrain from soliciting any acquisition proposal from third-parties as well as covenants requiring the board of directors of each of FCA and PSA to recommend that their respective shareholders approve the transaction, subject to limited exceptions to ensure compliance with the directors’ fiduciary duties in connection with a superior proposal.

The obligation of each party to effect the merger is subject to customary closing ~~conditions.~~conditions, including the absence of a material adverse effect with respect to the other party, regulatory clearances and approval by the shareholders of PSA and FCA.

Major Shareholders

Exor N.V. is the largest shareholder of FCA through its ~~28.98~~28.66 percent shareholding interest in our issued common shares (as of February ~~20, 2019)~~25, 2020). As a result of the loyalty voting mechanism, Exor N.V.’s voting power is ~~42.11~~41.74 percent.

Consequently, Exor N.V. could strongly influence all matters submitted to a vote of ~~FCA~~our shareholders, including approval of annual dividends, election and removal of directors and approval of extraordinary business combinations.

Exor N.V. is controlled by Giovanni Agnelli B.V. (“GA”), which holds 52.99 percent of its share capital. GA is a private limited liability company under Dutch law with its capital divided in shares and currently held by members of the Agnelli and Nasi families, descendants of Giovanni Agnelli, the founder of ~~Fiat.~~Fiat S.p.A. Its present principal business activity is to purchase, administer and dispose of equity interests in public and private entities and, in particular, to ensure the cohesion and continuity of the administration of its controlling equity interests. The directors of GA are John Elkann, Tiberto Brandolini d’Adda, Alessandro Nasi, Andrea Agnelli, Eduardo Teodorani-Fabbri, Luca Ferrero de’ Gubernatis Ventimiglia, Jeroen Preller and Florence Hinnen.

Based on the information in FCA’s shareholder register, regulatory filings with the AFM and the SEC and other sources available to FCA, the following persons owned, directly or indirectly, in excess of three percent of FCA's capital and/or voting interest as of February ~~20, 2019:~~25, 2020:


FCA Shareholders	Number of Issued Common Shares	Percentage Owned	Number of Issued Common Shares	Percentage Owned
Exor N.V.⁽¹⁾	449,410,092	28.98	449,410,092	28.66
Tiger Global Management LLC⁽²⁾	81,375,000	5.25
Harris Associates L.P.⁽³⁾	59,119,458	3.81
BlackRock, Inc.⁽²⁾			62,912,116	4.01

Cyclical Nature of the Business

As is typical in the automotive industry, our vehicle sales are highly sensitive to general economic conditions, availability of low interest rate vehicle financing for dealers and retail customers and other external factors, including fuel prices, and as a result may vary substantially from quarter to quarter and year to year. Retail consumers tend to delay the purchase of a new vehicle when disposable income and consumer confidence are low. In addition, our vehicle production volumes and related revenues may vary from month to month, sometimes due to plant shutdowns, which may occur for several reasons including production changes from one model year to the next and actions to balance vehicle supply and demand fluctuations and also to adjust dealer stock levels appropriately. Plant shutdowns, whether associated with model year changeovers or other factors such as temporary supplier interruptions, can have a negative impact on our revenues and working capital as we continue to pay suppliers under established terms while we do not receive proceeds from vehicle sales. Refer to Liquidity and Capital Resources—Liquidity Overview for additional information.

Environmental and Other Regulatory Matters

We engineer, manufacture and sell our products and offer our services around the world, subject to requirements applicable to our products that relate to vehicle emissions, fuel economy, emission control software calibration and on-board diagnostics, as well as those applicable to our manufacturing facilities that relate to stack emissions, the treatment of waste, water and hazardous materials, prohibitions on soil contamination, and worker health and safety. Our vehicles and the engines that power them must also comply with extensive regional, national and local laws and regulations and industry self-regulations (including those that regulate end-of-life vehicles and the chemical content of our parts). In addition, vehicle safety regulations are becoming increasingly strict.

We believe we are substantially in compliance with the relevant global regulatory requirements affecting our facilities and products taken as a whole, although we may from time to time fail to meet a particular regulatory requirement. We consistently monitor the relevant global regulatory requirements affecting our facilities and products and adjust our operations and processes as we seek to remain in compliance. Compliance with these requirements involves significant costs and risks. See “Risk Factors-~~Laws,~~Risks Related to the Legal and Regulatory Environment in which we OperateCurrent and future more stringent or incremental laws, regulations and governmental policies, including those regarding increased fuel efficiency requirements and reduced greenhouse gas and tailpipe emissions, have a significant effect on how we do ~~business.~~business and may increase our cost of compliance and negatively affect our operations and results. ” and“Risk Factors-“Risks Related to the Legal and Regulatory Environment in which we Operate-We ~~are~~remain subject to diesel emissions investigations by several governmental agencies and to a number of related private ~~lawsuits.~~lawsuits, as well as other claims and lawsuits which may lead to further enforcement actions, penalties or damage awards and may also adversely affect our reputation with consumers”

Automotive Tailpipe Emissions

Numerous laws and regulations limit automotive emissions, including vehicle exhaust emission standards, vehicle evaporative emission standards and emission control software calibration ~~and onboard diagnostic~~ system requirements. Advanced onboard diagnostic systems are used to identify and diagnose problems with emission control systems. These requirements become more challenging each year, especially in light of increased global scrutiny of diesel emission control software calibration and we expect these emissions and certification requirements will continue to become even more rigorous worldwide.

~~NAFTA~~North America Region

Under the U.S. Clean Air Act and California law, the U.S. Environmental Protection Agency (“EPA”), and the California Air Resource Board (“CARB”) by virtue of an EPA waiver, require emission compliance certification before a vehicle can be sold in the U.S. or in California (and many other states that have adopted the California emissions requirements). Both agencies impose limits on tailpipe and evaporative emissions of certain non-greenhouse gas pollutants from new motor vehicles and engines, and in some cases dictate the pollution control methods our engines must employ.

Our vehicles are subject to EPA's Tier 3 Vehicle Emission and Fuel Standards Program, which regulates vehicle tailpipe and evaporative emission standards and fuels. These Tier 3 standards ~~are~~ generally ~~more stringent than the prior standards and are also generally aligned~~align with California’s Low Emission Vehicle (“LEV”) III tailpipe and evaporative standards, discussed ~~below. The Tier 3 standards also~~below, and require automakers to conduct pre- and post-production vehicle testing to demonstrate compliance with these emissions limits for the useful life of a vehicle, and require that FCA Italy-produced and Maserati-branded vehicles sold in the U.S. be included in the Group's U.S. fleet as reported to EPA and CARB.

In addition, we have implemented hardware and software systems in all our vehicles in connection with onboard diagnostic monitoring requirements. Conditions identified through these systems could lead to vehicle recalls (or other remedial actions such as extended warranties) with significant costs for related inspections, repairs or per-vehicle penalties.

In addition to its LEV III emissions standards, CARB regulations also require that a specified percentage of cars and certain light-duty trucks sold in California bequalify as zero emission vehicles, such as electric vehicles, hybrid electric vehicles or hydrogen fuel cell vehicles. Our strategy for compliance with the zero emission vehicle requirements involves the sale of a variety of vehicles, including battery electric vehicles and hybrid electric vehicles. Our compliance strategy is also supported by the purchase of credits from other OEMs. The Group's compliance with zero emission vehicles regulations includes Maserati vehicles sold in the U.S.

In addition to California, ~~twelve~~12 states ~~as well as the Province of Quebec, Canada,~~ currently ~~use~~enforce California’s LEV III standards in lieu of the federal EPA standards, and 10nine states, as well as Quebec province in Canada, have also adopted California’s zero emission vehicle requirements.

For a discussion of inquiries into our compliance with certain regulations in the U.S., see Note 25, Guarantees granted, commitments and contingent liabilities within the Consolidated Financial Statements included elsewhere in this report. See also “Risk Factors-~~Laws,~~Risks Related to the Legal and Regulatory Environment in which we Operate-Current and future more stringent or incremental laws, regulations and governmental policies, including those regarding increased fuel efficiency requirements and reduced greenhouse gas and tailpipe emissions, have a significant effect on how we do ~~business.~~business and may increase our cost of compliance and negatively affect our operations and results. ”

LATAM Region

Certain countries in South America follow U.S. procedures, standards and onboard diagnostic requirements, while others follow the European procedures, standards and onboard diagnostic requirements described below under —EMEA Region. In Brazil, vehicle emission standards are regulated by the Ministry of the Environment and have been in place since 1988 for passenger cars and light commercial vehicles. The ~~first step in the~~ next phase of regulations ~~are currently under discussion and~~(PROCONVE L7) are expected to be aligned with fuel efficiency and safety standards in January 2022 and a second step ~~is also under discussion~~(PROCONVE L8) will be mandatory in January 2025 with ~~implementation dates still to be defined.~~fleet target limits (US BIN methodology), Real drive emission limits and onboard refueling vapor recovery. Argentina has implemented regulations that mirror the European Commission Euro 5 standards for all new vehicles. In Chile, implementation of Euro 6 standards is under discussion for 2022.

APAC Region

China 5 standards, which mirror Euro 5 standards, are currently in place in China nationwide. China 6 standards were released in 2016 and will be required nationwide beginning in July 2020 with China 6a thresholds and in July 2023 with China 6b thresholds. China 6a and 6b have more stringent tailpipe emissions thresholds than Euro 6 and also add European Union (“EU”) real driving emissions and U.S. onboard diagnostics, onboard refueling vapor recovery and evaporative emission control system requirements. Some regions within China ~~will implement~~implemented China 6b ~~prior to July 2023,~~in 2019 such as ~~Beijing (beginning in early 2020) and Tianjin,~~ Shanghai, Guangzhou, Shenzhen, Yangtze River Delta, Pearl River Delta, Chengdu, Chongqing and ~~Shenzhen (beginning in July 2019) with more regions expected to follow.~~Tianjin. Beijing implemented China 6b at the beginning of 2020. FCA's entire China fleet has been developed with the intent to meet China 6 ~~standards,~~standards.

South Korea implemented regulations that are similar to California’s LEV III regulations beginning in ~~2016.~~2016 and ~~will be~~became fully required ~~by the end of~~in 2019 for all gasoline vehicles. Diesel vehicles are required to meet Euro 6 EU emissions requirements. Japan adopted the Worldwide Harmonized Light Vehicle Testing Procedures (“WLTP”) without Extra High phase in 2018 for new models and will be required by September 2020 for all models. WLTP is a global harmonized standard for regulating greenhouse gas (“GHG”) emissions, non-GHG pollutants, and fuel or energy consumption for light-duty vehicles and electric range for battery electric vehicles or hybrids. India currently follows Bharat Stage IV (“BSIV”) emission norms, which are equivalent to Euro 4 standards. BSIV emission norms were enforced nationwide starting in 2017. The government will mandate the new Bharat Stage VI emission norms beginning in April 2020, skipping Euro 5 equivalent norms.

In addition, Australia is developing a revised Regulatory Impact Statement to introduce mandatory Euro 6 standards beginning in 2027 and Euro 5 standards are expected to remain in force until that time.

EMEA Region

In Europe, emissions are regulated by the European Commission (“EC”) and the United Nations Economic Commission for Europe (“UNECE”). The EC imposes standardized emission control requirements on vehicles sold in all 28 EU member states, while non-EU countries bound by the “1985 UN Agreement” (an agreement concerning the adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts which can be fitted or used on wheeled vehicles and the conditions for reciprocal recognition of approvals granted on the basis of these prescriptions) apply regulations under the UNECE framework. EU Member States can provide tax incentives for the purchase of vehicles that meet emission standards earlier than the compliance date. As a result, vehicles must meet emission requirements and receive specific approval from an appropriate Member State authority before they can be sold in any EU Member State. These regulatory requirements include random testing of newly assembled vehicles and a manufacturer in-use surveillance program. ~~EU and UNECE requirements are equivalent in terms of stringency and implementation.~~

Euro 6 emission levels are in effect for all passenger cars and light commercial vehicles and require additional technologies and further increase the cost of diesel engines compared to prior Euro 5 standards. These new technologies have put additional cost pressures on the already challenging European market for small and mid-size diesel-powered vehicles. Further requirements of Euro 6 have been developed by the EC and became effective for all new passenger cars registered after September 1, 2018. In addition to WLTP, a new test procedure to directly assess the regulated emissions of light duty vehicles under real driving conditions became effective for ~~newly homologated passenger cars in 2017 and will become effective for~~ all new passenger cars registered inafter September 1, 2019 and will become effective for new light commercial vehicles registered inafter September 1, 2020. For a discussion of inquiries ~~into our compliance with certain regulations~~from relevant governmental agencies in the European Union, see Note 25, Guarantees granted, commitments and contingent liabilities within the Consolidated Financial Statements included elsewhere in this report. See also “Risk Factors-Risks Related to the Legal and Regulatory Environment in which we Operate-We ~~are~~remain subject to diesel emissions investigations by several governmental agencies and to a number of related private ~~lawsuits.~~lawsuits, as well as other claims and lawsuits which may lead to further enforcement actions, penalties or damage awards and may also adversely affect our reputation with consumers”

Automotive Fuel Economy and Greenhouse Gas Emissions

~~NAFTA~~North America Region

~~Since~~In the U.S., since the enactment of the 1975 Energy Policy and Conservation Act, the National Highway Traffic Safety Administration (“NHTSA”) has enforced minimum ~~Corporate Average Fuel Economy (“CAFE”)~~CAFE for fleets of new passenger cars and light-duty trucks sold in the U.S. for each model year. These CAFE standards apply to all domestic and imported passenger car and light-duty truck fleets and currently require year-over-year increases in fuel economy through 2025. The requirement is scaled based on vehicle footprint size. The CAFE standards require that passenger cars imported into the U.S. from outside of ~~NAFTA~~North America are averaged separately from those manufactured within ~~NAFTA,~~North America, and domestic cars and light duty trucks are also considered separately. A civil fine can be paid under the CAFE standards which can vary to the extent fuel economy targets are not met, and the policy also allows for the trading of CAFE credits as a means to achieve compliance.

In addition, as part of a Joint Rule with NHTSA's CAFE standards, the EPA ~~enforces~~and CARB (by virtue of an EPA waiver) enforce a GHG standard that is also footprint based and increasing in stringency year over year through 2025. This requirement corresponds to an equivalent fuel economy target of 54.5 miles per gallon in the 2025 model year. Various flexibilities exist to reach this target, including utilizing advanced technology components and more environmentally friendly refrigerants. A civil fine cannot be paid to achieve compliance with GHG standards. ~~This standard is currently undergoing~~

Pursuant to the Joint Rule, EPA and NHTSA conducted a ~~“mid term”~~“mid-term” review to evaluate the appropriateness of model year 2022-2025 CAFE/GHG standards and ~~may be modified~~the original assumptions the agencies made as a basis for those standards. The “mid-term” review concluded that model year 2022-2025 standards were inappropriate. In September 2019, EPA and NHTSA issued a new Joint Rule that prohibits California from having a GHG program. California and other stakeholders challenged the ~~2021 through 2025 model years.~~new Joint Rule in federal court. FCA and other OEMs have intervened in this litigation to ensure the ability to participate in the case and any outcome.

~~Finally, for~~For light duty vehicles, ~~ten~~California and nine other states ~~including California have enacted~~enforce a ~~zero emission vehicle~~ZEV mandate requiring a certain percentage of each OEM’s fleet in each state to be zero emission - either battery electric vehicles or fuel cell vehicles. This standard also increases in stringency through model year 2025. The policy does allow for a limited number of sales of partial zero emission vehicles and plug-in electric hybrids as a flexibility for manufacturers. The Joint Rule also prohibits California from having its own ZEV program and is subject to challenge by California in federal court.

For heavy duty vehicles (>8,500 pound gross vehicle weight rating), the GHG standard is utility based (payload and towing) and is increasing in stringency through 2027. Similar to passenger cars, flexibilities exist to meet GHG regulation. A civil fine cannot be paid to achieve compliance with heavy duty vehicle GHG standards.

The approach and technologies being developed to meet U.S. requirements are intended to also enable compliance in the Canadian and Mexican markets.

LATAM Region

In 2012, the Brazilian government issued a CO₂ reduction decree which provided indirect tax incentives to manufacturers who met certain requirements. Participating companies had to meet vehicle energy efficiency targets on vehicles sold from October 1, 2016 to September 30, 2017 and must maintain the required level until September 30, 2020. The program has additional targets that result in additional tax incentives based on the magnitude and timing of target accomplishment.

In July 2018, the first regulations related to Rota 2030 were enacted. Rota 2030 is a long-term program (three cycles of five years each) which includes key principles related to energy efficiency for all vehicles sold in Brazil. Key Rota 2030 regulations were approved by the Brazilian Congress and sanctioned by the Brazilian President in December 2018 as well as ordinary regulations to address certain minimum requirements and other metrics. The regulation for the next phase of Energy Efficiency (CO₂/fuel efficiency) beginning in 2022 incorporates three fleets split into passenger, large SUV and light commercial vehicle categories. Among other things, the rule rewards the improvement of sugar cane ethanol combustion efficiency and also recognizes and provides credit flexibilities for technologies that provide benefits in conditions that are not seen on the standardized government test cycles.

In Argentina, although there is no current mandatory greenhouse gas requirement, the government is in the process of a CO₂ standard revision which is expected to be finalized by year end 2020.

APAC Region

In China, Phase IV of the Corporate Average Fuel Consumption (or “CAFC”) is currently in place and provides an industry target of 5.0 liters per 100 kilometers by 2020. Each OEM must meet a specific fleet average fuel consumption target related to vehicle weight. The phase-in of this fleet-average requirement began in 2016, with increasing stringency each year through 2020. Additional provisions for Phase IV include meeting a quota for New Energy Vehicles (“NEVs”) credit beginning in 2019. NEVs consist of plug-in electric hybrids, battery electric vehicles, and fuel cell vehicles. No off-cycle credit flexibilities exist in the China regulation, although credit multipliers are granted for NEVs.

~~A draft version of the Phase V rule has been distributed by the Chinese government with increasing stringency reaching a target of 4.0 liters per 100 kilometers by 2025.~~

In September 2017, China’s Ministry of Industry and Information Technology released administrative rules regarding CAFC and NEV credits that became effective in April 2018. Non-compliance with the CAFC target in these administrative rules can be offset through carry-forward CAFC credits, transfer of CAFC credits within affiliates, the OEMs use of its own NEV credits, or the purchase of NEV credits. Non-compliance with the NEV target can only be offset by the purchase of NEV credits. The homologation of new products that exceed CAFC targets will be suspended for OEMs that are unable to offset CAFC and/or ~~NAV~~NEV deficits until the deficits are offset.

Beginning in 2021, China will adopt WLTP for conventional and plug-in hybrid electric vehicles and a unique Chinese test cycle is also expected to be applicable to battery electric vehicles in the same year. A draft of Phase V CAFC and NEV credit rules has been released by the Chinese government with increasing stringency reaching a target of 4.6 liters per 100 kilometers by 2025. The final rules are expected to be issued soon.

Additional markets within the APAC region have enacted fuel consumption and GHG targets. India began enforcing a phase I CAFC limit starting in April 2017 with a second, more stringent phase beginning in 2022.

South Korea has implemented a new phase of CAFE/CO₂ standards beginning in 2016 with increased targets for ~~2020.~~2021.

In Japan, auto manufacturers are required to achieve the 2015 fuel economy standard for each vehicle weight class, which applies through the 2019 fiscal year. In 2020, a new fuel economy standard will be implemented that switches from vehicle weight class average to corporate average fuel economy. In Australia, although there is no mandatory greenhouse gas requirement, the government is in the midst of a CO₂ standard revision which is expected to result in a voluntary CO₂ target for light vehicles.

EMEA Region

Each automobile manufacturer must meet a specific sales-weighted fleet average target for CO₂emissions as related to vehicle weight. This ~~legislation~~regulation sets an industry fleet average target of 95 grams of CO₂per kilometer starting in 2020 for passenger cars (130g/km until 2019). In order to promote the sale of ultra-efficient vehicles, automobile manufacturers that sell vehicles emitting less than 50 grams of CO₂per kilometer earn additional CO₂credits from 2020 to 2022. Furthermore, automobile manufacturers that make use of innovative technologies, or eco-innovations, which improve real-world fuel economy but may not show in the test cycles, such as solar panels or LED lighting, may gain ~~a non-transferable~~an average credit for the manufacturer's fleet of up to seven grams of CO₂ per kilometer.

The EU has also adopted standards for regulating CO₂emissions from light commercial vehicles (“LCVs”). This regulation requires that new light commercial vehicles meet a fleet average CO₂target of 147 grams of CO₂per kilometer in 2020 (175g/km until 2019).

In ~~December 2018,~~April 2019, the ~~European Institutions agreed on~~Regulation (EU) 2019/631 which sets new CO₂emissions targets starting from 2025 and ~~2030: 15%~~2030 was adopted and requires a 15 percent reduction from 2021 levels in 2025 (both passenger cars and LCV) ~~and~~, a ~~37.5%~~37.5 percent reduction for passenger cars and ~~31%~~a 31 percent reduction for LCV in 2030 from 2021 levels.

A new regulatory test procedure for measuring CO₂ emissions and fuel consumption of light duty vehicles known as the ~~World harmonized Light vehicles Test Procedure (“WLTP”),~~WLTP entered into force onin September 1, 2018 for all registered passenger ~~cars.~~cars and in September 2019 for all registered LCVs. The WLTP is expected to provide CO₂ emissions and fuel consumption values that are more representative of real driving conditions.

The quantity of CO₂ emissions in ~~2019~~2020 will be affected not only by market evolution (such as the expected reduction of diesel market share), but also by the commercialization of ~~vehicles compliant with the new Euro 6d-temp standard, which regulates tailpipe emissions~~low-emission and ~~entered into force on September 1, 2018. Compliance with this regulation has led to new engine calibrations, implying higher CO~~₂ ~~emissions.~~electrified vehicles. FCA has defined a plan to ~~manage the disruption introduced by the new procedures,~~reach compliance with CO₂ emissions targets, mainly based on technical actions (such as ~~introduction~~the launch of electrified products and the extension of the new Gasoline Small ~~Engine)~~Engine family across a significant portion of its products) and commercial actions (such as the promotion of low CO₂ emission ~~vehicle versions)~~vehicles). Finally, according to applicable EU regulations, current pooling arrangements for emissions compliance with another OEM are also expected to apply in 2020.

Other countries in the EMEA region outside of the EU perimeter, such as Switzerland and Saudi Arabia, have introduced specific regulations aimed to reduce vehicle CO₂ emissions or fuel consumption. ~~FCA assumes for the time being that the~~The United Kingdom ~~will~~is expected to continue ~~to follow~~following the EU GHG policy post-Brexit.

Vehicle Safety

~~NAFTA~~North America Region

Under U.S. federal law, all vehicles sold in the U.S. must comply with Federal Motor Vehicle Safety Standards (“FMVSS”) promulgated by NHTSA, and must be certified by their manufacturer as being in compliance with all such standards at the time of the first purchase of the vehicle. In addition, if a vehicle contains a defect that is related to motor vehicle safety or does not comply with an applicable FMVSS, the manufacturer must notify NHTSA and vehicle owners and provide a remedy at no cost. Moreover, the TREAD Act authorized NHTSA to promulgate regulations requiring Early Warning Reporting (“EWR”). EWR requires manufacturers to provide NHTSA several categories of information, including all claims which involve one or more fatalities or injuries; all incidents of which the manufacturer receives actual notice which involve fatalities or injuries which are alleged or proven to have been caused by a possible defect in such manufacturer’s motor vehicle or motor vehicle equipment in the U.S.; and all claims involving one or more fatalities in a foreign country when the possible defect is in a motor vehicle or motor vehicle equipment that is identical or substantially similar to a motor vehicle or motor vehicle equipment offered for sale in the U.S., as well as aggregate data on property damage claims from alleged defects in a motor vehicle or in motor vehicle equipment; warranty claims; consumer complaints and field reports about alleged or possible defects. The rules also require reporting of customer satisfaction campaigns, consumer advisories, recalls, or other activity involving the repair or replacement of motor vehicles or items of motor vehicle equipment, even if not safety related.

NHTSA has secured a voluntary commitment from manufacturers, including FCA, to equip future vehicles with automatic electronic braking systems. The commitment will make these braking systems standard on virtually all light-duty cars and trucks with a gross vehicle weight of 8,500 pounds or less beginning no later than September 1, 2022 and on virtually all trucks with a gross vehicle weight between 8,501 pounds and 10,000 pounds beginning no later than September 1, 2025. ~~Compliance with these requirements and commitments, as well as other possible prospective NHTSA requirements, is likely to be costly.~~

In ~~2018, NHTSA updated guidelines for~~September 2019, the ~~testing~~Alliance of Automobile Manufacturers, Inc. and ~~deployment~~the Association of ~~automated driving systems (“ADS”), providing additional clarity~~Global Automakers, Inc. announced a voluntary commitment from auto manufacturers, including FCA, to introduce technology including a combination of auditory and ~~alignment with OEM requests, including~~visual alerts to remind parents and caregivers to check the ~~announcement~~back seat upon leaving a vehicle to help address the risk of ~~a possible pilot program~~pediatric heatstroke in children left in cars. The commitment is to ~~encourage public road testing of vehicles equipped with ADS. Additionally, as of October 2018, legislation has passed~~install such technology in essentially all cars and trucks by the U.S. House of Representatives to encourage safe testing and commercial deployment of “highly automated vehicles” (“HAVs”) and ADS-equipped vehicles. A similar bill is pending in the U.S. Senate. Both bills would direct a series of rulemakings eventually affecting manufacturers. The final bill could require that manufacturers introducing a HAV2025 model year or ADS-equipped vehicle into interstate commerce must provide the U.S. Department of Transportation with a Safety Evaluation Report that describes how the manufacturer is addressing nine areas regarding vehicle safety, with civil penalties for false or misleading reports. sooner.

At times, organizations like NHTSA or the U.S. Insurance Institute of Highway Safety (“IIHS”) issue or reissue safety ratings applicable to vehicles. In October ~~2018,~~2019, NHTSA ~~held~~announced a ~~public meeting~~plan to ~~hear from stakeholders about possible changes~~propose significant updates and upgrades to its New Car Assessment Program, also known as the ~~safety ratings issued by the agency.~~Five-star Safety Ratings Program, in 2020. The ~~timeframe for any such changes is~~details are not known at this ~~time. In 2017, the IIHS continued~~time, but are expected to ~~introduce~~include new ~~tests and modified its “Top Safety Pick” protocol. Pursuant~~test dummies, changes to the mandatory label, new ~~protocol, several~~test procedures and evaluation of ~~our vehicles' top ratings have been downgraded until~~ new ~~technologies are introduced such as new forward lighting systems. This~~technologies. Depending on the content of the final changes, this set of changes could impact the market competitiveness of the affected vehicles.

In 2016, NHTSA issued a Notice of Proposed Rulemaking (“NPRM”) designed to enable vehicle-to-vehicle ~~(“V2V”)~~ communication technology. Rulemaking in this area has been inactive since then, and any additional costs that would have been associated with the NPRM are deferred for the foreseeable future. However, NHTSA has engaged with industry to confirm continued interest in facilitating the growth of this technology.

Furthermore, NHTSA has issued non-binding guidelines for addressing cybersecurity issues in the design and manufacture of new motor vehicles, as well as guidance for the investigation and validation of cybersecurity measures.

In January 2018, Mexico ~~a new~~issued an amendment to the Consumers' Protection Law (“CPL”) regarding safety ~~regulation~~regulations based on U.S. ~~standards is expected to take effect which will,~~standards. The CPL, among other things, ~~include~~includes a deadline for vehicle manufacturers to provide to the Federal Consumer Protection Agency (i) the launch date and a detailed description of every safety campaign applicable to vehicles sold in Mexico, (ii) mandatory recall campaigns, based on international agencies' investigations and guidelines, ~~and~~ (iii) mandatory repurchase, repair or replacement (with a new vehicle model having the same characteristics) of ~~defective products.~~vehicles that risk the consumer's safety, health or life or threatens the consumer's personal financial condition, and (iv) mandatory product withdrawal, when the Federal Consumer Protection Agency determines that the vehicle could risk the consumer's safety, health or life or affect the consumer's personal financial condition.

LATAM Region

Vehicles sold in the LATAM region are subject to different vehicle safety regulations according to each country, generally based on European and United Nations standards. Brazil published a draft of its 10 year safety regulatory roadmap in 2017. This roadmap provides a staged approach to implementation of new testing requirements and active safety technology. The more costly active safety technologies would be scheduled for implementation after 2024. In July 2018, the first regulation related to Rota 2030 was enacted. Rota 2030 is a long-term program (three cycles of five years each) which includes principles related to mandatory safety for all vehicles sold in Brazil. These regulations were approved by the Brazilian Congress and sanctioned by the Brazilian President in December 2018 as well as ordinary regulations to address certain minimum requirements and other metrics.

APAC Region

Many countries in the Asia Pacific region, including China, South Korea, Japan and India, have adopted or are adopting measures for pedestrian protection and vehicle safety regulations. ~~For example,~~ China published the Regulation for Administration of Recall of Defective Vehicles effective in 2013 and the Implementation Provisions on the Regulation for Administration of Recall of Defective Vehicles effective in 2016. In 2019, State Administration for Market Supervision and Regulation in China issued a notice requiring close supervision of defects reporting and recall of new energy vehicles. In addition, India has implemented vehicle crash regulations effective in 2017 for new models and 2019 for all models, and has introduced for implementation in 2019 new standards relating to pedestrian safety, compulsory installation of airbags, speed limit reminders, anti-lock braking systems and reverse parking sensors. Further, in June 2019 the Indian Government Cabinet approved the “Road Transport and Safety Bill, 2015” which, among other things, covers provisions relating to the recall of vehicles. In South Korea, amendments to major provisions relating to vehicle accidents, fire incidents, defect reporting and recall procedures have been proposed that may considerably increase the liabilities and penalties of vehicle manufacturers.

EMEA Region

Vehicles sold in Europe are subject to vehicle safety regulations established by the EU or, in very limited cases and aspects, by individual Member States. In 2009, the EU established a uniform legal framework for vehicle safety, repealing more than 50 then-existing directives and replacing them with a single regulation known as the “General Safety Regulation” (“GSR”) aimed at incorporating relevant United Nations standards. The incorporation of United Nations standards commenced in 2012. In 2014, discussions began in Europe for a comprehensive upgrade to the GSR, which is expected to lead to the implementation of a variable suite of passive and active safety technologies, depending on vehicle type and classification. The significant items ~~under discussion~~ for ~~mainstream~~the most common vehicles ~~includes automatic~~include advanced emergency braking, intelligent speed assistance, emergency lane keeping, driver drowsiness and attention warning, advanced driver distraction warning, reversing detection, ~~advanced distraction recognition~~event data recorder, protection of pedestrians, cyclists and other vulnerable road users, and an expanded scope ~~for~~of front and side crash testing. Also included are the introduction of automated vehicle provisions, such as a driver availability monitoring system or vehicle platooning. The ~~timeline for~~updated GSR was published in 2019 and implementation of this upgraded GSR for new vehicle and vehicle types ~~is estimated to be~~will begin in 2022. In addition, in-vehicle emergency call systems became mandatory for new ~~vehicle types~~type-approved vehicles in the EU, Israel and Turkey markets in 2018. In Russia, a similar in-vehicle emergency call system became mandatory in 2015 and there are ~~now~~currently draft regulations for these systems in ~~many~~some countries in the Middle East region.

Industrial Environmental Control

Our operations are subject to a wide range of environmental protection laws including those laws regulating air emissions, water discharges, waste management and environmental clean-up. Certain environmental statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal, or ownership of a disposal site. Under certain circumstances, these laws impose ~~joint and several liability as well as~~ liability for related damages to natural resources. Our Environmental Management System (“EMS”) formalizes our commitment to responsible management ~~of the environment. Applied at all plants operating worldwide, the EMS consists~~ of methodologies and processes designed to prevent or reduce the environmental impact of our manufacturing activities. ISO 14001 is an internationally agreed standard that sets out the requirements for an EMS. At December 31, ~~2018,~~2019, the majority of the Group's ~~facilities~~manufacturing plants have an ISO 14001 certified EMS in place.

Our commitment to environmental and sustainability issues is also reflected through our internal World Class Manufacturing (“WCM”) system.

Workplace Health and Safety

FCA aims to provide all employees with a safe, healthy and productive work environment at every facility worldwide and in every area of activity. Accordingly, the Group focuses on identifying and evaluating workplace safety risks, implementing internal and governmental safety and ergonomic standards, promoting employee awareness and safe behavior and encouraging a healthy lifestyle.

The goal of achieving zero accidents is formalized in the targets set by FCA, as well as through global adoption of an Occupational Health and Safety Management System (“OHSMS”) certified to the ~~OHSAS~~Occupational Health and Safety Assessment Series (“OHSAS”) 18001 standard. At December 31, ~~2018,~~2019, the vast majority of our manufacturing plants had an OHSMS in place that was OHSAS 18001 certified.

Effective safety management is also supported by the application of WCM tools and methodologies, active involvement of employees and targeted investment.

Applicability of Banking Law and Regulation to Financial Services

Several of our captive finance companies, each of which provides financial services to our customers, are regulated as financial institutions in the jurisdictions in which they operate. FCA Bank S.p.A., incorporated in Italy, is subject to European Central Bank and Bank of Italy supervision. Within FCA Bank Group, two subsidiaries (the Austrian FCA Bank G.m.b.H. and the Portuguese FCA Capital Portugal I.F.I.C., S.A.), are subject to the supervision of the European Central Bank and of the local central banks, whereas certain other subsidiaries are subject to the supervision of the local Supervisory Financial or Banking Authority. Banco Fidis S.A., incorporated in Brazil, is subject to Brazilian Central Bank supervision. FCA Compañia Financiera S.A., incorporated in Argentina, is subject to Argentinian Central Bank supervision. FCA Automotive Finance Co., Ltd, incorporated in China, is subject to the supervision of the Chinese Banking Insurance Regulatory Commission and People’s Bank of China. As a result, those companies are subject to regulation in a wide range of areas including solvency, capital requirements, reporting, customer protection and account administration, among other matters.

FINANCIAL OVERVIEW

Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Group

The following discussion of our financial condition and results of operations should be read together with the information included under “GROUP OVERVIEW”, “SELECTED FINANCIAL DATA” and the Consolidated Financial Statements included elsewhere in this report. This discussion includes forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under “Forward-Looking Statements” and “Risk Factors”. Actual results may differ materially from those contained in any forward looking statements.

Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Group for the year ended December 31, 2017 was previously included in the section “FINANCIAL OVERVIEW” in the 2018 Annual Report and Form 20-F, as filed with the SEC on February 20, 2019, and has not been included in this report. Industrial free cash flows excluding Magneti Marelli and Adjusted diluted EPS for 2017 were not previously disclosed and have been disclosed below.

Trends, Uncertainties and Opportunities

Our results of operations and financial condition are affected by a number of factors, including those that are outside our control.

Shipments. Vehicle shipments are generally driven by ~~our plans to meet~~expectations of consumer ~~demand. Consumer~~ demand for vehicles, which is affected by economic conditions, availability and cost of dealer and customer financing and incentives offered to retail customers, as discussed further below. Transfer of control, and therefore revenue recognition, generally corresponds to vehicle ~~shipment.~~shipment to dealers or distributors. This generally occurs upon the release of the vehicle to the carrier responsible for transporting the vehicle to the dealer or distributor, or when the vehicle is made available to the dealer or distributor. Shipments and revenue recognition are ~~generally~~ not necessarily directly correlated with retail sales by dealers, which may be affected by other factors including dealer decisions as to ~~their~~ appropriate inventory levels.

Product Development and Technology. A key driver of consumer demand and therefore our shipments, has been the continued refresh, renewal and evolution of our vehicle portfolio, and we have committed significant capital and resources toward the introduction of new vehicles on new platforms, with additions of new powertrains and other new technologies. In order to realize a return on the significant investments we have made to sustain market share and to achieve competitive operating margins, we will have to continue significant investment in new vehicle launches. We believe efforts in developing common vehicle platforms and powertrains have accelerated the time-to-market for many of our new vehicle launches and resulted in cost savings.

The costs associated with product development, vehicle improvements and launches can impact our Net profit. In addition, our ability to continue to make the necessary investments in product development, and recover the related costs, depends in large part on the market acceptance and success of the new or significantly refreshed vehicles we introduce. During a new vehicle launch and introduction to the market, we typically incur increased selling, general and advertising expenses associated with the advertising campaigns and related promotional activity.

Costs we incur in the initial research phase for new projects (which may relate to vehicle models, vehicle platforms, powertrains or technology) are expensed as incurred and reported as Research and development costs. Costs we incur for product development are capitalized and recognized as intangible assets if and when the following two conditions are both satisfied: (i) development expenditures can be measured reliably and (ii) the technical feasibility of the project, and the anticipated volumes and pricing indicate it is probable that the development expenditures will generate future economic benefits. Capitalized development expenditures include all costs that may be directly attributed to the development process. Such capitalized development expenditures are amortized on a straight-line basis commencing from start of production over the expected economic useful life of the product developed and based on an end date that we estimate to correspond to the end of the useful life of such product, we recognize and report such amortization ~~is recognized and reported~~ as Research and development costs in our Consolidated Income Statement. ~~If vehicle production is planned to be terminated prior to~~Any changes in the expected end date ~~amortization~~ of ~~capitalized development expenditures is accelerated over the remaining useful economic life of that vehicle model or platform. If~~ vehicle production ~~is terminated~~(extensions, accelerations or terminations) result in a prospective change in the ~~current~~ period ~~all unamortized capitalized development expenditures are expensed during that period.~~over which the asset is amortized.

Future developments in our product portfolio to support our growth strategies and their related development expenditures could lead to significant capitalization of development assets. Our time to market is at least 24 months, but varies depending on our product, from the date the design is signed-off for tooling and production, after which the project goes into production, resulting in an increase in amortization. Therefore, our operating results are impacted by the cyclicality of our research and development expenditures based on our product portfolio strategies and our product plans.

In order to meet expected changes in consumer demand and regulatory requirements, we intend to invest significant resources in product development and research and development. New markets for alternative fuel source vehicles and autonomous vehicles are also ~~beginning~~continuing to emerge and we expect to invest resources in these areas in order to meet future demand and to support compliance with emissions and fuel efficiency requirements. In addition, global demand continues to shift from passenger cars to utility vehicles and away from diesel-powered vehicles.

Cost of revenues. Cost of revenues includes purchases (including costs related to the purchase of components and raw materials), labor costs, depreciation, amortization, logistic and product warranty and recall campaign costs. We purchase a variety of components, raw materials, supplies, utilities, logistics and other services from numerous suppliers. These purchases have historically accounted for 70-80 percent of total Cost of revenues. Fluctuations in Cost of revenues are primarily related to the number of vehicles we produce and sell along with shifts in vehicle mix, as newer models of vehicles generally have more technologically advanced components and enhancements and therefore higher costs per unit. Cost of revenues may also be affected by fluctuations in raw material prices. The cost of raw materials has historically comprised 10-15 percent of the total purchases described above, while the remaining portion of purchases is made of components, conversion of raw materials and overhead costs. We typically seek to manage these costs and minimize their volatility by using fixed price purchase contracts, commercial negotiations and technical efficiencies. Nevertheless, our Cost of revenues related to materials and components has increased as a result of recent tariff activity, and uncertainty related to tariffs and trade policy in our larger markets including the U.S. and China have made managing our raw material costs difficult to predict. Our Cost of revenues has also increased as we have significantly enhanced the content of our vehicles as we renew and refresh our product offerings. Over time, technological advancements and improved material sourcing may reduce the cost to us of the additional enhancements. In addition, we seek to recover higher costs through pricing actions, but even when ~~competitive~~market conditions permit this, there may be a time lag between the increase in our costs and our ability to realize improved pricing. Accordingly, our results are typically adversely affected, at least in the short term, until price increases are accepted in the market.

Further, in many markets where our vehicles are sold, we are required to pay import duties on those vehicles, which are included in Cost of revenues. We reflect these costs in the price charged to our customers to the extent market conditions permit. However, for many of our vehicles, particularly in the mass-market vehicle segments, we cannot always pass along increases in those duties to our dealers and distributors and remain competitive. Our ability to price our vehicles to recover those increased costs has affected, and will continue to affect, our profitability.

Pricing. Our profitability depends in part on our ability to maintain or improve pricing on the sale of our vehicles to dealers and fleet customers and will also be significantly impacted by our ability to pass along the increased costs of the technology needed to meet increased regulatory compliance requirements. However, as described above, import duties and tariffs affecting raw materials or component pricing may in some instances increase the price charged to our customers, where the market can accept such price increases in that particular market or otherwise impact our profitability if we are unable to increase prices to our customers.

In addition, the automotive industry continues to experience intense price competition resulting from the variety of available competitive vehicles and excess global manufacturing capacity. Historically, manufacturers have promoted products by offering dealer, retail and fleet incentives, including cash rebates, option package discounts, and subsidized financing or leasing programs. The amount and types of incentives are dependent on numerous factors, including market competition level, vehicle demand, economic conditions, model age and time of year, due to industry seasonality. We plan to continue to use such incentives to price vehicles competitively and to manage demand and support inventory management profitability.

