REMUNERATION POLICY 2019 - FCA Bank Group · banking group present in most of the European...

REMUNERATION POLICY 2019

Human Resources out of 34

REMUNERATION POLICY 2019


INDEX

SECTION I. THE REMUNERATION POLICY 2019 ......................................................................................... 3

1. PRINCIPLE AND OBJECTIVES .................................................................................................................. 3

2. THE REGULATORY FRAMEWORK ............................................................................................................ 4

3. COMPANY PROFILE .................................................................................................................................... 5

3.1 FCA Bank ................................................................................................................................................ 5

4. GOVERNANCE MODEL ............................................................................................................................... 9

4.1 Definition of the Group Remuneration Policy .................................................................................... 9

4.2 Local Adaptation ................................................................................................................................. 10

4.3 The Shareholders' Meeting ........................................................................................................... 10

4.4 The Board of Directors ....................................................................................................................... 10

4.5 The Remuneration Committee ........................................................................................................... 10

4.6 The Functions Involved in the Compensation System ................................................................... 12

4.7 The Material Risk Takers Identification Process ("MRT") ............................................................... 13

5. REMUNERATION STRUCTURE ................................................................................................................ 18

5.1 Fixed Remuneration ............................................................................................................................ 20

5.2 Variable remuneration ........................................................................................................................ 21

6. REMUNERATION OF MEMBERS OF THE BOARD OF DIRECTORS AND BOARD OF AUDITORS ..... 22

7. VARIABLE REMUNERATION OF MATERIAL RISK TAKERS (MRT) ....................................................... 23

7.1 The Performance Leadership Bonus (PLB) ...................................................................................... 23

7.2 The other forms of variable remuneration ........................................................................................ 27

7.3 Financial instruments ......................................................................................................................... 27

8. REMUNERATION OF THE HEADS OF CONTROL FUNCTIONS ............................................................. 31

9. REMUNERATION OF THE REMAINING PERSONNEL ............................................................................ 31

9.1 Sales Incentives .................................................................................................................................. 28

10. TERMINATION PAYMENTS ("SEVERANCE") ......................................................................................... 33

11. EXTERNAL NETWORKS .......................................................................................................................... 30


SECTION I. THE REMUNERATION POLICY 2019 1. PRINCIPLE AND OBJECTIVES

The purpose of this document is to describe the remuneration policies applied within the FCA Bank Group which, in line

with its values, manages these processes according to the principles of fairness, correctness and prudent risk

management, with the purpose of attracting and keeping in the company individuals with professionalism and ability

suitable for the needs of the company.

The aim is to achieve remuneration systems in line with the long-term corporate strategies and objectives, connected

with company results, suitably adjusted to take into account all the risks, consistent with the levels of capital and liquidity

necessary to meet the activities undertaken and, in any case, such as to avoid distorted incentives that could lead to

regulatory violations or excessive risk-taking by the Bank.

FCA Bank operates in a European context characterized by competitiveness and complexity. In such a scenario it is of

primary importance the need to have a compliant and competitive remuneration system that guarantees the best respect

of the delicate balance between strategic objectives and the recognition to the personnel of the right merits, as well as

creating value for our Shareholders. It is a primary objective to attract, retain and motivate highly qualified personnel, and

also to reward those who carry on corporate values with compensation linked to the creation of long-term value.

Integrity is a key value in order to achieve sustainable profits and create value for all stakeholders. It is therefore required

to all the leaders and all the employees of the Group to operate according to this principle, constantly keeping an ethical

behavior. The Bank intends to reward this type of behaviors through appropriate remuneration practices and to create

value over a long-term time horizon.

The guidelines and rules described within this Policy are applied in all countries where there is a company of the FCA

Bank Group and always in full compliance with local regulations on the matter.