Vehicle Profitability. Our results of operations reflect the profitability of the vehicles we sell, which tends to vary based upon a number of factors, including vehicle size, content of those vehicles and brand positioning. Vehicle profitability also depends on sales prices to dealers and fleet customers, net of sales incentives, costs of materials and components, as well as transportation and warranty costs. In the ~~NAFTA~~North America segment, our larger vehicles such as our larger SUVs and pickup trucks have historically been more profitable on a per vehicle basis than other vehicles and accounted for approximately 6871 percent of our total U.S. retail vehicle shipments in ~~2018.~~2019. In recent years, consumer preferences for certain larger vehicles, such as SUVs, have increased; however, there is no guarantee this will continue.

In all mass-market vehicle segments throughout the world, vehicles equipped with additional options selected by the dealer are generally more profitable for us. As a result, our ability to offer attractive vehicle options and upgrades is critical to our ability to increase our profitability on these vehicles. In addition, in the U.S. and Europe, our vehicle sales to dealers for sale to their retail consumers are normally more profitable than our fleet sales, asin part because the retail consumers ~~typically~~are more likely to prefer additional optional features while fleet customers increasingly tend to concentrate purchases on smaller, more fuel-efficient vehicles with fewer optional features, which have historically had a lower profitability per unit.

Vehicles sold under certain brand and model names are generally more profitable when there is strong brand recognition of those vehicles. In some cases this is tied to a long history for those brands and models, and in other cases to customers identifying these vehicles as being more modern and responsive to customer needs.

Economic Conditions. Demand for new vehicles tends to reflect economic conditions in the various markets in which we operate because retail sales depend on individual purchasing decisions, which in turn are affected by many factors including levels of disposable income. ~~For example, the recent economic deterioration and hyperinflationary conditions in Argentina have significantly impacted our shipments in the LATAM segment.~~ Fleet sales and sales of light commercial vehicles are also influenced by economic conditions, which drive vehicle utilization and investment activity. Further, demand for light commercial vehicles and pickup trucks is driven, in part, by construction and infrastructure projects. Therefore, our performance is affected by the macroeconomic trends in the markets in which we operate.

Regulation. We are subject to a complex set of regulatory regimes throughout the world in which vehicle safety, emissions and fuel economy regulations have become increasingly stringent and the related enforcement regimes increasingly active. These developments may affect our vehicle sales as well as our profitability and reputation. ~~For example, the recent transition to World harmonized Light vehicles Test Procedure (“WLTP”) significantly impacted our shipments in the EMEA segment.~~ We are subject to applicable national and local regulations and must achieve an appropriate level of compliance in order to continue operations in every market, including a number of markets in which we derive substantial revenue. Developing, engineering and manufacturing vehicles that meet these requirements and therefore may be sold in those markets requires a significant expenditure of management time and financial resources.

We pursue compliance with fuel economy and greenhouse gas regulations in the markets where we operate through the most cost effective combination of developing, manufacturing and selling vehicles with better fuel economy and lower emissions, purchasing ~~compliance~~regulatory emissions credits and paying regulatory ~~penalties.~~expenses. The cost of each of these components of our strategy has increased and is expected to continue to increase in the future. As the costs of each of these components, particularly the relative costs of each component, changes, we intend to adjust our strategies to the extent feasible in an effort to ~~maintain~~pursue the most cost effective means of ~~complying with the regulations.~~meeting our regulatory compliance obligations. In addition, these costs and the costs incurred to meet other regulatory requirements may be difficult to pass through to customers, so the increased costs may affect our results of operations and profitability.

Further, developments in regulatory requirements in China, the largest single market in the world in ~~2018,~~2019, limit in some respects, the product offerings we can pursue as we expand the scope of our operations in that country. Refer to Risk Factors-Risks Related to the Legal and Regulatory Environment in which we Operate- ~~Laws,~~Current and future more stringent or incremental laws, regulations and governmental policies, including those regarding increased fuel efficiency requirements and reduced greenhouse gas and tailpipe emissions, have a significant effect on how we do ~~business.~~business and may increase our cost of compliance and negatively affect our operations and results. for more information. In addition, recent legal proceedings instituted by the U.S. federal government have challenged the jurisdiction of U.S. states, such as California, to impose their own regulations on the vehicles that we sell, resulting in uncertainty regarding the applicability of these regulations.

Tariffs and Trade Policy. There has been a recent and significant increase in activity and speculation regarding tariffs and duties between the U.S. and its trading partners, including China and the EU. Tariffs or duties implemented between the U.S. and its trading partners, and the implementation of the ~~United States-Mexico-Canada Agreement or the U.S.'s withdrawal from the North American Free Trade Agreement,~~USMCA, may reduce consumer demand and/or make our products less profitable. In addition, the availability and price at which we are able to source components and raw materials globally may be adversely affected.

~~Magneti Marelli~~. On October 22, 2018, we announced that we have entered into a definitive agreement with CK Holdings, Ltd., a holding company of Calsonic Kansei Corporation, pursuant to which CK Holdings, Ltd. will acquire our automotive components business, Magneti Marelli. The agreement represents a transaction value of €6.2 billion, subject to certain adjustments. The transaction is expected to close in the second quarter of 2019, subject to regulatory approvals and other customary closing conditions.

Consolidation. The automotive industry is exceptionally capital intensive and capital expenditures and research and development requirements in our industry have continued to grow significantly in recent years as we pursue technological innovations and respond to a number of challenges. Compliance with enhanced emissions and safety regulations continue to impose new and increasing capital requirements as does the development of proprietary components. On December 17, 2019, we signed a binding Combination Agreement with Peugeot S.A. providing for a 50/50 merger (the “FCA-PSA Merger”) to create the 4^th largest global automotive OEM by volume and 3^rd largest by revenue. While we continue to implement our business plan, and we believe that our business will continue to grow and our operating margins will continue to improve, if we are unable to reduce our capital requirements ~~either~~ through consummation of the FCA-PSA Merger, or cooperation or consolidation with other manufacturers, we may not be able to reduce component development costs, optimize manufacturing investments or product allocation and improve utilization of tooling, machinery and equipment, as a result of which our product development and manufacturing costs will continue to restrict our profitability and return on capital. Although there can be no assurance that these challenges can be overcome through large scale integration or product development and manufacturing collaboration, if we are unable to pursue such benefits our returns on capital employed may be impaired which could adversely affect our results of operations and financial condition.

FCA-PSA Merger. Completion of the FCA-PSA Merger is subject to several conditions beyond our control that may prevent, delay or otherwise adversely affect its completion. In addition, even if the FCA-PSA Merger is completed, challenges in the integration process may arise and the synergies we expect to realize may not be realized in a timely manner or at all.

Dealer and Customer Financing. ~~Because dealers and retail customers finance their purchases of~~Given that a large percentage of the vehicles we sell to dealers and retail customers worldwide are financed, the availability and cost of financing is a significant factor affecting our vehicle shipment volumes and Net revenues. Availability of customer financing could affect the vehicle mix, as customers who have access to greater financing are able to purchase higher priced vehicles, whereas when customer financing is constrained, vehicle mix could shift towards less expensive vehicles. The low interest rate environment in recent years has had the ~~positive~~ effect of reducing the effective cost of vehicle ownership. While interest rates in the U.S. and Europe have been at historically low levels, the ~~U.S. Federal Reserve has recently raised interest rates, which may impact consumer financing rates, and the~~ availability and terms of financing will likely continue to change over time, impacting our results. We currently operate in many regions (including the U.S.) without a captive finance company, and we continue to provide access to financing through joint ventures and third party arrangements in several of our key markets (including the U.S.). Therefore, we may be less able to ensure availability of financing for our dealers and retail customers in those markets than our competitors that own and operate affiliated finance companies.

Effects of Foreign Exchange Rates. ~~Foreign exchange rates, including the U.S. Dollar/Euro exchange rate, have fluctuated significantly in 2018, and may continue to do so in the future.~~ We are affected by fluctuations in foreign exchange rates (i) through translation of foreign currency financial statements into Euro for consolidation, which we refer to as the translation impact, and (ii) through transactions by entities in the Group in currencies other than their own functional currencies, which we refer to as the transaction impact. Given the size of our U.S. operations, a strengthening of the U.S. ~~dollar~~Dollar against the Euro generally would have a positive effect on our financial results, which are reported in Euro, and on our operations in relation to sales in the U.S. of vehicles and components produced in Europe. Foreign exchange rates, including the U.S. Dollar/Euro exchange rate, have fluctuated significantly in 2019, and may continue to do so in the future. We are primarily financed by a mix of Euro, U.S. dollar and Brazilian Real denominated debt. Given the mix of our debt and liquidity, strengthening of the U.S. dollar against the Euro generally would have a positive impact on our net ~~debt~~cash position.

In order to reduce the impacts of foreign exchange rates, we hedge a percentage of certain exposures. Refer to Note 30, Qualitative and quantitative information on financial riskswithin our Consolidated Financial Statements included elsewhere in this report for additional information.

Shipment Information

As discussed in GROUP OVERVIEW—Overview of Our Business, our activities are carried out through five reportable segments: four regional mass-market vehicle segments ~~(NAFTA,~~(North America, LATAM, APAC and EMEA) and the Maserati global luxury brand segment. The following table sets forth our vehicle shipment information by segment. Vehicle shipments are generally aligned with current period production which is driven by our plans to meet consumer demand. Revenue is recognized when control of our vehicles, services or parts has been transferred and the Group’s performance obligations to our customers have been satisfied. The Group has determined that our customers from the sale of vehicles and service parts are generally dealers, distributors or fleet customers. Transfer of control, and therefore revenue recognition, generally corresponds to the date when the vehicles or service parts are made available to the customer, or when the vehicles or service parts are released to the carrier responsible for transporting them to the customer. New vehicle sales through the Guaranteed Depreciation Program (“GDP”) are recognized as revenue when control of the vehicle transfers to the fleet customer, except in situations where the Group issues a put for which there is a significant economic incentive to exercise. Refer to Note 2, Basis of preparation, within our Consolidated Financial Statements included elsewhere in this report for further details on our revenue recognition policy.

For a description of our dealers and distributors see GROUP OVERVIEW—Sales Overview. Accordingly, the number of vehicles sold does not necessarily correspond to the number of vehicles shipped for which revenues are recorded in any given period.


	Years ended December 31			Years ended December 31,
(thousands of units)	2018	2017	2016	2019	2018
NAFTA	2,633	2,401	2,587
North America				2,401	2,633
LATAM	585	521	456	577	585
APAC	84	85	91	76	84
EMEA	1,318	1,365	1,306	1,199	1,318
Maserati	35	51	42	19	35
Total Consolidated shipments	4,655	4,423	4,482	4,272	4,655
Joint venture shipments	187	317	238	146	187
Total Combined shipments	4,842	4,740	4,720	4,418	4,842

For discussion of shipments for ~~NAFTA,~~North America, LATAM, APAC, EMEA and Maserati for ~~2018~~2019 as compared to ~~2017 and for 2017 as compared to 2016,~~2018, refer to —Results by Segment below.

Non-GAAP Financial Measures

We monitor our operations through the use of several non-generally accepted accounting principles (“non-GAAP”) financial measures: ~~Net cash/(debt), Net industrial cash/(debt),~~ Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”), Adjusted net profit, Adjusted diluted earnings per share (“Adjusted diluted EPS”), Industrial free cash flows and certain information provided on a constant exchange rate (“CER”) basis. We believe that these non-GAAP financial measures provide useful and relevant information regarding our operating results and enhance the overall ability to assess our financial ~~performance and financial position.~~performance. They provide us with comparable measures which facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. These and similar measures are widely used in the industry in which we operate, however, these financial measures may not be comparable to other similarly titled measures of other companies and are not intended to be substitutes for measures of financial performance ~~and financial position~~ as prepared in accordance with IFRS as issued by the IASB as well as IFRS adopted by the European Union.

Adjusted EBIT: excludes certain adjustments from Net ~~profit/(loss)~~profit from continuing operations including gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and unusual income/(expenses) that are considered rare or discrete events that are infrequent in nature, and also excludes Net financial expenses and Tax expense/(benefit).

Adjusted EBIT is used for internal reporting to assess performance and as part of the Group's forecasting, budgeting and decision making processes as it provides additional transparency to the Group's core operations. We believe this non-GAAP measure is useful because it excludes items that we do not believe are indicative of the Group’s ongoing operating performance and allows management to view operating trends, perform analytical comparisons and benchmark performance between periods and among our segments. We also believe that Adjusted EBIT is useful for analysts and investors to understand how management assesses the Group’s ongoing operating performance on a consistent basis. In addition, Adjusted EBIT is one of the metrics used in the determination of the annual performance bonus and the achievement of certain performance objectives established under the terms of the 2019-2021 equity incentive plan for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive ~~Council.~~Council (“GEC”).

Refer to the sections Group Results and Results by Segment below for further discussion and for a reconciliation of this non-GAAP measure to Net profit from continuing operations, which is the most directly comparable measure included in our Consolidated Income Statement. Adjusted EBIT should not be considered as a substitute for Net profit from continuing operations, cash flow or other methods of analyzing our results as reported under IFRS.

Adjusted ~~Net Profit:~~net profit: is calculated as Net ~~profit/(loss)~~profit from continuing operations excluding post-tax impacts of the same items excluded from Adjusted EBIT, as well as financial income/(expenses) and tax income/(expenses) considered rare or discrete events that are infrequent in nature.

We believe this non-GAAP measure is useful because it also excludes items that we do not believe are indicative of the Group’s ongoing operating performance and provides investors with a more meaningful comparison of the Group's ongoing operating performance. In addition, Adjusted net profit is one of the metrics used in the determination of the annual performance bonus and the achievement of certain performance objectives established under the terms of the 2014-2018 equity incentive plan for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive Council.

Refer to the section Group Results below for further discussion and for a reconciliation of this non-GAAP measure to Net profit from continuing operations, which is the most directly comparable measure included in our Consolidated Income Statement. Adjusted net profit should not be considered as a substitute for Net profit from continuing operations, cash flow or other methods of analyzing our results as reported under IFRS.

~~Net Cash/(Debt) and Net Industrial Cash/(Debt)~~Adjusted diluted EPS: is calculated by adjusting Diluted earnings per share from continuing operations for the impact per share of the same items excluded from Adjusted net profit.

We believe ~~Net cash/(debt)~~this non-GAAP measure is useful ~~in providing a measure~~because it also excludes items that we do not believe are indicative of the Group’s ~~net indebtedness after consideration of cash~~ongoing operating performance and ~~cash equivalents and current securities.~~

~~Due to different sources of cash flows used for the repayment~~provides investors with a more meaningful comparison of the ~~financial debt between industrial activities and financial services (by cash from operations for industrial activities and by collection~~Group's ongoing quality of financial receivables for financial services) and the different business structure and leverage implications, we provide a separate analysis of Net cash/(debt) between industrial activities and financial services.

The division between industrial activities and financial services represents a sub-consolidation based on the core business activities (industrial or financial services) of each Group company. The sub-consolidation for industrial activities also includes companies that perform centralized treasury activities, such as raising funding in the market and financing Group companies, but do not, however, provide financing to third parties. Financial services includes companies that provide retail and dealer financing as well as leasing and rental services in support of the mass-market vehicle brands in certain geographical segments and for the Maserati luxury brand. In addition, activities of financial services include providing factoring services to industrial activities, as an alternative to factoring from third parties. Operating results of such financial services activities are included within the respective region or sector in which they operate.earnings.

Net industrial cash/(debt) (i.e., Net cash/(debt) of industrial activities) was management’s primary measure for analyzing our financial leverage and capital structure until the substantial completion of our balance sheet de-leveraging this year and remains one of the key targets used to measure our performance. Net industrial cash/(debt) is computed as: debt plus derivative financial liabilities related to industrial activities less (i) cash and cash equivalents, (ii) certain current debt securities, (iii) current financial receivables from Group or jointly controlled financial services entities and (iv) derivative financial assets and collateral deposits; therefore, debt, cash and cash equivalents and other financial assets/liabilities pertaining to financial services entities are excluded from the computation of Net industrial cash/(debt). Net industrial cash/(debt) should not be considered as a substitute for cash flows or other financial measures under IFRS; in addition, Net industrial cash/(debt) depends on the amount of cash and cash equivalents at each balance sheet date, which may be affected by the timing of monetization of receivables and the payment of accounts payable, as well as changes in other components of working capital, which can vary from period to period due to, among other things, cash management initiatives and other factors, some of which may be outside of the Group’s control. Net industrial cash/(debt) should therefore be evaluated alongside these other measures as reported under IFRS for a more complete view of the Company’s capital structure and liquidity. In addition, Net industrial cash/(debt) is one of the metrics used in the determination of the annual performance bonus for the Chief Executive Officer of the Group and other eligible employees, including members of the Group Executive Council.

Refer to the section ~~Liquidity and Capital Resources~~—~~Net Cash/(Debt)~~Group Results below for ~~further information and the~~a reconciliation of ~~these~~this non-GAAP ~~measures~~measure to ~~Debt,~~Diluted earnings per share from continuing operations, which is the most directly comparable measure included in our Consolidated ~~Statement~~Financial Statements. Adjusted diluted EPS should not be considered as a substitute for Basic earnings per share, Diluted earnings per share from continuing operations or other methods of ~~Financial Position.~~analyzing our quality of earnings as reported under IFRS.

Industrial free cash flows: ~~historically, due to~~is our ~~leveraged position, we used Net industrial cash/(debt) as a~~ key metric to focus our team on the fundamental task of de-leveraging the balance sheet. As our balance sheet de-leveraging was substantially completed this year, we have substituted this key metric with a cash flow metric, ~~going forward, specifically Industrial free cash flows, which we define~~and is calculated as Cash flows from operating activities less: cash flows from operating activities from discontinued operations; cash flows from operating activities related to financial services, net of eliminations; ~~investment~~investments in property, plant and equipment and intangible assets for industrial activities; adjusted for net intercompany payments between continuing operations and discontinued operations; and adjusted for discretionary pension contributions in excess of those required by the pension plans, net of tax. The timing of Industrial free cash flows may be affected by the timing of monetization of receivables and the payment of accounts payable, as well as changes in other components of working capital, which can vary from period to period due to, among other things, cash management initiatives and other factors, some of which may be outside of the Group’s control.

Refer to Liquidity and Capital Resources—Industrial free cash flows for further information and the reconciliation of this non-GAAP measure to Cash flows from operating activities, which is the most directly comparable measure included in our Consolidated Statement of Cash Flows. Industrial free cash flows should not be considered as a substitute for Net profit from continuing operations, cash flow or other methods of analyzing our results as reported under IFRS.

Constant Currency Information: ~~The~~the discussion within section Group Results includes information about our results at ~~constant exchange rates (“CER”),~~CER, which is calculated by applying the prior year average exchange rates to translate current financial data expressed in local currency in which the relevant financial statements are denominated (see Note 2, Basis of preparation, within the Consolidated Financial Statements included elsewhere in this report for the exchange rates applied). Although we do not believe that this non-GAAP measure is a substitute for GAAP measures, we believe that results excluding the effect of currency fluctuations provide additional useful information to investors regarding the operating performance and trends in our business on a local currency basis.

Results of Operations

Group Results – ~~2018~~2019 compared to ~~2017 and 2017 compared to 2016~~2018

The following is a discussion of the Group's results of operations for the year ended December 31, ~~2018~~2019 as compared to the year ended December 31, ~~2017 and for the year ended December 31, 2017 as compared to the year ended December 31, 2016.~~2018.


	Years ended December 31,						Years ended December 31,
(€ million)	2018		2017		2016		2019		2018
Net revenues	€	110,412	€	105,730	€	105,798	€	108,187	€	110,412
Cost of revenues	95,011		89,710		90,927		93,164		95,011
Selling, general and other costs	7,318		7,177		7,388		6,455		7,318
Research and development costs	3,051		2,903		2,930		3,612		3,051
Result from investments	235		399		310		209		235
Reversal of a Brazilian indirect tax liability	—		895		—
Gains on disposal of investments	—		76		13		15		—
Restructuring costs	103		86		68		154		103
Net financial expenses	1,056		1,345		1,858		1,005		1,056
Profit before taxes	4,108		5,879		2,950		4,021		4,108
Tax expense	778		2,588		1,237		1,321		778
Net profit from continuing operations	3,330		3,291		1,713		2,700		3,330
Profit from discontinued operations, net of tax	302		219		101		3,930		302
Net profit	€	3,632	€	3,510	€	1,814	€	6,630	€	3,632

Net profit attributable to:
Owners of the parent	€	3,608	€	3,491	€	1,803	€	6,622	€	3,608
Non-controlling interests	€	24	€	19	€	11	€	8	€	24

Net profit from continuing operations attributable to:
Owners of the parent	€	3,323	€	3,281	€	1,708	€	2,694	€	3,323
Non-controlling interests	€	7	€	10	€	5	€	6	€	7

Net profit from discontinued operations attributable to:
Owners of the parent	€	285	€	210	€	95	€	3,928	€	285
Non-controlling interests	€	17	€	9	€	6	€	2	€	17

As of January 1, ~~2018~~2019 the Group adopted IFRS 1516 - ~~Revenue from Contracts with Customers~~Leases using the modified retrospective approach and ~~IFRS 9~~ ~~- Financial Instruments~~.did not restate prior year comparatives. The impact of the adoption of ~~these~~this new ~~standards was~~standard is not material and the Group does not expect a material impact from the adoption of ~~these~~this new ~~standards~~standard on an ongoing basis. Refer to Note 2, Basis of preparation,, within our Consolidated Financial Statements included elsewhere in this report, for further information.

As a result of the presentation of Magneti Marelli as a discontinued operation, the remaining Components activities are no longer considered a separate reportable segment and are included within “Other activities”. Refer to Note 3, ~~Scope of consolidation~~ ,~~within our Consolidated Financial Statements included elsewhere in this report~~, ~~for further information~~.

Net revenues


							Increase/(Decrease)												Increase/(Decrease)
	Years ended December 31,						2018 vs. 2017				2017 vs. 2016				Years ended December 31,				2019 vs. 2018
(€ million)	2018		2017		2016		% Actual		% CER		% Actual		% CER		2019		2018		% Actual		% CER
Net revenues	€	110,412	€	105,730	€	105,798	4.4	%	9.3	%	(0.1	)%	0.1	%	€	108,187	€	110,412	(2.0	)%	(5.2	)%

For a discussion of Net revenues for each of our five reportable segments ~~(NAFTA,~~(North America, LATAM, APAC, EMEA and Maserati) for ~~2018~~2019 as compared to ~~2017 and for 2017 as compared to 2016,~~2018 see Results by Segment below.

Cost of revenues


										Increase/(Decrease)														Increase/(Decrease)
	Years ended December 31,									2018 vs. 2017				2017 vs. 2016				Years ended December 31,						2019 vs. 2018
(€ million)	2018			2017			2016			% Actual		% CER		% Actual		% CER		2019			2018			% Actual		% CER
Cost of revenues	€	95,011		€	89,710		€	90,927		5.9	%	10.8	%	(1.3	)%	(0.3	)%	€	93,164		€	95,011		(1.9	)%	(5.1	)%
Cost of revenues as % of Net revenues	86.1		%	84.8		%	85.9		%									86.1		%	86.1		%

Directors' Share Ownership

The table below shows the number of FCA common shares owned by members of the Board of Directors as at February ~~22, 2019:~~25, 2020:



Directors Owning FCA Common Shares	Shares	Percent of Class
John Elkann	133,000	—	%
Michael Manley	~~345,362~~694,406	—	%
Richard K. Palmer	415,058	—	%
John Abbott	—	—	%
Andrea Agnelli	36,102	—	%
Tiberto Brandolini d’Adda	25,973	—	%
Glenn Earle	34,136	—	%
Valerie Mars	25,973	—	%
~~Ruth J. Simmons~~	~~50,881~~	—	%
Ronald L. Thompson	25,973	—	%
Michelangelo Volpi	—	—	%
Patience Wheatcroft	25,973	—	%
Ermenegildo Zegna	29,008	—	%

No members of senior management beneficially own 1% or more of the Company's common shares.

Board Practices and Committees

Board Regulations

On December 20, 2017, the Board of Directors adopted its current regulations that deal with matters that concern the Board of Directors and its committees internally.

The regulations contain provisions concerning the manner in which meetings of the Board of Directors are called and held, including the decision-making process. The regulations provide that meetings may be held by telephone conference or video-conference, provided that all participating Directors can follow the proceedings and participate in real-time discussion of the items on the agenda.

The Board of Directors can only adopt valid resolutions when the majority of the Directors in office are present at the meeting or be represented thereat.

A Director may only be represented by another Director authorized in writing.

A Director may not act as a proxy for more than one other Director.

All resolutions shall be adopted by the favorable vote of the majority of the Directors present or represented at the meeting, provided that the regulations contain specific provisions in this respect. Each Director shall have one vote.

The Board of Directors shall be authorized to adopt resolutions without convening a meeting if all Directors shall have expressed their opinions in writing, unless one or more Directors shall object in writing against the resolution being adopted in this way prior to the adoption of the resolution.

The regulations are available on the Company’s website.

Committees

On October 13, 2014, the Board of Directors appointed the following internal committees: (i) an Audit Committee; (ii) a Governance and Sustainability Committee; and (iii) a Compensation Committee, with such appointments becoming effective as of the 2014 Merger effective date.

The Audit Committee

On December 20, 2017, the Board of Directors adopted the current charter of the Audit Committee. The Audit Committee is responsible for assisting and advising the Board of Directors’ oversight of, inter alia: (i) the integrity of the Company’s financial statements, including any published interim reports; (ii) the Company’s policy on tax planning; (iii) the Company’s financing; (iv) the Company’s applications of information and communication technology; (v) the systems of internal controls that management and the Board of Directors have established; (vi) the Company’s compliance with legal and regulatory requirements; (vii) the Company’s compliance with recommendations and observations of internal and independent auditors; (viii) the Company’s policies and procedures for addressing certain actual or perceived conflicts of interest; (ix) the independent auditors’ qualifications, independence, remuneration and any non-audit services for the Company; (x) the performance of the Company’s internal auditors and of the independent auditors; (xi) risk management guidelines and policies; and (xii) the implementation and effectiveness of the Company’s ethics and compliance program.

The Audit Committee currently consists of Mr. Glenn Earle (Chairman), Mr. Thompson, Ms. Wheatcroft and Ms. Mars. The Audit Committee is elected by the Board of Directors and is comprised of at least three non-executive Directors. Audit Committee members are also required (i) not to have any material relationship with the Company or to serve as auditors or accountants for the Company; (ii) to be “independent”, for purposes of NYSE rules, Rule 10A-3 of the Exchange Act and the Dutch Corporate Governance Code; and (iii) to be “financially literate” and have “accounting or selected financial management expertise” (as determined by the Board of Directors). At least one member of the Audit Committee shall be a “financial expert” as defined by the Sarbanes-Oxley Act and the rules of the U.S. Securities and Exchange Commission and section 2(3) of the Decree on the Establishment of an audit committee. No Audit Committee member may serve on more than four audit committees for other public companies, absent a waiver from the Board of Directors which must be disclosed in the Company’s annual report. Unless decided otherwise by the Audit Committee, the independent auditors of the Company, the Chief Financial Officer and the ~~Head of Internal~~Chief Audit, Sustainability and Compliance Officer attend its meetings while the Chief Executive Officer is entitled to attend meetings of the Audit Committee unless the Audit Committee determines otherwise and shall attend the meetings of the Audit Committee if the Audit Committee so requires. The Audit Committee shall meet with the independent auditor at least once per year outside the presence of the executive directors and management.

Our board of directors has determined that Glenn Earle and Ronald Thompson are “audit committee financial experts”. Mr. Earle and Mr. Thompson are independent directors under NYSE standards.

During ~~2018, 8~~2019, 10 meetings of the Audit Committee were held. The average attendance of its members at those meetings was 100 percent. The Committee reviewed the Group financial results on a quarterly basis with the assistance of the Group Chief Financial Officer and other ~~Company’s~~Company officers mainly from finance and legal departments, focusing on main business drivers in addition to key accounting and reporting matters. Independent Auditors attended all the meetings providing regular information to the Committee on their activity with specific focus on the areas of major audit risks such as the evaluation of assets and liabilities requiring management judgment. The Committee received updates on legal and compliance matters, with the General Counsel attending the Committee meetings. Internal Audit activity was reviewed on a regular basis with the ~~Head of the Internal~~Chief Audit, Sustainability and Compliance Officer attending all the meetings and discussing with the Committee the main findings and remediating actions. Internal control over financial reporting was part of these reviews as well. In line with the policy adopted by the Group, the Committee was regularly involved in the review and approval of transactions entered into with related parties.

The Compensation Committee

On December 20, 2017, the Board of Directors adopted the current charter of the Compensation Committee. The Compensation Committee is responsible for, inter alia, assisting and advising the Board of Directors in: (i) determining executive compensation consistent with the Company’s remuneration policy; (ii) reviewing and approving the remuneration structure for the executive Directors; (iii) administering equity incentive plans and deferred compensation benefit plans; (iv) discussing with management the Company’s policies and practices related to compensation and issuing recommendations thereon; and (v) to prepare the remuneration report.

The Compensation Committee currently consists of Mr. Zegna (Chairman), Ms. Mars and Mr. Volpi. The Compensation Committee is elected by the Board of Directors and is comprised of at least three non-executive Directors, of which at most one of them may not be independent under Dutch Corporate Governance Code. Unless decided otherwise by the Compensation Committee, the ~~Head of~~Chief Human Resources Officer of the Company attends its meetings.

During ~~2018,~~2019, 3 meetings of the Compensation Committee ~~met 4 times~~were held with ~~100~~88.89 percent attendance of its members at those meetings. The Compensation Committee reviewed the implementation of the Remuneration Policy and the Remuneration ~~Report.~~Report and it also reviewed and approved the new LTIP, including its Metrics and targets. Further details of the activities of the Compensation Committee are included in the REMUNERATION REPORT section included elsewhere in this report.

The Governance and Sustainability Committee

On December 20, 2017, the Board of Directors adopted the current charter of the Governance and Sustainability Committee. The Governance and Sustainability Committee is responsible for, inter alia, assisting and advising the Board of Directors with: (i) the identification of the criteria, professional and personal qualifications for candidates to serve as Directors; (ii) periodic assessment of the size and composition of the Board of Directors; (iii) periodic assessment of the performance of individual Directors and reporting on this to the Board of Directors; (iv) proposals for appointment of executive and non-executive Directors; (v) supervision of the selection criteria and appointment procedure for senior management; (vi) monitoring and evaluating reports on the Group’s sustainable development policies and practices, management standards, strategy, performance and governance globally; and (vii) reviewing, assessing and making recommendations as to strategic guidelines for sustainability-related issues, and reviewing the annual Sustainability Report.

The Governance and Sustainability Committee currently consists of Mr. Elkann (Chairman), Ms. Wheatcroft and Ms. ~~Simmons.~~Mars. The Governance and Sustainability Committee is elected by the Board of Directors and is comprised of at least three ~~Directors.~~Directors according to its charter. More than half of its members shall be independent under the Dutch Corporate Governance Code and at most one of the members may be an executive Director.

During ~~2018,~~2019, the Governance and Sustainability Committee met once with 100 percent attendance of its members at that meeting. The Committee reviewed the Board of Director’s and Committee’s assessments, the sustainability achievements and objectives and the recommendations for Directors’ election.

Indemnification of Directors

Under Dutch law, indemnification provisions may be included in a company's articles of association. Under its Articles of Association, FCA is required to indemnify any and all of its Directors, officers, former Directors, former officers and any person who may have served at its request as a Director or officer of another company in which it owns shares or of which it is a creditor, against any and all expenses actually and necessarily incurred by any of them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been a Director or officer of the Company, or of such other company, except in relation to matters as to which any such person shall be adjudged in such action, suit or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled otherwise.

Conflict of Interest

A Director shall not participate in discussions and the decision-making of the Board of Directors with respect to a matter in relation to which he or she has a direct or indirect personal interest that is in conflict with the interests of the Company and the business associated with the Company (“Conflict of Interest”), which shall be determined outside the presence of the Director concerned. All transactions where there is a Conflict of Interest must be concluded on terms that are customary in the branch concerned and approved by the Board of Directors. In addition, the Board of Directors as a whole may, on an ad hoc basis, resolve that there is such a strong appearance of a Conflict of Interest of an individual Director in relation to a specific matter that it is deemed in the best interest of a proper decision making process that such individual Director be excused from participation in the decision making process with respect to such matter even though such Director may not have an actual Conflict of Interest.

At least annually, each Director shall assess in good faith whether (i) he or she is independent under (a) best practice provision 2.1.8. of the Dutch Corporate Governance Code, (b) the requirements of Rule 10A-3 under the Exchange Act, and (c) Section 303A of the NYSE Listed Company Manual; and (ii) he or she has a Conflict of Interest in connection with any transactions between the Company and a significant shareholder or related party of the Company, including affiliates of a significant shareholder (such conflict, a “Related-Party Conflict”), it being understood that currently Exor N.V. would be considered a significant shareholder.

The Directors shall inform the Board of Directors through the Senior Non-executive Director or the Secretary of the Board of Directors as to all material information regarding any circumstances or relationships that may impact their characterization as “independent” or impact the assessment of their interests, including by responding promptly to the annual Directors and Officers (“D&O”) questionnaires circulated by or on behalf of the Secretary that are designed to elicit relevant information regarding business and other relationships.

Based on each Director’s assessment described above, the Board of Directors shall make a determination at least annually regarding such Director’s independence and such Director’s Related-Party Conflict. These annual determinations shall be conclusive, absent a change in circumstances from those disclosed to the Board of Directors that necessitates a change in such determination.

Senior Management

The Group’s management is led by FCA’s Chief Executive Officer who is supported by a Group Executive ~~Council (“GEC”).~~Council. From an operational perspective, each of our reportable segments are led by Chief Operating Officers, ~~(“COO”),~~ who are accountable for the profit or loss of the segment and management of segment resources, including industrial and commercial activities. These are supported centrally by corporate functions, including a Chief Financial Officer and General Counsel. With the exception of the General Counsel, each of these members of senior management are members of the GEC.

The regional COOs and leaders of the key corporate functions are:

Michael Manley as Chief Executive Officer;

Richard K. Palmer as Chief Financial Officer;

Pietro Gorlier as Chief Operating Officer EMEA and Global Head of Parts & Service (MOPAR);

Antonio Filosa as Chief Operating Officer LATAM;

Mark Stewart as Chief Operating Officer ~~NAFTA;~~North America;

~~Daphne Zheng~~Davide Grasso as Chief Operating Officer ~~of China;~~

~~Paul Alcala as Chief Operating Officer APAC (excluding China);~~

~~Harald Wester as Chief Operating Officer~~ Maserati;

~~Richard K. Palmer as Chief Financial Officer;~~ and

Giorgio Fossati as Corporate General Counsel.

Summary biographies for these individuals are included below. For the biography of Mr. Manley and Mr. Palmer, see above.

Pietro Gorlier - Pietro Gorlier was named Chief Operating Officer (COO) of the EMEA region in October 2018. He has been a member of the GEC and Global Head of Parts & Service (MOPAR) since September 2011. Mr. Gorlier has held other key roles for the Group including being appointed COO of Components in June 2015 and President and Chief Executive Officer - MOPAR Brand Service, Parts and Customer Care, Chrysler Group LLC, in June 2009.

He joined the Chrysler Group from Fiat Group Automobiles S.p.A. and CNH Global N.V., where he previously served as Head of the Network and Owned Dealerships organization. Mr. Gorlier joined the Fiat Group in 1989 as a Market Analyst in Iveco and held various positions in Logistics, After Sales, and Customer Care before joining Fiat Group Automobiles in 2006 in Network Development.

He is a graduate from the University of Turin where he studied economics and business. Mr. Gorlier was born in Turin, Italy in 1962.

Antonio Filosa - Antonio Filosa was named Chief Operating Officer of the LATAM region and a member of the GEC in March 2018. Previously, Mr. Filosa served as the Head of Argentina as well as the Head of Alfa Romeo and Maserati brands for the Latin America region, positions he held since 2016 and 2018, respectively.

Prior to those roles, he was responsible for all Purchasing activities in the LATAM region. Mr. Filosa has held a series of positions with increasing responsibility within the Group including serving as plant manager of the Betim facility. He joined the Group in 1999.

Mr. Filosa holds a master’s degree in engineering from Politecnico di Milano (Italy). Mr. Filosa was born in Castellammare di Stabia, Italy in 1973.

Mark Stewart - Mark Stewart was appointed Chief Operating Officer for the ~~NAFTA~~North America region and named a member of the Group Executive Council (GEC) on December 6, 2018. Previously, Mr. Stewart was Vice President of Operations for Amazon since 2017. He was the lead executive for customer fulfillment across 200 operations facilities in North America. In this position, he was also responsible for overseeing operations, procurement, construction, and engineering with teams dedicated to pursuing automation, artificial intelligence and advanced robotics and conveyance. Prior to that, Mr. Stewart was Executive Vice President and Chief Operating Officer for ZF TRW Automotive from 2015. He also held a number of positions with increasing responsibility at TRW Automotive, Inc., from 2006. He spent the first years of his career in manufacturing with TRW Inc., and later Tower Automotive, Inc. where he served as Director of Operations and Executive Vice President. Mr. Stewart has been based in the U.S., Belgium, Germany, and China with a variety of experiences in production, quality, and engineering.

He holds a Bachelor of Engineering from Vanderbilt University and a Master of Business Administration from the University of Tennessee. Mr. Stewart was born in Madison (Alabama, USA), in 1967.

~~Daphne Zheng~~ Davide Grasso- ~~Daphne Zheng~~Davide Grasso was ~~appointed~~named Chief Operating Officer ~~China~~(COO) of Maserati and member of the GEC in January 2017. Ms. Zheng most recently served as the Managing Director of the Sales Joint Venture in China with Guangzhou Automotive Group Co., Ltd., and previously has held senior positions in Sales and Marketing with FCA in China since 2008.

Prior to that appointment, she served as Vice President at Honeywell China in 2007 and Global Vice President at Onstar in the United States in 2005. Ms. Zheng began her career in 1993 as a journalist at China Daily and later joined GM China serving as the Director of Public Relations. She holds a Master of Business Administration degree from Rutgers University and a bachelor’s degree in journalism from Shanghai International Studies University. Ms. Zheng was born in Shanghai, China in 1970.

~~Paul Alcala~~ ~~- Paul Alcala was~~ appointed Chief Operating Officer APAC (excluding China) and member of the GEC in January 2017. He most recently served as the Head of China Developments and the Vice Chairman for the Manufacturing and Sales Joint Ventures in China with Guangzhou Automotive Group Co., Ltd. Prior to this, he was Head of Aftersales for Maserati, Director of Customer Care and Call Centers for FCA US as well as Director of International Service and Parts at FCA US. Mr. Alcala also served as General Manager of Beijing Jeep Corp. and Chief Executive of Chrysler de Venezuela. He was also Director of Manufacturing and Chief Financial Officer of Chrysler de Venezuela. Mr. Alcala joined the former Chrysler Corporation in 1987 and held a series of positions of increasing responsibility in the U.S., Europe, Latin America and Asia Pacific.

~~Mr. Alcala holds a Master of Business Administration from Duke University and a Bachelor of Business from the University of Michigan. Mr. Alcala was born in Royal Oak, Michigan, USA in 1961.~~

~~Harald Wester~~ ~~- Harald Wester was appointed Chief Operating Officer Maserati in October 2018. He has also been~~ a member of the Group Executive Council (GEC) in July 2019. In October 2019 he became CEO of Maserati S.p.A. He is responsible for overall commercial and ~~Chief Technical Officer since September 2011.~~financial performance and, as COO, drives the operating success of the brand across all global markets. Previously, ~~he was Head of Alfa Romeo and Maserati (until May 2016) and Abarth (until 2013).~~ Mr. ~~Wester was appointed Chief Technical Officer for Fiat Group in September 2007. In addition to this role, in August 2008 he was appointed~~Grasso served as Chief Executive Officer for Converse, Inc., a subsidiary of ~~Maserati S.p.A.~~Nike, Inc., where he engineered the iconic brand for long-term sustainable growth. Mr. Grasso has held a series of positions with increasing responsibility within Nike including Chief Marketing Officer. He also has led teams in ~~January 2009 Chief Executive Officer of Abarth & C. S.p.A.,~~Europe, the Americas and Asia. He joined Nike in ~~January 2010 Chief Executive Officer of Alfa Romeo Automobiles.~~2001.

Mr. ~~Wester started his professional career at Volkswagen AG in Wolfsburg, where he was General Manager~~Grasso holds a master’s degree from Bocconi University - Milan Graduate School of the Vehicle Research and New Concepts department from 1991 to 1995. Later that year, he joined Audi AG in Ingolstadt where he became Program Manager for the A2 models and Special Vehicles, a position that he held until January 1999. Subsequently, he joined Ferrari S.p.A. at Maranello as Director of Product Development, where he remained until January 2002. Mr. Wester was then hired by Magna Steyr AG, Magna AG (Graz, Vienna) as Group President Engineering and Chief Technical Officer (Research, Development and Technologies). In 2004, he joined the Fiat Group where he took on the role of Chief Technical Officer of Fiat Group Automobiles.

~~He obtained a Masters in Mechanical Engineering from Technical University of Braunschweig in Braunschweig, Germany. Mr. Wester was born in Linz am Rhein, Germany in 1958.~~

~~Richard K. Palmer~~ ~~- Richard K. Palmer was appointed Chief Financial Officer~~Management and a member of the GEC in September 2011. He was also named Head of Business Development in July 2018. Previously he served as Chief Operating Officer Systems and Castings. In his current role, Mr. Palmer is responsible for all financial activities of the Group including control, treasury and tax. Mr. Palmer was Chief Financial Officer of FCA US from June 2009 until 2017. Mr. Palmer joined FCA US from the former Fiat Group Automobiles, where he held the position of Chief Financial Officer beginning in December 2006. In 2003, he joined the Group as Chief Financial Officer of Comau, and in 2005, moved to Iveco in the same role.