The Group's remuneration approach, in order to ensure the competitiveness and effectiveness of its policies, is based on

the following principles:

Integrity and ethical behavior


Clear governance

Full compliance with regulatory requirements and with the Code of Conduct that FCA Bank has adopted

Remuneration programs that address the expected leadership standards and business results

Compensation structure that does not provide incentives to encourage employees to take risks that are not in

line with the Company's risk profile

Sustainability of remuneration and alignment with corporate results and individual performance

Internal remuneration equity and competitiveness towards the external market

Retention and motivation of the most strategic talents, at all levels of the organization

2. THE REGULATORY FRAMEWORK

The continuous changes in the financial services sector, the international regulatory entities and the regulatory evolution

are imposing on banks an increasing attention to the issue of remuneration, especially regarding governance (with a

particular focus on the roles and responsibilities of corporate bodies and of the control functions), the definition of the

remuneration structure and transparency towards the shareholders, with the aim of ensuring a sound and prudent

remuneration policy.

The Remuneration Policy of the FCA Bank Group refers to the overall applicable regulatory framework, both at European

and national level, and in particular to:

Bank of Italy provisions on remuneration and incentive policies and practices (Circular No. 285, Part I, Title IV),

in implementation of Directive 2013/36 / EU (Capital Requirements Directive - CRD IV) updated on

23rd October 2018 - reflecting also the EBA 2015/22 Guidelines on "sound remuneration policies" published on

June 27th, 2016 and the EBA 2016/06 Guidelines on Remuneration Policies and practices relating to the sale

and supply of retail banking products and services, published on September 28th, 2016 effective from January

13th, 2018.

Technical reference standards ("Regulatory Technical Standards" - RTS Delegated Regulation 604/2014)

published by the European Union in 2014, based on the proposal of the European Banking Authority (EBA),

which define qualitative and quantitative criteria for the identification of categories of personnel whose

professional activities have a substantial impact on the risk profile of the Company ("Material Risk Takers");

Supplementary Guidelines to the FSB principles and standards on sound Compensation Practices, published on

March 2018, providing firms and supervisors with a framework to consider how compensation practices and

tools, such as in-year bonus adjustments, malus or clawback, can be used to reduce misconduct risk and

address misconduct incidents.

Finally, it should be emphasized that the Remuneration Policy of FCA Bank is fully compliant with the Volcker Rule.


3. COMPANY PROFILE 3.1 FCA Bank

FCA Bank S.p.A. owned equally by FCA Italy S.p.A. and Crèdit Agricole Consumer Finance S.A. is an international

banking group present in most of the European countries and in the southern Mediterranean.

The proven partnership presents itself on the market with a unique offer, combining a strong and widespread presence in

European countries, a variety of brands and an extraordinary range of products, tailored and flexible financial products

and services with constant attention to the relationship with the client. A philosophy that the market has shown to

appreciate and that has positioned FCA Bank among the main players of automotive financing1 in Europe.

The main products of FCA Bank are dealer financing, customer financing and long-term rental, the online deposit

account and recently launched credit cards.

1 FCA Bank provides financial support to Fiat, Lancia, Alfa Romeo, Fiat Professional, Abarth, Chrysler, Jeep, Maserati, Aston Martin, Morgan Motor Company, Dodge and RAM in several countries; to prestigious brands such as Jaguar and Land Rover in continental Europe; to Erwin Hymer Group, the largest European manufacturer of motorcaravans and caravans, owner of the Bürstner, Carado, Dethleffs, Hymer, Niesmann + Bischoff, Laika, LMC, Sunlight and 3DOG camping brands, McRent, Goldschmitt, Movera. Moreover FCA Bank entered the motorcycles sector thanks to the agreement signed with Harley Davidson and MV Agusta


The Corporate Structure

100%

100%

99,99%

99,99%

100%

100%

Note:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

100%

100%

100%

FCA Bank GmbH (AT) - 25% held by Fidis S.p.A. and for the remaining 25% from CA Consumer Finance S.A..

FCA Capital Hellas S.A. (GR) - Number 1 share is held by a natural person.

FCA Insurance Hellas S.A. (GR) - Number 1 share is held by a natural person.

FCA Capital France S.A. (FR) - Numbers 5 shares are held by a natural person.

FCA Leasing France SNC (FR) - Held for the remainder by Leasys France S.A.S..

Ferrari Financial Services GmbH (DE) - Held by FCA Bank for 50% + 1 share; the remaining part is held by Ferrari Financial Services S.p.A..

From 1 November 2018 FCA Capital Belgium S.A. was merged by incorporation into Fca Bank S.p.A .

From 1 October 2018 Leasys S.p.A. has acquired 100% of the share capital of Win Rent S.p.A.

FCA Bank as a "significant supervised entity" is subject to direct supervision by the European Central Bank, which is

responsible for full compliance with the specific duties relating to the prudential supervision of credit institutions within the

Single Supervisory Mechanism. In addition, FCA Bank applies the most stringent provisions for large banks in terms of

governance and alignment of payments to the company's risk profile, including:

• Constitution of the Remuneration Committee in 2016 (Focus par 4.5);

• Application to the ratio between the variable and the fixed remuneration of the limit of 100% for the entire

workforce and 33% for Control functions. The Human resources function is no longer assimilated to the Control

Functions as per new regulatory requirement (Focus par. 5);

• Identification of Material Risk Takers (Focus par 4.7);


• Application of both mechanisms of deferral and payment of 60% of the variable remuneration in financial

instruments as well as the alignment with the risk profile of the company ex ante and ex post (i.e. Malus and

Clawback) (Focus par 7.1).

For the year 2019, FCA Bank confirms the principles of the previous Remuneration Policy and a remuneration structure

aligned to the latest requirements.

Specifically, the 2019 Remuneration Policy does align pay-out schemes for Senior Management to the latest regulatory

requirements (Focus on par. 7.1).

In case awarded variable remuneration exceeds the identified threshold, i.e. € 60.000:

• Deferral of 40% for 5 years;

• Increase up to 60% of the incidence of instrument of the deferred component.

In order to maintain the ability to attract talents and retain people who are crucial to the Group's strategic objectives, in

terms of profits and sustainability, the remuneration structure provides:

• Stability and non-competition agreements able to strengthen the attractiveness of remuneration packages

for key people

• Role indemnity able to compensate for the role and responsibility discouraging risk-taking.

Both components, already included in previous Remuneration Policies, have been confirmed for the current year and are

intended to diversify and enrich the compensation proposal for key figures, In line with latest regulatory requirements

they are considered respectively within the variable and fixed components of the remuneration.

Over the last few years, the overall governance model has been strengthened, increasing the role of FCA Bank in

ensuring the overall consistency of Group remuneration policies, including the identification process of Material Risk

Takers and the correct implementation at a consolidated and individual level, taking into account the regulatory

framework in place at local level and strengthening the involvement of control functions.

The 2019 Remuneration Policy, once approved by the FCA Bank Shareholders' Meeting, is shared with the Group's

Legal Entities, which will proceed either to adopt or to adapt the Policy, in line with the local regulations in force, giving

appropriate information to FCA Bank2. The local remuneration policy will be approved by the local Board of Directors and

published on relevant websites. The HR Function will guarantee the overall consistency of the remuneration policies

adopted.

The principles identified in the present Remuneration Policy for the definition of variable remuneration (i.e. indicators

linked both to individual and overall corporate performance) apply to all Group entities. Specific requirements for financial

institutions (e.g. deferral mechanisms, malus conditions) that limit overall competitiveness will not apply to entities not

included in the Group's banking perimeter.

2 It is noted that in case of different Regulatory requirements, it always applies the most stringent one (i.e. 33% cap of variable remuneration to all Head of Control Function even if belonging to a Legal Entity outside Italy).


4. GOVERNANCE MODEL

The Remuneration Governance model aims to guarantee clarity, reliability and adequate control over remuneration

practices in all areas of the Group, ensuring that decisions are taken sufficiently autonomously while informing the

relevant corporate bodies.

This model is transparent and clear, prevents any conflicts of interest and guarantees full compliance with regulations

and internal rules.

4.1 Definition of the Group Remuneration Policy

Annually the Remuneration Policy, upon the proposal of the Remuneration Committee, is defined by the Board of

Directors, and subsequently submitted to the Shareholders' Meeting for approval. In particular, the Group Remuneration

Policy is formulated at Headquarters level by Human Resource (HR), with the involvement of the Risk & Permanent

Control (R&PC), and is validated by the Compliance before being submitted to the Remuneration Committee.