Prior to that appointment, he was Finance Manager for several business units at General Electric Oil and Gas. Mr. Palmer spent the first years of his career in audit with Pricewaterhouse and later with United Technologies Corporation. Mr. Palmer served as a member of the Board of Directors of R.R. Donnelley & Sons Company from 2013 to September 2016. Since October 1, 2016, Mr. Palmer has served as member of the Board of Directors of LSC Communications, Inc., which was spun off from R.R. Donnelly and Sons Company, on that date.

~~Mr. Palmer is a Chartered Accountant and member of ICAEW (UK) and holds a Bachelor of Science~~bachelor’s degree in ~~Microbiology~~business and economics from the University of ~~Warwick (UK). Mr. Palmer~~Turin. He was born in ~~Keynsham, England~~Turin, Italy in ~~1966.~~1963.

Giorgio Fossati - Giorgio Fossati was appointed Corporate General Counsel in November 2014. He is also General Counsel - EMEA. Previously Mr. Fossati was General Counsel of Fiat, a position to which he was appointed in 2011. Previously he had been General Counsel of Fiat Auto since 2002, following other positions of increasing responsibility within the Fiat Legal department. Prior to that, Mr. Fossati worked in positions of increasing responsibility in the legal department at Iveco S.p.A.

Mr. Fossati earned his master’s degree in law from the University of Turin School of Law. Mr. Fossati was born in Orbassano, Italy in 1961.

Articles of Association and Information on FCA Shares

The following is a summary of material information relating to FCA common shares, including summaries of certain provisions of the Articles of Association, the terms and conditions in respect of FCA special voting shares (the “Terms and Conditions of Special Voting Shares”) and the applicable Dutch law provisions in effect at the date of this report. The summaries of the Articles of Association and the Terms and Conditions of Special Voting Shares as set forth in this report are qualified in their entirety by reference to the full text of the Articles of Association and the Terms and Conditions of Special Voting Shares.

Share Capital

The authorized share capital of FCA is forty million Euro (€40,000,000), divided into two billion (2,000,000,000) common shares, nominal value of one Euro cent (€0.01) per share and two billion (2,000,000,000) special voting shares, nominal value of one Euro cent (€0.01) per share.

On October 29, 2014, the Board of Directors of FCA resolved to authorize the issuance of up to a maximum of 90,000,000 FCA common shares under the framework equity incentive plan which had been adopted before the closing of the 2014 Merger. Any issuance of shares thereunder in the period from 2014 to 2018 was subject to the satisfaction of certain performance and retention requirements. Any issuances to directors was subject to shareholder approval. During ~~2018~~2019 a total of ~~10,527,873~~16,901,711 FCA common shares were issued under the ~~framework~~LTIP (framework equity incentive ~~plan.~~plan).

At December 31, 2014, there were 1,250,000 FCA common shares reserved for issuance under the FCA Non-Executive Directors’ Compensation Plan in the following 5 years. During 2015, a total of 83,172 FCA common shares were issued at fair market value, being equal to the average of the highest and lowest sale price of an FCA common share during normal trading hours on the NYSE on the last trading day of the applicable plan year quarter. During 2016, a total of 163,333 FCA common shares were issued at fair market value. During 2017, a total of 54,855 common shares were issued at fair market value. No FCA common shares were issued during 2018 and 2019 following the amendment of the remuneration policy for the Board of Directors, as adopted by the General Meeting of Shareholders held on April, 14, 2017, which introduced cash payments for Non-Executive Directors.

FCA common shares are registered shares represented by an entry in the share register of FCA. The Board of Directors may determine that, for the purpose of trading and transfer of shares on a foreign stock exchange, share certificates shall be issued in such a form as shall comply with the requirements of such a foreign stock exchange. A register of shareholders is maintained by FCA in the Netherlands and a branch register is maintained in the U.S. on FCA’s behalf by the Transfer Agent, which serves as branch registrar and transfer agent.

Beneficial interests in FCA common shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in FCA’s register of shareholders in the name of Cede & Co., as DTC’s nominee. Beneficial interests in FCA common shares traded on the MTA are held through Monte Titoli S.p.A., the Italian central clearing and settlement system, as a participant in DTC.

Additional information on FCA’s equity is contained in Note 26, Equity, to the Consolidated Financial Statements included elsewhere in this report.

Directors

Set forth below is a summary of the material provisions of the Articles of Association relating to our Directors. This summary does not restate the Articles of Association in their entirety.

FCA's Directors serve on the Board of Directors for a term of approximately one year, with that term ending on the day that the first annual general meeting of shareholders is held in the following calendar year. FCA’s shareholders appoint the directors of the Board of Directors at a general meeting. Each Director may be reappointed for an unlimited number of terms. The general meeting of shareholders determines whether a Director is an executive director or a non-executive director.

FCA has a policy in respect of the remuneration of the members of the Board of Directors. With due observation of the remuneration policy, the Board of Directors may determine the remuneration for directors in respect of the performance of their duties. The Board of Directors must submit plans to award shares or the right to subscribe for shares to the general meeting of shareholders for its approval.

FCA shall not grant the Directors any personal loans or guarantees.

Additional information on the Board of Directors is contained in the Report of the Non-Executive Directors included elsewhere in this report.

No Liability to Further Capital Calls

All of the outstanding FCA common shares and special voting shares are fully paid and non-assessable.

Discriminating Provisions

There are no provisions of the Articles of Association that discriminate against a shareholder because of its ownership of a substantial number of shares.

Rights of Pre-Emption

Under Dutch law and the Articles of Association, each FCA shareholder has a right of pre-emption in proportion to the aggregate nominal value of its shareholding upon the issuance of new FCA common shares, or the granting of rights to subscribe for FCA common shares. Exceptions to this right of pre-emption include the issuance of new FCA common shares, or the granting of rights to subscribe for common shares: (i) to employees of FCA or another member of its Group pursuant to an equity incentive plan of FCA; (ii) against payment in kind (contribution other than in cash) and (iii) to persons exercising a previously granted right to subscribe for FCA common shares.

In the event of an issuance of special voting shares, shareholders shall not have any right of pre-emption.

The general meeting of shareholders may resolve to limit or exclude the rights of pre-emption upon an issuance of FCA common shares, which resolution requires approval of at least two-thirds of the votes cast, if less than half of the issued share capital is represented at the general meeting of shareholders. The Articles of Association, or the general meeting of shareholders, may also designate the Board of Directors to resolve to limit or exclude the rights of pre-emption in relation to the issuance of FCA common shares. Pursuant to Dutch law, the designation by the general meeting of shareholders may be granted to the Board of Directors for a specified period of time of not more than five years and only if the Board of Directors has also been designated or is simultaneously designated the authority to resolve to issue FCA common shares. The Board of Directors is designated in the Articles of Association as the competent body to exclude or limit rights of pre-emption for an initial period of five years, ~~from October 12, 2014~~ which may be extended by the general meeting of shareholders with additional periods up to a maximum of five years per period. The current period, extended at the 2019 general meeting of shareholders, will expire on October 11, 2020.

Repurchase of Shares

Upon agreement with the relevant FCA shareholder, FCA may acquire its own shares at any time for no consideration (om niet), or, subject to certain provisions of Dutch law and the Articles of Association, for consideration if: (i) FCA’s shareholders’ equity less the payment required to make the acquisition does not fall below the sum of called-up and paid-in share capital and any statutory reserves; (ii) FCA would thereafter not hold a pledge over FCA common shares, or together with its subsidiaries, hold FCA common shares with an aggregate nominal value exceeding 50 percent of ~~the~~ FCA’s issued share capital; and (iii) the Board of Directors has been authorized to do so by the general meeting of shareholders.

The acquisition of fully paid-up shares by FCA other than for no consideration (om niet) requires authorization by the general meeting of shareholders. Such authorization may be granted for a period not exceeding 18 months and shall specify the number of shares, the manner in which the shares may be acquired and the price range within which shares may be acquired. The authorization is not required for the acquisition of shares for employees of FCA, or another member of its Group, under a scheme applicable to such employees and no authorization is required for repurchase of shares acquired in certain other limited circumstances in which the acquisition takes place by operation of law, such as pursuant to mergers or demergers. Such shares must be officially listed on the price list of an exchange.

At a general meeting of shareholders, the shareholders may resolve to designate the Board of Directors as the competent body to resolve on FCA acquiring any fully paid up FCA common shares other than for no consideration (om niet) for a period of up to 18 months.

FCA may, jointly with its subsidiaries, hold FCA shares in its own capital exceeding one-tenth of its issued capital for no more than three years after acquisition of such FCA shares for no consideration (om niet) or in certain other limited circumstances in which the acquisition takes place by operation of law, such as pursuant to mergers or demergers. Any FCA shares held by FCA in excess of the amount permitted shall transfer to all members of the Board of Directors jointly at the end of the last day of such a three-year period. Each member of the Board of Directors shall be jointly and severally liable to compensate FCA for the value of the FCA shares at such a time, with interest payable at the statutory rate thereon. The term FCA shares as used in this paragraph shall include depositary receipts for shares and shares in respect of which FCA holds a right of pledge.

No votes may be cast at a general meeting of shareholders on the FCA shares held by FCA or its subsidiaries. In addition, no voting rights may be cast at a general meeting of shareholders in respect of FCA shares for which depositary receipts have been issued that are owned by FCA. Nonetheless, the holders of a right of usufruct or pledge in respect of shares held by FCA and its subsidiaries in FCA’s share capital are not excluded from the right to vote on such shares if the right of usufruct or pledge was granted prior to the time such shares were acquired by FCA or its subsidiaries. Neither FCA nor any of its subsidiaries may cast votes in respect of a share on which it or its subsidiaries holds a right of usufruct or pledge. No right of pledge may be established on special voting shares and the voting rights attributable to special voting shares may not be assigned to a usufructuary.

Reduction of Share Capital

Shareholders at a general meeting have the power to cancel shares acquired by FCA or to reduce the nominal value of shares. A resolution to reduce the share capital requires a majority of at least two-thirds of the votes cast at the general meeting of shareholders if less than one-half of the issued capital is present or represented at the meeting. If more than one-half of the issued share capital is present or represented at the general meeting of shareholders, a simple majority of the votes cast is required. Any proposal for a cancellation or reduction of nominal value is subject to general requirements of Dutch law with respect to reductions of share capital.

Transfer of Shares

In accordance with the provisions of Dutch law, pursuant to Article 12 of the Articles of Association, the transfer of FCA shares or the creation of a right in rem thereon requires a deed intended for that purpose and, save when the company is a party, written acknowledgment by the Company of the transfer.

The transfer of FCA common shares that have not been entered into a book-entry system will be effected in accordance with Article 12 of the Articles of Association.

Common shares that have been entered into the DTC book-entry system will be registered in the name of Cede & Co. as nominee for DTC and transfers of beneficial ownership of shares held through DTC will be effected by electronic transfer made by DTC participants. Article 12 of the Articles of Association does not apply to the trading of such FCA common shares on a regulated market or the equivalent thereof.

Transfers of shares held outside of DTC (including Monte Titoli S.p.A. as a participant in DTC) or another direct registration system maintained by Computershare US, FCA’s transfer agent in New York, or the Transfer Agent, and not represented by certificates are effected by a stock transfer instrument and require the written acknowledgment by FCA. Transfer of registered certificates is effected by presenting and surrendering the certificates to the Transfer Agent. A valid transfer requires the registered certificates to be properly endorsed for transfer as provided for in the certificates and accompanied by proper instruments of transfer and stock transfer tax stamps for, or funds to pay, any applicable stock transfer taxes.

FCA common shares are freely transferable. As described below, special voting shares are generally not transferable.

At any time, a holder of FCA common shares that are registered in the Loyalty Register (i.e. Electing Common Shares or Qualifying Common Shares) wishing to transfer such FCA common shares other than in limited specified circumstances (i.e., transfers to affiliates or to relatives through succession, donation or other transfers) must first request a de-registration of such shares from the Loyalty Register and, if held outside the Regular Trading System, transfer such common shares back into the Regular Trading System. After de-registration from the Loyalty Register, such FCA common shares no longer qualify as Electing Common Shares or Qualifying Common Shares and, as a result, the holder of such FCA common shares is required to offer and transfer the special voting shares associated with such FCA common shares that were previously Qualifying Common Shares to FCA for no consideration (om niet) as described in detail in “Loyalty Voting Structure-Terms and Conditions of the Special Voting Shares-Withdrawal of Special Voting Shares”.

Exchange Controls

Under Dutch law, there are no foreign exchange control restrictions on investments in, or payments on, FCA common shares. There are no special restrictions in the Articles of Association or Dutch law that limit the right of shareholders who are not citizens or residents of the Netherlands to hold FCA common shares or vote.

Annual Accounts and Independent Auditor

FCA’s financial year is the calendar year. Pursuant to FCA’s deed of incorporation, the first financial year of FCA ended on December 31, 2014. Within four months after the end of each financial year, the Board of Directors will prepare and publish the annual accounts, which must be accompanied by an annual report and an auditor’s report, and make those available for inspection at FCA’s registered office. All members of the Board of Directors are required to sign the annual accounts and in case the signature of any member is missing, the reason for this must be stated. The annual accounts are to be adopted by the general meeting of shareholders at the annual general meeting, at which meeting the members of the Board of Directors will be discharged from liability for performance of their duties with respect to any matter disclosed in the annual accounts for the relevant financial year insofar this appears from the annual accounts. The annual accounts, the annual report and independent auditor’s report are made available through FCA’s website to the shareholders for review as from the day of the notice convening the annual general meeting of shareholders.

Payment of Dividends

Information on the payment of dividends is contained in the section “OTHER INFORMATION” elsewhere in this report.

Amendments to the Articles of Association, including Variation of Rights

A resolution of the general meeting of shareholders to amend the Articles of Association or to wind up FCA may be approved only if proposed by the Board of Directors and approved by a vote of a majority of at least two-thirds of the votes cast if less than one-half of the issued share capital is present or represented at such a general meeting of shareholders.

The rights of shareholders may be changed only by amending the Articles of Association in compliance with Dutch law.

Dissolution and Liquidation

The general meeting of shareholders may resolve to dissolve FCA upon a proposal of the Board of Directors thereto. A majority of at least two-thirds of the votes cast shall be required if less than one-half of the issued capital is present or represented at the meeting. In the event of dissolution, FCA will be liquidated in accordance with Dutch law and the Articles of Association and the liquidation shall be arranged by the members of the Board of Directors, unless the general meeting of shareholders appoints other liquidators. During liquidation, the provisions of the Articles of Association will remain in force as long as possible.

If FCA is dissolved and liquidated, whatever remains of FCA’s equity after all its debts have been discharged shall first be applied to distribute the aggregate balance of share premium reserves and other reserves (other than the special dividend reserve), to holders of FCA common shares in proportion to the aggregate nominal value of FCA common shares held by each holder; secondly, from any balance remaining, an amount equal to the aggregate amount of the nominal value of FCA common shares will be distributed to the holders of FCA common shares in proportion to the aggregate nominal value of FCA common shares held by each of them; thirdly, from any balance remaining, an amount equal to the aggregate amount of the special voting shares dividend reserve will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; fourthly, from any balance remaining, the aggregate amount of the nominal value of the special voting shares will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; and, lastly, any balance remaining will be distributed to the holders of FCA common shares in proportion to the aggregate nominal value of FCA common shares held by each of them.

Liability of Directors

Under Dutch law, the management of a company with a one-tier board structure like FCA is a joint undertaking and each member of the Board of Directors can be held jointly and severally liable to FCA for damages in the event of improper or negligent performance of their duties. Furthermore, members of the Board of Directors can be held liable to third parties based on tort, pursuant to certain provisions of the Dutch Civil Code. All Directors are jointly and severally liable for failure of one or more co-Directors. An individual Director is only exempted from liability if he or she proves that he or she cannot be held seriously culpable for the mismanagement and that he or she has not been negligent in seeking to prevent the consequences of the mismanagement. In this regard a Director may, however, refer to the allocation of tasks between the Directors. In certain circumstances, Directors may incur additional specific civil and criminal liabilities.

Election and Removal of Directors

FCA’s Articles of Association provide that FCA’s Board of Directors shall be composed of three or more members.

Directors are appointed by a simple majority of the votes validly cast at a general meeting of shareholders. The general meeting of shareholders may at any time suspend or dismiss any Director.

Loyalty Voting Structure

The Company implemented a loyalty voting structure, pursuant to which the former shareholders of Fiat S.p.A. were able to elect to receive one special voting share with a nominal value of €0.01 per share for each common share they were entitled to receive in the 2014 Merger, provided that they fulfilled the requirements described in the terms and conditions of the special voting shares. Such shareholders had their common shares registered in a separate register (the “Loyalty Register”) of the Company’s shareholders register. Following this registration, a corresponding number of special voting shares were allocated to the above-mentioned Shareholders. By signing an election form, the execution of which was necessary to elect to receive special voting shares, shareholders also agreed to be bound by the terms and conditions thereof, including the transfer restrictions described below.

~~Following the completion of the Merger, shareholders~~Shareholders may at any time elect to participate in the loyalty voting structure by requesting that the Company registers all or some of their common shares in the Loyalty Register. If these common shares have been registered in the Loyalty Register (and thus blocked from trading in the regular trading system) for an uninterrupted period of three years in the name of the same shareholder, such shares become eligible to receive special voting shares (the “Qualifying Common Shares”) and the relevant shareholder will be entitled to receive one special voting share for each such Qualifying Common Share. If, at any time, such common shares are de-registered from the Loyalty Register for whatever reason, the relevant shareholder shall lose its entitlement to hold a corresponding number of special voting shares.

A holder of Qualifying Common Shares may at any time request the de-registration of some or all such shares from the Loyalty Register, which will allow such shareholder to freely trade its common shares. From the moment of such a request, the holder of Qualifying Common Shares shall be considered to have waived his or her rights to cast any votes associated with such Qualifying Common Shares. Upon the de-registration from the Loyalty Register, the relevant shares will therefore cease to be Qualifying Common Shares. Any de-registration request would automatically trigger a mandatory transfer requirement pursuant to which the special voting shares will be acquired by the Company for no consideration (om niet) in accordance with the terms and conditions of the special voting shares.

The Company’s common shares are freely transferable. However, any transfer or disposal of the Company’s common shares with which special voting shares are associated would trigger the de-registration of such common shares from the Loyalty Register and the transfer of all relevant special voting shares to the Company. Special voting shares are not admitted to listing and are transferable only in very limited circumstances. In particular, no shareholder shall, directly or indirectly: (a) sell, dispose of or transfer any special voting share or otherwise grant any right or interest therein; or (b) create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over any special voting share or any interest in any special voting share.

The purpose of the loyalty voting structure is to grant long-term shareholders an extra voting right by means of granting a special voting share (shareholders holding special voting shares are entitled to exercise one vote for each special voting share held and one vote for each common share held), without entitling such shareholders to any economic rights, other than those pertaining to the common shares. However, under Dutch law, the special voting shares cannot be totally excluded from economic entitlements. As a result, pursuant to the Articles of Association, holders of special voting shares are entitled to a minimum dividend, which is allocated to a separate special dividend reserve (the “Special Dividend Reserve”). A distribution from the Special Dividend Reserve or the (partial) release of the Special Dividend Reserve, will require a prior proposal from the Board of Directors and a subsequent resolution of the meeting of holders of special voting shares. The power to vote upon the distribution from the Special Dividend Reserve is the only power that is granted to that meeting, which can only be convened by the Board of Directors as it deems necessary. The special voting shares do not have any other economic entitlement.

Section 10 of the terms and conditions of the special voting shares includes liquidated damages provisions intended to discourage any attempt by holders to violate the terms thereof. These liquidated damages provisions may be enforced by the Company by means of a legal action brought by the Company in the courts of the Netherlands. In particular, a violation of the provisions of the above-mentioned terms and conditions concerning the transfer of special voting shares may lead to the imposition of liquidated damages.

Pursuant to Section 12 of the terms and conditions of the special voting shares, any amendment to the terms and conditions (other than merely technical, non-material amendments) may only be made with the approval of the shareholders at a general meeting of FCA shareholders.

Terms and Conditions of the Special Voting Shares

The terms and conditions of the special voting shares apply to the issuance, allocation, acquisition, holding, repurchase and transfer of special voting shares in the share capital of FCA and to certain aspects of Electing Common Shares, Qualifying Common Shares and FCA common shares which are, or will be, registered in the Loyalty Register.

Application for Special Voting Shares

An FCA shareholder may at any time elect to participate in the loyalty voting structure by requesting that FCA register all or some of the number of FCA common shares held by such an FCA shareholder in the Loyalty Register. Such an election shall be effective and registration in the Loyalty Register shall occur as of the end of the calendar month during which the election is made. If such FCA common shares (i.e. Electing Common Shares) have been registered in the Loyalty Register (and are thus blocked from trading in the Regular Trading System) for an uninterrupted period of three years in the name of the same shareholder, the holder of such FCA common shares will be entitled to receive one FCA special voting share for each such FCA common share that has been registered. If at any moment in time such FCA common shares are de-registered from the Loyalty Register for whatever reason, the relevant shareholder loses its entitlement to hold a corresponding number of FCA special voting shares.

Withdrawal of Special Voting Shares

As described above, a holder of Qualifying Common Shares or Electing Common Shares may request that some or all of its Qualifying Common Shares or Electing Common Shares be de-registered from the Loyalty Register and, if held outside the Regular Trading System, transfer such shares back to the Regular Trading System, which will allow such a shareholder to freely trade its FCA common shares, as described below. From the moment of such a request, the holder of Qualifying Common Shares shall be considered to have waived his rights to cast any votes associated with the FCA special voting shares which were issued and allocated in respect of such Qualifying Common Shares. Any such request would automatically trigger a mandatory transfer requirement pursuant to which the FCA special voting shares will be offered and transferred to FCA for no consideration (om niet) in accordance with the Articles of Association and the terms and conditions of the special voting shares. FCA may continue to hold the special voting shares as treasury stock, but will not be entitled to vote through any such treasury stock. Alternatively, FCA may withdraw and cancel the special voting shares, as a result of which the nominal value of such shares will be allocated to the special capital reserves of FCA. Consequently, the loyalty voting feature relating to the relevant Qualifying Common Shares being deregistered from the Loyalty Register will terminate. No shareholder required to transfer special voting shares, pursuant to the terms and conditions, shall be entitled to any consideration for such special voting shares and each shareholder expressly waives any rights in that respect as a condition to participation in the loyalty voting structure.

Change of Control

A Qualifying Shareholder or a shareholder with common shares registered in the Loyalty Register must promptly notify the Company in the event of a change of control and must make a de-registration request with respect to his or her common shares registered in the Loyalty Register. The de-registration request leads to a withdrawal of the special voting shares as described above. A change of control is defined in Article 1.1. of the Articles of Association as including any direct or indirect transfer carried out by a shareholder that is not an individual (natuurlijk persoon) through one or a series of related transactions as a result of which (i) a majority of the voting rights of such a shareholder; (ii) the de facto ability to direct the casting of a majority of the votes exercisable at general meetings of FCA shareholders of such a shareholder; and/or (iii) the ability to appoint or remove a majority of the directors, executive directors or board members or executive officers of such a shareholder or to direct the casting of a majority or more of the voting rights at meetings of the board of directors, governing body or executive committee of such a shareholder has been transferred to a new owner. No change of control shall be deemed to have occurred if (a) the transfer of ownership and/or control is an intragroup transfer under the same parent company; (b) the transfer of ownership and/or control is the result of the succession or the liquidation of assets between spouses or the inheritance, inter vivo donation or other transfer to a spouse or a relative up to and including the fourth degree; or (c) the fair market value of the Qualifying Common Shares held by such a shareholder represents less than twenty percent (20%) of the total assets of the Transferred Group at the time of the transfer and the Qualifying Common Shares held by such a shareholder, in the sole judgment of the Company, are not otherwise material to the Transferred Group or the change of control transaction.

Article 1.1 of the Articles of Association defines “Transferred Group” as comprising the relevant shareholder together with its affiliates, if any, over which control was transferred as part of the same change of control transaction, as defined in the above-mentioned Article of the Articles of Association.

General Meeting of Shareholders and Voting Rights

General Meetings

At least one general meeting of FCA shareholders shall be held every year, which shall be held within six months after the close of the financial year. The purpose of the annual general meeting of shareholders is to discuss, inter alia, the annual report, the adoption of the annual accounts, allocation of profits (including the proposal to distribute dividends), release of members of the Board of Directors from liability for their management and supervision, and other proposals brought up for discussion by the Board of Directors.

Furthermore, general meetings of FCA shareholders shall be held in the case referred to in Section 2:108a of the Dutch Civil Code as often as the Board of Directors, the Chairman or the Chief Executive Officer deem it necessary to hold them or as otherwise required by Dutch law, without prejudice to what has been provided in the next paragraph hereof.

Shareholders solely or jointly representing at least ten percent (10%) of the issued share capital may request in writing, stating the matters to be dealt with, that the Board of Directors call a general meeting of FCA shareholders.

If the Board of Directors fails to call a meeting, then such shareholders may, on their application, be authorized by the interim provisions judge of the court (voorzieningenrechter van de rechtbank) to convene a general meeting of FCA shareholders. The interim provisions judge (~~voorzieningenrechter van de rechtbank~~) shall reject the application if he or she is not satisfied that the applicants have previously requested in writing, stating the exact subjects to be discussed, that the Board of Directors convene a general meeting of FCA shareholders.

General meetings of FCA shareholders shall be held in Amsterdam or Haarlemmermeer (Schiphol Airport), the Netherlands, and shall be called by the Board of Directors, the Chairman or the Chief Executive Officer, in such manner as is required to comply with the law and the applicable stock exchange regulations, not later than on the forty-second day prior to the day of the meeting. All convocations of general meetings of FCA shareholders and all announcements, notifications and communications to shareholders shall be made by means of an announcement on the Company’s corporate website and such an announcement shall remain accessible until the relevant general meeting of FCA shareholders.

Any communication to be addressed to the general meeting of FCA shareholders by virtue of Dutch law or the Articles of Association may be either included in the notice referred to in the preceding sentence or, to the extent provided for in such notice, on the Company’s corporate website and/or in a document made available for inspection at the office of the Company and such other place(s) as the Board of Directors shall determine. Convocations of general meetings of FCA shareholders may be sent to shareholders through the use of an electronic means of communication to the address provided by such shareholders to the Company for this purpose. The notice shall state the place, date and hour of the meeting and the agenda of the meeting as well as the other data required by law. An item proposed in writing by such a number of shareholders who, under Dutch law, are entitled to make such proposal, shall be included in the notice or shall be announced in a manner similar to the announcement of the notice, provided that the Company has received the relevant request, including the reasons for putting the relevant item on the agenda, no later than the sixtieth day before the day of the meeting.

Convocation, Agenda, Minutes and Attendance

The agenda of the annual general meeting of FCA shareholders shall contain, inter alia, the following ~~items:~~items in addition to any other item required by law:


a)	adoption of the annual accounts;


b)	the implementation of the remuneration policy;


c)	the policy of the Company on additions to reserves and on dividends, if any;


d)	granting of discharge to the Directors in respect of the performance of their duties in the relevant financial year;


e)	the appointment of Directors;


f)	if applicable, the proposal to pay a dividend;


g)	if applicable, discussion of any substantial change in the corporate governance structure of the Company; and


h)	any matters decided upon by the person(s) convening the meeting and any matters placed on the agenda with due observance of applicable Dutch law.

The Board of Directors shall provide the general meeting of FCA shareholders with all requested information, unless this would be contrary to an overriding interest of the Company. If the Board of Directors invokes an overriding interest, it must give reasons.

When convening a general meeting of FCA shareholders, the Board of Directors shall determine that, for the purpose of Article 19 and Article 20 of the Articles of Association, persons with the right to vote or attend meetings shall be considered those persons who have these rights at the twenty-eighth day prior to the day of the meeting (the “Record Date”) and are registered as such in a register to be designated by the Board of Directors for such purpose, irrespective of whether they will have these rights at the date of the meeting. In addition to the Record Date, the notice of the meeting shall further state the manner in which shareholders and other parties with meeting rights may have themselves registered and the manner in which those rights can be exercised.

The general meeting of FCA shareholders shall be presided over by the Chairman or, in his absence, by the person chosen by the Board of Directors to act as chairman for such a meeting. One of the persons present designated for that purpose by the chairman of the meeting shall act as secretary and take minutes of the business transacted.

The minutes shall be confirmed by the chairman and secretary of the meeting and signed by them in witness thereof. The minutes of the general meeting of FCA shareholders shall be made available, on request, to shareholders no later than three months after the end of the meeting, after which shareholders shall have the opportunity to react to the minutes in the following three months. The minutes shall then be adopted in the manner as described in the preceding paragraph. If an official notarial record is made of the business transacted at the meeting then minutes need not be drawn up and it shall suffice that the official notarial record be signed by the notary.

As a prerequisite to attending the meeting and, to the extent applicable, exercising voting rights, the shareholders entitled to attend the meeting shall be obliged to inform the Board of Directors in writing within the time frame mentioned in the convening notice. At the latest, this notice must be received by the Board of Directors on the day mentioned in the convening notice. Shareholders and those permitted by Dutch law to attend the general meetings of FCA shareholders may cause themselves to be represented at any meeting by a proxy duly authorized in writing, provided they notify the Company in writing of their wish to be represented at such time and place as shall be stated in the notice of the meetings. For the avoidance of doubt, such attorney is also authorized in writing if the proxy is documented electronically. The Board of Directors may determine further rules concerning the deposit of the powers of attorney; these shall be mentioned in the notice of the meeting. The chairman of the meeting shall decide on the admittance to the meeting of persons other than those who are entitled to attend.

For each general meeting of FCA shareholders, the Board of Directors may decide that shareholders shall be entitled to attend, address and exercise voting rights at such a meeting through the use of electronic means of communication, provided that shareholders who participate in the meeting are capable of being identified through the electronic means of communication and have direct cognizance of the discussions at the meeting and the exercising of voting rights (if applicable). The Board of Directors may set requirements for the use of electronic means of communication and state these in the convening notice. Furthermore, the Board of Directors may, for each general meeting of FCA shareholders, decide that votes cast by the use of electronic means of communication prior to the meeting and received by the Board of Directors shall be considered to be votes cast at the meeting. Such votes may not be cast prior to the Record Date. Whether the provision of the foregoing sentence applies and the procedure for exercising the rights referred to in that sentence shall be stated in the notice.

Prior to being allowed admittance to a meeting, a shareholder and each person entitled to attend the meeting, or its attorney, shall sign an attendance list, while stating his or her name and, to the extent applicable, the number of votes to which he or she is entitled. Each shareholder and other person attending a meeting by the use of electronic means of communication and identified in accordance with the above shall be registered on the attendance list by the Board of Directors. In the event that it concerns an attorney of a shareholder or another person entitled to attend the meeting, the name(s) of the person(s) on whose behalf the attorney is acting, shall also be stated. The chairman of the meeting may decide that the attendance list must also be signed by other persons present at the meeting.

The chairman of the meeting may determine the time during which shareholders and others entitled to attend the general meeting of FCA shareholders may speak, if he considers this desirable, with a view to the orderly conduct of the meeting as well as other procedures that the chairman considers desirable for the efficient and orderly conduct of the business of the meeting.

FCA is exempt from the proxy rules under the U.S. Securities Exchange Act of 1934, as amended. The chairman of the meeting shall decide on the admittance to the meeting of persons other than those who are entitled to attend.

Voting Rights at General Meetings

Every share (whether common or special voting) shall confer the right to cast one vote at a general meeting of shareholders. Shares in respect of which Dutch law determines that no votes may be cast shall be disregarded for the purposes of determining the proportion of shareholders voting, present or represented or the proportion of the share capital present or represented. All resolutions shall be passed with an absolute majority of the votes validly cast unless otherwise specified in the Articles of Association. Blank votes shall not be counted as votes cast.

All votes shall be cast in writing or electronically. The chairman of the meeting may, however, determine that voting by raising hands or in another manner shall be permitted. Voting by acclamation shall be permitted if none of the shareholders present or represented objects. No voting rights shall be exercised in the general meeting of FCA shareholders for shares owned by the Company or by a subsidiary of the Company. However, pledgees and usufructuaries of shares owned by the Company and its subsidiaries shall not be excluded from exercising their voting rights if the right of pledge or usufruct was created before the shares were owned by the Company or a subsidiary. Neither the Company nor any of its subsidiaries may exercise voting rights for shares in respect of which it holds a right of pledge or usufruct.

Without prejudice to the Articles of Association, the Company shall determine for each resolution passed:


a)	the number of shares on which valid votes have been cast;


b)	the percentage that the number of shares as referred to under (a) represents in the issued share capital;


c)	the aggregate number of votes validly cast; and


d)	the aggregate number of votes cast in favor of and against a resolution, as well as the number of abstentions.

Shareholders’ Votes on Certain Transactions

Any important change in the identity or character of FCA must be approved by the general meeting of shareholders, including (i) the transfer to a third party of the business of FCA or practically the entire business of FCA; (ii) the entry into or breaking off of any long-term cooperation of FCA or a subsidiary with another legal entity or company or as a fully liable partner of a general partnership or limited partnership, where such entry into or breaking off is of far-reaching importance to FCA; and (iii) the acquisition or disposal by FCA or a subsidiary of an interest in the capital of a company with a value of at least one-third of FCA’s assets according to the Consolidated Statement of Financial Position with explanatory notes included in the last adopted annual accounts of FCA.

Issuance of shares

The general meeting of FCA shareholders, or alternatively the Board of Directors if it has been designated to do so at the general meeting of FCA shareholders, shall have authority to resolve on any issuance of shares and rights to subscribe for shares. The general meeting of FCA shareholders shall, for as long as any such designation of the Board of Directors for this purpose is in force, no longer have authority to decide on the issuance of shares and rights to subscribe for shares.

For a period of five years from October 12, 2014, the Board of Directors has been irrevocably authorized to issue shares and rights to subscribe for shares up to the maximum aggregate amount of shares as provided for in the Company’s authorized share capital as set out in Article 4.1 of the Articles of Association, as amended from time to time. The current period, extended at the 2019 general meeting of shareholders, will expire on October 11, 2020.

The general meeting of FCA shareholders, or the Board of Directors if so designated in accordance with the Articles of Association, shall decide on the price and the further terms and conditions of issuance, with due observance of what has been provided in relation thereto in Dutch law and the Articles of Association.

If the Board of Directors is designated to have authority to decide on the issuance of shares or rights to subscribe for shares, such a designation shall specify the class of shares and the maximum number of shares or rights to subscribe for shares that can be issued under such a designation. When making such designation the duration thereof, which shall not be for more than five years, shall be resolved upon at the same time. The designation may be extended from time to time for periods not exceeding five years. The designation may not be withdrawn unless otherwise provided in the resolution in which the designation is made.

Payment for shares shall be made in cash unless another form of consideration has been agreed. Payment in a currency other than euro may only be made with the consent of the Company.

The Board of Directors has also been designated as the authorized body to limit or exclude the rights of pre-emption of shareholders in connection with the authority of the Board of Directors to issue common shares and grant rights to subscribe for common shares as referred to above. Refer to the Rights of Pre-Emption section elsewhere in this report.

In the event of an issuance of common shares every holder of common shares shall have a right of pre-emption with regard to the common shares or rights to subscribe for common shares to be issued in proportion to the aggregate nominal value of his common shares, provided however that no such right of pre-emption shall exist in respect of shares or rights to subscribe for common shares to be issued to employees of the Company or of a group company pursuant to any option plan of the Company.

A shareholder shall have no right of pre-emption for shares that are issued against a non-cash contribution.

In the event of an issuance of special voting shares to qualifying shareholders, shareholders shall not have any right of pre-emption.

The general meeting of FCA shareholders or the Board of Directors, as the case may be, shall decide when passing the resolution to issue shares or rights to subscribe for shares in which manner the shares shall be issued and, to the extent that rights of pre-emption apply, within what period those rights may be exercised.

Disclosure of Holdings under Dutch Law

As a result of the listing of the FCA common shares on the MTA, chapter 5.3 of the Dutch Financial Supervision Act (“AFS”) applies, pursuant to which any person who, directly or indirectly, acquires or disposes of an actual or potential capital interest and/or actual or potential voting rights in FCA must promptly give written notice to the AFM of such acquisition or disposal by means of a standard form if, as a result of such acquisition or disposal, the percentage of capital interest and/or voting rights held by such person reaches, exceeds or falls below the following thresholds: 3 percent, 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, 30 percent, 40 percent, 50 percent, 60 percent, 75 percent and 95 percent.

For the purpose of calculating the percentage of capital interest or voting rights, the following interests must, inter alia, be taken into account: (i) shares and/or voting rights directly held (or acquired or disposed of) by any person; (ii) shares and/or voting rights held (or, acquired or disposed of) by such person’s controlled entities or by a third party for such person’s account; (iii) voting rights held (or acquired or disposed of) by a third party with whom such person has concluded an oral or written voting agreement; (iv) voting rights acquired pursuant to an agreement providing for a temporary transfer of voting rights in consideration for a payment; and (v) shares which such person, or any controlled entity or third party referred to above, may acquire pursuant to any option or other right to acquire shares.

As a consequence of the above, special voting shares must be added to FCA common shares for the purposes of the above thresholds.

Controlled entities (within the meaning of the AFS) do not themselves have notification obligations under the AFS as their direct and indirect interests are attributed to their (ultimate) parent. If a person who has a three percent or larger interest in FCA’s share capital or voting rights ceases to be a controlled entity it must immediately notify the AFM and all notification obligations under the AFS will become applicable to such former controlled entity.

Special rules apply to the attribution of shares and/or voting rights which are part of the property of a partnership or other form of joint ownership. A holder of a pledge or right of usufruct in respect of shares can also be subject to notification obligations if such person has, or can acquire, the right to vote on the shares. The acquisition of (conditional) voting rights by a pledgee or beneficial owner may also trigger notification obligations as if the pledgee or beneficial owner were the legal holder of the shares and/or voting rights.

Furthermore, when calculating the percentage of capital interest, a person is also considered to be in possession of shares if (i) such person holds a financial instrument the value of which is (in part) determined by the value of the shares or any distributions associated therewith and which does not entitle such person to acquire any shares; (ii) such person may be obliged to purchase shares on the basis of an option; or (iii) such person has concluded another contract whereby such person acquires an economic interest comparable to that of holding a share.

If a person’s capital interest and/or voting rights reaches, exceeds or falls below the above-mentioned thresholds as a result of a change in FCA’s issued and outstanding share capital or voting rights, such person is required to make a notification not later than on the fourth trading day after the AFM has published FCA’s notification as described below.

Following the implementation of Directive 2013/50/EU into the AFS, every holder of three percent or more of the issued and outstanding share capital or voting rights whose interest has changed compared to his most recent notification and which holder knows, or should know, that pursuant to this change his interest reaches or crosses a threshold as a result of certain acts (as described above and including the exchange of a financial instrument or a contract pursuant to which the holder is deemed to have issued and outstanding shares or voting rights at his disposal), must notify the AFM of this change.

FCA is required to notify the AFM promptly of any change of one percent or more in its issued and outstanding share capital or voting rights since a previous notification. Other changes in FCA’s issued and outstanding share capital or voting rights must be notified to the AFM within eight days after the end of the quarter in which the change occurred.

In addition to the above described notification obligations pertaining to capital interest or voting rights, pursuant to Regulation (EU) No 236/2012, as amended, notification must be made of any net short position of 0.2 percent in the issued share capital of FCA, and of every subsequent 0.1 percent above this threshold. Notifications starting at 0.5 percent and every subsequent 0.1 percent above this threshold will be made public via the short selling register of the AFM. Furthermore, gross short positions shall be notified in the event that a threshold is reached, exceeded or fallen below. With regard to gross short positions, the same disclosure thresholds as for holders of capital interests and/or voting rights apply.

Furthermore, each member of the Board of Directors must notify the AFM:

within two weeks after his/her appointment of the number of shares he/she holds and the number of votes he/she is entitled to cast in respect of FCA’s issued and outstanding share capital; and

subsequently of each change in the number of shares he/she holds and of each change in the number of votes he/she is entitled to cast in respect of FCA’s issued and outstanding share capital, immediately after the relevant change.

The AFM keeps a public register of all notifications made pursuant to these disclosure obligations and publishes any notification received which can be accessed via www.afm.nl. The notifications referred to in this paragraph should be made in writing by means of a standard form or electronically through the notification system of the AFM.

Non-compliance with these disclosure obligations is an economic offense and may lead to criminal prosecution. The AFM may impose administrative penalties for non-compliance and the publication thereof. In addition, a civil court can impose measures against any person who fails to notify or incorrectly notifies the AFM of matters required to be notified. A claim requiring that such measures be imposed may be instituted by FCA and/or by one or more shareholders who alone or together with others represent at least three percent of the issued and outstanding share capital of FCA or are able to exercise at least three percent of the voting rights. The measures that the civil court may impose include:

an order requiring appropriate disclosure;

suspension of the right to exercise the voting rights for a period of up to three years as determined by the court;

voiding a resolution adopted by the general meeting of shareholders, if the court determines that the resolution would not have been adopted but for the exercise of the voting rights of the person with a duty to disclose, or suspension of a resolution adopted by the general meeting of shareholders until the court makes a decision about such voiding; and

an order to refrain, during a period of up to five years as determined by the court, from acquiring shares and/or voting rights in FCA.