Yearly the R&PC function issues an independent ex-ante opinion on the Material Risk Taker assessment process and on

the risk adjusted metrics to ensure the alignment between the Remuneration Policy and the Risk Appetite Framework,

Compliance verifies the alignment with the regulatory framework and the Internal Audit function (IA) verifies the

alignment of the remuneration practice of the previous year to the approved remuneration policies.

4.2 Local Adaptation

The Remuneration Policy is submitted annually to the Local Adaptation process in the various Legal Entities in order to

ensure consistency and sustainability in line with local and sector regulatory requirements.


Local HR and local internal control function have analyzed whether to proceed in a full adoption or a local adaptation in

line with the local regulations in force. In case of different Regulatory requirements at country level, the most stringent

one applies (i.e. 33% cap of variable remuneration to all Head of Control Function even if belonging to a Legal Entity

outside Italy).

The countries that have decided to completely adopt the Group Remuneration Policy, approved by the local Board of

Directors, are: Belgium, Germany (including Ferrari Financial Services), France, Greece, Ireland, Netherland, Nordics,

Poland, Portugal, Spain, Switzerland and United Kingdom. Austria: in line with local regulatory requirement the threshold

triggering the deferral payout for MRT is set at €30.000.

4.3 The Shareholders' Meeting

The Shareholders' Meeting, in line with the regulatory provisions in force, annually approves the Remuneration Policy for

the current year (including the provisions concerning severance payments), the limits of the variable remuneration and

the related ratio of variable component on the fixed component, plans based on financial instruments, and examines the

qualitative and quantitative ex-post information on the decisions taken the previous year, as well as the related report on

the controls performed by the Internal Audit function.

4.4 The Board of Directors

According to the provisions of the Regulator, the Board of Directors is responsible for defining the remuneration for the

members of the Board, also in relation to their duties and powers.

Name Position Born in YEAR

Year first appointed

to the Board of

Directors

Principal Offices outside of the FCA Bank Group

Philippe

DUMONTChairman of the Board 1960 2009

- Deputy Managing Director of Credit Agricole S.A. for Specialized Financial Services;

- Ca Consumer Finance SA - Chief Execvutive Officer;

- Member of the Comitè Executif and of the Comitè de Direction of Crèdit Agricole;

- Agos Ducato S.p.A. - Chairman of the Board

Giacomo

CARELLI

Chief Executive Officer and

General Manager1972 2014

Davide MELE Not Executive Director 1973 2018 - FCA - Deputy Chief Operating Officer EMEA Region

Paola DE

VINCENTIIS

Independent Not Executive

Director1972 2017 - Full professor of Banking and Finance, Turin University, Italy

Andrea

FAINANot Executive Director 1962 2014

- FCA - Head of Group Financial Services

- Fidis S.p.A - Chief Executive Officer and General Manager

Andrea

GIORIO

Independent Not Executive

Director1964 2014 - AUXE Partners s.r.L. - Risk Capital Management Avisory, Managing Director

Olivier

GUILHAMONNot Executive Director 1958 2019

- Credit Agricole Cariparma S.p.A. - Deputy General Manager

- Credit Agricole FriulAdria S.p.A. - Board Member

Bernard

MANUELLINot Executive Director 1956 2006 - CA Consumer Finance Sa - Head of Internal Automotive Partnerships

Richard

Keith

PALMER

Not Executive Director 1966 2008 - FCA - Chief Financial Officer

Valerie

WANQUETNot Executive Director 1966 2017

- CA Consumer Finance SA - Group Chief Financial Officer, and Member of the Group

Executive Committee


The Board annually reviews the Remuneration Policy, approves it before proposing it for final approval to the

Shareholders' Meeting and is responsible for its adoption and correct implementation. The Board also ensures that the

Remuneration Policy is accessible within the company structure. In particular, the Board of Directors is responsible for

the remuneration structure of:

the Chief Executive Officer and General Manager and its first levels;

the heads of the control functions

the Material Risk Takers (MRT).