Shareholders are advised to consult with their own legal advisers to determine whether the disclosure obligations apply to them.

Mandatory Bid Requirement

Under Dutch law, any person who, acting alone or in concert with others, directly or indirectly acquires 30 percent or more of FCA’s voting rights will be obliged to launch a public offer for all outstanding shares in FCA’s share capital. An exception is made for shareholders who, whether alone or acting in concert with others, had an interest of at least 30 percent of FCA’s voting rights before the shares were first listed on the MTA and who still maintained such an interest after such first listing. Immediately after the first listing of FCA common shares on the MTA, Exor N.V. held more than 30 percent of FCA’s voting rights. Therefore, Exor N.V.’s interest in FCA was grandfathered and the exception that applies to it will continue to apply to it for as long as its holding of shares represents over 30 percent of FCA’s voting rights.

Dutch Financial Reporting Supervision Act

On the basis of the Dutch Financial Reporting Supervision Act (Wet toezicht financiële verslaggeving, or the “FRSA”), the AFM supervises the application of financial reporting standards by, amongst others, companies whose corporate seat is in the Netherlands and whose securities are listed on a regulated Dutch or foreign stock exchange.

Pursuant to the FRSA, the AFM has an independent right to (i) request an explanation from FCA regarding its application of the applicable financial reporting standards and (ii) recommend to us the making available of further explanations. If we do not comply with such a request or recommendation, the AFM may request that the Enterprise Chamber order us to (i) make available further explanations as recommended by the AFM; (ii) provide an explanation of the way we have applied the applicable financial reporting standards to our financial reports; or (iii) prepare our financial reports in accordance with the Enterprise Chamber’s instructions.

Compulsory Acquisition

Pursuant to article 2:92a of the Dutch Civil Code, a shareholder who, for its own account, holds at least 95 percent of the issued share capital of FCA may institute proceedings against the other shareholders jointly for the transfer of their shares to it. The proceedings are held before the Dutch Enterprise Chamber and can be instituted by means of a writ of summons served upon each of the minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure. The Enterprise Chamber may grant the claim for the squeeze-out in relation to all minority shareholders and will determine the price to be paid for the shares, if necessary after appointment of one to three expert(s) who will offer an opinion to the Enterprise Chamber on the value to be paid for the shares of the minority shareholders. Once the order to transfer becomes final before the Enterprise Chamber, the person acquiring the shares must give written notice of the date and place of payment and the price to the holders of the shares to be acquired whose addresses are known to it. Unless the addresses of all of them are known to it, it must also publish the same in a Dutch daily newspaper with a national circulation. A shareholder can only appeal against the judgment of the Enterprise Chamber before the Dutch Supreme Court.

In addition, pursuant to article 2:359c of the Dutch Civil Code, following a public offer, a holder of at least 95 percent of the issued share capital and of voting rights of FCA has the right to require the minority shareholders to sell their shares to it. Any such request must be filed with the Enterprise Chamber within three months after the end of the acceptance period of the public offer. Conversely, pursuant to article 2:359d of the Dutch Civil Code each minority shareholder has the right to require the holder of at least 95 percent of the issued share capital and the voting rights of FCA to purchase its shares in such a case. The minority shareholder must file such a claim with the Enterprise Chamber within three months after the end of the acceptance period of the public offer.

Disclosure of Trades in Listed Securities

Pursuant to the AFS and the Market Abuse Regulation (EU) No 596/2014, each of the members of the Board of Directors and any other person discharging managerial responsibilities within FCA and who in that capacity is authorized to make decisions affecting the future developments and business prospects of FCA and has regular access to inside information relating, directly or indirectly, to FCA (each, an “Insider”) must notify the AFM of all transactions, conducted or carried out for his/her own account, relating to FCA common shares, special voting shares or financial instruments, the value of which is (in part) determined by the value of FCA common shares or special voting shares.

In addition, persons who are closely associated with members of the Board of Directors or any of the other Insiders must notify the AFM of all transactions conducted for their own account relating to FCA’s shares or financial instruments, the value of which is (in part) determined by the value of FCA’s shares. The Market Abuse Regulation designates the following categories of persons: (i) the spouse or any partner considered by applicable law as equivalent to the spouse; (ii) dependent children; (iii) other relatives who have shared the same household for at least one year at the relevant transaction date; and (iv) any legal person, trust or partnership, among other things, whose managerial responsibilities are discharged by a member of the Board of Directors or any other Insider or by a person referred to under (i), (ii) or (iii) above.

The AFM must be notified forthwith of transactions, effected in either FCA’s shares or financial instruments, the value of which is (in part) determined by the value of FCA’s shares following the transaction date by means of a standard form. Notifications under the Market Abuse Regulation may however be postponed until the date that the value of the transactions carried out on a person’s own account, together with the transactions carried out by the persons associated with that person, reaches or exceeds the amount of €5,000 in the calendar year in question. The AFM keeps a public register of all notifications made pursuant to the AFS and the Market Abuse Regulation.

Non-compliance with these reporting obligations could lead to criminal penalties, administrative fines and cease-and-desist orders (and the publication thereof), imprisonment or other sanctions.

Shareholder Disclosure and Reporting Obligations under U.S. Law

Holders of FCA shares are subject to certain U.S. reporting requirements under the Exchange Act for shareholders owning more than 5 percent of any class of equity securities registered pursuant to Section 12 of the Exchange Act. Among the reporting requirements are disclosure obligations intended to keep investors aware of significant accumulations of shares that may lead to a change of control of an issuer.

If FCA were to fail to qualify as a foreign private issuer in the future, Section 16(a) of the Exchange Act would require FCA’s directors and executive officers, and persons who own more than ten percent of a registered class of FCA’s equity securities, to file reports of ownership of, and transactions in, FCA’s equity securities with the SEC. Such directors, executive officers and ten percent stockholders would also be required to furnish FCA with copies of all Section 16 reports they file.

Disclosure Requirements under Italian law and European Union law

Further disclosure requirements shall apply to FCA under Italian law by virtue of the listing of FCA’s shares on the MTA. Summarized below are the most significant requirements to be complied with by FCA in connection with the admission to listing of FCA common shares on the MTA. The breach of the obligations described below may result in the application of fines and criminal penalties (including, for instance, those provided for insider trading and market manipulation).

In particular, the following main disclosure obligations shall apply to FCA:

the Legislative Decree no. 58/1998, or the Italian Financial Act effective as of the date of this report: article 92 (equal treatment principle), article 114-bis (to the extent applicable to Dutch companies, information concerning the allocation of financial instruments to corporate officers, employees and collaborators), article 115 (information to be disclosed to CONSOB) and article 180 and the following (relating to insider trading and market manipulation);

the applicable law concerning market abuse and, in particular, Regulation ~~(UE)~~(EU) 596/2014 (the “MAR Regulation”) and its implementing measures: article 7 (Inside information), article 17 (Public disclosure of inside information) and article 18 (Insider lists) as well as the implementing regulations.

In addition to the above, the applicable provisions set forth under the market rules (including those relating to the timing for the payment of dividends) shall apply to FCA.

It remains understood that the foregoing is based on the current legal framework and, therefore, it may vary following any potential regulatory intervention by the concerned Member States and competent authorities.

Disclosure of Inside Information - Article 17 of the MAR Regulation

Pursuant to the MAR Regulation, FCA shall disclose to the public, without delay, any inside information which: (i) is of a precise nature; (ii) has not been made public; (iii) relates directly to FCA or FCA’s common shares; and (iv) if it were made public, would be likely to have a significant effect on the prices of FCA’s common shares or on the price of related derivative financial instruments (the “Inside Information”). In this regard,

“information shall be deemed to be of a precise nature” if: (a) it indicates a set of circumstances which exists or which may reasonably be expected to come into existence, or an event which has occurred, or which may reasonably be expected to occur and (b) it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of the financial instruments (i.e., FCA’s common shares) or the related derivative financial instrument. In this respect in the case of a protracted process that is intended to bring about, or that results in, particular circumstances or a particular event, those future circumstances or that future event, and also the intermediate steps of that process which are connected with bringing about or resulting in those future circumstances or that future event, may be deemed to be precise information.

“information which, if it were made public, would be likely to have a significant effect on the prices of financial instruments, derivative financial instruments” shall mean information a reasonable investor would be likely to use as part of the basis of his or her investment decisions.

An intermediate step in a protracted process shall be deemed to be Inside Information if, by itself, it satisfies the criteria of Inside Information as referred to above.

The above disclosure requirement shall be complied with through the publication of a press release by FCA, in accordance with the modalities set forth under the MAR Regulation and Dutch and Italian law, disclosing to the public the relevant Inside Information.

Under specific circumstances, CONSOB may at any time request: (a) FCA to disclose to the public specific information or documentation where deemed appropriate or necessary or alternatively (b) to be provided with specific information or documentation. For this purpose, CONSOB has wide powers to, among other things, carry out inspections or request information to the members of the managing board, the members of the supervisory board or to the external auditor.

FCA shall publish and transmit to CONSOB any information disseminated in any non EU-countries where FCA’s common shares are listed (i.e., the U.S.), if this information is significant for the purposes of the evaluation of FCA’s common shares listed on the MTA.

FCA may, on its own responsibility, delay disclosure to the public of Inside Information provided that all of the following conditions are met: (a) immediate disclosure is likely to prejudice the legitimate interests of FCA; (b) delay of disclosure is not likely to mislead the public; (c) FCA is able to ensure the confidentiality of that information.

In the case of a protracted process that occurs in stages and that is intended to bring about, or that results in, a particular circumstance or a particular event, FCA may on its own responsibility delay the public disclosure of Inside Information relating to this process, subject to points (a), (b) and (c) above.

Insiders’ Register - Article 18 of the MAR Regulation

FCA, as well as persons acting on its behalf or on its account, shall draw up and keep regularly updated, a list of all persons who have access to Inside Information and who are working for them under a contract of employment, or otherwise performing tasks through which they have access to Inside Information, such as advisers, accountants or credit rating agencies (the “insider list”).

FCA or any person acting on its behalf or on its account, shall take all reasonable steps to ensure that any person on the insider list acknowledges in writing the legal and regulatory duties entailed and is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information.

Public Tender Offers

Certain rules provided for under Italian law with respect to both voluntary and mandatory public tender offers shall apply to any offer launched for FCA’s common shares. In particular, among other things, the provisions concerning the tender offer price, the content of the offer document and the disclosure of the tender offer will be subject to the supervision by CONSOB and Italian law.

FCA Policies

Code of Conduct

The Company and all its subsidiaries refer to the principles contained in the FCA code of conduct (the “Code of Conduct”) approved by the Board of Directors on April 29, 2015 and updated in January 2017.

The Code applies to all board members and officers of FCA and its subsidiaries, as well as full-time and part-time employees of FCA and any of its subsidiaries. The Code of Conduct also applies to all temporary, contract and all other individuals and companies that act on behalf of FCA, wherever they are located in the world.

The Code of Conduct represents a set of values recognized, adhered to and promoted by the Group which understands that conduct based on the principles of diligence, integrity and fairness is an important driver of social and economic development.

The Code of Conduct is a pillar of the integrity system which regulates the decision-making processes and operating approach of the Group and its employees in the interests of stakeholders. The Code of Conduct amplifies aspects of conduct related to the economic, social and environmental dimensions, underscoring the importance of dialog with stakeholders. Explicit reference is made to the UN’s Universal Declaration on Human Rights, the principal Conventions of the International Labor Organisation (“ILO”), the OECD Guidelines for Multinational Enterprises, the U.S. Foreign Corrupt Practices Act (“FCPA”) and United Kingdom Bribery Act (“UKBA”). The Code of Conduct is supplemented by Practices aimed to provide specific guidance to all workforce members on how to effectively apply the Principles under the Code of Conduct in relation to various topics such as: the Environment, Health and Safety, Anti-corruption, Suppliers, Respect of Human Rights, Conflicts of Interest, Data Privacy, Information Assets Protection, Antitrust and Export controls. Moreover FCA has ~~recently~~ published on the FCA Website an updated version of the Company Sustainability Guidelines to cover specific business matters detailing FCA's accountability and commitment to a culture of responsibility and integrity.

FCA endeavors to ensure that the Code of Conduct is regarded as a best practice of business conduct and observed by those third parties with whom it maintains business relationships of a lasting nature such as suppliers, dealers, advisors and agents. In fact, Group contracts worldwide include specific clauses relating to recognition and adherence to the principles underlying the Code of Conduct, as well as compliance with local regulations, particularly those related to corruption, money-laundering, terrorism and other crimes constituting liability for legal persons.

The Company closely monitors the effectiveness of and compliance with the Code of Conduct. Violations of the Code of Conduct are essentially determined through, among others: periodic activities carried out by Internal Audit of the Group according to the annual Audit Plan, approved by the FCA Audit Committee and the CEO, that is based on a group risk assessment process; allegations received in accordance with the “Ethics Helpline ~~process”~~process and procedure”; and checks forming part of the standard operating procedures. Internal Audit investigates violations of the Code of Conduct also through specific Business Ethics Audits (“BEA”). On a regular basis the Chief Audit, Sustainability and Compliance Officer (the Chief Audit Executive, ~~(CAE)~~or CAE) informs the Chief Executive Officer and the Audit Committee on the major findings. For all Code of Conduct violations, the disciplinary measures taken are commensurate with the seriousness of the case and comply with local legislation.

The Code of Conduct, including further information on its effectiveness and compliance, is available on the Governance section of the Group’s website at https://www.fcagroup.com/en-US/group/governance/code_of_conduct/.

Insider Trading Policy

On October 10, 2014, Fiat Investments’ board of directors adopted an insider trading policy, setting forth guidelines and recommendations to all Directors, officers and employees of the Group with respect to transactions in the Company’s securities. This policy, which also applies to immediate family members and members of the households of persons covered by the policy, is designed to prevent insider trading or allegations of insider trading, and to protect the Company’s integrity and ethical conduct. This policy was amended by the Board of Directors of FCA on July 28, 2016 following the new applicable law concerning market abuse and, in particular, the MAR Regulation and its implementing ~~regulations.~~regulations; the Policy was further revised by the Board of Directors on October 2, 2019, effective as of November 4, 2019, to improve its effectiveness and scope.

Sustainability Practices

The Group is committed to operating in an environmentally and socially-responsible manner. For a full description of sustainability governance, guidelines, targets and results, refer to the section NON-FINANCIAL INFORMATIONelsewhere in this report.

Diversity Policy

On December 20, 2017, the Board of Directors adopted a diversity policy for the Board of Directors (the “Diversity Policy”), as the Company believes that diversity in the composition of the Board of Directors in terms of age, gender, expertise, work and personal background and nationality is an important means of promoting debate, balanced decision-making and independent actions of the Board of Directors. For further information, refer to the section Composition of the Board of Directors included elsewhere in this report.

The Company applies the following aspects of diversity to the Board of Directors: age, gender, expertise, work and personal background and nationality. The Company considers each of these aspects key drivers to support the above-mentioned goals and to achieve sufficient diversity of views and the expertise needed for a proper understanding of current affairs and longer-term risks and opportunities related to the Company's business. The Board of Directors and its Governance and Sustainability Committee consider such factors when evaluating nominees for election to the Board of Directors and during the annual performance assessment process.

Concrete targets that the Company aims to achieve, with an overriding emphasis based on merit, within the next several years, are that (a) at least 30% of the seats of the Board of Directors are occupied by women and at least 30% by men; (b) the nationality of the members of the Board of Directors shall be reasonably consistent with the geographic spread of FCA’s business in such manner that no nationality shall count for more than 60% of the members of the Board of Directors; and (c) the age of the members of the Board of Directors should be more diverse by having one or more members of the Board of Directors aged under 50 at the day of their nomination; provided that in the selection of a candidate on the basis of the defined diversity criteria, rules and generally accepted principles of non-discrimination (on grounds such as ethnic origin, race, disability or sexual orientation) will be taken into account.

To ensure its correct implementation, the Diversity Policy has been considered in the adoption of a profile for non-executive Directors and will be taken into account in the nomination of executive Directors, as well as in nominating and recommending non-executive Directors. In the ~~2018~~2019 financial year, the targets relating to nationality and age have been realized.

Compliance with Dutch Corporate Governance Code

The Dutch Corporate Governance Code contains principles and best practice provisions that regulate relations between the board and the shareholders (including the general meeting of shareholders). The Dutch Corporate Governance Code is divided into five chapters which address the following topics: (i) long-term value creation; (ii) effective management and supervision; (iii) remuneration; (iv) the general meeting; and (v) one-tier governance structure.

Dutch companies whose shares are listed on a regulated stock exchange or comparable system, such as the NYSE or the MTA, are required under Dutch law to disclose in their annual reports whether or not they apply the provisions of the Dutch Corporate Governance Code and, in the event that they do not apply a certain provision, to explain the reasons why they have chosen to deviate.

FCA acknowledges the importance of good corporate governance and supports the best practice provisions of the Dutch Corporate Governance Code.

The Dutch Corporate Governance Code was revised in December 2016 and the revised Dutch Corporate Governance Code became effective on January 1, 2018, being applicable retrospectively from the 2017 financial year. Consequently, FCA has reported in 2018 regarding its application of the revised Dutch Corporate Governance Code over the 2017 financial year.

While the Company endorses the principles and best practice provisions of the Dutch Corporate Governance Code, its current corporate governance structure applies the following best practice provisions as follows:

We deviate from the Dutch Corporate Governance Code’s general best practice provision regarding the maximum of one non-executive director affiliated with a shareholder holding ten percent or more of the shares in the company. We believe this is appropriate in light of the position of Exor N.V. as our reference shareholder.

The Company does not have a retirement schedule as referred to in best practice provision 2.2.4. of the Dutch Corporate Governance Code, because, pursuant to the Articles of Association, the term of office of Directors is approximately one year, with such a period expiring on the day the first annual general meeting of FCA shareholders is held in the following calendar year. This approach is in line with the general practice for companies listed in the U.S. As the Company is listed at NYSE, the Company also relies on certain US governance policies, one of which is the reappointment of our Directors at each annual general meeting of FCA shareholders.

The Board has not appointed a Vice-chairman in the sense of best practice provision 2.3.7 of the Dutch Corporate Governance Code. The Board has however appointed a Chairman of the Company and one of the non-executive directors as “voorzitter” of the Board of Directors (referred to as the “Senior Non-executive Director”). The Board Regulations provide that in the absence of the Senior Non-executive Director, any other non-executive director chosen by a majority of the directors present at a meeting shall preside at meetings of the Board of Directors. In addition, the Chairman of the Company acts as contact for individual directors regarding the functioning of the Senior Non-executive Director and any conflict of interest, or potential conflict of interest, of the Senior Non-executive Director can be reported to the Chairman. We believe that this is sufficient to ensure that the functions assigned to the vice-chairman by the Dutch Corporate Governance Code are properly discharged.

Pursuant to best practice provision 4.1.8 of the Dutch Corporate Governance Code, every executive and non-executive Director nominated for appointment should attend the general meeting at which votes will be cast on his or her nomination. Since, pursuant to the Articles of Association, the term of office of Directors is approximately one year, with such a period expiring on the day the first annual general meeting of FCA shareholders is held in the following calendar year, all members of the Board of Directors are nominated for (re)appointment each year. By publishing the relevant biographical details and curriculum vitae of each nominee for (re)appointment, the Company ensures that the Company's general meeting of shareholders is well informed in respect of the nominees for (re)appointment and, in practice, only the executive Directors will therefore be present at the general meeting.

Mr. John Elkann, being an executive Director, has a position on the Governance and Sustainability Committee to which best practice provision 5.1.4 of the Dutch Corporate Governance Code applies. The position of Mr. Elkann as executive Director in this committee inter alia follows from the duties of the governance and sustainability committee, which are more extensive than the duties of a selection and appointment committee and include duties that warrant participation of an executive Director in the view of the Company.

Differences between Dutch Corporate Governance Practices and NYSE Listing Standards

The discussion below summarizes the significant differences between our corporate governance practices and the NYSE standards applicable to U.S. companies, as well as certain ways in which our governance practices (see above section Compliance with Dutch Corporate Governance Code) deviate from those suggested in the Dutch Corporate Governance Code.

The NYSE requires that when an audit committee member of a U.S. domestic listed company serves on four or more audit committees of public companies, the listed company should disclose (either on its website or in its annual proxy statement or annual report filed with the SEC) that the board of directors has determined that this simultaneous service would not impair the director’s service to the listed company. Dutch law does not require the Company to make such a determination.

The Audit Committee is elected by the Board of Directors and is comprised of at least three non-executive Directors. Audit Committee members are also required (i) not to have any material relationship with the Company or to serve as auditors or accountants for the Company; (ii) to be “independent” for the purposes of NYSE rules, Rule 10A-3 of the Exchange Act and the Dutch Corporate Governance Code; and (iii) to be “financially literate” and have “accounting or selected financial management expertise” (as determined by the Board of Directors). Furthermore, the Audit Committee may not be chaired by the Chairperson of the Board or by a former executive of the Company. Currently, the Audit Committee consists of Mr. Earle (Chairman), Mr. Thompson, Ms. Wheatcroft and Ms. Mars.

In contrast to NYSE rules applicable to U.S. companies which require that external auditors be appointed by the Audit Committee, the general rule under Dutch law is that external auditors are appointed at a general meeting of shareholders. In accordance with the requirements of Dutch law, the appointment and removal of our independent registered public accounting firm must be resolved upon at a general meeting of shareholders. Our Audit Committee is responsible for the recommendation to the shareholders of the appointment and compensation of the independent registered public accounting firm and oversees and evaluates the work of our independent registered public accounting firm.

NYSE rules require a U.S. listed company to have a compensation committee and a nominating/corporate governance committee composed entirely of independent directors. As a foreign private issuer, we do not have to comply with this requirement, however the Dutch Corporate Governance Code also requires us to have a Compensation Committee and a selection and appointment committee (which we call our Governance and Sustainability Committee). Our Compensation Committee Charter states that a maximum of one member of the Compensation Committee may be non-independent according to the Dutch Corporate Governance Code. All the current members of the Compensation Committee are independent under both the NYSE rules and the Dutch Corporate Governance Code.

Under NYSE listing standards, shareholders of U.S. companies must be given the opportunity to vote on all equity compensation plans and to approve material revisions to those plans, with the limited exceptions set forth in the NYSE rules. As a foreign private issuer, we are permitted to follow our home country laws regarding shareholder approval of compensation plans, and under Dutch law such approval from shareholders is not required for equity compensation plans for employees other than the members of the Board of Directors, and to the extent the authority to grant equity rights has been delegated at a general meeting of shareholders to the Board of Directors. For equity compensation plans for members of the Board of Directors and/or in the event that the authority to issue shares and/or rights to subscribe for shares has not been delegated to the Board of Directors, approval at a general meeting of shareholders is required.

While NYSE rules do not require listed companies to have shareholders approve or declare dividends, the Dutch Corporate Governance Code requires that a dividend distribution be a separate agenda item at a general meeting of shareholders in which the annual accounts are adopted. In our case, Article 23 of our Articles of Association provides that annual dividends must be resolved upon at a general meeting of shareholders. However, interim dividend distributions can be resolved upon by the Board of Directors, subject to meeting certain criteria listed in Article 23 of our Articles of Association.

Report of the Non-Executive Directors

Introduction

This is the report of the non-executive Directors of the Company over the ~~2018~~2019 financial year as referred to in best practice provision 5.1.5 of the Dutch Corporate Governance Code.

It is the responsibility of the non-executive Directors to supervise the policies carried out by the executive Directors and the general affairs of the Company and its affiliated enterprise, including the implementation of the strategy of the Company regarding long-term value creation. In so doing, the non-executive Directors act solely in the interest of the Company. With a view to maintaining supervision on the Company, the non-executive Directors regularly discuss FCA’s long-term business plans, the implementation of such plans and the risks associated with such plans with the executive Directors.

According to the Articles of Association, the Board of Directors is a single board and consists of three or more members, comprising both members having responsibility for the day-to-day management of FCA (executive Directors) and members not having such day-to-day responsibility (non-executive Directors). The tasks of the executive and non-executive Directors in a one-tier board such as the Company’s Board of Directors may be allocated under or pursuant to the Articles of Association, provided that the general meeting of shareholders has stipulated whether such Director is appointed as executive or as non-executive Director and furthermore provided that the task to supervise the performance by the Directors of their duties can only be performed by the non-executive Directors. Regardless of an allocation of tasks, all Directors remain collectively responsible for the proper management and strategy of the Company (including supervision thereof in case of non-executive Directors).

Details of the current composition of the Board of Directors (including the non-executive Directors) and its committees are set forth in the section “Board of Directors” above.

Supervision by the non-executive Directors

The non-executive Directors supervise the policies carried out by the executive Directors and the general affairs of the Company and its affiliated enterprises. In so doing, the non-executive Directors have also focused on the effectiveness of the Company’s internal risk management and control systems, the integrity and quality of the financial reporting and FCA’s long-term business plans, the implementation of such plans and the associated risks.

The non-executive Directors also determine the remuneration of the executive directors and nominate candidates for the Director appointments. Furthermore, the Board of Directors may allocate certain specific responsibilities to one or more individual directors or to a committee comprised of eligible Directors of the Company and subsidiaries of the Company. In this respect, the Board of Directors has allocated certain specific responsibilities to the Audit Committee, the Compensation Committee and the Governance and Sustainability Committee. Further details on the manner in which these committees have carried out their duties, are set forth in the sections “The Audit Committee”, “The Compensation Committee” and “The Governance and Sustainability Committee”, within “Board Practices and Committees” above.

The non-executive Directors supervised the adoption and implementation of the strategies and policies by the Group, reviewed this annual report, including the Remuneration Report and the Group’s financial results, received updates on legal and compliance matters and they have been regularly involved in the review and approval of transactions entered into with related parties. The non-executive Directors have also reviewed the reports of the Board of Directors and its committees, the sustainability achievement and objectives and the recommendations for the appointment of Directors.

During ~~2018,~~2019, there were 918 meetings of the Board of Directors. Portions of these meetings took place without the executive Directors being present. The average attendance at those meetings was approximately 9589.81 percent. An overview of the attendance of the individual Directors per meeting of the Board of Directors and its committees set out against the total number of such meetings is set out below:



Name	Meeting Board of Directors	Audit Committee	Governance and Sustainability Committee	Compensation Committee
John Elkann	~~9/9~~18/18	-	1/1	-
~~Sergio Marchionne~~Michael Manley	~~3/4~~18/18	-	-	-
Richard K. Palmer ⁽¹⁾	17/17
~~Michael Manley~~⁽¹⁾	~~4/4~~	-	-	-
Ronald L. Thompson	~~9/9~~17/18	~~8/8~~10/10	-	-
Andrea Agnelli	~~8/9~~13/18	-	-	-
Tiberto Brandolini d’Adda	~~9/9~~18/18	-	-	-
Glenn Earle	~~9/9~~18/18	~~8/8~~10/10	-	-
Valerie A. Mars	~~9/9~~17/18	~~8/8~~10/10	-	~~4/4~~3/3
Ruth J. Simmons⁽²⁾	~~8/9~~0/1	-	1/1	-
Michelangelo A. Volpi	~~7/9~~11/18	-	-	~~4/4~~2/3
Patience Wheatcroft	~~9/9~~17/18	~~8/8~~10/10	1/1	-
Ermenegildo Zegna	~~9/9~~17/18	-	-	~~4/4~~3/3
John Abbott⁽²⁾	~~7/7~~13/18	-	-	-

(1) Mr. ~~Michael Manley~~Richard K. Palmer was appointed as executive ~~director at the extraordinary meeting of shareholders held on Friday, September 7, 2018.~~

~~(2) Mr. John Abbott was appointed as non-executive~~ director at the general meeting of shareholders held on Friday, April ~~13, 2018.~~12, 2019.

(2) Ms. Ruth J. Simmons decided not to stand for another election at the general meeting of shareholders held on Friday, April 12, 2019

During these meetings, the key topics discussed were, amongst others: the Group’s strategy and ~~2018-2022 business plan,~~analysis of strategic options, investments, the Group’s financial results and reporting, ~~investments,~~ acquisitions and divestitures, executive compensation, product plan and technological developments, risk management, legal and compliance matters, sustainability, human resources, implementation of the Remuneration Policy, and the Remuneration ~~Report. In addition, during many meetings~~Report, the new LTIP, including the Metrics and ~~also in~~targets and the ~~absence of the executive directors~~Stock Ownership and with the advice of external consultants, the Board focused extensively on the succession plan for the CEO’s position due to Mr. Marchionne’s intention to leave the Company at the beginning of 2019.Retention Guidelines.

Independence of the non-executive Directors

The non-executive Directors are required by Dutch law to act solely in the interest of the Company. The Dutch Corporate Governance Code stipulates the corporate governance rules relating to the independence of non-executive Directors and requires under most circumstances that a majority of the non-executive Directors be “independent.”

We have determined that ~~eight~~seven of our twelve Board members qualify as independent for purposes of NYSE rules, Rule 10A-3 of the Exchange Act, and the Dutch Corporate Governance Code.

Mr. Thompson, the Senior Non-Executive Director and “voorzitter” of the Board of Directors, is independent under the Dutch Corporate Governance Code in accordance with best practice provision 2.1.9 of the Dutch Corporate Governance Code.

Whilst FCA acknowledges that it is not in compliance with best practice provision 2.1.7 (iii) of the Dutch Corporate Governance Code on the basis that more than one of its non-executive directors are affiliated with FCA’s largest shareholder, Exor N.V. and notwithstanding the foregoing regarding the non-independent directors, FCA is of the opinion that it otherwise meets the independence requirements set forth in best practice provision 2.1.10 of the Dutch Corporate Governance Code.

Evaluation by the non-executive Directors

The non-executive Directors are responsible for supervising the Board of Directors and its committees, as well as the individual executive and non-executive Directors, and are assisted by the Governance and Sustainability Committee in this respect.

In accordance with the Governance and Sustainability Committee Charter, the Governance and Sustainability Committee assists and advises the Board of Directors with respect to periodic assessment of the performance of individual Directors. In this respect, the Governance and Sustainability Committee has, amongst others, the duties and responsibilities to review annually the Board of Directors’ performance and the performance of its committees and to review each Director’s continuation on the Board of Directors at appropriate regular intervals as determined by the Governance and Sustainability Committee.

In ~~2018,~~2019, the Governance and Sustainability Committee focused on the periodic assessment of the performance of the Board of Directors, its committees and the individual Directors during the meeting held on February 19. During that meeting, the Governance and Sustainability Committee dealt also with the directors’ nomination process and focused on the assessment of Directors’ qualifications, the size and composition of the Board of Directors and the committees, and the recommendations for Directors’ election.

The non-executive Directors have been regularly informed by each committee as referred to in best practice provision 2.3.5 of the Dutch Corporate Governance Code and the conclusions of those committees were taken into account when drafting this report of the non-executive Directors.

The non-executive Directors were able to review and evaluate the performance of the Audit Committee, the Governance and Sustainability Committee and the Compensation Committee. No need to amend the size or composition of the Audit Committee, the Governance and Sustainability Committee and the Compensation Committee, nor any reason to amend their charters was identified. Further details on the manner in which these committees have carried out their duties, are set forth in the sections “The Audit Committee”, “The Compensation Committee” and “The Governance and Sustainability Committee”, within “Board Practices and Committees” above.

On the basis of the preparations by the Governance and Sustainability Committee, the non-executive Directors were able to review the Board of Director’s assessments, the individual Directors’ assessments and the recommendation for Directors’ election. The Board of Directors concluded that each of the Directors continues to demonstrate commitment to its respective role in the Company.

Also, pursuant to the Compensation Committee Charter, the Compensation Committee implements and oversees the Remuneration Policy as it applies to non-executive Directors, executive Directors and senior officers reporting directly to the executive Directors. The Compensation Committee administers all the equity incentive plans and the deferred compensation benefits plans. On the basis of the assessments performed, the non-executive Directors determine the remuneration of the executive ~~directors~~Directors and nominate candidates for the Director appointments.

The non-executive Directors have supervised the performance of the Audit Committee, the Compensation Committee and the Governance and Sustainability Committee.

REMUNERATION REPORT

~~Remuneration of the Members of the Board of Directors and the Group Executive Council of FCA~~

The quality of our leadership and their commitment to the Company are fundamental to our success. FCA’s global remuneration principles support our business strategy and growth objectives in athe diverse and evolving ~~global market.~~markets in which we compete. Our remuneration policies are designed to ~~competitively reward the achievement of~~appropriately pay-for-performance with an emphasis on creating long-term sustainable performance and to attract, motivate and retain highly qualified executives who are committed to performing their roles in the long-term interest of our shareholders. Given the changing international standards regarding responsible and sound remuneration, ashareholder value, avoiding arrangements that risk pay for failure. A variety of factors are taken into consideration when evaluating compensation ~~such as the complexity of functions, the scope of responsibilities, the alignment of risks and rewards, national and international legislation and~~arrangements, including the long-term objectives of the Company and its ~~shareholders.~~shareholders and a clear framework of compensation best practices which keep pace with ever-evolving US and European market-specific best practices.

Within the scope of FCA’s Remuneration Policy, ~~for~~the remuneration of the Executive Directors

~~The compensation for our executive directors~~ is determined by the Board of Directors ~~based on recommendations from~~at the recommendation of the Compensation Committee of the Board of Directors (the “Compensation Committee”). This annual Remuneration Report describes how the pay programs and practices of the Executive Directors were implemented in 2019, in accordance with the ~~Company’s~~Remuneration Policy.

Please note that, as required by changes to Dutch law and Corporate Governance Code, FCA will be presenting an updated Remuneration Policy to its shareholders for approval during its Annual General Meeting (“AGM”) in April 2020. Accordingly, this Remuneration Report has been written and formatted to adopt the standardized presentation communicated by the Commission under the European Union Revised Shareholders' Rights Directive.

Going forward, per the revised legislation, the following Remuneration elements will be explicitly addressed in our Remuneration Policy, not the Report. For completeness, they are stated now and detailed herein until the updated Policy is formally presented to and approved by FCA’s shareholders:

Description of Purpose, Vision and Values of the Company;

Remuneration Principles;

How we select our Peer Group for Executive ~~Directors (the “Remuneration Policy”). The current~~Compensation benchmarking;

Five year Pay Ratio trend;

Overview of Remuneration ~~Policy was approved by the shareholders~~Elements including how fixed and variable elements are used and how they relate to each other;

Stock Related Provisions including a description of ~~Fiat Chrysler Automobiles N.V. at the 2017 annual general meeting~~policies relating to stock-ownership, retention, claw-back, insider trading;

Terms of ~~FCA shareholders~~Engagement for Non-Executive Directors; and ~~is reviewed annually by the Compensation Committee. Our Remuneration Policy is available in full on the Company’s website at www.fcagroup.com.~~

~~The Compensation Committee reviews~~Derogation from the Remuneration Policy and its implementation. The Compensation Committee concluded that there were no reasons to recommend adjustments to the Remuneration Policy at the 2019 annual general meeting of FCA shareholders with regard to its executive directors. This report describes the Company’s compensation principles and structure for the executive directors and summarizes the significant compensation decisions made by the Compensation Committee in 2018.

~~Change in Executive Directors in 2018~~

On July 21, 2018, Michael Manley assumed the role of CEO, due to the unfortunate passing of our former CEO Sergio Marchionne. Mr. Manley’s appointment to the Board was approved by shareholders at the September 7, 2018 Extraordinary General Meeting. Pursuant to Mr. Marchionne’s employment agreement no bonus will be paid for performance year 2018 and one remaining pro-rated long-term incentive award of 1,561,165 units will vest in 2019 if performance vesting conditions are confirmed as satisfied by the Compensation Committee. (At the average January 2019 stock price of $16.10 per unit, the estimated value of these units would be $25,134,756). Other payments will be made consistent with obligations set forth in Mr. Marchionne’s employment agreement, including his post mandate benefit of 5 x base compensation.

2019 Financial Year ~~2018~~ - ~~Select Business~~ Highlights summary

A key tenet of FCA's Remuneration Policy is pay for performance. The Group ~~had~~reported strong full year 2019 results, while setting a ~~record year despite unexpected challenges in 2018.~~secure path to remain an industry leader. The following ~~table~~ highlights some of the key achievements during the year:

~~Record~~Strong operating results with adjusted EBIT of ~~Adjusted EBIT at €7.3~~€6.7 billion and ~~Adjusted net profit at €5.0 billion (including Magneti Marelli);~~

~~Net industrial cash of €1.9 billion at December 2018, up €4.3 billion over prior year reflecting improved~~ Industrial free cash ~~flows; and~~flows of €2.1 billion; record North America Adjusted EBIT of €6.7 billion, with higher results in LATAM of €0.5 billion;

Record ~~global~~U.S. Ram brand sales ~~for Jeep and Ram brands,~~of 703 thousand units, up ~~14% and 5%~~18% year over year;


•	FCA and PSA signed binding combination agreement for 50/50 merger to create 3^rd largest global OEM by revenues and 4^th by volume;

Completed sale of Magneti Marelli with cash proceeds of €5.8 billion and payment of €2.0 billion extraordinary dividend to shareholders;

New UAW four year ~~respectively.~~collective bargaining agreement in United States, building on Group’s commitment to grow U.S. manufacturing operations;

~~Notwithstanding~~€1.1 billion ordinary dividend to be paid in Spring 2020, subject to Board and shareholder approval.

The following table highlights the ~~record results, the Group did not achieve all of its performance goals set out~~financial metrics in the ~~Group's guidance, which is reflected in the remuneration discussed below.~~year:



Financial Metric	2019		Change from 2018
	(€ million, except as otherwise noted)
Worldwide combined shipments (in thousands of units)	4,418		(9	)%
Net revenues	108,187		(2	)%
Net profit from continuing operations	2,700		(19	)%
Adjusted EBIT⁽¹⁾	6,668		(1	)%
Adjusted EBIT margin⁽¹⁾	6.2	%	+10 bps
Adjusted Net profit⁽¹⁾	4,297		(9	)%
Diluted earnings per share from continuing operations (€ per share)	1.71		(19	)%
Adjusted diluted earnings per share⁽¹⁾(€ per share)	2.73		(9	)%
Cash flows from operating activities - continuing operations	10,770		14	%
Industrial free cash flows⁽¹⁾	2,113		(52	)%

(1) Refer to FINANCIAL OVERVIEW - Non-GAAP Financial Measures for additional detail and definitions of these performance metrics.

Remuneration Principles

The guiding ~~principle~~principles of our Remuneration Policy isdirect our efforts to provide a compensation structure that allows FCA to attract and retain the most highly qualified executive talent and to motivate such executives to achieve business and financial goals that create long-term value for shareholders and other stakeholders in a manner consistent with our core business and leadership values. FCA’s compensation philosophy, ~~as set forth in the Remuneration Policy,~~ aims to provide compensation to its executive directors as outlined below.



Alignment with FCA's strategy	Compensation is strongly linked to the achievement of the Group's publicly disclosed performance targets.
Pay for performance	Compensation must reinforce our performance-driven culture and principles of meritocracy. As such, the majority of pay is linked directly to the Group's performance through both short and long-term variable pay instruments.
Competitiveness	Compensation ~~should~~will be competitive against the comparable market and set in a manner to attract, retain and motivate expert leaders and highly qualified ~~executives.~~executives in geographies where we directly compete.
Long-term shareholder value creation	Targets triggering any variable compensation payment should directly align with the interest of ~~shareholders.~~shareholders and other stakeholders to promote the long-term success of the Company and constructed to avoid excessive levels of compensation.
Compliance	Our compensation policies and plans are designed to comply with applicable laws and corporate governance requirements.
Risk prudence	The compensation structure should avoid incentives that encourage unnecessary or excessive risks that could threaten the Company's ~~value.~~value or reputation.

Director's Total Remuneration in 2019

The following table summarizes the remuneration paid or awarded to the members of the Board of Directors for the year ended December 31, 2019.