It is envisaged that the Board of Directors will decide whether or not to disburse - considering, among other aspects, the

bank's income and capital results - the "Performance & Leadership Bonus" (PLB) annual bonus, as described in more

detail in par. 7.1 and may, if necessary, suspend the payment of all variable remuneration. All decisions regarding

remuneration, for the definition of the Remuneration Policy and for the review of the fixed and variable remuneration for

the CEO & GM and its first reports and for the personnel identified as Material Risk Takers in an aggregate manner, are

pre-evaluated through the independent directors, both within the Remuneration Committee and the Risk & Audit

Committee (RAC).

In its activity of defining and reviewing the remuneration policies, the Board of Directors relies on the support of the

Remuneration Committee through the work of preliminary investigation, monitoring and recommendations based on the

supervisory provisions of the Bank of Italy on Remuneration Governance.

The review of the fixed remuneration and variable remuneration of the Chief Executive Officer and General Manager is

defined by the Board of Directors; during the session the Independent Directors evaluate the proposed revision and

express their opinion.

The wage adjustments and the variable remuneration inherent to the Heads of the Control Functions are supervised by

the Risk & Audit Committee and shared with the Remuneration Committee.

The overall decision framework includes roles and responsibilities of management functions, as described below.

4.5 The Remuneration Committee

The Remuneration Committee is a committee set up by the Board of Directors on March 23rd, 2016, in line with the

banking regulatory provisions regarding corporate governance (Bank of Italy circular 285 and subsequent updates based

on the EBA Guidelines).

With effect 30th June 2017, the Remuneration Committee, formed on the basis of Article 11 of the Statute in compliance

with the supervisory provisions, is made up of 3 non-executive directors, 2 of whom are independent.

The Committee is appointed by the Board of Directors taking into consideration the different professional experience of

its members. The Remuneration Committee is chaired by an independent director of the Board of Directors and in his

absence by the other independent director. During the mandate of the Board of Directors two separate mandates of the

Remuneration Committee shall occur. The office of Chairman expires on the 30th of September of the second year of

mandate of the Board, and in the second mandate the Committee Chairman shall be the other independent director.


The Committee has advisory and support tasks for the BoD in terms of procedures and remuneration policies for FCA

Bank.

In particular, the Committee expresses its opinion to the BoD on the remuneration structure of the MRTs, on the

Remuneration Policy and on the report regarding their application (ex-post information). The Committee, based on the

remuneration and incentive policies approved by the Shareholders:

• Proposes the compensation of the Chief Executive Officer & General Manager (based on the proposal by

the Chairman of the Board of Directors, after consultation with both Shareholders); proposes (on the basis

of the proposal of the Chief Executive Officer and General Manager) the remuneration of all the heads of

the Control Functions reporting directly to the Chief Executive Officer and General Manager, having heard

the Risk & Audit Committee for the Control Functions reporting directly to him; proposes the remuneration

of the Head of Internal Audit, having heard the Risk & Audit Committee;

• Proposes the remuneration of directors with special duties (Chairman, Deputy Chairman, Board Directors);

• Performs advisory role regarding the determination of the remuneration criteria of MRTs;

• Monitors directly the correct approval of the remuneration rules of the heads of the Control Functions, , and

of the Head of Human Resources, in close collaboration with the Board of Statutory Auditors;

• Ensures the involvement of the control functions, in line with their duties, in the process of elaboration and

control of the remuneration policies;

• Expresses its opinion, making use of the information received from the departments involved, on the

achievement of corporate performance targets for the activation of incentive systems and the evaluation of

all the criteria ("ex-post risk adjustment") for the payment of compensation;

• Cooperates with the other Board committees, in particular with the Risk & Audit Committee with regards to

the compliance of the incentive system to the Risk Appetite Framework in order to examine whether the

incentives defined in the remuneration system take into consideration the risks, the capital requirements

and liquidity of the Bank.

The Remuneration Committee provides annually, in the ex-post documentation (disclosure report), adequate information

on the activities performed to the Board of Directors and to the Shareholders.

The Committee prepares, with the support of the Control Functions involved, the documentation to be submitted to the

Board of Directors and to the Shareholders' Meeting for their decisions.


4.6 The Functions Involved in the Compensation System

- Human Resources: establishes and guides the process of drawing up the Remuneration Policy, and the relevant

document for the approval of the competent functions and bodies; it governs its execution through the management of

the remuneration components, in line with the envisaged governance process and in compliance with the relevant

legislation. This function is also responsible for periodically evaluating market practices with the aim of verifying the

competitiveness and attractiveness of remuneration packages, also through the support of external consultants experts

in remuneration matters.