				Fixed Remuneration				Variable Remuneration
Directors of FCA	Office held	Year		Base salary	Annual Fee	Fringe benefits		Short-term incentive⁽¹⁾	Long-term incentive ⁽²⁾		Retirement Benefits Expense		Total Remuneration	Proportion of Fixed Remuneration		Proportion of Variable Remuneration
				(€)
Executive Directors
ELKANN, John Philipp⁽³⁾	Chairman	2019		893,276	—	672,284	⁽⁵⁾	—	2,284,386	⁽⁸⁾	—	⁽¹¹⁾	3,849,946	41	%	59	%
		2018		1,693,545	—	875,944		—	—		549,000		3,118,489	82	%	18	%
MANLEY, Michael	CEO	2019		1,429,241	—	30,389	⁽⁶⁾	1,203,243	8,819,249	⁽⁹⁾	1,798,791	^{(12), (13)}	13,280,913	11	%	89	%
		2018	⁽⁴⁾	600,442	—	89,817		310,766	1,687,075		292,329		2,980,429	23	%	77	%
PALMER, Richard⁽¹⁴⁾	CFO	2019		923,916	—	53,351	⁽⁷⁾	501,128	2,309,323	⁽¹⁰⁾	247,570	⁽¹³⁾	4,035,288	24	%	76	%
		2018		—	—	—		—	—		—		—	—	%	—	%

Non-Executive Directors
ABBOTT, John	Director	2019		—	178,655	—		—	—		—		178,655	100	%	—	%
		2018		—	84,677	—		—	—		—		84,677	100	%	—	%
AGNELLI, Andrea	Director	2019		—	178,655	1,502		—	—		—		180,157	100	%	—	%
		2018		—	169,355	—		—	—		—		169,355	100	%	—	%
BRANDOLINI D'ADDA, Tiberto	Director	2019		—	178,655	2,313		—	—		—		180,968	100	%	—	%
		2018		—	169,355	1,074		—	—		—		170,429	100	%	—	%
EARLE, Glenn	Director	2019		—	196,521	19,128	⁽¹⁵⁾	—	—		—		215,649	100	%	—	%
		2018		—	186,290	18,392		—	—		—		204,682	100	%	—	%
MARS, Valerie	Director	2019		—	192,054	16,475	⁽¹⁵⁾	—	—		—		208,529	100	%	—	%
		2018		—	182,056	8,044		—	—		—		190,100	100	%	—	%
SIMMONS, Ruth J.⁽¹⁶⁾	Director	2019		—	91,561	8,274	⁽¹⁵⁾	—	—		—		99,835	100	%	—	%
		2018		—	173,588	6,917		—	—		—		180,505	100	%	—	%
THOMPSON, Ronald L.	Director	2019		—	209,920	10,604	⁽¹⁵⁾	—	—		—		220,524	100	%	—	%
		2018		—	198,992	6,917		—	—		—		205,909	100	%	—	%
VOLPI, Michelangelo A.	Director	2019		—	183,122	6,287	⁽¹⁵⁾	—	—		—		189,409	100	%	—	%
		2018		—	173,588	—		—	—		—		173,588	100	%	—	%
WHEATCROFT, Patience	Director	2019		—	192,054	12,230	⁽¹⁵⁾	—	—		—		204,284	100	%	—	%
		2018		—	182,056	11,819		—	—		—		193,875	100	%	—	%
ZEGNA, Ermenegildo	Director	2019		—	192,054	13,572	⁽¹⁵⁾	—	—		—		205,626	100	%	—	%
		2018		—	182,056	9,186		—	—		—		191,242	100	%	—	%
Total 2019				3,246,433	1,793,251	846,409		1,704,371	13,412,958		2,046,361		23,049,783

(1) The amounts represent the bonus earned for the performance year 2019 which will be paid in 2020.

(2) The amounts represent the Company's 2019 expense relating to grants issued to the Executive Directors under the Long Term Equity Incentive Plan.

(3) Effective January 1, 2019 The Chairman’s compensation arrangement was changed to include a reduction in base salary and introduction of a long term variable pay component.

(4) Represents remuneration paid or earned for his CEO service from July 21, 2018 through December 31, 2018.

(5) The stated amount includes the use of transport and insurance premiums.

(6) The stated amount includes the use of transport and financial counseling.

(7) The stated amount includes the use of transport, insurance premiums and tax preparation.

(8) Chairman expense relates to the LTI grant he received in 2019 relating to the 2019 - 2021 performance period

(9) CEO expense includes €1,205,281 relating to the LTI grant he received in 2018 for his CEO service during the period July 21, 2018 through December 31, 2018 and €7,613,968 relating to the LTI grant he received in 2019 relating to the 2019 - 2021 performance period. In 2019, the CEO received the 3^rd and final tranche of the equity award granted in 2015 for the 2014 - 2018 performance period for his role prior to becoming CEO. The 2019 expense relating to this grant is included in the aggregate compensation expense for executives with strategic responsibilities in Note 24, Related party transactions, within the Consolidated Financial Statements included elsewhere in this report.

(10) CFO expense relates to the LTI grant he received in 2019 relating to the 2019 - 2021 performance period

(11) Effective January 1, 2019 the Chairman waived his post retirement benefit and a recovery of €1.8 million was recognized in connection with the elimination of this benefit.

(12) Includes one-time expense of €0.9 million relating to his Executive Postretirement Health Care Plan.

(13) Both the CEO and CFO have fully vested post retirement pension benefits that were provided to them prior to their appointments to Executive Directors. The expense relating to this benefit is included in aggregate compensation expense for executives with strategic responsibilities in Note 24, Related party transactions, within the Consolidated Financial Statements included elsewhere in this report.

(14) Represents remuneration paid or earned since his appointment to the Board on April 12, 2019 through December 31, 2019.

(15) The stated amount refers to certain automobile perquisites, which are subject to taxes for the imputed income on the purchase or lease of Company vehicles.

(16) Represents remuneration paid or earned from January 1, 2019 through April 12, 2019. Upon departure from the Board, FCA US legacy Board payments in the amount of €735,894 were delivered in 2019.

1. Remuneration of Executive Directors

Summary Overview of Remuneration Elements

Remuneration of the executive directors’ is simple and transparent in design, and consists of the following key elements, all of which have been benchmarked and confirmed by an external compensation consultant:



Element	Description	2019 Application
Annual base salary	Market based fixed cash compensation set competitively to approved multinational peer group	Annual base salary as follows: • Chairman: Effective January 1, 2019 changed from U.S. $2.0 million to U.S.$1.0 million upon introduction of a long-term variable pay component in compensation arrangement • CEO: U.S.$1.6 million, no change as competitive pay was set upon appointment in 2018. • CFO: U.S.$1.43 million, carry-over arrangement approved by the Compensation Committee in 2019 upon his appointment to Executive Director
Short-term incentive (“Annual Bonus”)	Annual Bonus payout in cash subject to the achievement of annually pre-established, challenging financial objectives and thus demonstrably linked to the performance of the Company	Three equally weighted metrics were selected to align with business priorities (€ millions): • Adjusted EBIT (7,500) • Adjusted net profit (4,700) • Industrial Free Cash Flow (2,000) Chairman: Not eligible for annual bonus payout CEO: Target annual bonus payout: 150 percent of base salary Maximum annual bonus payout: Capped at 300 percent of base salary. CFO: Legacy arrangement approved by the Compensation Committee in 2019 upon appointment to Executive Director Target annual bonus payout: 100 percent of base salary Maximum annual bonus payout: Capped at 150 percent of base salary. Payout incentive zone: Linear between minimum and target and linear between target and maximum
Long-term incentive (“LTI”)	Long-term incentive to align Executive Directors to strategic goals and reward for sustained long-term growth Two components • performance share units • restricted (retention) share units Performance component is subject to the achievement of predetermined challenging performance and market objectives comprised of two equally weighted metrics, relative Total Shareholder Return (“TSR”) and Adjusted EBIT Maximum payout: 225 percent of the target number of TSR performance share units granted and 100 percent of the target number of Adjusted EBIT performance share units granted	A new LTI Plan design was approved by the shareholders at the 2019 Annual General Meeting. This new design incorporates annual rolling LTI plan grants directly linked to three year performance periods. With this approach, the intent is to deliver a consistent long-term incentive opportunity vesting annually, providing of course that company and individual performance conditions are met. FCA's previous plan covered a five-year performance period with partial vesting after performance years 3 and 4 if cumulative targets were met, with final cliff vesting after year 5. The new annual rolling nature of the new plan design will eliminate the yearly variability of FCA's previous long-term incentive approach. In 2019, grants were awarded for the first of the 2019-2021 three-year performance period (with a transitional vesting schedule). In 2020, grants will follow for the 2020-2022 cumulative performance period (with cliff vesting in 2023). Chairman: Target annual LTI grant: 300 percent of base salary of which 75% is performance share units and 25% is restricted (retention) share units. In 2019, a grant of 558,480 units was awarded for the 2019 - 2021 performance period. CEO: Target annual LTI grant: 625 percent of base salary of which 75% is performance share units and 25% is restricted (retention) share units. In 2019, a grant of 1,861,440 units was awarded for the 2019 - 2021 performance period. CFO: Target annual LTI grant: 210 percent of base salary of which 66.7% is performance share units and 33.3% is restricted (retention) share units. In 2019, a grant of 558,990 units was awarded for the 2019 - 2021 performance period.



Element	Description	2019 Application
Post Retirement Benefits	The CEO participates in a defined contribution plan for U.S. based salaried employees and has a supplemental retirement benefit and a retiree health care benefit. The Chairman and the CFO participate in a retiree health care benefit plan.	Chairman: Effective January 1, 2019 waived post mandate benefit of 5 times base salary; a recovery of €1.8 million was recognized in connection with the elimination of the post mandate benefit. Eligible for a retiree healthcare plan provided to executives in Italy which provides for a reimbursement of a portion of health care costs incurred in retirement. CEO: Consistent with US CEO compensation benchmarks, a supplemental retirement benefit of three times annual base salary is provided. This benefit requires five years of CEO service for 100% vesting and 3 years of service for 50% vesting. Eligible for Executive Postretirement Health Care Plan which provides healthcare coverage in the United States upon retirement. In 2019, a cost of €1.7 million was recognized in connection with these benefits. CFO: Eligible for a retiree healthcare plan provided to executives in Italy which provides for a reimbursement of a portion of health care costs incurred in retirement.
Other benefits	Executive directors may receive usual and customary fringe benefits such as severance, company cars, medical insurance, accident and disability insurance, tax preparation, financial counseling, tuition reimbursement and tax equalization	Chairman severance: 1 times annual base salary CEO severance: 1 times annual base salary linked to non-compete and other restrictive covenants for 1 year. CFO severance: Carry-over, pre Executive Director arrangement of 2 times base salary linked to non-compete and other restrictive covenants for 2 years. CEO and CFO change of control provision: severance and accelerated vesting of outstanding awards under the Equity Incentive Plan in case of termination following change of control within 24 months by the company (unless for cause) or by the Executive Director for good reason. For 2019, no severance benefits were paid or due to Executive Directors.

Compensation Peer Group

~~In 2016, our Compensation Committee assessed~~The Company periodically benchmarks its executive compensation programs and the ~~suitability of our potential~~compensation offered to Directors against peer companies ~~which are companies operating~~and monitors compensation levels and trends in ~~similar industries with whom we are most likely to compete for executive level talent, and restructured~~ the ~~composition of our peer group to the 26 companies listed below. For 2018, this same compensation peer group was utilized to evaluate relative pay level alignment with Company performance.~~market.

The Compensation Committee strives to identify a peer group that best reflects all aspects of ~~FCA’s~~the Company’s business and considers public listing, industry practices, geographic reach, and revenue proximity, with market capitalization considered as a secondary characteristic. Our peer group represents a blend of both U.S. and European ~~companies~~Companies in recognition of the relevant talent market for our executives. In addition to including U.S. and European automobile manufacturers, our peer group includes U.S. and European companies that have significant manufacturing and/or engineering operations and a global market presence. ~~The list is divided between 14 U.S. and 12 European companies, similar to~~

For 2019, the Compensation Committee confirmed that the composition of our ~~senior executive team.~~

26 company peer group listed below continues to be appropriate for evaluating pay level (and pay practices) for our Executive Directors versus external benchmarks. For 2020, the Committee has updated this peer group to remove Johnson Controls and add ABB.

Peer Group ~~Companies~~Companies:



Airbus Group	Daimler AG	Johnsons Controls Inc.	The 3M Company
ArcelorMittal SA	Deere & Company	Lockheed Martin Corporation	ThyssenKrupp AG
Bayer AG	Ford Motor Company	Northrop Grumman Corporation	United Technologies Corporation
BMW Group AG	General Dynamics Corporation	PSA Peugeot Citroen	Volkswagen AG
The Boeing Company	General Electric Company	Raytheon Company	The Volvo Group
Caterpillar Inc.	General Motors Company	Renault SA
Continental AG	Honeywell International Inc.	Siemens AG

~~Summary Overview~~

Short-Term Incentive

For 2019, the Compensation Committee pre-established the annual financial performance goals for the Short Term Incentive based on the Company's 2019 financial plan approved by the Board of ~~Remuneration Elements~~Directors in 2018. In addition, the Compensation Committee considered input from the external compensation consultant to ensure the goals are linked to long-term shareholder value creation. The 2019 bonus plan goals were set with challenging hurdles, directly in line with the Group's business plan, and as set forth below.



2019 Performance Metrics⁽¹⁾	Weight	Minimum (€ millions)	Target (€ millions)	Maximum (€ millions)
Adjusted EBIT	1/3	6,750	7,500	11,250
Adjusted net profit	1/3	4,230	4,700	7,050
Industrial Free Cash Flows	1/3	1,800	2,000	3,000

(1) Refer to FINANCIAL OVERVIEW - Non-GAAP Financial Measures for additional detail and definitions of these performance metrics.

The target incentive for the annual bonus program for 2019 is 150% of base salary for the CEO and 100% of base salary for the CFO. To earn any incentive, the performance achieved must be at least 90% of the specific target established. For the CEO, to earn the maximum payout of 300% of base salary, actual results must be delivered at 150% of the target performance, or greater, for all the performance metrics. The CFO maximum payout is capped at 150% of base salary. The payout incentive zone is linear between minimum and target and as well as between target and maximum.

Executive Director's 2019 Bonus Company Performance Factor Calculations:



Executive Directors	Target Payout	Corporate Measures	Weight	Minimum (€ millions)		Target (€ millions)		Maximum (€ millions)		Achievement (€ millions)	Actual vs Target		Company Performance Factor⁽¹⁾		Weighted Company Performance Factor
MANLEY, Michael	150% of base salary	Adjusted EBIT	1/3	6,750		7,500		11,250		6,668	88.9	%	0.0	%	0.0	%
		Adjusted Net profit	1/3	4,230		4,700		7,050		4,297	91.4	%	57.1	%	19.0	%
		Industrial Free Cash Flows	1/3	1,800		2,000		3,000		2,113	105.7	%	111.3	%	37.1	%
		Total Annual Bonus (U.S.$ thousands)		$	1,200	$	2,400	$	4,800	Weighted Company Performance Factor					56.1	%
PALMER, Richard	100% of base salary	Adjusted EBIT	1/3	6,750		7,500		11,250		6,668	88.9	%	0.0	%	0.0	%
		Adjusted Net profit	1/3	4,230		4,700		7,050		4,297	91.4	%	57.1	%	19.0	%
		Industrial Free Cash Flows	1/3	1,800		2,000		3,000		2,113	105.7	%	105.7	%	35.2	%
		Total Annual Bonus (U.S.$ thousands)		$	715	$	1,430	$	2,145	Weighted Company Performance Factor					54.2	%

(1) As described above, the Company Performance Factor for the CEO is higher than the CFO as at maximum performance the CEO would receive two times his targeted bonus whereas the CFO would receive one and a half times his targeted bonus.

The Compensation Committee reviews the achievement of the above metrics against the pre-established targets and presents the results to the non-executive Directors, typically in the first quarter of each year with the completion of the year-end earnings release. In 2019, Industrial Free Cash Flow was slightly over achieved, and the 90% minimum threshold for Adjusted Net Profit performance was achieved at 91.4%, however Adjusted EBIT performance fell below the 90% minimum threshold and, therefore, paid nothing.

CEO 2019 Short-term Incentive Calculation

The ~~executive directors’ remuneration~~bonus earned by the CEO for performance year 2019, payable in 2020, was U.S. $ 1,347,000 based on the corresponding weighted company performance factor of 56.1%.



Base Salary			Bonus Target %			Weighted Company Performance Factor			Bonus Earned
$	1,600,000	X	150	%	X	56.1	%	=	$	1,347,000

CFO 2019 Short-term Incentive Calculation

The bonus earned by the CFO for performance year 2019, prorated for his appointment to Executive Director from April 12, 2019 through to December 31, 2019 was U.S. $ 561,000 payable in 2020, based on the corresponding weighted company performance factor of 54.2%.



Base Salary			Bonus Target %			Weighted Company Performance Factor			Prorated percentage⁽¹⁾			Bonus Earned
$	1,430,000	X	100	%	X	54.2	%	X	72.3	%	=	$	561,000

(1) Prorated percentage relates to the period from his appointment to Executive Director, April 12, 2019, through to December 31, 2019

2020 Bonus Plan Goals

The 2020 Bonus Plan goals as approved by the Compensation Committee, are set forth below:



2020 Performance Metrics⁽¹⁾	Weight	Minimum (€ millions)	Target (€ millions)	Maximum (€ millions)
Adjusted EBIT	1/3	6,300	7,000	10,500
Adjusted net profit	1/3	4,050	4,500	6,750
Industrial Free Cash Flows	1/3	1,800	2,000	3,000

(1) Refer to FINANCIAL OVERVIEW - Non-GAAP Financial Measures for additional detail and definitions of these performance metrics.

Realized Long-Term Incentives

In 2019, the CEO received the pro-rated CEO service units as granted in 2018 and approved by shareholders at the April 12, 2019 AGM under the 2014 - 2018 LTI plan. This grant was made only to recognize the additional duties and corresponding new total compensation package associated with his serving as the Group CEO (as opposed to the Head of Jeep) for the period July 21, 2018 through December 31, 2018. This grant also included a higher ratio of at-risk Performance Share Units, as is ~~simple~~typical for LTI plans awarded to the Chief Executive.

For the avoidance of doubt, these awards were fully based on the pre-established goals set for the 2014-2018 LTI Plan and ~~transparent in design,~~were pro-rated and ~~consists~~granted only to align to the associated time period of his appointment as CEO with the mandate to deliver the final months' performance of the ~~following key elements:~~five year business plan. The units granted to the previous CEO for this five month time period (which directly corresponded to his LTI percentage of his total compensation package) were forfeited.

As disclosed in the 2018 Remuneration Report, Total Shareholder Return (“TSR”) performance share units were earned at 150% of target by ranking number one amongst the TSR peer group for the cumulative performance period. Adjusted Net profit performance shares were earned at 100% of target as cumulative Adjusted Net profit significantly exceeded the cumulative target. Accordingly, 214,182 shares were delivered to the CEO. This outcome, and delivery of shares in 2019, reflects the successful completion of the Company's 2014 - 2018 Business Plan and the Company's delivery of significant value to its shareholders.

New Long-Term Equity Incentive Plan Grant

A new LTI Plan design was approved by shareholders at the April 12, 2019 Annual General Meeting. This new design incorporates annual rolling LTI plan grants directly linked to three-year performance period. With this approach, the intent is to deliver a consistent long-term incentive opportunity vesting annually, providing of course that performance conditions are met. FCA's previous plan covered a five year performance period with partial vesting after performance year 3 and year 4 if cumulative targets were met, with final cliff vesting after year 5. The annual, rolling nature of the new plan design will eliminate the yearly vesting variability of FCA's previous long-term incentive approach. In 2019, grants were awarded for the first three-year performance period 2019 - 2021 (with a transitional vesting schedule). In 2020, grants will follow for the 2020-2022 cumulative performance period (with cliff vesting in 2023).

Annual awards granted under the new LTI will be comprised of a spilt of performance share units and restricted (retention) share units. The performance based awards vesting under the new LTI plan are conditional on meeting two independent, equally weighted cumulative three year metrics, Adjusted EBIT and Relative TSR. Each metric has minimum and target performance levels; performance below the minimum results in no awards being earned. The 2019 -2021 Cumulative Performance Targets are set forth below,



2019 - 2021 Performance Metrics	Weight	2019 - 2021 Cumulative Performance Targets
Adjusted EBIT (€ billions)	50%	28.2
Relative TSR	50%	Rank 5^th out of 16 competitors

As shown in the tables below, the Adjusted EBIT component payout begins at 80% of target achievement and has a maximum payout at 100% for target achievement. The Relative TSR component earns partial vesting if the Company is ranked seventh or better among an industry specific peer group of sixteen, including the Company, and a maximum payout of 225%, if the Company is ranked first among the sixteen companies. The plan allows no payout if the Company is ranked below the median of the designated peer group over the performance period.

Listed below are the Adjusted EBIT and TSR payout scales:



Adjusted EBIT Payout Scale		TSR Payout Scale
% Achieved	Payout % of Target	FCA Rank	Payout % of Target
100.0%	100.0%	1	225.0%
95.0%	87.5%	2	180.0%
90.0%	75.0%	3	145.0%
85.0%	62.5%	4	120.0%
80.0%	50.0%	5	100.0%
		6	75.0%
		7	50.0%
		8-16	0.0%

Listed below is the Relative TSR peer group:



~~Element~~	~~Description~~	~~2018 Application~~
~~Annual base salary~~Volkswagen AG	• ~~Market competitive fixed cash compensation~~ • ~~Reviewed annually, considering market environment and peer group~~ Toyota Motor Corporation	~~Annual base salary as follows:~~ • ~~Chairman: U.S. $2.0 million~~ • ~~CEO: U.S. $1.6 million~~ Daimler AG	General Motors Company
~~Short-term incentive (“STI” or “Bonus”)~~⁽¹⁾ Ford Motor Company	• ~~Performance metrics determined annually~~ • ~~CEO target STI payout: 150 percent of base salary~~ • ~~CEO maximum STI payout: 300 percent of base salary~~ • ~~STI payout in cash based on annual targets and achievement of metrics~~ • ~~Chairman: not eligible for STI~~ Honda Motor Co. Ltd.	~~Three equally weighted metrics:~~ • ~~Adjusted EBIT~~ • ~~Adjusted net profit~~ • ~~Net industrial cash~~ ~~Actual payout~~ • ~~CEO: 34.0% of target STI~~ • ~~Payout incentive zone: linear between minimum and target and linear between target and maximum~~ BMW Group	The Hyundai Motor Company
~~Long-term incentive (“LTI”)~~⁽¹⁾ PSA Peugeot Citroen	• ~~One plan: 2014-2018 Long Term Incentive program~~ • ~~Two components for our CEO~~ ◦ ~~75% performance share units~~ ◦ ~~25% restricted share units~~ • ~~Performance criteria comprised of two equally weighted metrics, relative Total Shareholder Return (“TSR”) and Adjusted net profit~~ • ~~Maximum payout: 125 percent of the target number of performance share units granted~~ • ~~Chairman: not eligible for LTI~~ Renault SA	• ~~CEO: LTI award of 180,364 units granted for CEO service during the period July 21, 2018 - December 31, 2018~~ Nissan Motor Co.	KIA Motors
~~Pension and retirement savings~~Suzuki Motor Corporation	• ~~CEO participates in a defined contribution plan for U.S. based salaried employees and has a supplemental retirement benefit~~ • ~~Chairman participates in a post mandate benefit of 5 times base salary~~ Mazda Motor Corporation	• ~~CEO: Supplemental retirement benefit: three times annual base salary~~ • ~~Chairman: Effective January 1, 2019 waived post mandate benefit~~
~~Other benefits~~Tesla Inc.	• ~~Executive directors may receive typical benefits such as severance, company cars, medical insurance, accident and disability insurance, tax preparation, financial counseling and tax equalization~~	• ~~CEO severance: 1 times base linked to non-compete restriction~~ • Chairman severance: currently 2 times base salary based on legacy agreements, however based on his views of his current compensation, the Chairman has expressed his desire to reduce his severance benefit to one times base salary. In 2019, the Company will update written agreements with the Chairman for Board approval to formally incorporate this change

~~(1) For~~Under this new Long-Term Equity Incentive Plan approved by shareholders, the first three-year rolling plan (2019-2021) includes a transitional partial vesting schedule so that participants of the previous five year 2014 - 2018 ~~the Chairman received fixed compensation only and was~~LTI Plan do not again deliver results for three (or five) years without earning an annual incentive payout opportunity. New hires eligible for a long-term incentive will not receive any ~~variable compensation.~~

such transitional vesting opportunity. Providing a partial incentive vesting ‘bridge’ to previous plan participants (who waited five years for full LTI plan vesting with FCA’s prior plan) was deemed critical to ensuring key talent is retained. The tables below illustrate the previous five year 2014 - 2018 ~~Remuneration of Executive Directors~~

~~Our executive compensation program is designed to align~~LTI approach, the ~~interests of our executive directors with those of our shareholders. It is designed to reward our executive directors based on~~new annual rolling LTI grant approach and the ~~achievement of sustained financial and operating performance~~associated three-year cliff vesting as well as demonstrated leadership. We aim to attract, engage, and retain high-performing executives who help us achieve immediate and future success and maintain our position as an industry leader. We support a shared, one-company mindsetthe one-time transitional partial vesting for plan participants switching between the two LTI plan designs. (Note that full payout of this transitional vesting opportunity does not occur until after performance ~~and accountability to deliver on business objectives.~~year 2021 is complete).

~~Executive Directors’ Target Direct Compensation Mix~~2014- 2018 Vesting Schedule

The Group has a written agreement with the Chairman, memorializing agreed terms and conditions of his service with the Company. In 2018, no changes were made to any of the compensation elements set forth above for the Chairman. The Chairman was not eligible for any form of variable compensation.



	2014	2015	2016	2017	2018	2019
	Performance Period
2014 - 2018 Plan		Grant PSU's and RSU's		1/3 vests	1/3 vests	1/3 vests

Effective January 1, 2019, and based on the Chairman’s views of his current compensation, the Board approved a new prospective compensation program for the Chairman. This compensation framework consists of both base compensation and long-term variable pay. For 2019, 75 percent of our Chairman’s compensation is at-risk performance based compensation.

In September 2018, the Group approved an amended employment agreement for the newly appointed CEO, which sets forth base salary, short-term variable pay and long-term variable pay. The compensation terms were established after reviewing external benchmarks and evaluating internal equity, and were supported by our external compensation consultant. For the performance based pay elements, the combination of the annual incentive and the long term incentive imposes 89% of targeted pay at risk. The CEO’s targeted annual compensation of $14.0 million consists of:

~~Base salary: $1.6 million~~

~~Target bonus: $2.4 million~~

~~Target equity fair market value at grant: $10.0 million of which 75% is performance based and 25% is retention based~~

~~This is illustrated in the weighting of the CEO Target Pay Mix table below:~~

New Annual Rolling Approach Vesting Schedule



~~Elements of Compensation~~	Year 1	Year 2	Year 3	Year 4		Year 5
	Performance Period
Three Year Plan #1	~~Salary~~Grant ~~11%~~PSU's and RSU's	~~Annual Incentive~~ ~~17%~~	~~Long-Term Incentives~~ ~~72%~~	Cliff Vests
		Performance Period
Three Year Plan #2
~~Fixed vs. Variable~~	~~Fixed~~Grant ~~11%~~PSU's and RSU's	~~Variable~~ ~~89%~~			Cliff Vests

2019 - 2021 Transitional Partial Vesting Schedule

As noted in the Summary Overview of Remuneration Elements, the Executive Directors received a grant in 2019 under the new LTI plan. The ~~material~~actual payout that the Executive Directors may realize on the performance share units depends on the achievement of critical financial and relative stock performance targets established by the Compensation Committee for the 2019-2021 performance period. The maximum opportunity of these new equity awards is 820,269 units for the Chairman, 2,733,990 units for the CEO, and 791,904 units for the CFO.

The Compensation Committee reviews the results and achievement of metrics and presents the results to the non-Executive Directors typically in the first quarter of each year with the completion of the year-end earnings release. In 2019, the 88.9% of the Adjusted EBIT target was achieved resulting in a payout of 72.27% of the target Adjusted EBIT performance share units. In addition, the Company ranked 6th among the 16 Relative TSR peer group resulting in a payout of 75% of the target Relative TSR performance share units.



Adjusted EBIT Payout Scale			TSR Payout Scale
% Achieved	Payout % of Target		FCA Rank	Payout % of Target
100.0%	100.0%		1	225.0%
95.0%	87.5%		2	180.0%
90.0%	75.0%	ç	3	145.0%
85.0%	62.5%	ç	4	120.0%
80.0%	50.0%		5	100.0%
		è	6	75.0%
			7	50.0%
			8-16	0.0%

Subject to the achievement or satisfaction of the terms and conditions of the award agreements, the number of units to be delivered in 2020 to the Executive Directors based on this 2019 achievement is 165,435 to the Chairman, 551,409 to the CEO and 170,122 to the CFO.

Share Plans Granted to Directors

The following table provides an overview of the share plans held by the Executive Directors for the year ended December 31, 2019:



Name of Director, Position	Specification of Plan	Performance Period	Grant Date⁽¹⁾	Vesting Date	Opening Balance	Shares Granted	Market Value on Grant Date		Shares Awarded Due to Performance	Shares Vested⁽³⁾	Shares Subject to a Performance Condition	Shares Awarded and Unvested	Share-Based Compensation Expense⁽²⁾
ELKANN, John Philipp, Chairman	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	139,620	€	1,844,006	—	—	—	139,620	€	622,462
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	418,860	€	5,532,017	—	—	418,860	418,860	€	1,661,924

MANLEY, Michael, CEO	2014 - 2018 LTI RSU	2014-2018	September 27, 2018	May 8, 2019	45,091	—	€	821,493	—	45,091	—	—	€	156,978
	2014 - 2018 LTI PSU	2014-2018	September 27, 2018	May 8, 2019	135,273	—	€	2,464,497	33,818	169,091	135,273	—	€	1,048,303
	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	465,360	€	6,146,158	—	—	—	465,360	€	2,074,696
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	1,396,080	€	18,438,473	—	—	1,396,080	1,396,080	€	5,539,272

PALMER, Richard, CFO	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	186,330	€	2,460,920	—	—	—	186,330	€	830,708
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	372,660	€	4,921,839	—	—	372,660	372,660	€	1,478,615

(1) In 2019, the Board approved holding requirements for Executive Directors effective for grants issued after January 1, 2020. The grants issued in 2018 and 2019 are not subject to these holding requirements.

(2) In 2019, the CEO received the 3^rd and final tranche of the equity award granted in 2015 for the 2014 - 2018 performance period for his role prior to becoming CEO. The 2019 expense relating to this grant is included in the aggregate compensation expense for executives with strategic responsibilities in Note 24, Related party transactions, within the Consolidated Financial Statements included elsewhere in this report.

(3) The fair market value of the shares that vested on May 8, 2019 was €2,931,078.

In December 2019, the Compensation Committee, in accordance with the terms of the ~~Chairman's~~LTI plan, approved a conversion factor of 1.107723 that was applied to outstanding awards under the Long Term Incentive Plan to make equity award holders whole for the resulting diminution in the value of an FCA common share as a result of the payment of an extraordinary cash distribution to holders of FCA common shares on May 30, 2019. The number of shares granted has been adjusted as follows:



Name of Director, Position	Specification of Plan	Performance Period	Grant Date	Shares Granted	Conversion Factor	Dilution Adjustment	Number of Adjusted Shares
ELKANN, John Philipp, Chairman	2019 LTI RSU	2019 - 2021	May 15, 2019	139,620	1.107723	15,040	154,660
ELKANN, John Philipp, Chairman	2019 LTI PSU	2019 - 2021	May 15, 2019	418,860	1.107723	45,121	463,981

MANLEY, Michael, CEO	2019 LTI RSU	2019 - 2021	May 15, 2019	465,360	1.107723	50,130	515,490
MANLEY, Michael, CEO	2019 LTI PSU	2019 - 2021	May 15, 2019	1,396,080	1.107723	150,390	1,546,470

PALMER, Richard, CFO	2019 LTI RSU	2019 - 2021	May 15, 2019	186,330	1.107723	20,072	206,402
PALMER, Richard, CFO	2019 LTI PSU	2019 - 2021	May 15, 2019	372,660	1.107723	40,144	412,804

Stock Ownership

Our Board recognizes the critical role that executive stock ownership and retention has in aligning the ~~current CEO's respective agreements in effect~~interests of management with those of shareholders. In 2019, the Board approved stock ownership and retention guidelines for ~~2018~~Executive Directors.

The Chairman and CEO are ~~described below in greater detail.~~

subject to stock ownership guidelines which require owning shares with an aggregate value of not less than six (6) times base salary. The CFO is subject to stock ownership guidelines which requires owning shares with an aggregate value of not less than three (3) times base salary. Executive Directors ~~Realized Compensation~~are required to meet their required level of ownership prior to February 21, 2024 (five years from the date of Board approval) and, once achieved, maintain their required level until the Executive Director ceases to be subject to these ownership guidelines or becomes subject to a lower ownership level.

~~Realized compensation is the amount that our executive directors actually received in 2018. Realized compensation includes actual base salary earned, actual annual bonus,~~The Chairman and ~~the value~~CEO are required to retain one hundred percent (100%) of net, after-tax shares of Common stock issued upon vesting and settlement of any equity awards ~~that vested during~~granted until the ~~year. In~~fifth (5th) anniversary of the grant date of such award. The CFO, in accordance with his carry-over pre-Executive Director arrangement is required to retain fifty percent (50%) of any net, after- tax shares of Common stock issued upon vesting and settlement of any equity awards granted until the ownership guidelines are met. These retention requirements apply to Common stock issued upon vesting and settlement of any equity awards granted after January 1, 2020.

Remuneration to Former Executive Directors

Pursuant to our former CEO’s employment agreement and as described in the 2018 ~~our Chairman’s realized cash compensation~~Remuneration Report, the remaining pro-rated long-term incentive award was ~~€1,693,545, consisting~~delivered in 2019. As a result of ~~only~~overachievement of performance objectives for the 2014 - 2018 performance period a total of 1,951,457 units were delivered. This represented the maximum amount of 125% of the pro-rated award. Other payments will be made consistent with obligations set forth in Mr. Marchionne’s employment agreement, including his post mandate benefit of 5 x base ~~salary (consistent with prior years, our Chairman did not receive any variable compensation in 2018). Our current CEO's realized cash compensation was €600,442 consisting~~compensation.

2. Remuneration for Non-Executive Directors

Remuneration of ~~base salary only as our current CEO did not receive any variable compensation in 2018 attributable to his role as CEO.~~

~~Realized compensation differs from the total compensation~~non-executive directors is set forth in the ~~Directors'~~Remuneration Policy. The current remuneration for the non-executive directors is shown in the table below.



Non-Executive Director Compensation		U.S.$
Annual cash retainer		200,000
Additional retainer for Audit Committee member		10,000
Additional retainer for Audit Committee Chair		20,000
Additional retainer for Compensation/Governance Committee member		5,000
Additional retainer for Compensation/Governance Committee Chair		15,000
Additional retainer for Lead Independent Director		25,000

At the 2017 annual general meeting of FCA shareholders, the Company's shareholders approved amendments to the Remuneration Policy to introduce the principle that non-executive directors are paid in cash. Remuneration of non-executive directors is fixed and not dependent on the Group's financial results. Non-executive directors are not eligible for variable compensation and do not participate in any incentive plans. Non-executive directors are entitled to certain automobile perquisites, which are subject to taxes for the imputed income on the purchase or lease of Company vehicles.

3. Recoupment of Incentive Compensation ~~table later~~(Claw back Policy)

The Company is dedicated to maintaining and enhancing a culture focused on integrity and accountability. Employment agreements with members of management, including its executive officers, and also the Equity Incentive Plan (“EIP”), allow the Company to recover, or clawback, incentive compensation, including the ability to retroactively adjust if any cash or equity incentive award is predicated upon achieving financial results and the financial results were subject to an accounting restatement. In addition, the CEO and each of the Company’s executive officers will repay net amounts received for their, 2017, 2018 and 2019 annual bonuses, restricted share units and performance share units if, during the two years after payment, (i) FCA restates its financial statements for any vesting or performance period covered by the compensation (“covered period”), (ii) “cause”, as defined in ~~this report.~~executive’s employment agreement, existed during a covered period, or (iii) the executive engaged in certain conduct that has been materially injurious to the Company. In the financial year 2019, no situation occurred which variable remuneration has been, or had to be, reclaimed.

4. Insider Trading Policy

The Company maintains an insider trading policy applicable to all directors, employees, members of the households and immediate family members (including spouse and children) of persons listed and other unrelated persons, if they are supported by the persons listed. The insider trading policy provides that the aforementioned individuals may not buy, sell or engage in other transactions in the Company’s stock while in possession of material non-public information; buy or sell securities of other companies while in possession of material non-public information about those companies they become aware of as a result of business dealings between the Company and those companies; disclose material non-public information to any unauthorized persons outside of the Company; or engage in hedging transactions through the use of certain derivatives, such as put and call options involving the Company’s securities. The insider trading policy also restricts trading by specified individuals to defined window periods which follow the Company’s quarterly earnings releases.

To ensure alignment with shareholders' interest and to further strengthen our compensation risk management policies and practice, the Company’s insider trading policy prohibits all individuals to whom the policy applies from engaging in a short sale of the Company's or its subsidiaries' securities and derivatives (such as options, puts, calls, or warrants).

5. Compliance with the Remuneration Policy

The remuneration paid to executive and non-executive directors for 2019 was done in line with the applicable remuneration policy. We refer to the paragraphs on Summary Overview of Remuneration Elements, Short Term Incentive Calculations 2019 and Long Term Incentive Calculations 2019 above, for an elaboration on how the remunerations in the Remuneration Report contribute to the long-term performance of the Company.

6. Terms of engagement

The Executive Directors are employed by the Company on the basis of an employment agreement for an indefinite period of time and are employed at will, meaning either party can terminate the employment relationship at any time. They are appointed in their Corporate role for a period of approximately one year (i.e. until the general meeting in the calendar year following the year of appointment).

7. Derogations and deviations from the Remuneration Policy

For 2019, no derogations or deviations were made to the applicable remuneration policy.

8. Internal Pay Ratios and Comparative Information

~~Internal Pay Ratios~~Stock Ownership

~~During 2018,~~Our Board recognizes the ~~Company externally benchmarked~~critical role that executive stock ownership and retention has in aligning the ~~executive directors’ pay~~interests of management with those of shareholders. In 2019, the Board approved stock ownership and ~~continued to monitor Dutch Corporate Governance Code with the support of Netherlands outside counsel and noted there were no updates to Dutch pay ratio guidance.~~retention guidelines for Executive Directors.

~~U.S. peers began disclosing pay ratios in 2018 per SEC guidelines, providing limited comparative context as none of our 12 European peer group companies disclosed a CEO pay ratio.~~

In light of the above, FCA reviewed our CEO pay ratio relative to 17 Fortune 200 companies who have a similar employee geographic profile (with more than approximately 75% of their employees outside of the United States). FCA ranked below the median of 403:1 according to our external compensation consultant. The ratio of our CEO's total annual target compensation of €12,642,204 (base salary, bonus, long term equity award and change in pension balance) to that of our median employee’s annual total compensation of €33,353 (base salary, variable compensation, overtime and change in pension balance) is estimated to be 379:1.

In light of the partial year earnings realized by the CEO we deemed annual target compensation, including base salary and short and long term incentive, to be the most appropriate comparison for 2018 pay.

~~Base Salary~~

The Chairman and CEO are subject to stock ownership guidelines which require owning shares with an aggregate value of not less than six (6) times base ~~salary for our Chairman has remained unchanged for five consecutive~~salary. The CFO is subject to stock ownership guidelines which requires owning shares with an aggregate value of not less than three (3) times base salary. Executive Directors are required to meet their required level of ownership prior to February 21, 2024 (five years ~~(2014, 2015, 2016, 2017 and 2018). Effective January 1, 2019, the annual base salary for our Chairman will be reduced~~ from ~~U.S. $2.0 million to U.S. $1.0 million. Effective July 21, 2018,~~ the date of ~~our new CEO's appointment, his annual base salary is U.S.$1.6 million. The Company does not guarantee annual base pay increases for executive directors~~Board approval) and, once achieved, maintain their ~~agreements do not contemplate automatic base salary increases. Base salary is~~required level until the ~~only fixed component of our executive directors’ total cash compensation and is intended~~Executive Director ceases to provide market-competitive pay to attract and retain well-qualified senior executives and expert leaders. Base salary is based on the individual’s skills, scope of job responsibilities, experience and competitive market data. The base salaries of our executive directors are evaluated together with other components of compensation to ensure that they are in line with our overall compensation philosophy and are aligned with performance.

~~Variable Components~~

~~FCA's CEO is eligible to receive short-term variable compensation,~~be subject to these ownership guidelines or becomes subject to a lower ownership level.

The Chairman and CEO are required to retain one hundred percent (100%) of net, after-tax shares of Common stock issued upon vesting and settlement of any equity awards granted until the ~~achievement of pre-established, operating and financial performance targets. The variable components~~fifth (5th) anniversary of the grant date of such award. The CFO, in accordance with his carry-over pre-Executive Director arrangement is required to retain fifty percent (50%) of any net, after- tax shares of Common stock issued upon vesting and settlement of any equity awards granted until the ownership guidelines are met. These retention requirements apply to Common stock issued upon vesting and settlement of any equity awards granted after January 1, 2020.

Remuneration to Former Executive Directors

Pursuant to our former CEO’s ~~remuneration, both short~~employment agreement and as described in the 2018 Remuneration Report, the remaining pro-rated long-term ~~are linked to predetermined, measurable~~incentive award was delivered in 2019. As a result of overachievement of performance objectives ~~which serve to motivate strong~~for the 2014 - 2018 performance ~~and shareholder returns and are approved by~~period a total of 1,951,457 units were delivered. This represented the ~~non-executive directors. The~~maximum amount of 125% of the pro-rated award. Other payments will be made consistent with obligations set forth in Mr. Marchionne’s employment agreement, including his post mandate benefit of 5 x base compensation.

2. Remuneration for Non-Executive Directors

Remuneration of non-executive directors ~~believe that placing significantly more weight on~~is set forth in the ~~long-term component is appropriate~~Remuneration Policy. The current remuneration for ~~the CEO position because it focuses efforts on the Company’s long-term objectives.~~

As specified by Dutch Corporate Governance Code, scenario analyses are carried out annually to examine the relationship between the performance criteria chosen and the possible outcomes for the variable remuneration of our CEO. When such analyses were completed for the 2018 financial year, the Company found a strong link between remuneration and performance and concluded that the chosen performance criteria are appropriate under both the short-term and long-term incentive components of total remuneration in support of the Company’s strategic objectives.

~~Short-Term Variable Incentive~~

The primary objective of the short-term variable incentive is to motivate achievement of the business priorities for the current year. The CEO’s short-term variable incentive is based solely on annual financial objectives proposed by the Compensation Committee and approved by the non-executive directors ~~each year. The short-term variable incentive program applies rigorous performance measures to ensure a link between annual payout and Company performance.~~

~~Our Methodology for Determining Annual Bonus Awards~~

~~With regard to the determination of the CEO’s annual performance bonus, the Compensation Committee:~~

~~approves the objectives and maximum allowable bonus;~~

~~selects the metrics and weighting of objectives;~~

~~sets the stretch objectives;~~

~~reviews the performance delivered for each operating metric to determine the appropriate overall measurement of achievement of the objectives; and~~

~~approves the final bonus determination.~~

~~The target incentive for the annual bonus program~~ is 150% of base salary for the CEO. To earn any incentive, the threshold performance must be at least 90% of the specific target established. To earn the maximum payout of 200% of target, actual results must be achieved at 150% of the target performance, or greater, for all the performance metrics.

The Compensation Committee established the annual financial performance goals based on the Company’s 2018 financial plan presented to the Board of Directors. In addition the Compensation Committee considered the Company’s performance relative to the business plan and input from the external compensation consultant to ensure the goals are linked to long-term shareholder value creation. The 2018 bonus plan goals were set with challenging hurdles, and are in line with the Group's initial external guidance and our five-year business plan, as set forth below.

2018 Performance Metrics⁽¹⁾
Weight
Threshold (€ millions)
Target (€ millions)
Maximum (€ millions)
Adjusted EBIT 1/3 7,830
8,700
13,050
Adjusted net profit 1/3 4,500
5,000
7,500
Net industrial cash 1/3 3,600
4,000
6,000

~~(1) Refer to FINANCIAL OVERVIEW - Non-GAAP Financial Measures for additional detail and definitions of these performance metrics; 2018 Performance Metrics include the results of Magneti Marelli,~~

~~Discussion of 2018 Results~~

The Compensation Committee reviews the results and achievements and presents the results to the non-executive Directors, typically in the first quarter of each year in connection with the completion of the year-end earnings release. In 2018 the Adjusted net profit metric was achieved, while Adjusted EBIT and Net Industrial Cash fell below the 90% threshold, providing for an overall company performance factor of 34.0%

~~CEO Bonus Calculation~~

The Compensation Committee determined that the current CEO earned an annual bonus of $367,000 for 2018 related to his CEO service from July 21, 2018 through December 31, 2018 based on the achievement of the pre-established metrics set forth above. The Chairman was not eligible for any form of short-term variable compensation in 2018.

~~Long-Term Incentives~~

~~Long-term incentive compensation is a critical component of our Executive Directors' compensation structure. This compensation component is designed to:~~

~~align the interests of our Executive Directors and other key contributors with the interests of our shareholders;~~

~~motivate the attainment of Company performance goals and reward sustained shareholder value creation; and~~

~~serve as an important attraction and long-term retention tool that management and the Compensation Committee use to strengthen loyalty to the Company.~~

~~Cyclical, Long-Term Nature of Our Business.~~ Market demand for automobiles and light commercial vehicles is cyclical and product life cycles are long, and thus so is the nature of FCA's business. As long-term incentive compensation is one of the key mechanisms to motivate and reward managers, the Company has structured this component to consider the long-term, cyclical nature of the business.

~~2014-2018 Long-Term Equity Incentive Plan~~

With the aim to attract, motivate and retain Executive Directors for the long-term, to reward Executive Directors based on our future performance as reflected by the market price of FCA shares, and to foster a long-term link between Executive Directors’ interests and the interests of the Company and its shareholders, the Compensation Committee established the 2014-2018 long-term incentive program (“2014-2018 LTIP”). This plan is consistent with the Company's business plan presented to Capital Markets in May 2014, which was subsequently updated to reflect changes in the Company's capital structure. In this way, Executive Directors’ payouts are tied and aligned with the interests of shareholders.

The performance based awards vesting under the LTI program are conditional on meeting two independent metrics, Adjusted net profit and Relative TSR, which are weighted equally at target. Each metric has threshold and target performance levels such that performance below threshold results in no awards being earned. The payout opportunity is based on the Company’s relative TSR ranking against the companies in the peer group as shown in the table below. Accordingly, the CEO may earn between 0 percent and 125 percent of the target number of awards granted. The Adjusted net profit component payout begins at 80 percent of target achievement and has a maximum payout at 100 percent of target. The Relative TSR component has partial vesting if the Company is ranked seventh or better among an industry specific peer group of eleven, including the Company, and a maximum payout of 150 percent, if the Company is ranked first among the eleven companies. The awards have three vesting opportunities, the first after 2014-2016 results, the second after 2014-2017 results, and the third after the full 2014-2018 results. FCA achieved 100 percent Adjusted net profit payout and had a ranking of number one for each of the three vesting opportunities.

Adjusted Net Profit Payout Scale TSR Payout Scale
% Achieved Payout % of Target FCA Rank Payout % of Target
80.0% 50.0% 1 150.0%
85.0% 62.5% 2 133.3%
90.0% 75.0% 3 125.0%
95.0% 87.5% 4 100.0%
100.0% 100.0% 5 83.3%
6 66.7%
7 50.0%
8-11 0.0%

~~Listed below is the Relative TSR peer group:~~

~~2014-2018 Performance Cycle Relative TSR Metric Peers~~



~~Volkswagen AG~~	~~Toyota Motor Corporation~~	~~Daimler AG~~	~~General Motors Company~~
~~Ford Motor Company~~	~~Honda Motor Co. Ltd.~~	~~BMW Group~~	~~The Hyundai Motor Company~~
~~PSA Peugeot Citroen~~	~~Renault SA~~Non-Executive Director Compensation		U.S.$
Annual cash retainer		200,000
Additional retainer for Audit Committee member		10,000
Additional retainer for Audit Committee Chair		20,000
Additional retainer for Compensation/Governance Committee member		5,000
Additional retainer for Compensation/Governance Committee Chair		15,000
Additional retainer for Lead Independent Director		25,000

~~2019-2021 Long-Term Equity~~At the 2017 annual general meeting of FCA shareholders, the Company's shareholders approved amendments to the Remuneration Policy to introduce the principle that non-executive directors are paid in cash. Remuneration of non-executive directors is fixed and not dependent on the Group's financial results. Non-executive directors are not eligible for variable compensation and do not participate in any incentive plans. Non-executive directors are entitled to certain automobile perquisites, which are subject to taxes for the imputed income on the purchase or lease of Company vehicles.

3. Recoupment of Incentive ~~Plan~~Compensation (Claw back Policy)

~~In December 2018,~~The Company is dedicated to maintaining and enhancing a culture focused on integrity and accountability. Employment agreements with members of management, including its executive officers, and also the ~~Compensation Committee approved a new 2019-2021 Long-Term~~ Equity Incentive Plan ~~structure that better aligns with market practice. This new plan~~(“EIP”), allow the Company to recover, or clawback, incentive compensation, including the ability to retroactively adjust if any cash or equity incentive award is ~~consistent with~~predicated upon achieving financial results and the financial results were subject to an accounting restatement. In addition, the CEO and each of the Company’s ~~business plan presented to Capital Markets in June 2018. Issuance of shares under the new plan is subject to shareholder approval at the~~executive officers will repay net amounts received for their, 2017, 2018 and 2019 ~~Annual General Meeting (AGM).~~

~~CEO’s Long-Term Incentive Equity Awards~~

~~Our CEO received a new one-time grant consisting of 135,273~~annual bonuses, restricted share units and performance share units ~~and 45,091 restricted share units under the 2014-2018 LTI program for his CEO service~~if, during the two years after payment, (i) FCA restates its financial statements for any vesting or performance period ~~July 21, 2018 - December 31, 2018.~~ covered by the compensation (“covered period”), (ii) “cause”, as defined in executive’s employment agreement, existed during a covered period, or (iii) the executive engaged in certain conduct that has been materially injurious to the Company. In the financial year 2019, no situation occurred which variable remuneration has been, or had to be, reclaimed.

4. Insider Trading Policy

The ~~design and award level for the one-time grant covering the remainder~~Company maintains an insider trading policy applicable to all directors, employees, members of the ~~five-year performance period was based on market competitive analysis provided~~households and immediate family members (including spouse and children) of persons listed and other unrelated persons, if they are supported by the ~~Compensation Committee’s external compensation consultant.~~persons listed. The ~~performance share units~~insider trading policy provides that the aforementioned individuals may not buy, sell or engage in other transactions in the Company’s stock while in possession of material non-public information; buy or sell securities of other companies while in possession of material non-public information about those companies they become aware of as a result of business dealings between the Company and ~~the restricted share units can convert into shares~~those companies; disclose material non-public information to any unauthorized persons outside of the ~~Company~~Company; or engage in hedging transactions through the use of certain derivatives, such as put and call options involving the Company’s securities. The insider trading policy also restricts trading by specified individuals to defined window periods which follow the Company’s quarterly earnings releases.

5. Compliance with the Remuneration Policy

The remuneration paid to executive and non-executive directors for 2019 ~~subject~~was done in line with the applicable remuneration policy. We refer to ~~specific vesting conditions. The actual payout that~~ the ~~CEO may realize~~paragraphs on Summary Overview of Remuneration Elements, Short Term Incentive Calculations 2019 and Long Term Incentive Calculations 2019 above, for an elaboration on how the remunerations in the Remuneration Report contribute to the long-term performance ~~share units depends on~~of the ~~achievement~~Company.

6. Terms of critical operation and relative stock performance targets established by the Compensation Committee for the 2014-2018 performance period. The Compensation Committee will assess the satisfaction of these performance targets in 2019. The maximum opportunity for the final vesting of this new equity award linked to his CEO service is 214,182 units.

~~Pension and Retirement Savings~~

Based on legacy arrangements which were developed to assist in incentivizing the Chairman during an extremely challenging period, certain retirement benefits were provided. FCA's Chairman had retirement savings benefits in an aggregate amount equal to five times his last annual base compensation. In 2018 based on the Chairman’s views of his pension and retirement savings benefit, he offered to remove this benefit from his current compensation framework effective January 1, 2019. The Board approved the removal of this benefit for the Chairman.engagement

The CEO participates in a defined contribution plan similar to other U.S. based salaried employees and a supplemental retirement benefit plan. In consideration of his CEO service, the supplemental retirement benefit plan provides a retirement savings benefit in an aggregate amount equal to 3 times his annual base salary. This benefit requires five years of CEO service for 100% vesting and 3 years of service for 50% vesting (with straight-line interpolation in between 0 and 3 years of service and for greater than 3 years of service and less than 5 years of service). In 2018, a cost of €0.3 million was recognized in connection with these retirement savings benefit plans.

~~Non-compete Restrictions and Severance~~

In connection with our CEO’s written agreement approved in 2018, he agreed to a non-compete restriction under which he committed not to directly or indirectly work for or associate with any business that competes with the Company for one year after termination of his services. In addition, under the agreement, if the Company terminates his services for reasons other than for cause (as defined) or if he terminates his services for good reason (as defined), the Company will pay the CEO an amount equal to the sum of one times the sum of his annual base salary, for the last fiscal year prior to termination of his services, if within twenty-four months following a change of control (as defined), the CEO’s servicesExecutive Directors are ~~involuntarily terminated~~employed by the Company ~~(other than~~on the basis of an employment agreement for ~~cause), or~~an indefinite period of time and are ~~terminated by~~employed at will, meaning either party can terminate the ~~CEO for good reason, the CEO is entitled to receive the severance and accelerated vesting of awards under the EIP. If the CEO leaves the Company then pursuant to his agreement, he may not work~~employment relationship at any time. They are appointed in their Corporate role for a ~~competitor for~~period of approximately one year ~~after~~(i.e. until the ~~termination date. The CEO will not be entitled~~general meeting in the calendar year following the year of appointment).

7. Derogations and deviations from the Remuneration Policy

For 2019, no derogations or deviations were made to the ~~severance if he is terminated for cause.~~

Currently, in connection with our Chairman’s legacy written employment agreement, if the Company terminates his services for reasons other than for cause (as defined) or if he terminates his services for good reason (as defined), the Company will pay the Chairman an amount equal to two times his annual base salary, using the base salary as in effect for the last fiscal year prior to termination of services. Based on his views of his current compensation, the Chairman has expressed his desire to reduce his severance benefit to one times base salary. In 2019, the Company will update written agreements with the Chairman for Board approval to formally incorporate this change.

~~Other Benefits~~

We offer customary perquisites to our CEO and Chairman. The executive directors may also be entitled to usual and customary fringe benefits such as personal use of aircraft, company car and driver, personal/home security, medical insurance, accident and disability insurance, tax preparation, financial counseling and tax equalization. The Remuneration Policy also enables the Compensation Committee to grant other benefits to the executive directors in particular circumstances.applicable remuneration policy.

~~Tax Equalization~~



~~Action Taken~~	~~Rationale~~
~~Tax equalization for executive directors~~	~~Maintain respective home country taxation on all income for services, in the event of incremental taxes~~

8. Internal Pay Ratios and Comparative Information

The executive directors, by nature of their role in our geographically diverse company, may be subject to tax on their income for services in multiple countries. Given the executive directors are subject to tax on their worldwide income in their respective home countries, the Company studied the prevalent practice for handling incremental tax costs incurred by globally mobile executives. Based on that analysis, the Board decided to tax equalize all of the employment earnings, including equity income, to the executive directors’ respective home country effective tax rate, if incremental taxes over their home country tax rate would arise.

~~Stock Ownership~~

Our Board recognizes the critical role that executive stock ownership has in aligning the interests of management with those of shareholders. While the Company did not maintain a formal stock ownership policy, the current CEO’s stock holdings, when viewed as a multiple of his 2018 base salary, was significantly greater than common market practice of six times base salary. The company has taken under advisement a stock ownership and retention policy which is planned for implementation in 2019.

~~Recoupment of Incentive Compensation (Claw back Policy)~~

~~The Company is dedicated~~Share Plans Granted to maintaining and enhancing a culture focused on integrity and accountability. Employment agreements with members of management, including its executive officers , and also the EIP, allow the Company to recover, or “claw back”, incentive compensation, including the ability to retroactively adjust if any cash or equity incentive award is predicated upon achieving financial results and the financial results were subject to an accounting restatement. In addition, the CEO and each of the Company’s executive officers will repay net amounts received for their 2016, 2017 and 2018 annual bonuses, restricted share units and performance share units if, during the two years after payment, (i) FCA restates its financial statements for any vesting or performance period covered by the compensation (a “covered period”), (ii) “cause”, as defined in executive’s employment agreement, existed during a covered period, or (iii) the executive engaged in certain conduct that has been materially injurious to the Company.

~~Equity Incentive Plan - Long Term Incentive Program~~



~~2014 - 2016~~	~~2014 - 2017~~	~~2014 - 2018~~	~~2017, 2018 and 2019 Vesting~~

~~Performance Periods~~			~~Awards subject to reduction/cancellation/recovery based on claw back policy~~

1^st~~, 2~~^nd~~and 3~~^rd ~~tranche equity awards based on 2014 – 2016, 2014 – 2017 and 2014 - 2018 performance achieved, respectively~~			~~Award in share of common stock~~

~~Annual Bonus Plan~~



~~2016, 2017 and 2018~~						~~2016, 2017 and 2018 Claw back~~

~~Annual Performance Periods~~						~~Awards subject to reduction/cancellation/recovery~~

~~Results based on performance in 2016, 2017 and 2018~~						~~Awards in cash in first quarter of 2017, 2018 and 2019~~

~~Insider Trading Policy~~

The Company maintains an insider trading policy applicable to all directors, employees, members of the households and immediate family members (including spouse and children) of persons listed and other unrelated persons, if they are supported by the persons listed. The insider trading policy provides that the aforementioned individuals may not buy, sell or engage in other transactions in the Company’s stock while in possession of material non-public information; buy or sell securities of other companies while in possession of material non-public information about those companies they become aware of as a result of business dealings between the Company and those companies; disclose material non-public information to any unauthorized persons outside of the Company; or engage in hedging transactions through the use of certain derivatives, such as put and call options involving the Company’s securities. The insider trading policy also restricts trading to defined window periods which follow the Company’s quarterly earnings releases.

~~Prohibition on Short Sales (Anti-hedging)~~

~~Remuneration for Non-Executive~~ Directors

~~Remuneration of non-executive directors is set forth in the Remuneration Policy. The current remuneration for the non-executive directors is shown in the table below.~~



~~Non-Executive Director Compensation~~	~~U.S.$~~
~~Annual cash retainer~~	~~200,000~~
~~Additional retainer for Audit Committee member~~	~~10,000~~
~~Additional retainer for Audit Committee Chair~~	~~20,000~~
~~Additional retainer for Compensation/Governance Committee member~~	~~5,000~~
~~Additional retainer for Compensation/Governance Committee Chair~~	~~15,000~~
~~Additional retainer for Lead Independent Director~~	~~25,000~~

At the 2017 annual general meeting of FCA shareholders, the Company's shareholders approved amendments to the Remuneration Policy to introduce the principle that non-executive directors are paid in cash. Pursuant to the amendment, implemented shortly after the 2017 annual general meeting of shareholders, non-executive directors are to be paid in cash, and no longer have the option to elect to receive their annual retainer fee, committee membership, and committee chair fee payments in the form of common shares. Remuneration of non-executive directors is fixed and not dependent on the Group's financial results. Non-executive directors are not eligible for variable compensation and do not participate in any incentive plans. Non-executive directors are also entitled to certain automobile perquisites, which are subject to taxes for the imputed income on the purchase or lease of Company vehicles.

~~Directors' Compensation~~

The following table ~~summarizes the remuneration paid or awarded to the members~~provides an overview of the ~~Board of~~share plans held by the Executive Directors for the year ended December 31, ~~2018.~~2019:

Directors of FCA Office held In office from/to
Annual fee
(cash)
(€)

Annual incentive (equity) ⁽¹⁾ (€)

Annual incentive (bonus)
⁽²⁾(€)
Other compensation (€)
Pension & similar benefits ⁽⁷⁾(€)
Total (€)
ELKANN John Philipp Chairman 01/01/2018 - 12/31/2018 1,693,545
—
—
875,944
⁽³⁾
549,000
3,118,489
MARCHIONNE Sergio
Former
CEO
01/01/2018 - 07/20/2018 1,975,803
284,671
—
4,369,176
⁽⁴⁾
4,336,905
10,966,555
MANLEY Michael CEO 07/21/2018 - 12/31/2018 600,442
1,687,075
310,766
89,817
⁽⁵⁾
292,329
2,980,429
ABBOTT John Director 04/13/2018 - 12/31/2018 84,677
—
—
—
—
84,677
AGNELLI Andrea Director 01/01/2018 - 12/31/2018 169,355
—
—
—
—
169,355
BRANDOLINI D'ADDA Tiberto Director 01/01/2018 - 12/31/2018 169,355
—
—
1,074
—
170,429
EARLE Glenn Director 01/01/2018 - 12/31/2018 186,290
—
—
18,392
⁽⁶⁾
—
204,682
MARS Valerie Director 01/01/2018 - 12/31/2018 182,056
—
—
8,044
⁽⁶⁾
—
190,100
SIMMONS Ruth J. Director 01/01/2018 - 12/31/2018 173,588
—
—
6,917
⁽⁶⁾
—
180,505
THOMPSON Ronald L. Director 01/01/2018 - 12/31/2018 198,992
—
—
6,917
⁽⁶⁾
—
205,909
VOLPI Michelangelo A. Director 01/01/2018 - 12/31/2018 173,588
—
—
—
173,588
WHEATCROFT Patience Director 01/01/2018 - 12/31/2018 182,056
—
—
11,819
⁽⁶⁾
—
193,875
ZEGNA Ermenegildo Director 01/01/2018 - 12/31/2018 182,056
—
—
9,186
⁽⁶⁾
—
191,242
Total 5,971,803
1,971,746
310,766
5,397,286
5,178,234
18,829,835



Name of Director, Position	Specification of Plan	Performance Period	Grant Date⁽¹⁾	Vesting Date	Opening Balance	Shares Granted	Market Value on Grant Date		Shares Awarded Due to Performance	Shares Vested⁽³⁾	Shares Subject to a Performance Condition	Shares Awarded and Unvested	Share-Based Compensation Expense⁽²⁾
ELKANN, John Philipp, Chairman	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	139,620	€	1,844,006	—	—	—	139,620	€	622,462
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	418,860	€	5,532,017	—	—	418,860	418,860	€	1,661,924

MANLEY, Michael, CEO	2014 - 2018 LTI RSU	2014-2018	September 27, 2018	May 8, 2019	45,091	—	€	821,493	—	45,091	—	—	€	156,978
	2014 - 2018 LTI PSU	2014-2018	September 27, 2018	May 8, 2019	135,273	—	€	2,464,497	33,818	169,091	135,273	—	€	1,048,303
	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	465,360	€	6,146,158	—	—	—	465,360	€	2,074,696
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	1,396,080	€	18,438,473	—	—	1,396,080	1,396,080	€	5,539,272

PALMER, Richard, CFO	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	186,330	€	2,460,920	—	—	—	186,330	€	830,708
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	372,660	€	4,921,839	—	—	372,660	372,660	€	1,478,615

~~(1)For~~(2) In 2019, the ~~former~~ CEO received the 3^rd and final tranche of the equity award granted in 2015 for the ~~year ended December 31,~~2014 - 2018 performance period for his role prior to becoming CEO. The 2019 expense relating to this grant is included in the ~~Company recognized a net share-based~~aggregate compensation expense for executives with strategic responsibilities in Note 24, Related party transactions, within the Consolidated Financial Statements included elsewhere in this report.

(3) The fair market value of ~~€284,671. This expense includes €4.3 million~~the shares that vested on May 8, 2019 was €2,931,078.

In December 2019, the Compensation Committee, in accordance with the terms of ~~prior period expense~~the LTI plan, approved a conversion factor of 1.107723 that ~~has been reversed~~was applied to outstanding awards under the Long Term Incentive Plan to make equity award holders whole for the resulting diminution in ~~2018~~the value of an FCA common share as a result of the ~~forfeiture~~payment of ~~683,583 units in accordance with the Special Equity Vesting Terms included in the formers CEO’s employment agreement.~~an extraordinary cash distribution to holders of FCA common shares on May 30, 2019. The ~~CEO received a one-time grant for his CEO service during the period July 21, 2018 - December 31, 2018, the Company recognized a share-based compensation expense~~number of ~~€1,687,075 relating to this grant.~~shares granted has been adjusted as follows:

~~(2) The annual incentive represents the bonus earned for performance year 2018 which will be paid in 2019.~~



Name of Director, Position	Specification of Plan	Performance Period	Grant Date	Shares Granted	Conversion Factor	Dilution Adjustment	Number of Adjusted Shares
ELKANN, John Philipp, Chairman	2019 LTI RSU	2019 - 2021	May 15, 2019	139,620	1.107723	15,040	154,660
ELKANN, John Philipp, Chairman	2019 LTI PSU	2019 - 2021	May 15, 2019	418,860	1.107723	45,121	463,981

MANLEY, Michael, CEO	2019 LTI RSU	2019 - 2021	May 15, 2019	465,360	1.107723	50,130	515,490
MANLEY, Michael, CEO	2019 LTI PSU	2019 - 2021	May 15, 2019	1,396,080	1.107723	150,390	1,546,470

PALMER, Richard, CFO	2019 LTI RSU	2019 - 2021	May 15, 2019	186,330	1.107723	20,072	206,402
PALMER, Richard, CFO	2019 LTI PSU	2019 - 2021	May 15, 2019	372,660	1.107723	40,144	412,804

~~(3) The stated amount includes the use of transport and insurance premiums.~~

~~(4) The stated amount includes insurance premiums, tax preparation and tax equalization.~~

~~(5) The stated amount includes the use of transport and financial counseling.~~

~~(6)The stated amount refers to certain automobile perquisites, which are subject to taxes for the imputed income on the purchase or lease of Company vehicles~~

~~(7) The amounts reflect pension, retirement and similar benefits set aside or accrued for Directors for the year ended December 31, 2018.~~

Share Plans Granted to Directors

The following table ~~gives~~provides an overview of the share plans held by the ~~former Chief~~ Executive ~~Officer.~~Directors for the year ended December 31, 2019:

Name / Plan Grant Date Vesting Date Number of shares under award at January 1, 2018
Fair Value on Grant Date ⁽¹⁾
Shares Granted Shares Vested Number of shares under award at December 31, 2018
Marchionne / FCA LTI awards ^(1)(2),(3)
04/16/2015 2017 / 2018 / 2019 4,472,800
U.S.$14.84 —
2,805,935
1,561,165
Manley/ FCA LTI awards
09/27/2018 2019 —
U.S.$16.61 180,364
—
180,364



Name of Director, Position	Specification of Plan	Performance Period	Grant Date⁽¹⁾	Vesting Date	Opening Balance	Shares Granted	Market Value on Grant Date		Shares Awarded Due to Performance	Shares Vested⁽³⁾	Shares Subject to a Performance Condition	Shares Awarded and Unvested	Share-Based Compensation Expense⁽²⁾
ELKANN, John Philipp, Chairman	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	139,620	€	1,844,006	—	—	—	139,620	€	622,462
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	418,860	€	5,532,017	—	—	418,860	418,860	€	1,661,924

MANLEY, Michael, CEO	2014 - 2018 LTI RSU	2014-2018	September 27, 2018	May 8, 2019	45,091	—	€	821,493	—	45,091	—	—	€	156,978
	2014 - 2018 LTI PSU	2014-2018	September 27, 2018	May 8, 2019	135,273	—	€	2,464,497	33,818	169,091	135,273	—	€	1,048,303
	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	465,360	€	6,146,158	—	—	—	465,360	€	2,074,696
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	1,396,080	€	18,438,473	—	—	1,396,080	1,396,080	€	5,539,272

PALMER, Richard, CFO	2019 LTI RSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	186,330	€	2,460,920	—	—	—	186,330	€	830,708
	2019 LTI PSU	2019 - 2021	May 15, 2019	May 1, 2020 May 1, 2021 May 1, 2022	—	372,660	€	4,921,839	—	—	372,660	372,660	€	1,478,615

(3) The fair market value of the shares that vested on May 8, 2019 was €2,931,078.

In December 2019, the Compensation Committee, in accordance with the terms of the LTI plan, ~~adjusted~~approved a conversion factor of 1.107723 that was applied to outstanding awards under the ~~equity awards~~Long Term Incentive Plan to make equity award holders ~~of the Company’s LTI awards~~ whole for the resulting diminution in the value of an FCA common share ~~resulting~~as a result of the payment of an extraordinary cash distribution to holders of FCA common shares on May 30, 2019. The number of shares granted has been adjusted as follows:



Name of Director, Position	Specification of Plan	Performance Period	Grant Date	Shares Granted	Conversion Factor	Dilution Adjustment	Number of Adjusted Shares
ELKANN, John Philipp, Chairman	2019 LTI RSU	2019 - 2021	May 15, 2019	139,620	1.107723	15,040	154,660
ELKANN, John Philipp, Chairman	2019 LTI PSU	2019 - 2021	May 15, 2019	418,860	1.107723	45,121	463,981

MANLEY, Michael, CEO	2019 LTI RSU	2019 - 2021	May 15, 2019	465,360	1.107723	50,130	515,490
MANLEY, Michael, CEO	2019 LTI PSU	2019 - 2021	May 15, 2019	1,396,080	1.107723	150,390	1,546,470

PALMER, Richard, CFO	2019 LTI RSU	2019 - 2021	May 15, 2019	186,330	1.107723	20,072	206,402
PALMER, Richard, CFO	2019 LTI PSU	2019 - 2021	May 15, 2019	372,660	1.107723	40,144	412,804

Stock Ownership

Our Board recognizes the critical role that executive stock ownership and retention has in aligning the interests of management with those of shareholders. In 2019, the Board approved stock ownership and retention guidelines for Executive Directors.

The Chairman and CEO are subject to stock ownership guidelines which require owning shares with an aggregate value of not less than six (6) times base salary. The CFO is subject to stock ownership guidelines which requires owning shares with an aggregate value of not less than three (3) times base salary. Executive Directors are required to meet their required level of ownership prior to February 21, 2024 (five years from the ~~distribution~~date of Board approval) and, once achieved, maintain their required level until the ~~ordinary~~Executive Director ceases to be subject to these ownership guidelines or becomes subject to a lower ownership level.

The Chairman and CEO are required to retain one hundred percent (100%) of net, after-tax shares ~~in GEDI Gruppo Editoriale S.p.A. (GEDI). For LTI~~of Common stock issued upon vesting and settlement of any equity awards granted until the actual value of units received will depend on the Company’s performance as described above. Fair value is calculated by multiplying the per unit value of the award by the number of units corresponding in the most probable outcome of the performance conditions asfifth (5th) anniversary of the grant ~~date.~~date of such award. The ~~per unit~~CFO, in accordance with his carry-over pre-Executive Director arrangement is ~~based~~required to retain fifty percent (50%) of any net, after- tax shares of Common stock issued upon vesting and settlement of any equity awards granted until the ownership guidelines are met. These retention requirements apply to Common stock issued upon vesting and settlement of any equity awards granted after January 1, 2020.

Remuneration to Former Executive Directors

Pursuant to our former CEO’s employment agreement and as described in the 2018 Remuneration Report, the remaining pro-rated long-term incentive award was delivered in 2019. As a result of overachievement of performance objectives for the 2014 - 2018 performance period a total of 1,951,457 units were delivered. This represented the maximum amount of 125% of the pro-rated award. Other payments will be made consistent with obligations set forth in Mr. Marchionne’s employment agreement, including his post mandate benefit of 5 x base compensation.

2. Remuneration for Non-Executive Directors

Remuneration of non-executive directors is set forth in the Remuneration Policy. The current remuneration for the non-executive directors is shown in the table below.



Non-Executive Director Compensation		U.S.$
Annual cash retainer		200,000
Additional retainer for Audit Committee member		10,000
Additional retainer for Audit Committee Chair		20,000
Additional retainer for Compensation/Governance Committee member		5,000
Additional retainer for Compensation/Governance Committee Chair		15,000
Additional retainer for Lead Independent Director		25,000

At the 2017 annual general meeting of FCA shareholders, the Company's shareholders approved amendments to the Remuneration Policy to introduce the principle that non-executive directors are paid in cash. Remuneration of non-executive directors is fixed and not dependent on the Group's financial results. Non-executive directors are not eligible for variable compensation and do not participate in any incentive plans. Non-executive directors are entitled to certain automobile perquisites, which are subject to taxes for the imputed income on the purchase or lease of Company vehicles.

3. Recoupment of Incentive Compensation (Claw back Policy)

The Company is dedicated to maintaining and enhancing a culture focused on integrity and accountability. Employment agreements with members of management, including its executive officers, and also the Equity Incentive Plan (“EIP”), allow the Company to recover, or clawback, incentive compensation, including the ability to retroactively adjust if any cash or equity incentive award is predicated upon achieving financial results and the financial results were subject to an accounting restatement. In addition, the CEO and each of the Company’s executive officers will repay net amounts received for their, 2017, 2018 and 2019 annual bonuses, restricted share units and performance share units if, during the two years after payment, (i) FCA restates its financial statements for any vesting or performance period covered by the compensation (“covered period”), (ii) “cause”, as defined in executive’s employment agreement, existed during a covered period, or (iii) the executive engaged in certain conduct that has been materially injurious to the Company. In the financial year 2019, no situation occurred which variable remuneration has been, or had to be, reclaimed.

4. Insider Trading Policy

5. Compliance with the Remuneration Policy

6. Terms of engagement

The Executive Directors are employed by the Company on the ~~grant date, adjusted~~basis of an employment agreement for an indefinite period of time and are employed at will, meaning either party can terminate the employment relationship at any time. They are appointed in their Corporate role for a period of approximately one year (i.e. until the general meeting in the calendar year following the year of appointment).

7. Derogations and deviations from the Remuneration Policy

For 2019, no derogations or deviations were made to ~~reflect~~ the ~~relative TSR modifiers using a Monte Carlo simulation that includes multiple inputs such as stock price, performance period, volatility and dividend yield.~~

Event Number of shares under award Conversion Factor Fair Value on award date Dilution Adjustment Number of adjusted shares
GEDI 4,472,800 1.003733 U.S.$9.52 16,696 4,489,496
applicable remuneration policy.

~~(2) Shares Vested represents~~

8. Internal Pay Ratios and Comparative Information

Internal Pay Ratios

The Compensation Committee considers internal pay ratios within the ~~maximum opportunity for~~Company when setting the ~~second vesting~~Executive Directors’ compensation. In line with the newly released guidance provided under the Dutch Corporate Governance Code and the Dutch Civil Code, the CEO pay ratio and five year average employee compensation are to be disclosed in the annual Remuneration Report. Last year, FCA voluntarily reported our CEO pay ratio as our US peers began disclosing in 2018 per SEC guidelines. In accordance with SEC guidelines, the median compensated employee’s total direct compensation was used last year to compare to the CEO’s targeted total direct compensation. This year, the basis of the ~~CEO’s equity award.~~CEO pay ratio uses recently disclosed Dutch methodology of average employee compensation, including all labor costs.

~~(3) The target number~~To meet the new five year trend of ~~units to be delivered~~average employee compensation requirement, total personnel costs reported in the 2019 vest will be 1,561,165 outstanding units at December 31, 2018. This amount has been calculated in accordance with the Special Equity Vesting Terms included in the formers CEO’s employment agreement. The award will remain subject in all respects to the achievement of applicable performance goals.

~~Executive Officers’ Compensation~~

~~Refer~~annual report (refer to Note ~~24,~~8, ~~Related party transactions,~~Other information by nature within the Consolidated ~~Financial Statements~~financial statements included elsewhere in this report) less any Executive Director compensation divided by the average headcount reported in the annual report (refer to Note 8, Other information by nature within the Consolidated financial statements included elsewhere in this report) less any Executive Directors who are included in the total average headcount was utilized and is illustrated below:



Employees excluding Executive Directors	2019	2018	2017	2016⁽¹⁾	2015⁽¹⁾	5 year average
Personnel Costs (€ billions)	11.4	11.7	11.7	13.2	13.4	12.3
Average number of employees	198,770	203,120	197,038	235,480	236,558	214,193
Average employee compensation (€)	57,353	57,601	59,379	56,056	56,646	57,407

(1) These amounts reflect the Personnel Cost and Average number of employees as per the 2016 annual report on Form 20-F as filed with the SEC, and have not been restated to exclude the results of Magneti Marelli following the classification of Magneti Marelli as a discontinued operation.

A five-year trend of the CEO’s pay ratio as required is shown below:



	2019⁽¹⁾	2018⁽²⁾	2017⁽³⁾	2016⁽³⁾	2015⁽³⁾	5 year average
CEO Compensation (€)
Current CEO	13,280,913	2,980,429	—	—	—
Former CEO	—	10,966,555	15,209,696	13,066,520	13,929,560
	13,280,913	13,946,984	15,209,696	13,066,520	13,929,560	13,886,735
Average employee compensation (€)	57,353	57,601	59,379	56,056	56,646	57,407
CEO Pay Ratio	232	242	256	233	246	242

(1) Total reported in 2019 Director’s total remuneration in 2019 for ~~detail~~the CEO

(2) Total reported in 2018 Directors Compensation table for former and current CEO

(3) Total reported in 2017, 2016 and 2015 annual report in the Director's Compensation table plus pension and retirement savings costs for former CEO.

Comparative Table over Remuneration and Company Performance

In line with the new guidance provided under the Dutch Corporate Governance Code and the Dutch Civil Code, the performance of the company, the annual change of remuneration of each director, and of the average employee remuneration other than directors from 2015 to 2019 financial years is disclosed in the following table.

There was no change in the Chairman’s remuneration from 2015 through 2018 as the Chairman’s compensation arrangement consisted of a base salary and did not include variable compensation. As previously noted, the Chairman’s compensation arrangement changed in 2019 to include a reduction in annual fee and the introduction of a long term incentive component representing 75% of his total targeted remuneration. The change in CEO remuneration in 2018 versus 2019 is largely a result of 2019 representing his first full year of remuneration given his appointment to CEO in July 21, 2018. As previously noted, Directors remuneration consists of an annual fee and does not include variable compensation. Year over year changes are a result of coming or leaving the Board or a Committee.



Company Performance	2019	2019 vs. 2018		2018 vs. 2017	2017 vs. 2016		2016 vs. 2015
	Annual Change Higher/(Lower)
Net revenues (€ million)	108,187	(2,225	)	4,682	(68	)	(61	)
Net profit/(loss) from continuing operations (€ million)	2,700	(630	)	39	1,578		1,728
Diluted earnings/(loss) per share from continuing operations (€)	1.71	(0.41	)	0.01	0.99		1.13



Directors Remuneration^{(1), (2)}	Position	2019	2019 vs. 2018		2018 vs. 2017	2017 vs. 2016	2016 vs. 2015
		Annual Change (€) Higher/(Lower)
ELKANN, John Philipp⁽³⁾	Chairman	3,177,662	1,391,110		—	—	—
MANLEY, Michael⁽⁴⁾	CEO	11,446,462	8,710,757		—	—	—
PALMER, Richard	CFO	3,734,367	—		—	—	—
ABBOTT, John⁽⁵⁾	Director	178,655	89,328		89,328	—	—
AGNELLI, Andrea	Director	178,655	—		—	—	—
BRANDOLINI D'ADDA, Tiberto	Director	178,655	—		—	—	—
EARLE, Glenn	Director	196,521	—		—	—	—
MARS, Valerie	Director	192,054	—		—	—	—
SIMMONS, Ruth J.⁽⁵⁾	Director	91,561	(91,561	)	—	—	—
THOMPSON, Ronald L.	Director	209,920	—		—	—	—
VOLPI, Michelangelo A.⁽⁵⁾	Director	183,122	—		91,561	91,561	—
WHEATCROFT, Patience	Director	192,054	—		—	—	—
ZEGNA, Ermenegildo⁽⁵⁾	Director	192,054	—		4,464	4,464	—



Average employee remuneration	2019	2019 vs. 2018		2018 vs. 2017		2017 vs. 2016	2016 vs. 2015
	Annual Change (€) Higher/(Lower)
Average employee remuneration	57,353	(248	)	(1,778	)	3,323	(590	)

(1) Amounts included in 2019 and the year over year annual change are base salary, annual fee, short-term incentive and long-term incentive only. Amounts relating to fringe benefits and post retirement benefits expense have been excluded.

(2) Board of Directors base salary, annual fee, short-term incentive and long-term incentive are paid in U.S. dollars and presented in the annual Remuneration Report in Euros. For purposes of determining annual change, amounts reported in prior years have been restated to reflect a constant average exchange rate throughout the period reported. The rate used for translation was the average Euro to U.S. dollars for the year ended December 31, 2019 of €1.119.

(3) From 2015 - 2018, Chairman received an annual fee of $2,000,000 and no variable compensation. The change in 2018 vs 2019 is due a change in the Chairman's compensation arrangement to include a reduction in fixed annual fee and introduction of a long-term variable pay component representing 75% of total targeted compensation.

(4) 2019 vs 2018 change is a result of 2018 remuneration relates to his CEO service from July 21, 2018 through December 31, 2018.

(5) Year over year change a result of coming on or leaving the ~~aggregate compensation expense for executives with strategic responsibilities.~~Board or a Committee.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision, and with the participation, of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, ~~2018~~2019 pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with IFRS.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation in accordance with IFRS.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2018,~~2019, using the criteria set forth in the “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, management believes that, as of December 31, ~~2018,~~2019, the Company’s internal control over financial reporting was effective.

The Company’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting. That report is included herein.

Changes in Internal Control

No change to our internal control over financial reporting occurred during the year ended December 31, ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Principal Characteristics of the Internal Control System and Internal Control over Financial Reporting

The Company has designed a system of internal control over financial reporting based on the model provided in the COSO Framework for Internal Controls, according to which the internal control system is defined as a set of rules, procedures and tools designed to provide reasonable assurance of the achievement of corporate objectives. In relation to the financial reporting process, reliability, accuracy, completeness and timeliness of the information contribute to the achievement of such corporate objectives. A periodic evaluation of the system of internal control over financial reporting is designed to provide reasonable assurance regarding the overall effectiveness of the components of the COSO Framework (control environment, risk assessment, control activities, information and communication, and monitoring) in achieving those objectives.

The approach adopted by the Company for the evaluation, monitoring and continuous updating of the system of internal control over financial reporting, is based on a ‘top-down, risk-based’ process consistent with the COSO Framework. This enables focus on areas of higher risk and/or materiality, where there is risk of significant errors, including those attributable to fraud, in the elements of the financial statements and related documents. The key components of the process are:

identification and evaluation of the source and probability of material errors in elements of financial reporting;

assessment of the adequacy of key controls in preventing or detecting potential misstatements in elements of financial reporting; and

verification of the operating effectiveness of controls based on the assessment of the risk of misstatement in financial reporting, with testing focused on areas of higher risk.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Fiat Chrysler Automobiles N.V.

Opinion on Internal Control over Financial Reporting

We have audited Fiat Chrysler Automobiles N.V.’s internal control over financial reporting as of December 31, ~~2018,~~2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Fiat Chrysler Automobiles N.V. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2018~~2019 based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of Fiat Chrysler Automobiles N.V. as of December 31, ~~2018~~2019 and ~~2017,~~2018, and the related consolidated statements of income, comprehensive income, cash flows and changes in equity for each of the three years in the period ended December 31, ~~2018,~~2019, and the related notes, and our report dated February ~~22, 2019~~25, 2020 expressed an unqualified opinion thereon.

~~Basis for Opinion~~

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

~~Definition and Limitations of Internal Control Over Financial Reporting~~

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~/s/ EY S.p.A.~~

~~Turin, Italy~~

~~February 22, 2019~~

~~FINANCIAL STATEMENTS~~

~~FCA CONSOLIDATED FINANCIAL STATEMENTS~~

~~FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES~~

~~Index to the Consolidated Financial Statements~~



		~~Page~~

~~Report of Independent Registered Public Accounting Firm~~		~~150~~
~~Consolidated Income Statement~~		~~151~~
~~Consolidated Statement of Comprehensive Income~~		~~152~~
~~Consolidated Statement of Financial Position~~		~~153~~
~~Consolidated Statement of Cash Flows~~		~~154~~
~~Consolidated Statement of Changes in Equity~~		~~155~~
~~Notes to Consolidated Financial Statements~~		~~156~~
~~(1) Principal Activities~~		~~156~~
~~(2) Basis of preparation~~		~~156~~
~~(3) Scope of consolidation~~		~~184~~
~~(4) Net revenues~~		~~188~~
~~(5) Research and development costs~~		~~189~~
~~(6) Net financial expenses~~		~~190~~
~~(7) Tax expense~~		~~190~~
~~(8) Other information by nature~~		~~194~~
~~(9) Goodwill and intangible assets with indefinite useful lives~~		~~195~~
~~(10) Other intangible assets~~		~~196~~
~~(11) Property, plant and equipment~~		~~197~~
~~(12) Investments accounted for using the equity method~~		~~199~~
~~(13) Other financial assets~~		~~202~~
~~(14) Inventories~~		~~202~~
~~(15) Trade, other receivables and tax receivables~~		~~203~~
~~(16) Derivative financial assets and liabilities~~		~~206~~
~~(17) Cash and cash equivalents~~		~~209~~
~~(18) Share-based compensation~~		~~209~~
~~(19) Employee benefits liabilities~~		~~213~~
~~(20) Provisions~~		~~220~~
~~(21) Debt~~		~~221~~
~~(22) Other liabilities and Tax payables~~		~~226~~
~~(23) Fair value measurement~~		~~228~~
~~(24) Related party transactions~~		~~231~~
~~(25) Guarantees granted, commitments and contingent liabilities~~		~~234~~
~~(26) Equity~~		~~239~~
~~(27) Earnings per share~~		~~242~~
~~(28) Segment reporting~~		~~243~~
~~(29) Explanatory notes to the Consolidated Statement of Cash Flows~~		~~248~~
~~(30) Qualitative and quantitative information on financial risks~~		~~250~~
~~(31) Subsequent events~~		~~255~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and Shareholders of~~

~~Fiat Chrysler Automobiles N.V.~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated statement of financial position of Fiat Chrysler Automobiles N.V. (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, cash flows and changes in equity for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2018 and 2017, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board, as well as International Financial Reporting Standards as adopted by the European Union.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

Definition and Limitations of Internal Control Over Financial Reporting

/s/ EY S.p.A.

Turin, Italy

February 25, 2020

FINANCIAL STATEMENTS

FCA CONSOLIDATED FINANCIAL STATEMENTS

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

Index to the Consolidated Financial Statements



		Page

Report of Independent Registered Public Accounting Firm		147
Consolidated Income Statement		150
Consolidated Statement of Comprehensive Income		151
Consolidated Statement of Financial Position		152
Consolidated Statement of Cash Flows		153
Consolidated Statement of Changes in Equity		154
Notes to Consolidated Financial Statements		155
(1) Principal Activities		155
(2) Basis of preparation		155
(3) Scope of consolidation		184
(4) Net revenues		188
(5) Research and development costs		189
(6) Net financial expenses		190
(7) Tax expense		190
(8) Other information by nature		195
(9) Goodwill and intangible assets with indefinite useful lives		196
(10) Other intangible assets		197
(11) Property, plant and equipment		199
(12) Investments accounted for using the equity method		201
(13) Other financial assets		204
(14) Inventories		204
(15) Trade, other receivables and tax receivables		205
(16) Derivative financial assets and liabilities		208
(17) Cash and cash equivalents		211
(18) Share-based compensation		211
(19) Employee benefits liabilities		216
(20) Provisions		223
(21) Debt		224
(22) Other liabilities and Tax liabilities		230
(23) Fair value measurement		232
(24) Related party transactions		235
(25) Guarantees granted, commitments and contingent liabilities		237
(26) Equity		243
(27) Earnings per share		247
(28) Segment reporting		248
(29) Explanatory notes to the Consolidated Statement of Cash Flows		253
(30) Qualitative and quantitative information on financial risks		255

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Fiat Chrysler Automobiles N.V.

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of financial position of Fiat Chrysler Automobiles N.V. (the Company) as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, cash flows and changes in equity for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board, as well as International Financial Reporting Standards as adopted by the European Union.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The Critical Audit Matters communicated below are matters arising from the current period audit of financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of Critical Audit Matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the Critical Audit Matters below, providing separate opinions on the Critical Audit Matters or on the accounts or disclosures to which they relate.



Valuation of goodwill and other non-current assets with indefinite useful lives, with particular reference to APAC and LATAM goodwill
Description of the Matter	At December 31, 2019, the recorded amount of goodwill and other non-current assets with indefinite useful lives was €11,065 million and €3,192 million, respectively. These amounts have primarily been allocated to the Company’s four cash generating units (‘CGU’) that align with the car mass market operating segments (North America, APAC, LATAM and EMEA) as set out in notes 2 and 9 of the consolidated financial statements. The amount of goodwill allocated to APAC and LATAM was €1,174 million and €563 million, respectively. Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the significant estimation required to determine the Value-In-Use (‘VIU’) of the CGUs. In particular, the determination of the VIU was sensitive to significant assumptions, such as changes in the discount rate, revenue growth rate, operating margin and terminal value, which are affected by expectations about future market or economic conditions, particularly those in APAC and LATAM.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and other non-current assets with indefinite useful lives impairment assessment process, including controls over management’s review of the significant assumptions described above. To test the determination of the VIU of the Company’s CGUs, we performed audit procedures that included, among others, evaluating the CGUs identified in the current year and testing the allocation of assets and liabilities to the carrying value of each CGU. We assessed the impairment methodology applied by the Company and obtained an understanding of the analysis performed by management for the purposes of the impairment assessment. We assessed the cash flow forecasts for each CGU as compared to the Group’s business plan for the period 2018-2022, including comparisons to industry forecasts and sector data, and evaluated the historical accuracy of the Company’s forecasts by comparison to actual results. We assessed the operational margins, discount rates and long-term growth rates applied within the model, with the support of valuation specialists, by performing independent calculations and sensitivity analyses for each CGU, as well as the adequacy of the disclosures made by the Company in this area, in particular those related to reasonably possible changes in key assumptions that could lead to an impairment of goodwill.
Income taxes - recoverability of the Italian deferred tax assets
Description of the Matter	At December 31, 2019, the Company had deferred tax assets on deductible temporary differences of €5,711 million which were recognized and €1,113 million which were not recognized. At the same date the Company also had deferred tax assets in respect of tax losses carried forward of €918 million which were recognized and €3,943 million which were not recognized. The recognized and unrecognized amounts related to Italy were €705 million and €2,558 million, respectively. The disclosures in relation to income taxes are included in note 7 of the consolidated financial statements. Auditing the Company’s recognition and recoverability of the deferred tax assets in Italy was complex because it involves material amounts, judgments and estimates in relation to future taxable profits and hence the capacity to utilize available tax assets in this tax jurisdiction.
How We Addressed the Matter in Our Audit	The procedures performed to address the matter in our audit included, among others, obtaining an understanding, evaluating the design and testing the operating effectiveness of controls over the Company’s income taxes process, including controls over management’s review of the significant assumptions described above. We evaluated the forecast periods selected in determining the likelihood of the Group generating sufficient future taxable profits to support the recognition of the Italian deferred tax assets, including the Company’s assumptions and sensitivity analysis in relation to the likelihood of generating sufficient future taxable income, taking into account local tax regulations. We evaluated the historical accuracy of management’s forecasting of taxable profits for the Italian tax jurisdiction by comparison to actual results, the accuracy of the forecast models and consistency of the projections with the forecasts used for the purposes of the goodwill and other non-current assets with indefinite and definite useful lives impairment analysis by the Company and results from other areas of our audit. We involved tax professionals to assist in evaluating the key assumptions and methodologies developed by management in this area. We assessed the adequacy of the disclosures made by the Company in respect of recoverability of deferred taxes.



Provision for North America product warranty and recall campaigns
Description of the Matter	At December 31, 2019, the provisions for product warranty and recall campaigns amounted to €6,306 million with the most significant amounts related to the North America segment. The Company establishes provisions for product warranty obligations, including the estimated cost of service and recall actions in the North America region, at the time the vehicle is sold. The estimated future costs of these actions, which are recorded in cost of sales in the consolidated income statement, are principally based on assumptions regarding the lifetime warranty costs of each vehicle line and each model year of that vehicle line, as well as historical claims experience for the vehicles. The disclosures on warranty provisions are included in notes 2 and 20 to the consolidated financial statements. Auditing management’s provision for product warranty and recall campaign was complex due to numerous uncertainties, especially related to the North America region’s warranty and campaign provisions, including the enactment of new laws and regulations, the number of vehicles affected by a service or recall action and the nature of the corrective action that may result in adjustments to the established reserves. Due to the size and the uncertainty and potential volatility of these estimated future costs and other factors, such as new laws and regulations, changes in assumptions used could materially affect the result of the Company’s operations.
How We Addressed the Matter in Our Audit	The procedures designed to address the matter in our audit included, among others, obtaining an understanding, evaluating the design and testing the operating effectiveness of controls over the Company’s warranty process. We involved actuarial specialists to assist us to evaluate and test the Company's methodology, the assumptions developed by management in determining the warranty provisions, and to perform sensitivity analyses and calculate an independent range of reasonably probable outcomes for the North America product warranty and recall campaigns provision, including evaluating current year development against expectations. We performed other audit procedures to evaluate the data applied in the model including, among others, (i) vouching of the warranty payments made in the year and (ii) obtaining external third-party confirmations in respect of the completeness and accuracy of current year claims. We assessed the adequacy of the disclosures made by the Company in this area.
Recoverability of non-current assets with definite useful lives with reference to EMEA
Description of the Matter	At December 31, 2019, the non-current assets with definite useful lives amounted to €41,055 million. Non-current assets with definite useful lives include property, plant and equipment (€28,608 million) and intangible assets (€12,447 million). Intangible assets with definite useful lives mainly consist of capitalized development expenditures. The Company periodically reviews the carrying amount of non-current assets with definite useful lives when events or circumstances indicate that an asset may be impaired. The recoverability of non-current assets with definite useful lives is based on the estimated future cash flows, using the Company’s current business plan, of the CGUs to which the assets relate. The disclosures on non-current assets with definite useful lives are included in notes 2, 10 and 11 of the consolidated financial statements. Auditing management’s assessment of the recoverability of non-current assets with definite useful lives with reference to EMEA was complex and highly judgmental due to the size and the uncertainty and potential volatility of the forecast volumes, contribution margin and other factors, such as new laws and regulations, used in estimating future cash flows of the CGUs to which the assets relate. Any change in these assumptions used could materially affect the recoverability of EMEA non-current assets with definite useful lives.
How We Addressed the Matter in Our Audit	The procedures designed to address the matter in our audit included, among others, obtaining an understanding, evaluating the design and testing the operating effectiveness of controls over the Company’s non-current assets with definite useful lives impairment assessment process, including controls over management’s review of the significant assumptions described above. To test the determination of the recoverable amount of the CGUs, we involved valuation specialists to assist in evaluating the methodology used by the Company, including the impairment test model developed and the discount rates (Weighted Average Cost of Capital) applied, by performing independent calculations and sensitivity analyses for each CGUs. We evaluated the key assumptions applied in determining the recoverable amount and evaluated the CGUs identified, tested the allocation of assets to the carrying value of each CGU and assessed the cash flow forecasts for each CGU, including comparisons to industry forecasts and sector data. We tested the reconciliation of these cash flow forecasts for each CGU to the EMEA regional business plan used in the impairment analysis of goodwill and other non-current assets with indefinite useful lives. We evaluated the historical accuracy of the Company's forecasts by comparison to actual results and assessed the adequacy of the disclosures made by the Company in this area.

/s/ EY S.p.A.

We have served as the Company’s auditor since 2012.

Turin, Italy

February ~~22, 2019~~25, 2020

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

(in € million, except per share amounts)


		Years ended December 31,									Years ended December 31,
	Note	2018			2017			2016		Note	2019		2018			2017
Net revenues	4	€	110,412		€	105,730		€	105,798	4	€	108,187	€	110,412		€	105,730
Cost of revenues		95,011			89,710			90,927			93,164		95,011			89,710
Selling, general and other costs		7,318			7,177			7,388			6,455		7,318			7,177
Research and development costs	5	3,051			2,903			2,930		5	3,612		3,051			2,903
Result from investments:		235			399			310			209		235			399
Share of the profit of equity method investees	12	240			400			308		12	208		240			400
Other income from investments		(5		)	(1		)	2			1		(5		)	(1		)
Reversal of a Brazilian indirect tax liability	22	—			895			—		22	—		—			895
Gains on disposal of investments		—			76			13			15		—			76
Restructuring costs		103			86			68			154		103			86
Net financial expenses	6	1,056			1,345			1,858		6	1,005		1,056			1,345
Profit before taxes		4,108			5,879			2,950			4,021		4,108			5,879
Tax expense	7	778			2,588			1,237		7	1,321		778			2,588
Net profit from continuing operations		3,330			3,291			1,713			2,700		3,330			3,291
Profit from discontinued operations, net of tax	3	302			219			101		3	3,930		302			219
Net profit		€	3,632		€	3,510		€	1,814		€	6,630	€	3,632		€	3,510

Net profit attributable to:
Owners of the parent		€	3,608		€	3,491		€	1,803		€	6,622	€	3,608		€	3,491
Non-controlling interests		24			19			11			8		24			19
		€	3,632		€	3,510		€	1,814		€	6,630	€	3,632		€	3,510
Net profit from continuing operations attributable to:
Owners of the parent		€	3,323		€	3,281		€	1,708		€	2,694	€	3,323		€	3,281
Non-controlling interests		7			10			5			6		7			10
		€	3,330		€	3,291		€	1,713		€	2,700	€	3,330		€	3,291
Earnings per share:	27									27
Basic earnings per share		€	2.33		€	2.27		€	1.19		€	4.23	€	2.33		€	2.27
Diluted earnings per share		€	2.30		€	2.24		€	1.18		€	4.22	€	2.30		€	2.24

Earnings per share for Net profit from continuing operations:	27									27
Basic earnings per share		€	2.15		€	2.14		€	1.13		€	1.72	€	2.15		€	2.14
Diluted earnings per share		€	2.12		€	2.11		€	1.12		€	1.71	€	2.12		€	2.11

The accompanying notes are an integral part of the Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in € million)


		Years ended December 31,										Years ended December 31,
	Note	2018			2017			2016			Note	2019			2018			2017
Net profit (A)		€	3,632		€	3,510		€	1,814			€	6,630		€	3,632		€	3,510

Items that will not be reclassified to the Consolidated Income Statement in subsequent periods:	26										26
Gains/(losses) on remeasurement of defined benefit plans		317			(72		)	616
Share of gains/(losses) on remeasurement of defined benefit plans for equity method investees		—			2			(5		)
(Losses)/gains on remeasurement of defined benefit plans												(63		)	317			(72		)
Share of (losses)/gains on remeasurement of defined benefit plans for equity method investees												(5		)	—			2
Gains/(losses) on equity instruments measured at fair value through other comprehensive income		(4		)	14			15				6			(4		)	14
Related tax impact		(76		)	(18		)	(265		)		7			(76		)	(18		)
Items relating to discontinued operations, net of tax		2			5			(28		)		(9		)	2			5
Total items that will not be reclassified to the Consolidated Income Statement in subsequent periods (B1)		239			(69		)	333				(64		)	239			(69		)

Items that may be reclassified to the Consolidated Income Statements in subsequent periods:	26										26
Gains/(losses) on cash flow hedging instruments		(9		)	129			(240		)
Exchange (losses)/gains on translating foreign operations		126			(1,982		)	509
(Losses)/gains on cash flow hedging instruments												(191		)	(9		)	129
Exchange gains/(losses) on translating foreign operations												268			126			(1,982		)
Share of Other comprehensive (loss) for equity method investees		(103		)	(121		)	(122		)		(15		)	(103		)	(121		)
Related tax impact		(6		)	(12		)	69				50			(6		)	(12		)
Items relating to discontinued operations, net of tax		(91		)	60			(60		)		9			(91		)	60
Total items that may be reclassified to the Consolidated Income Statement in subsequent periods (B2)		(83		)	(1,926		)	156				121			(83		)	(1,926		)

Total Other comprehensive income/(loss), net of tax (B1)+(B2)=(B)		156			(1,995		)	489				57			156			(1,995		)

Total Comprehensive income (A)+(B)		€	3,788		€	1,515		€	2,303			€	6,687		€	3,788		€	1,515

Total Comprehensive income attributable to:
Owners of the parent		€	3,763		€	1,491		€	2,288			€	6,676		€	3,763		€	1,491
Non-controlling interests		25			24			15				11			25			24
		€	3,788		€	1,515		€	2,303			€	6,687		€	3,788		€	1,515
Total Comprehensive income attributable to owners of the parent:
Continuing operations		€	3,558		€	1,212		€	2,281			€	2,749		€	3,558		€	1,212
Discontinued operations		205			279			7				3,927			205			279
		€	3,763		€	1,491		€	2,288			€	6,676		€	3,763		€	1,491

The accompanying notes are an integral part of the Consolidated Financial Statements.

FIAT CHRYSLER AUTOMOBILES N.V. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in € million)


		At December 31					At December 31,
	Note	2018		2017		Note	2019		2018
Assets
Goodwill and intangible assets with indefinite useful lives	9	€	13,970	€	13,390	9	€	14,257	€	13,970
Other intangible assets	10	11,749		11,542		10	12,447		11,749
Property, plant and equipment	11	26,307		29,014		11	28,608		26,307
Investments accounted for using the equity method	12	2,002		2,008		12	2,009		2,002
Other financial assets	13	362		482		13	340		362
Deferred tax assets	7	1,814		2,004		7	1,689		1,814
Other receivables	15	1,484		666		15	2,376		1,484
Tax receivables	15	71		83		15	94		71
Prepaid expenses and other assets		266		328			535		266
Other non-current assets		556		508			757		556
Total Non-current assets		58,581		60,025			63,112		58,581
Inventories	14	10,694		12,922		14	9,722		10,694
Assets sold with a buy-back commitment		1,707		1,748			1,626		1,707
Trade and other receivables	15	7,188		7,887		15	6,628		7,188
Tax receivables	15	419		215		15	372		419
Prepaid expenses and other assets		418		377			524		418
Other financial assets	13	615		487		13	670		615
Cash and cash equivalents	17	12,450		12,638		17	15,014		12,450
Assets held for sale	3	4,801		—		3	376		4,801
Total Current assets		38,292		36,274			34,932		38,292
Total Assets		€	96,873	€	96,299		€	98,044	€	96,873
Equity and liabilities
Equity	26					26
Equity attributable to owners of the parent		€	24,702	€	20,819		€	28,537	€	24,702
Non-controlling interests		201		168			138		201
Total Equity		24,903		20,987			28,675		24,903
Liabilities
Long-term debt	21	8,667		10,726		21	8,025		8,667
Employee benefits liabilities	19	7,875		8,584		19	8,507		7,875
Provisions	20	5,561		5,770		2,20	5,027		5,413
Other financial liabilities	16	3		1		16	124		3
Deferred tax liabilities	7	937		388		7	1,628		937
Tax payables	22	1		74
Tax liabilities						2,22	278		149
Other liabilities	22	2,452		2,500		22	2,426		2,452
Total Non-current liabilities		25,496		28,043			26,015		25,496
Trade payables		19,229		21,939			21,616		19,229
Short-term debt and current portion of long-term debt	21	5,861		7,245		21	4,876		5,861
Employee benefit liabilities	19	595		694		19	544		595
Provisions	20	10,483		9,009		2,20	8,978		10,394
Other financial liabilities	16	204		138		16	194		204
Tax payables	22	114		309
Tax liabilities						2,22	122		203
Other liabilities	22	7,057		7,935		22	6,788		7,057
Liabilities held for sale	3	2,931		—		3	236		2,931
Total Current liabilities		46,474		47,269			43,354		46,474
Total Equity and liabilities		€	96,873	€	96,299		€	98,044	€	96,873

Taxation

Material U.S. Federal Income Tax Consequences

This section describes the material U.S. federal income tax consequences of owning FCA stock. It applies solely to persons that hold shares as capital assets for U.S. federal income tax purposes. This section does not apply to members of a special class of holders subject to special rules, including:

a dealer in securities or foreign currencies;

a regulated investment company;

a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;

a tax-exempt organization;

a bank, financial institution, or insurance company;

a person liable for alternative minimum tax;

a person that actually or constructively owns 10 percent or more, by vote or value, of FCA;

a person that holds shares as part of a straddle or a hedging, conversion, or other risk reduction transaction for U.S. federal income tax purposes;

a person that acquired shares pursuant to the exercise of employee stock options or otherwise as compensation; or

a person whose functional currency is not the U.S. Dollar.

This section is based on the Internal Revenue Code of 1986, as amended, the Code, its legislative history, existing and proposed regulations, published rulings and court decisions, as well as on applicable tax treaties, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in an entity treated as a partnership for U.S. federal income tax purposes holding shares should consult its tax advisors with regard to the U.S. federal income tax treatment of the ownership of FCA stock.

No statutory, judicial or administrative authority directly discusses how the ownership of FCA stock should be treated for U.S. federal income tax purposes. As a result, the U.S. federal income tax consequences of the ownership of FCA stock are uncertain. Shareholders should consult their own tax advisors regarding the U.S. federal, state and local and foreign and other tax consequences of owning and disposing of FCA stock in their particular circumstances.

For the purposes of this discussion, a “U.S. Shareholder” is a beneficial owner of shares that is:

an individual that is a citizen or resident of the United States;

a corporation, or other entity taxable as a corporation, created or organized under the laws of the United States;

an estate whose income is subject to U.S. federal income tax regardless of its source; or

a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.

Tax Consequences of Owning FCA Stock

Taxation of Dividends

Under the U.S. federal income tax laws, and subject to the discussion of PFIC taxation below, a U.S. Shareholder must include in its gross income the gross amount of any dividend paid by FCA to the extent of its current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Dividends will be taxed as ordinary income to the extent that they are paid out of FCA’s current or accumulated earnings and profits. Dividends paid to a non-corporate U.S. Shareholder by certain “qualified foreign corporations” that constitute qualified dividend income are taxable to the shareholder at the preferential rates applicable to long-term capital gains provided that the shareholder holds the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meets other holding period requirements. For this purpose, stock of FCA is treated as stock of a qualified foreign corporation if FCA is eligible for the benefits of an applicable comprehensive income tax treaty with the United States or if such stock is listed on an established securities market in the United States. The common shares of FCA are listed on the NYSE and FCA expects to be eligible for the benefits of such a treaty. Accordingly, subject to the discussion of PFIC taxation below, dividends FCA pays with respect to the shares will constitute qualified dividend income, assuming the holding period requirements are met.

A U.S. Shareholder must include any foreign tax withheld from the dividend payment in this gross amount even though the shareholder does not in fact receive the amount withheld. The dividend is taxable to a U.S. Shareholder when the U.S. Shareholder receives the dividend, actually or constructively.

The dividend will not be eligible for the dividends-received deduction allowed to U.S. corporations in respect of dividends received from other U.S. corporations.

Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the U.S. Shareholder’s basis in the shares of FCA stock, causing a reduction in the U.S. Shareholder’s adjusted basis in FCA stock, and thereafter as capital gain.

Subject to certain limitations, any non-U.S. tax withheld and paid over to a non-U.S. taxing authority is eligible for credit against a U.S. Shareholder’s U.S. federal income tax liability except to the extent a refund of the tax withheld is available to the U.S. Shareholder under non-U.S. tax law or under an applicable tax treaty. The amount allowed to a U.S. Shareholder as a credit is limited to the amount of the U.S. Shareholder’s U.S. federal income tax liability that is attributable to income from sources outside the U.S. and is computed separately with respect to different types of income that the U.S. Shareholder receives from non-U.S. sources. Subject to the discussion below regarding Section 904(h) of the Code, dividends paid by FCA will be foreign source income and depending on the circumstances of the U.S. Shareholder, will be either “passive” or “general” income for purposes of computing the foreign tax credit allowable to a U.S. Shareholder.

Under Section 904(h) of the Code, dividends paid by a foreign corporation that is treated as 50 percent or more owned, by vote or value, by U.S. persons may be treated as U.S. source income (rather than foreign source income) for foreign tax credit purposes, to the extent the foreign corporation earns U.S. source income. In certain circumstances, U.S. Shareholders may be able to choose the benefits of Section 904(h)(10) of the Code and elect to treat dividends that would otherwise be U.S. source dividends as foreign source dividends, but in such a case the foreign tax credit limitations would be separately determined with respect to such “resourced” income. In general, therefore, the application of Section 904(h) of the Code may adversely affect a U.S. Shareholder’s ability to use foreign tax credits. FCA does not believe that it is 50 percent or more owned by U.S. persons, but this conclusion is a factual determination and is subject to change; no assurance can therefore be given that FCA may not be treated as 50 percent or more owned by U.S. persons for purposes of Section 904(h) of the Code. U.S. Shareholders are strongly urged to consult their own tax advisors regarding the possible impact if Section 904(h) of the Code should apply.

Taxation of Capital Gains

Subject to the discussion of PFIC taxation below, a U.S. Shareholder that sells or otherwise disposes of its FCA common shares will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. Dollar value of the amount that the U.S. Shareholder realizes and the U.S. Shareholder’s tax basis in those shares. Capital gain of a ~~noncorporate~~non-corporate U.S. Shareholder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will be U.S. source income or loss for foreign tax credit limitation purposes. The deduction of capital losses is subject to limitations.

Loyalty Voting Structure

NO STATUTORY, JUDICIAL OR ADMINISTRATIVE AUTHORITY DIRECTLY DISCUSSES HOW THE RECEIPT, OWNERSHIP OR DISPOSITION OF SPECIAL VOTING SHARES SHOULD BE TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AND AS A RESULT, THE U.S. FEDERAL INCOME TAX CONSEQUENCES ARE UNCERTAIN. ACCORDINGLY, WE URGE U.S. SHAREHOLDERS TO CONSULT THEIR TAX ADVISOR AS TO THE TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP AND DISPOSITION OF SPECIAL VOTING SHARES.

If a U.S. Shareholder receives special voting shares after requesting all or some of the number of its FCA common shares be registered on the Loyalty Register, the tax consequences of the receipt of special voting shares is unclear. While distributions of stock are tax-free in certain circumstances, the distribution of special voting shares would be taxable if it were considered to result in a “disproportionate distribution.” A disproportionate distribution is a distribution or series of distributions, including deemed distributions, that have the effect of the receipt of cash or other property by some shareholders of FCA and an increase in the proportionate interest of other shareholders of FCA in FCA’s assets or earnings and profits. It is possible that the distribution of special voting shares to a U.S. Shareholder that has requested all or some of the number of its FCA common shares be registered on the Loyalty Register and a distribution of cash in respect of FCA common shares could be considered together to constitute a “disproportionate distribution.” Unless FCA has not paid cash dividends in the 36 months prior to a U.S. Shareholder’s receipt of special voting shares and FCA does not intend to pay cash dividends in the 36 months following a U.S. Shareholder’s receipt of special voting shares, FCA intends to treat the receipt of special voting shares as a distribution that is subject to tax as described above in “Consequences of Owning FCA Stock—Taxation of Dividends.” The amount of the dividend should equal the fair market value of the special voting shares received. For the reasons stated above, FCA believes and intends to take the position that the value of each special voting share is minimal. However, because the fair market value of the special voting shares is factual and is not governed by any guidance that directly addresses such a situation, the IRS could assert that the value of the special voting shares (and thus the amount of the dividend) as determined by FCA is incorrect.

Ownership of Special Voting Shares

FCA believes that U.S. Shareholders holding special voting shares should not have to recognize income in respect of amounts transferred to the special voting shares dividend reserve that are not paid out as dividends. Section 305 of the Code may, in certain circumstances, require a holder of preferred shares to recognize income even if no dividends are actually received on such shares if the preferred shares are redeemable at a premium and the redemption premium results in a “constructive distribution.” Preferred shares for this purpose refer to shares that do not participate in corporate growth to any significant extent. FCA believes that Section 305 of the Code should not apply to any amounts transferred to the special voting shares dividend reserve that are not paid out as dividends so as to require current income inclusion by U.S. Shareholders because, among other things, (i) the special voting shares are not redeemable on a specific date and a U.S. Shareholder is only entitled to receive amounts in respect of the special voting shares upon liquidation, (ii) Section 305 of the Code does not require the recognition of income in respect of a redemption premium if the redemption premium does not exceed a de minimis amount and, even if the amounts transferred to the special voting shares dividend reserve that are not paid out as dividends are considered redemption premium, the amount of the redemption premium is likely to be “de minimis” as such term is used in the applicable Treasury Regulations. FCA therefore intends to take the position that the transfer of amounts to the special voting shares dividend reserve that are not paid out as dividends does not result in a “constructive distribution,” and this determination is binding on all U.S. Shareholders of special voting shares other than a U.S. Shareholder that explicitly discloses its contrary determination in the manner prescribed by the applicable regulations. However, because the tax treatment of the loyalty voting structure is unclear and because FCA’s determination is not binding on the IRS, it is possible that the IRS could disagree with FCA’s determination and require current income inclusion in respect of such amounts transferred to the special voting shares dividend reserve that are not paid out as dividends.

Disposition of Special Voting Shares

The tax treatment of a U.S. Shareholder that has its special voting shares redeemed for zero consideration after removing its common shares from the Loyalty Register is unclear. It is possible that a U.S. Shareholder would recognize a loss to the extent of the U.S. Shareholder’s basis in its special voting shares, which should equal (i) if the special voting shares were received in connection with the2014 Merger, the basis allocated to the special voting shares, and (ii) if the special voting shares were received after the requisite holding period on the Loyalty Register, the amount that was included in income upon receipt. Such loss would be a capital loss and would be a long-term capital loss if a U.S. Shareholder has held its special voting shares for more than one year. It is also possible that a U.S. Shareholder would not be allowed to recognize a loss upon the redemption of its special voting shares and instead a U.S. Shareholder should increase the basis in its FCA common shares by an amount equal to the basis in its special voting shares. Such basis increase in a U.S. Shareholder’s FCA common shares would decrease the gain, or increase the loss, that a U.S. Shareholder would recognize upon the sale or other taxable disposition of its FCA common shares.

THE U.S. FEDERAL INCOME TAX TREATMENT OF THE LOYALTY VOTING STRUCTURE IS UNCLEAR AND U.S. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS IN RESPECT OF THE CONSEQUENCES OF ACQUIRING, OWNING, AND DISPOSING OF SPECIAL VOTING SHARES.

PFIC Considerations—Consequences of Holding FCA Stock

FCA believes that shares of its stock are not stock of a PFIC for U.S. federal income tax purposes, but this conclusion is based on a factual determination made annually and thus is subject to change. As discussed in greater detail below, if shares of FCA stock were to be treated as stock of a PFIC, gain realized (subject to the discussion below regarding a mark-to-market election) on the sale or other disposition of shares of FCA stock would not be treated as capital gain, and a U.S. Shareholder would be treated as if such U.S. Shareholder had realized such gain and certain “excess distributions” ratably over the U.S. Shareholder’s holding period for its shares of FCA stock and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, a U.S. Shareholder’s shares of FCA stock would be treated as stock in a PFIC if FCA were a PFIC at any time during such U.S. Shareholder’s holding period in the shares. Dividends received from FCA would not be eligible for the special tax rates applicable to qualified dividend income if FCA were treated as a PFIC in the taxable years in which the dividends are paid or in the preceding taxable year (regardless of whether the U.S. holder held shares of FCA stock in such year) but instead would be taxable at rates applicable to ordinary income.

FCA would be a PFIC with respect to a U.S. Shareholder if for any taxable year in which the U.S. Shareholder held shares of FCA stock, after the application of applicable “look-through rules”:

75 percent or more of FCA’s gross income for the taxable year consists of “passive income” (including dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business, as defined in applicable Treasury Regulations); or

at least 50 percent of its assets for the taxable year (averaged over the year and determined based upon value) produce or are held for the production of passive income.

Because the determination whether a foreign corporation is a PFIC is primarily factual and there is little administrative or judicial authority on which to rely to make a determination, the IRS might not agree that FCA is not a PFIC. Moreover, no assurance can be given that FCA would not become a PFIC for any future taxable year if there were to be changes in FCA’s assets, income or operations.

If FCA were to be treated as a PFIC for any taxable year (and regardless of whether FCA remains a PFIC for subsequent taxable years), each U.S. Shareholder that is treated as owning FCA stock for purposes of the PFIC rules (i) would be liable to pay U.S. federal income tax at the highest applicable income tax rates on (a) ordinary income upon the receipt of excess distributions (the portion of any distributions received by the U.S. Shareholder on FCA stock in a taxable year in excess of 125 percent of the average annual distributions received by the U.S. Shareholder in the three preceding taxable years or, if shorter, the U.S. Shareholder’s holding period for the FCA stock) and (b) on any gain from the disposition of FCA stock, plus interest on such amounts, as if such excess distributions or gain had been recognized ratably over the U.S. Shareholder’s holding period of the FCA stock, and (ii) may be required to annually file Form 8621 with the IRS reporting information concerning FCA.

If FCA were to be treated as a PFIC for any taxable year and provided that FCA common shares are treated as “marketable stock” within the meaning of applicable Treasury Regulations, which FCA believes will be the case, a U.S. Shareholder may make a mark-to-market election. Under a mark-to-market election, any excess of the fair market value of the FCA common shares at the close of any taxable year over the U.S. Shareholder’s adjusted tax basis in the FCA common shares is included in the U.S. Shareholder’s income as ordinary income. These amounts of ordinary income would not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. In addition, the excess, if any, of the U.S. Shareholder’s adjusted tax basis at the close of any taxable year over the fair market value of the FCA common shares is deductible in an amount equal to the lesser of the amount of the excess or the amount of the net mark-to-market gains that the U.S. Shareholder included in income in prior years. A U.S. Shareholder’s tax basis in FCA common shares would be adjusted to reflect any such income or loss. Gain realized on the sale, exchange or other disposition of FCA common shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of FCA common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. Shareholder. It is not expected that the special voting shares would be treated as “marketable stock” and eligible for the mark-to-market election.

The adverse consequences of owning stock in a PFIC could also be mitigated if a U.S. Shareholder makes a valid “qualified electing fund” election, or QEF election, which, among other things, would require a U.S. Shareholder to include currently in income its pro rata share of the PFIC’s net capital gain and ordinary earnings, based on earnings and profits as determined for U.S. federal income tax purposes. Because of the administrative burdens involved, FCA does not intend to provide information to its shareholders that would be required to make such election effective.

A U.S. Shareholder which holds FCA stock during a period when FCA is a PFIC will be subject to the foregoing rules for that taxable year and all subsequent taxable years with respect to that U.S. Shareholder’s holding of FCA stock, even if FCA ceases to be a PFIC, subject to certain exceptions for U.S. Shareholders which made a mark-to-market or QEF election. U.S. Shareholders are strongly urged to consult their tax advisors regarding the PFIC rules, and the potential tax consequences to them if FCA were determined to be a PFIC.

Medicare Tax on Net Investment Income

A U.S. person that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8 percent tax, the Medicare tax, on the lesser of (i) the U.S. person’s “net investment income” (or undistributed net investment income in the case of an estate or trust) for the relevant taxable year and (ii) the excess of the U.S. person’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between U.S.$125,000 and U.S.$250,000, depending on the individual’s circumstances). A shareholder’s net investment income generally includes its dividend income and its net gains from the disposition of shares, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If a shareholder is a U.S. person that is an individual, estate or trust, the shareholder is urged to consult the shareholder’s tax advisors regarding the applicability of the Medicare tax to the shareholder’s income and gains in respect of the shareholder’s investment in FCA stock.

Information with Respect to Foreign Financial Assets

Owners of “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000, (and in some cases, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are held for investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons; (ii) financial instruments and contracts that have non-U.S. issuers or counterparties; and (iii) interests in foreign entities. U.S. Shareholders are urged to consult their tax advisors regarding the application of this legislation to their ownership of FCA stock.

Backup Withholding and Information Reporting

Information reporting requirements for a ~~noncorporate~~non-corporate U.S. Shareholder, on IRS Form 1099, will apply to:

dividend payments or other taxable distributions made to such U.S. Shareholder within the U.S.; and

the payment of proceeds to such U.S. Shareholder from the sale of FCA stock effected at a U.S. office of a broker.

Additionally, backup withholding (currently at a 24 percent rate) may apply to such payments to a non-corporate U.S. Shareholder that:

fails to provide an accurate taxpayer identification number;

is notified by the IRS that such U.S. Shareholder has failed to report all interest and dividends required to be shown on such U.S. Shareholder’s federal income tax returns; or

in certain circumstances, fails to comply with applicable certification requirements.

A person may obtain a refund of any amounts withheld under the backup withholding rules that exceed the person’s income tax liability by properly filing a refund claim with the IRS.

Material Netherlands Tax Consequences

This section describes solely the ~~material~~principal Dutch tax consequences of the acquisition, ownership and disposal of FCA common shares and, if applicable, FCA special voting shares by ~~Non-resident~~Non-Resident holders of such shares (as defined below). It does not ~~consider~~purport to describe every aspect of Dutch taxation that may be relevant to a particular holder of FCA common shares and, if applicable, FCA special voting shares. Tax matters are complex and the tax consequences to a particular holder of FCA common shares and, if applicable, FCA special voting shares will depend in ~~special circumstances or who is subject~~part to ~~special treatment under applicable law.~~such holder’s circumstances. Shareholders and any potential investor should consult their own tax advisors regarding the Dutch tax consequences of acquiring, owning and disposing of FCA common shares and, if applicable, FCA special voting shares in their particular circumstances.

Where in this section English terms and expressions are used to refer to Dutch concepts, the meaning to be attributed to such terms and expressions shall be the meaning to be attributed to the equivalent Dutch concepts under Dutch tax law. Where in this section the terms “the Netherlands” and “Dutch” are used, these refer solely to the European part of the Kingdom of the Netherlands.

This ~~summary~~section also assumes that the board shall control the conduct of the affairs of FCA and shall procure that FCA is organized in accordance with the facts, based upon which the competent authorities of the United Kingdom and The Netherlands have ruled that FCA should be treated as solely resident of the United Kingdom for the application of the tax treaty as concluded between the United Kingdom and The Netherlands. A change in facts and circumstances based upon which the ruling was issued may invalidate the contents of this section, which will not be updated to reflect any such change.

This ~~description~~section is based on the tax law of the Netherlands (unpublished case law not included) as it stands at the date of this Form. The law upon which this description is based is subject to change, possibly with retroactive effect. Any such change may invalidate the contents of this description, which will not be updated to reflect such change.

Where in this Dutch taxation ~~discussion~~section reference is made to “a holder of FCA common shares and, if applicable, FCA special voting shares”, that concept includes, without limitation:


1.	an owner of one or more FCA common shares and/or FCA special voting shares who in addition to the title to such FCA common shares and/or FCA special voting shares, has an economic interest in such FCA common shares and/or FCA special voting shares;


2.	a person who or an entity that holds the entire economic interest in one or more FCA common shares and/or FCA special voting shares;


3.	a person who or an entity that holds an interest in an entity, such as a partnership or a mutual fund, that is transparent for Dutch tax purposes, the assets of which comprise one or more FCA common shares and/or FCA special voting shares, within the meaning of 1. or 2. above; or


4.	a person who is deemed to hold an interest in FCA common shares and/or FCA special voting shares, as referred to under 1. to 3., pursuant to the attribution rules of article 2.14a, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001), with respect to property that has been segregated, for instance in a trust or a foundation.

Scope of the summary

The summary of Dutch taxes set out in this section “Material Dutch tax consequences” only applies to a holder of FCA common shares and, if applicable FCA special voting shares who is a Non-Resident holder of such shares. For the purpose of this summary a holder of FCA common shares and, if applicable FCA special voting shares is a Non-Resident holder of such shares if such holder is neither a resident nor deemed to be resident in The Netherlands for purposes of Dutch income tax or corporation tax as the case may be.

~~This~~Please note that this summary does not describe the tax considerations for holders of FCA common shares and, if applicable FCA special voting shares ~~who~~ who:

are individuals and derive benefits from FCA common shares and, if applicable FCA special voting shares that are a remuneration or deemed to be a remuneration in connection with past, present or future employment performed in The Netherlands or management activities and functions or membership of a management board (bestuurder) or a supervisory board (commissaris) of a Netherlands resident entity by such holder or certain individuals related to such holder (as defined in The Dutch Income Tax Act 2001); or ~~deemed to be a remuneration in connection with past, present or future employment performed in The Netherlands or management activities and functions or membership of a management board (bestuurder) or a supervisory board (commissaris) of a Netherlands resident entity by such holder or certain individuals related to such holder (as defined in The Dutch Income Tax Act 2001).~~


ii.	if for Dutch tax purposes taxable as a corporate entity and resident of Aruba, Curacao or Saint Martin.

Taxes on income and capital gains

A Non-Resident holder (as defined above) of FCA common shares and, if applicable, FCA special voting shares will not be subject to any Dutch taxes on income or capital gains in respect of any benefits derived or deemed to be derived by such holder from such holder’s FCA common shares and, if applicable, FCA special voting shares, including any capital gain realized on the disposal thereof, unless:

such holder derives profits from an enterprise directly, or pursuant to a co-entitlement to the net value of such enterprise, other than as a holder of securities, which enterprise either is managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands, and such holder’s FCA common shares and, if applicable, FCA special voting shares are attributable to such enterprise; or

such holder is an individual and such holder derives benefits from FCA common shares and, if applicable, FCA special voting shares that are taxable as benefits from miscellaneous activities (resultaat uit overige werkzaamheden) in the Netherlands. Such holder may, inter alia, derive, or be deemed to derive, benefits from FCA common shares and, if applicable, FCA special voting shares that are taxable as benefits from miscellaneous activities if such holder’s investment activities go beyond the activities of an active portfolio investor, for instance in the case of use of insider knowledge or comparable forms of special knowledge.

Benefits derived or deemed to be derived from certain miscellaneous activities by a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or the parents who exercise, authority over the child, irrespective of the country of residence of the child.

Dividend withholding tax

FCA is generally required to withhold Dutch dividend withholding tax at a rate of 15 percent from dividends distributed by it. However, the competent authorities of the United Kingdom and The Netherlands have ruled that FCA is resident of the United Kingdom for the application of the tax treaty as concluded between The Netherlands and the United Kingdom. Consequently, payments made by FCA on the common shares and or the special voting shares to non-resident shareholders may be made free from Dutch dividend withholding tax.

Gift and inheritance taxes

If a holder of FCA common shares and, if applicable, FCA special voting shares disposes of FCA common shares and, if applicable, FCA special voting shares by way of gift, in form or in substance, or if a holder of FCA common shares and, if applicable, FCA special voting shares who is an individual dies, no Dutch gift tax or Dutch inheritance tax, as applicable, will be due, unless:

~~the donor is, or the deceased was, resident or deemed to be resident in the Netherlands for purposes of Dutch gift tax or Dutch inheritance tax, as applicable; or~~

the donor made a gift of FCA common shares and, if applicable, FCA special voting shares, then became a resident or deemed resident of the Netherlands, and died as a resident or deemed resident of the Netherlands within 180 days of the date of the gift.


i.	the donor is, or the deceased was, resident or deemed to be resident in the Netherlands for purposes of Dutch gift tax or Dutch inheritance tax, as applicable; or


ii.	the donor made a gift of FCA common shares and, if applicable, FCA special voting shares, then became a resident or deemed resident of the Netherlands, and died as a resident or deemed resident of the Netherlands within 180 days of the date of the gift.

For purposes of the above, a gift of FCA common shares and, if applicable, FCA special voting shares made under a condition precedent is deemed to be made at the time the condition precedent is satisfied.

Value Added Tax

No Dutch value added tax will arise in respect of any payment in consideration for the issue of FCA common shares and, if applicable, FCA special voting shares.

Registration taxes and duties

No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty, other than court fees, is payable in the Netherlands by a holder in respect of or in connection with (i) the subscription, issue, placement or allotment of FCA common shares and, if applicable, FCA special voting shares, (ii) the enforcement by way of legal proceedings (including the enforcement of any foreign judgment in the courts of the Netherlands) of the documents relating to the issue of FCA common shares and, if applicable, FCA special voting shares or the performance by FCA of FCA’s obligations under such documents, or (iii) the transfer of FCA common shares and, if applicable, FCA special voting shares.

Material UK Tax Consequences

This section describes the material United Kingdom tax consequences of the ownership of FCA common shares for U.S. Shareholders. It does not purport to be a complete analysis of all potential UK tax consequences of holding FCA common shares. This section is based on current UK tax law and what is understood to be the current practice of H.M. Revenue and Customs, as well as on applicable tax treaties. This law and practice and these treaties are subject to change, possibly on a retroactive basis.

This section applies only to shareholders of FCA that are U.S. Shareholders, that are not resident or domiciled in the UK, that are not individuals temporarily non-resident in the UK for a period of up to five years, that hold their shares as an investment (other than through an individual savings account), and that are the absolute beneficial owner of both the shares and any dividends paid on them. This section does not apply to members of any special class of shareholders subject to special rules, such as:

a pension fund;

a charity;

persons acquiring their shares in connection with an office or employment;

a dealer in securities;

an insurance company; or

a collective investment scheme.

In addition, this section may not apply to:

any shareholders that, either alone or together, with one or more associated persons, such as personal trusts and connected persons, control directly or indirectly at least ten percent of the voting rights or of any class of share capital of FCA; or

any person holding shares as a borrower under a stock loan or an interim holder under a repo.

Shareholders should consult their own tax advisors on the UK tax consequences of owning and disposing of FCA common shares in their particular circumstances.

Tax Consequences of Owning FCA Common Shares

Taxation of Dividends

Dividend payments may be made without withholding or deduction for or on account of UK income tax.

A U.S. Shareholder will not be liable to account for income or corporation tax in the UK on dividends paid on the shares unless the shareholder carries on a trade (or profession or vocation) in the UK and the dividends are either a receipt of that trade or, in the case of corporation tax, the shares are held by or for a UK permanent establishment through which the trade is carried on (unless, if certain conditions are met, the trade is carried on through an independent broker or investment manager).

Taxation of Capital Gains

A disposal of FCA common shares by a shareholder that is not resident in the United Kingdom for tax purposes will not give rise to a chargeable gain or allowable loss unless that shareholder carries on a trade, profession or vocation in the United Kingdom through a branch, agency or permanent establishment (excluding, if certain conditions are met, an independent broker or investment manager) and has used, held or acquired FCA common shares for the purposes of that trade, profession or vocation or that branch, agency or permanent establishment.

Stamp Duty and Stamp Duty Reserve Tax

No liability to UK stamp duty or Stamp Duty Reserve Tax (“SDRT”) will arise on the issue of FCA common shares to shareholders. FCA will not maintain any share register in the UK and, accordingly, (i) UK stamp duty will not normally be payable in connection with a transfer of common shares, provided that the instrument of transfer is executed and retained outside the UK and no other action is taken in the UK by the transferor or transferee, and (ii) no UK SDRT will be payable in respect of any agreement to transfer FCA common shares.

Tax Consequences of Participating in the Loyalty Voting Structure

A U.S. Shareholder that would not be subject to tax on dividends or capital gains in respect of FCA common shares will not be subject to tax in respect of the special voting shares.

FCA will not maintain any share register in the UK and, accordingly, no liability to UK stamp duty or SDRT will arise to shareholders on the issue or repurchase of special voting shares.

Exhibits



Exhibit Number	Description of Documents
1.1	English translation of the Articles of Association of Fiat Chrysler Automobiles N.V. (incorporated by reference to Exhibit 3.1 to Amendment No. 3 to Registration Statement on Form F-1, filed with the SEC on December 4, 2014, File No. 333-199285)
1.2	English translation of the Deed of Incorporation of Fiat Chrysler Automobiles N.V. (incorporated by reference to Exhibit 3.2 to Registration Statement on Form F-4, filed with the SEC on July 3, 2014, File No. 333-197229)
2.1	Terms and Conditions of the Global Medium Term Notes (incorporated by reference to Exhibit 4.1 to Registration Statement on Form F-4, filed with the SEC on July 3, 2014, File No. 333-197229)
2.2	Deed of Guarantee, dated as of March 19, 2013, by Fiat S.p.A. in favor of the Relevant Account Holders and the holders for the time being of the Global Medium Term Notes and the interest coupons appertaining to the Global Medium Term Notes (incorporated by reference to Exhibit 4.2 to Registration Statement on Form F-4, filed with the SEC on July 3, 2014, File No. 333-197229)
2.3	Indenture, dated as of April 14, 2015, between Fiat Chrysler Automobiles N.V. and The Bank of New York Mellon, as Trustee, relating to senior debt securities (incorporated by reference to Exhibit 4.1 to Report on Form 6-K, filed with the SEC on April 16, 2015, File No. 001-36676)
2.4	Form of 4.500% Global Security for Exchange Notes due 2020 (incorporated by reference to Exhibit 4.3 to Registration Statement on Form F-4, filed with the SEC on May 19, 2015, File No. 333-204303)
2.5	Form of 5.250% Global Security for Exchange Notes due 2023 (incorporated by reference to Exhibit 4.4 to Registration Statement on Form F-4, filed with the SEC on May 19, 2015, File No. 333-204303)
2.6	~~There have not been filed as exhibits~~ Description of the Registrant's Securities Registered Pursuant to ~~this Form 20-F certain~~Section 12 of the Exchange Act
	Certain long-term debt instruments, none of which relates to indebtedness that exceeds 10% of the consolidated assets of Fiat Chrysler Automobiles N.V., have not been filed as exhibits to this Form 20-F. Fiat Chrysler Automobiles N.V. agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of Fiat Chrysler Automobiles N.V. and its consolidated subsidiaries.
4.1	Fiat Chrysler Automobiles N.V. Equity Incentive Plan (incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-8, filed with the SEC on January 12, 2015, File No. 333-201440)
4.2	Fiat Chrysler Automobiles N.V. Remuneration Policy (incorporated by reference to Exhibit 4.3 to Registration Statement on Form S-8, filed with the SEC on January 12, 2015, File No. 333-201440)
4.3	Combination Agreement, dated as of December 17, 2019, by and between Fiat Chrysler Automobiles N.V. and Peugeot S.A.
4.4	Undertaking Letter, dated December 17, 2019, by and between Exor N.V. and Fiat Chrysler Automobiles N.V.
4.5	Undertaking Letter, dated December 17, 2019, by and among Establissements Peugeot Freres, FFP and Peugeot S.A.
4.6	Undertaking Letter, dated December 17, 2019, by and among Dongfeng Motor Group Company Ltd., Dongfeng Motor (Hong Kong) International Co Ltd. and Peugeot S.A.
4.7	Undertaking Letter, dated December 17, 2019, by and among Bpifrance Participations, Lion Participations and Peugeot S.A.
8.1	Subsidiaries
12.1	Section 302 Certification of the Chief Executive Officer
12.2	Section 302 Certification of the Chief Financial Officer
13.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
23	Consent of Independent Registered Public Accounting Firm



101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

FORM 20-F CROSS REFERENCE

The table below sets out the location within the document of the information required by the SEC for ~~Annual Reports~~annual reports on Form 20-F. The exact location is included in the column “Cross Reference”. The column “Page” refers to the starting page of the section (or sub-section) for reference only.



Item	Section	Cross Reference	Page
Part I
Item 1.	Identity of Directors, Senior Management and Advisers	Not applicable
Item 2.	Offer Statistics and Expected Timetable	Not applicable
Item 3.	Key Information
	A. Selected Financial Data	Selected Financial Data	10
	B. Capitalization and Indebtedness	Not applicable
	C. Reasons for the Offer and Use of Proceeds	Not applicable
	D. Risk Factors	Risk Factors	8376
Item 4.	Information on the Company
	A. History and Development of the Company	Group Overview	1213
		Documents on Display	6
	B. Business Overview	Group Overview	1213
		Overview of Our Business	1621
		Sales Overview	2430
		Results by Segment	5861
		Note 25 (Guarantees granted, commitments and contingent Liabilities) to the Consolidated Financial Statements	~~234~~237
		Environmental and Other Regulatory Matters	3238
	C. Organization Structure	Note 3 (Scope of consolidation) to the Consolidated Financial Statements	184
	D. Property, Plant and Equipment	Property, Plant and Equipment	2127
		Significant Vehicle Assembly Plants	~~260~~266
Item 4A.	Unresolved Staff Comments	None
Item 5.	Operating and Financial Review	MD&A Overview	4046
		Our Business Plan	1520
		Trends, Uncertainties and Opportunities	4046
		Note 2 (Basis of preparation - Use of estimates) to the Consolidated Financial Statements	~~165~~170
		Non-GAAP Financial Measures	4451
	A. Operating Results	Result of Operations	4753
	B. Liquidity and Capital Resources	Liquidity and Capital Resources	6968
		Note 21 (Debt) to the Consolidated Financial Statements	224
		Note 29 (Explanatory notes to the Consolidated statement of cash flows) to the Consolidated Financial Statements	253
	C. Research and Development, Patents and Licenses, etc.	Research and Development	1722
	D. Trend Information	Trends, Uncertainties and Opportunities	4046
	E. Off-Balance Sheet Arrangements	Note 25 (Guarantees granted, commitments and contingent Liabilities) to the Consolidated Financial Statements	~~234~~237
	F. Tabular Disclosure of Contractual Obligations	Contractual Obligations	~~259~~
		~~Note 25 (Guarantees granted, commitments and contingent Liabilities)~~ ~~to the Consolidated Financial Statements~~	~~234~~
	~~G. Safe Harbor~~	~~Forward-Looking Statements~~	8265



Item	Section	Cross Reference	Page
		Note 25 (Guarantees granted, commitments and contingent Liabilities) to the Consolidated Financial Statements	237
	G. Safe Harbor	Forward-Looking Statements	8
Item 6.	Directors, Senior Management and Employees
	A. Directors and Senior Management	Board of Directors	9995
		Senior Management	~~109~~105
	B. Compensation	Remuneration Report	~~134~~129
		Note 24 (Related party transactions) to the Consolidated Financial Statements	235
	C. Board Practices	The Audit Committee	~~107~~102
		The Compensation Committee	~~107~~103
		The Governance and Sustainability Committee	~~108~~104
	D. Employees	Employees	2228
	E. Share Ownership	Directors' Share Ownership	~~106~~101
Item 7.	Major Shareholders and Related Party Transactions
	A. Major Shareholders	Major Shareholders	1419
	B. Related Party Transactions	Note 24 (Related party transactions) to the Consolidated Financial Statements	~~231~~235
		Corporate Reorganisation	14
	C. Interests of Experts and Counsel	Not applicable
Item 8.	Financial Information
	A. Consolidated Statements and Other Financial Information	Consolidated Financial Statements	~~149~~146
		Sales Overview	2430
		Note 25 (Guarantees granted, commitments and contingent Liabilities) to the Consolidated Financial Statements	~~234~~237
		Our Share Information	~~260~~267
	B. Significant Changes	Presentation of Financial and Other Data	7
Item 9.	The Offer and Listing
	A. Offer and Listing Details	Our Share Information	~~260~~267
	B. Plan of Distribution	Not applicable
	C. Markets	Our Share Information	~~260~~267
	D. Selling Shareholders	Not applicable
	E. Dilution	Not applicable
	F. Expenses of the Issue	Not applicable
Item 10.	Additional Information
	A. Share Capital	Not applicable
	B. Memorandum and Articles of Association	Articles of Association and Information on FCA Shares	~~111~~106
	C. Material Contracts	Note 18 (Share-based compensation) to the Consolidated Financial Statements	~~209~~211
		Note 21 (Debt) to the Consolidated Financial Statements	~~221~~224
		Note 25 (Guarantees granted, commitments and contingent Liabilities) to the Consolidated Financial Statements	237
		Note 26 (Equity) to the Consolidated Financial Statements	~~239~~243
	D. Exchange Controls	Articles of Association and Information on FCA Shares	~~111~~106



Item	Section	Cross Reference	Page
	E. Taxation	Taxation	~~261~~268
	F. Dividends and Paying Agents	Not applicable
	G. Statements of Experts	Not applicable
	H. Documents on Display	Documents on Display	6
	I. Subsidiary Information	Not applicable
Item 11.	Quantitative and Qualitative Disclosures	Note 30 (Qualitative and quantitative information on financial risks) to the Consolidated Financial Statements	~~250~~255



~~Item~~	~~Section~~	~~Cross Reference~~	~~Page~~
Item 12.	Description of Securities Other than Equity Securities
	A. Debt Securities	Not applicable
	B. Warrants and Rights	Not applicable
	C. Other Securities	Not applicable
	D. American Depositary Shares	~~Not applicable~~None
Part II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	~~Not applicable~~None
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	~~Not applicable~~None
Item 15.	Controls and Procedures	Controls and Procedures	~~147~~144
Item 16A.	Audit Committee Financial Expert	The Audit Committee	~~107~~102
Item 16B.	Code of Ethics	Code of Conduct	~~127~~122
Item 16C.	Principal Accountant Fees and Services	Principal Accountant Fees and Services	~~261~~267
Item 16D.	Exemptions from the Listing Standards for Audit Committees	None
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	None
Item 16F.	Change in the Registrant's Certifying Accountant	~~Not applicable~~None
Item 16G.	Corporate Governance	Differences between Dutch Corporate Governance Practices and NYSE Listing Standard	~~129~~124
Item 16H.	Mine Safety Disclosure	~~Not applicable~~None
Part III
Item 17.	Financial Statements	Consolidated Financial Statements	~~149~~146
Item 18.	Financial Statements	Consolidated Financial Statements	~~149~~146
Item 19.	Exhibits	Exhibits	~~271~~278

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



		FIAT CHRYSLER AUTOMOBILES N.V.
		(Registrant)

		By:	/s/ Richard K. Palmer

		Name: Richard K. Palmer
		Title: Chief Financial Officer and Director
Date:	February ~~22, 2019~~25, 2020

~~275~~283


	Hourly			Salaried			Total			Hourly			Salaried			Total
	2018	2017⁽¹⁾	2016⁽¹⁾	2018	2017⁽¹⁾	2016⁽¹⁾	2018	2017⁽¹⁾	2016⁽¹⁾	2019	2018	2017	2019	2018	2017	2019	2018	2017
Europe	40,446	40,910	42,257	24,170	24,920	25,306	64,616	65,830	67,563	37,609	40,446	40,910	23,027	24,170	24,920	60,636	64,616	65,830
North America(1)	74,703	71,414	64,981	22,326	22,778	22,313	97,029	94,192	87,294	72,667	74,703	71,414	22,954	22,326	22,778	95,621	97,029	94,192
Latin America	26,004	25,634	26,171	7,062	6,917	8,138	33,066	32,551	34,309	24,525	26,004	25,634	7,088	7,062	6,917	31,613	33,066	32,551
Asia	253	271	266	3,313	3,486	3,394	3,566	3,757	3,660	230	253	271	3,413	3,313	3,486	3,643	3,566	3,757
Rest of the world	46	4	4	222	177	160	268	181	164	46	46	4	193	222	177	239	268	181
Total	141,452	138,233	133,679	57,093	58,278	59,311	198,545	196,511	192,990	135,077	141,452	138,233	56,675	57,093	58,278	191,752	198,545	196,511


	Years ended December 31						Years ended December 31,
U.S.	2018		2017		2016		2019		2018		2017
Automaker	Percentage of industry						Percentage of industry
GM	16.7	%	17.1	%	17.0	%	16.5	%	16.7	%	17.1	%
Ford	14.1	%	14.7	%	14.6	%	13.8	%	14.1	%	14.7	%
Toyota	13.7	%	13.9	%	13.7	%	13.6	%	13.7	%	13.9	%
FCA	12.6	%	11.7	%	12.6	%	12.6	%	12.6	%	11.7	%
Honda	9.1	%	9.3	%	9.2	%	9.2	%	9.1	%	9.3	%
Nissan	8.4	%	9.1	%	8.8	%	7.7	%	8.4	%	9.1	%
Hyundai/Kia	7.2	%	7.3	%	8.0	%	7.6	%	7.2	%	7.3	%
Other	18.2	%	16.9	%	16.1	%	19.0	%	18.2	%	16.9	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



	Years ended December 31
	2018^(1),(2),(3)			2017^(1),(2),(3)			2016^(1),(2),(3)
EMEA Light Commercial Vehicles	Group Sales	Market Share		Group Sales	Market Share		Group Sales	Market Share
	Thousands of units (except percentages)
Europe*	263	11.1	%	260	11.4	%	250	11.6	%
Other EMEA**	50	—		75	—		69	—
Total	313	—		335	—		319	—



	Years ended December 31,
(€ million)	2019⁽¹⁾			2018⁽¹⁾
Cash flows from operating activities - continuing operations	€	10,770		€	9,464
Cash flows (used in)/from operating activities - discontinued operations	(308		)	484
Cash flows used in investing activities - continuing operations	(8,178		)	(6,106		)
Cash flows from investing activities - net cash proceeds, disposal of discontinued operations⁽²⁾	5,348			—
Cash flows used in investing activities - discontinued operations	(155		)	(632		)
Cash flows used in financing activities - continuing operations	(6,152		)	(2,695		)
Cash flows from/(used in) financing activities - discontinued operations	325			(90		)
Translation exchange differences	212			106
Total change in cash and cash equivalents	1,862			531

Cash and cash equivalents at beginning of the period	12,450			12,638
Add: Cash and cash equivalents at beginning of the period included within Assets held for sale	719			—
Total change in cash and cash equivalents	1,862			531
Less: Cash and cash equivalents at end of the period included within Assets held for sale⁽³⁾	17			719
Cash and cash equivalents at end of the period	€	15,014		€	12,450



	Years ended December 31,
(€ million)	2018⁽¹⁾			2017⁽¹⁾			2016⁽¹⁾
Cash flows from operating activities - continuing operations	€	9,464		€	9,680		€	9,912
Cash flows from operating activities - discontinued operations	484			705			682
Cash flows used in investing activities - continuing operations	(6,106		)	(8,726		)	(8,490		)
Cash flows used in investing activities - discontinued operations	(632		)	(570		)	(549		)
Cash flows used in financing activities - continuing operations	(2,695		)	(4,287		)	(5,126		)
Cash flows used in financing activities - discontinued operations	(90		)	(186		)	(1		)
Translation exchange differences	106			(1,296		)	228
Total change in cash and cash equivalents	531			(4,680		)	(3,344		)

Cash and cash equivalents at beginning of the period	12,638			17,318			20,662
Total change in cash and cash equivalents	531			(4,680		)	(3,344		)
Less: Cash and cash equivalents at end of the period included within Assets held for sale	719			—			—
Cash and cash equivalents at end of the period	€	12,450		€	12,638		€	17,318


(1)	In addition, Exor N.V. holds 375,803,870 special voting shares; Exor N.V.'s beneficial ownership in FCA is ~~42.11~~41.74 percent, calculated as the ratio of (i) the aggregate number of common and special voting shares owned by Exor N.V. and (ii) the aggregate number of outstanding common shares and issued special voting shares.


~~(3)~~	~~Harris Associates L.P. beneficially owns 59,119,458 common shares (3.02 percent of the issued shares).~~


(i)	~~NAFTA~~North America: our operations to support distribution and sale of mass-market vehicles in the United States, Canada, Mexico and Caribbean islands, primarily under the Jeep, Ram, Dodge, Chrysler, Fiat, Alfa Romeo and Abarth brands.


(ii)	LATAM: our operations to support the distribution and sale of mass-market vehicles in South and Central America, primarily under the Fiat, Jeep, Dodge and Ram brands, with the largest focus of our business in Brazil and Argentina.


(iii)	APAC: our operations to support the distribution and sale of mass-market vehicles in the Asia Pacific region (mostly in China, Japan, India, Australia and South Korea) carried out in the region through both subsidiaries and joint ventures, primarily under the Jeep, Fiat, Alfa Romeo, Abarth, Fiat Professional, Ram and Chrysler brands.


(iv)	EMEA: our operations to support the distribution and sale of mass-market vehicles in Europe (which includes the 2827 members of the European Union, the UK and the members of the European Free Trade Association), the Middle East and Africa, primarily under the Fiat, Fiat Professional, Jeep, Alfa Romeo, Lancia, Abarth, Ram and Dodge brands.


(v)	Maserati: the design, engineering, development, manufacturing, worldwide distribution and sale of luxury vehicles under the Maserati brand.


	Years ended December 31,									Years ended December 31,
	2018^(1),(2)			2017^(1),(2)			2016^(1),(2)			2019^(1),(2)			2018^(1),(2)			2017^(1),(2)
NAFTA	Sales	Market Share		Sales	Market Share		Sales	Market Share
North America										Sales	Market Share		Sales	Market Share		Sales	Market Share
	Thousands of units (except percentages)									Thousands of units (except percentages)
U.S.	2,235	12.6	%	2,059	11.7	%	2,244	12.6	%	2,204	12.6	%	2,235	12.6	%	2,059	11.7	%
Canada	225	11.3	%	267	13.0	%	279	14.2	%	223	11.6	%	225	11.3	%	267	13.0	%
Mexico and Other	74	5.1	%	86	5.5	%	88	5.3	%	63	4.7	%	74	5.1	%	86	5.5	%
Total	2,534	12.0	%	2,412	11.4	%	2,611	12.2	%	2,490	12.0	%	2,534	12.0	%	2,412	11.4	%


Brazil	Years ended December 31,						Years ended December 31,
	2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2019⁽¹⁾		2018⁽¹⁾		2017⁽¹⁾
Automaker	Percentage of industry						Percentage of industry
FCA							18.7	%	17.5	%	17.5	%
GM	17.6	%	18.1	%	17.4	%	17.9	%	17.6	%	18.1	%
FCA	17.5	%	17.5	%	18.4	%
Volkswagen	14.8	%	12.5	%	12.1	%	15.6	%	14.8	%	12.5	%
Ford	9.2	%	9.5	%	9.1	%	8.2	%	9.2	%	9.5	%
Other	40.9	%	42.4	%	43.0	%	39.6	%	40.9	%	42.4	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%


	Years ended December 31,									Years ended December 31,
	2018^(1),(4)			2017^(1),(4)			2016^(1),(4)			2019^(1),(4)			2018^(1),(4)			2017^(1),(4)
APAC	Sales	Market Share		Sales	Market Share		Sales	Market Share		Sales	Market Share		Sales	Market Share		Sales	Market Share
	Thousands of units (except percentages)									Thousands of units (except percentages)
China⁽²⁾	163	0.8	%	215	0.9	%	176	0.8	%	92	0.4	%	163	0.8	%	215	0.9	%
Japan	22	0.5	%	21	0.5	%	20	0.5	%	24	0.6	%	22	0.5	%	21	0.5	%
India⁽³⁾	19	0.6	%	15	0.5	%	7	0.2	%	12	0.4	%	19	0.6	%	15	0.5	%
Australia	11	1.0	%	13	1.1	%	18	1.6	%	9	0.8	%	11	1.0	%	13	1.1	%
South Korea	8	0.5	%	8	0.5	%	7	0.4	%	10	0.7	%	8	0.5	%	8	0.5	%
APAC 5 major Markets	223	0.7	%	272	0.8	%	228	0.7	%	147	0.5	%	223	0.7	%	272	0.8	%
Other APAC	5	—		5	—		5	—		5	—		5	—		5	—
Total	228	—		277	—		233	—		152	—		228	—		277	—


	Years ended December 31						Years ended December 31,
Europe-Passenger Cars	2018^(*)		2017^(*)		2016^(*)		2019⁽¹⁾		2018⁽¹⁾		2017⁽¹⁾
Automaker	Percentage of industry						Percentage of industry
Volkswagen	23.9	%	23.8	%	24.1	%	24.5	%	23.9	%	23.8	%
PSA	16.0	%	12.1	%	9.7	%	15.6	%	16.0	%	12.1	%
Renault	10.5	%	10.4	%	10.1	%	10.5	%	10.5	%	10.4	%
Hyundai/Kia							6.7	%	6.7	%	6.3	%
BMW	6.6	%	6.7	%	6.8	%	6.6	%	6.6	%	6.7	%
FCA ⁽¹⁾	6.5	%	6.7	%	6.6	%
Daimler							6.4	%	6.2	%	6.3	%
Ford	6.4	%	6.6	%	6.9	%	6.1	%	6.4	%	6.6	%
Daimler	6.2	%	6.3	%	6.2	%
FCA⁽²⁾							6.0	%	6.5	%	6.7	%
Toyota	4.9	%	4.6	%	4.3	%	5.0	%	4.9	%	4.6	%
GM	—	%	3.8	%	6.6	%
Other	19.0	%	19.0	%	18.7	%	12.6	%	12.3	%	16.5	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%


	As a percentage of 2018 sales		As a percentage of 2017 sales		As a percentage of 2016 sales		As a percentage of 2019 sales		As a percentage of 2018 sales		As a percentage of 2017 sales
U.S.	32	%	28	%	31	%	31	%	32	%	28	%
China	24	%	30	%	30	%	24	%	24	%	30	%
Europe Top 4 countries⁽¹⁾	17	%	16	%	15	%	17	%	17	%	16	%
Japan	4	%	4	%	3	%	5	%	4	%	4	%
Other countries	23	%	22	%	21	%	23	%	23	%	22	%
Total	100	%	100	%	100	%	100	%	100	%	100	%



	Years ended December 31,						Increase/(Decrease)
(€ per share)	2019		2018		2017		2019 vs. 2018		2018 vs. 2017
Adjusted diluted EPS	€	2.73	€	3.00	€	2.25	(9.0	)%	33.3	%



	Years ended December 31,
(€ per share except otherwise noted)	2019		2018		2017⁽¹⁾
Diluted earnings per share from continuing operations	€	1.71	€	2.12	€	2.11
Impact of adjustments above, net of taxes, on Diluted earnings per share from continuing operations	1.02		0.88		0.14
Adjusted diluted earnings per share	€	2.73	€	3.00	€	2.25
Weighted average number of shares outstanding for Diluted earnings per share from continuing operations (thousand)	1,570,850		1,567,839		1,556,306


(€ million, except shipments which are in thousands of units)	Net revenues									Adjusted EBIT									Shipments			Net revenues						Adjusted EBIT						Shipments
	Years ended December 31																					Years ended December 31,
	2018			2017			2016			2018			2017			2016			2018	2017	2016	2019			2018			2019			2018			2019	2018
NAFTA	€	72,384		€	66,094		€	69,094		€	6,230		€	5,227		€	5,133		2,633	2,401	2,587
North America																						€	73,357		€	72,384		€	6,690		€	6,230		2,401	2,633
LATAM	8,152			8,004			6,197			359			151			5			585	521	456	8,461			8,152			501			359			577	585
APAC	2,703			3,250			3,662			(296		)	172			105			84	85	91	2,814			2,703			(36		)	(296		)	76	84
EMEA	22,815			22,700			21,860			406			735			540			1,318	1,365	1,306	20,571			22,815			(6		)	406			1,199	1,318
Maserati	2,663			4,058			3,479			151			560			339			35	51	42	1,603			2,663			(199		)	151			19	35
Other activities	2,888			3,248			3,116			(40		)	(98		)	(175		)	—	—	—	3,009			2,888			(173		)	(40		)	—	—
Unallocated items & eliminations⁽¹⁾	(1,193		)	(1,624		)	(1,610		)	(72		)	(138		)	(267		)	—	—	—	(1,628		)	(1,193		)	(109		)	(72		)	—	—
Total	€	110,412		€	105,730		€	105,798		€	6,738		€	6,609		€	5,680		4,655	4,423	4,482	€	108,187		€	110,412		€	6,668		€	6,738		4,272	4,655



Level 1	~~operating~~Operating areas, which identify and assess risks as well as establish specific actions for the management of risks
Level 2	~~specific~~Specific individuals identified as risk owners, which define methodologies and tools for both monitoring and managing risks
Level 3	~~enterprise~~Enterprise risk management (“ERM”) functions, which support the monitoring of our risks and manage discussions of our risks at the Group level


▪	Reviewing the results of the annual Enterprise Risk Assessment (“ERA”).


▪	~~Assisting in the review of Key Risk Indicators (“KRIs”) and Dashboards, including:~~


◦	Identifying risks to be discussed ~~with~~at the ~~GRMC, and~~


◦	~~Reviewing and providing feedback on risk mitigation plans on the risks discussed with the GRMC.~~Group level (GEC and/or Group Product Committee).


▪	Assisting in the development of the Company’s risk appetite and risk tolerance, which ~~represent~~support disclosures required in our EUEuropean Union Annual ~~Report.~~Report (Annual Report).


▪	Reviewing risk management disclosure in the EU Annual Report.


▪	Reviewing the design of the Group’s risk management functions, including reporting lines of authority, communications and control functions to ensure they are appropriate.



Risk category	Category description	Risk appetite
Strategic	Risk that may arise from the pursuit of FCA’s business plan, from strategic changes in the business environment, and/or from adverse strategic business decisions.	We are prepared to take risks in a responsible way that takes our stakeholders’ interests into account and are consistent with our business plan.
Operational	Risk relating to internal processes, people and systems or external events (including legal and reputational risks).	We look to mitigate operational risks to the maximum extent based on cost/benefit considerations.
Financial	Risk relating to uncertainty of return and the potential for financial loss due to financial performance.	We seek capital market and other transactions to strengthen our financial position while allowing us to finance our operations on a consolidated global basis.
Compliance	Risk of non-compliance with relevant regulations and laws, internal policies and procedures.	We hold ourselves, as well as our employees, responsible for acting with honesty, integrity and respect, including complying with our Code of Conduct, applicable laws and regulations everywhere we do business.



Risk Category	Key Global Risk Description	Control / Mitigating Actions
Compliance	Regulatory Compliance Our ability to manage the impact of regulatory compliance with vehicle fuel economy (“FE”), greenhouse gas (“GHG”) and zero emission vehicle (“ZEV”) requirements.	Group Product Committee (“GPC”) manages approval for investments in FE/ GHG/ZEV related ~~compliance.~~compliance ensures governance of program timing and monitors compliance impact related to changes in the long-range plan. Continued reduction of CO2 emissions is achieved through a combination of technologies aligned to the vehicle mix, consumer needs and regulatory framework in each market. Central coordination and oversight of internal checks and conformity activities under senior management to promote consistency in approach and process across our operations. CO₂ ~~compliance strategy communicated at~~The FCA Code of Conduct clearly and affirmatively requires employees to report issues of non-compliance, in addition, the ~~June 2018 Capital Markets Day outlined technologies and applications being pursued to improve fuel consumption and emissions.~~ ~~The~~ “Leave No Doubt” program encourages employees, contractors, suppliers and dealers to report any issue which may concern vehicle safety, emissions or regulatory compliance. FCA continuously works to improve on emission compliance tools and implements these tools throughout the organization as appropriate.
Operational	~~Product Quality and~~ Customer Satisfaction Our ability to produce vehicles to meet product quality standards, gain market acceptance and satisfy customer expectations.	Quality and customer satisfaction performance improvement metrics monitored at GEC and Product ~~Committees~~Committee meetings. World Class Manufacturing (“WCM”) principles deployed throughout our manufacturing operations, foster a manufacturing culture that targets improved safety, quality and efficiency. Quality considerations ranging from customer expectations to functional requirements are analyzed from the earliest stages of design. A cross-functional initiative within FCA focuses on managing risks and implementing solutions for new vehicles. The program helps identify and avoid potential issues earlier in the vehicle development process and makes implementing solutions more cost effective.
Operational	~~Vehicle~~Corporate Cybersecurity Our ability to protect our ~~complex electronic control~~ systems ~~contained in our vehicles~~globally against a security incident or system failure that may lead to a significant ~~malfunction,~~business disruption, loss of confidential information, or ~~security breach.~~breach of data privacy resulting in financial and/ or reputational damage.	~~Cross-functional team of professionals focus~~FCA’s dedicated cyber risk insurance coverage is designed on the ~~cybersecurity~~basis of ~~our vehicles through activities such as threat monitoring, design enhancements,~~a comprehensive and ~~third-party penetration testing. Cybersecurity is considered throughout a vehicle’s life cycle~~thorough analysis of: • the threats of exposure of vital company assets, including ~~development, manufacturing~~the information that must be protected and ~~service.~~at which level • ~~Financial rewards offered for discovery~~policies and ~~reporting~~procedures in place to reduce the risk of ~~potential cybersecurity vulnerabilities through a crowdsourced bounty program.~~ ~~Active engagement~~attack in the ~~Automotive - Information Sharing~~event of a security breach • plans and ~~Analysis Center (“Auto-ISAC”). The Auto-ISAC enhances the industry’s ability~~procedures in place to ~~quickly learn of new~~neutralize threats and ~~vulnerabilities and to work in a collaborative manner on threat triage.~~ remedy security issues.
Operational	Interruption of Critical Supplies and Supplier Quality Our ability to manage our critical supplies to ensure alignment with required expectations, needs and quality standards and prevent interruption resulting in production blockages.	Active monitoring of the financial health of suppliers to mitigate disruption due to financial distress of companies in our supply chain. Monitoring political, environmental and economic events, globally, ~~for~~ to anticipate or identify events that could lead to supply chain disruption so that mitigating action can be taken.
Operational / Strategic	Talent Management - Attraction, Development & Retention of Critical Resources Our ability to globally manage ~~globally~~ all aspects of Talent Management - including attraction, development and retention to facilitate internal benchmarking and improvement in order to meet current and future needs.	Convergence of key HR talent management processes, metrics, and reporting, along with adding global HR process oversight and governance, ~~are planned~~has been initiated in ~~the~~ 2019 ~~- 2021 business cycle, including:~~and included: • ~~Implementation~~Organizational restructuring to reinforce the global governance of ~~a single, worldwide Learning~~Talent Management ~~System~~programs • ~~Agreeing the plan to merge current regional HRIS systems into one common Group level system~~ • ~~Further enhancement to standardization~~Consolidation of standardized retention/attrition metrics and reporting, including global views by function with ~~inclusion of~~ internal and external benchmarks ~~(initially introduced in mid-2018)~~ • Monitoring of specific KPIs for key position succession planning and talent development. • Periodic updates provided to the GEC • Development of a consistent employer value proposition for use by each region in attracting talent • Deployment of Regional best practice sharing and integration methodology



Name	Year of Birth	Position
John Elkann	1976	executive director
Michael Manley	1964	executive director
Richard K. Palmer	1966	executive director
John Abbott	1960	non-executive director
Andrea Agnelli	1975	non-executive director
Tiberto Brandolini d’Adda	1948	non-executive director
Glenn Earle	1958	non-executive director
Valerie A. Mars	1959	non-executive director
~~Ruth J. Simmons~~	~~1945~~	~~non-executive director~~
Ronald L. Thompson	1949	non-executive director
Michelangelo A. Volpi	1966	non-executive director
Patience Wheatcroft	1951	non-executive director
Ermenegildo Zegna	1955	non-executive director



2018 Performance Metrics⁽¹⁾	Weight	Threshold (€ millions)	Target (€ millions)	Maximum (€ millions)
Adjusted EBIT	1/3	7,830	8,700	13,050
Adjusted net profit	1/3	4,500	5,000	7,500
Net industrial cash	1/3	3,600	4,000	6,000



Adjusted Net Profit Payout Scale		TSR Payout Scale
% Achieved	Payout % of Target	FCA Rank	Payout % of Target
80.0%	50.0%	1	150.0%
85.0%	62.5%	2	133.3%
90.0%	75.0%	3	125.0%
95.0%	87.5%	4	100.0%
100.0%	100.0%	5	83.3%
		6	66.7%
		7	50.0%
		8-11	0.0%



Directors of FCA	Office held	In office from/to	Annual fee (cash) (€)	Annual incentive (equity) ⁽¹⁾ (€)	Annual incentive (bonus) ⁽²⁾(€)	Other compensation (€)		Pension & similar benefits ⁽⁷⁾(€)	Total (€)
ELKANN John Philipp	Chairman	01/01/2018 - 12/31/2018	1,693,545	—	—	875,944	⁽³⁾	549,000	3,118,489
MARCHIONNE Sergio	Former CEO	01/01/2018 - 07/20/2018	1,975,803	284,671	—	4,369,176	⁽⁴⁾	4,336,905	10,966,555
MANLEY Michael	CEO	07/21/2018 - 12/31/2018	600,442	1,687,075	310,766	89,817	⁽⁵⁾	292,329	2,980,429
ABBOTT John	Director	04/13/2018 - 12/31/2018	84,677	—	—	—		—	84,677
AGNELLI Andrea	Director	01/01/2018 - 12/31/2018	169,355	—	—	—		—	169,355
BRANDOLINI D'ADDA Tiberto	Director	01/01/2018 - 12/31/2018	169,355	—	—	1,074		—	170,429
EARLE Glenn	Director	01/01/2018 - 12/31/2018	186,290	—	—	18,392	⁽⁶⁾	—	204,682
MARS Valerie	Director	01/01/2018 - 12/31/2018	182,056	—	—	8,044	⁽⁶⁾	—	190,100
SIMMONS Ruth J.	Director	01/01/2018 - 12/31/2018	173,588	—	—	6,917	⁽⁶⁾	—	180,505
THOMPSON Ronald L.	Director	01/01/2018 - 12/31/2018	198,992	—	—	6,917	⁽⁶⁾	—	205,909
VOLPI Michelangelo A.	Director	01/01/2018 - 12/31/2018	173,588		—	—		—	173,588
WHEATCROFT Patience	Director	01/01/2018 - 12/31/2018	182,056	—	—	11,819	⁽⁶⁾	—	193,875
ZEGNA Ermenegildo	Director	01/01/2018 - 12/31/2018	182,056	—	—	9,186	⁽⁶⁾	—	191,242
Total			5,971,803	1,971,746	310,766	5,397,286		5,178,234	18,829,835



Name / Plan	Grant Date	Vesting Date	Number of shares under award at January 1, 2018	Fair Value on Grant Date ⁽¹⁾	Shares Granted	Shares Vested	Number of shares under award at December 31, 2018
Marchionne / FCA LTI awards ^(1)(2),(3)	04/16/2015	2017 / 2018 / 2019	4,472,800	U.S.$14.84	—	2,805,935	1,561,165
Manley/ FCA LTI awards	09/27/2018	2019	—	U.S.$16.61	180,364	—	180,364

Performance Period

2019 - 2021 Plan

2019 Grant
PSU's and RSU's