- Compliance: verifies, among other things, the compliance of the Remuneration Policy and processes, including the

annual process of identification of MRTs at local and consolidated level, with the regulatory framework, the statute and

the Code of Conduct.

- R&PC: verifies the correct mapping of all the MRTs and, vice versa, that the people not included do not assume

significant risks based on the EBA RTS and related guidelines. R&PC checks the consistency between the

Remuneration Policy and the sound and prudent risk management, supporting the inclusion of "Risk Management"

indicators in the "Performance & Leadership Bonus" (PLB) in order to verify the alignment between profitability and

practices of sound risk management. R&PC also examines the indicators to be included in the "Performance &

Leadership Management" (PLM) objectives, ensuring alignment with the Risk Appetite Framework (RAF) to manage

individual risks. R&PC, prior to the PLB payments and to any extraordinary payments to the CEO & GM, its direct reports

and to the other MRT, assesses the conditions of financial sustainability and consistency with the economic, capital and

liquidity levels of FCA Bank.

Furthermore, it provides for the identification of the "relevant business units" as defined by the Delegated Regulation

604/20143. R&PC and HR cascades the individual risk-adjusted objectives, starting from the Risk Appetite Framework

(RAF), to the PLM schemes of the MRTs.

R&PC:

provides for the verification of the alignment of the Company Factor with the existing Risk Appetite Framework

(RAF);

is involved in defining the ex-post risk alignment in the payment of the variable bonus through the verification of

the malus conditions (e.g. the Group's pre-tax profit should have a negative value, the Group Core Tier1 Ratio

should be less than regulatory minimum, as defined by the Risk Appetite Framework target) and claw-back

conditions (e.g. fraudulent conduct involving damage or loss to the Bank that significantly reduce the results

used to define and pay variable bonuses).

3 i.e. in the case of capital assigned at least equal to 2% of the consolidated capital.


- Finance: ensures the consistency and financial sustainability of the plans for adjusting fixed and variable remuneration

at the bonus pool level, as well as aligning them with forecasts, budgets and long-term strategic plans;

- Internal Audit: verifies the compliance of the implementation of the remuneration procedures with the relative company

policies, reporting to the Board of Directors and to the Shareholders the results of the audits.

4.7 The Material Risk Takers Identification Process ("MRT")

FCA Bank annually proceeds with the identification of the Material Risk takers in application of the European

Commission Delegated Regulation (EU) No 604/2014, through a self-assessment processes set up, activated and

coordinated by Human Resources both at a consolidated level and at local level for all bank subsidiaries (i.e. Credit and

Financial Institutions).

The Bank has carefully carried out the identification process at a consolidated and individual level:

• Human Resources performs a preliminary analysis through qualitative and quantitative criteria at the

consolidated level and collects the assessments made at local level by the bank subsidiaries, also with the

support of the Compliance Function (local Compliance Officer and Group Compliance);

• R&PC provides support on the implementation of risk-related criteria and assesses whether the excluded

personnel have a material impact on the Bank's risk profile on the basis of responsibilities and powers of

delegation;

• Compliance verifies the alignment of MRTs identification process with the regulatory framework.

The identification process is performed at the consolidated level by the Headquarters (HR), which is also responsible for

ensuring that all subsidiary banks complete their own assessment, if foreseen by local laws.

HR at Headquarters level supplied a proper information on the assessment result. The Internal Audit function annually

reviews the implementation and the effects of this identification process.

The whole process is appropriately formalized and documented by the function involved.

The Remuneration Committee is actively involved in the process. The control functions and the competent board

committees are involved in the identification process on an ongoing basis.

The identification process and the related remuneration policy are ultimately the responsibility of the Board of Directors in

its strategic supervision function which, through this document:

• approves the Policy and the identification process as a part of it

• partecipate in self-assessment

• controls the process on an ongoing basis

• approves or controls any exclusion of personnel


Also for the current year, the identification of the most relevant personnel has followed the above process, leading to the

identification of 56 MRT, about 2% of the workforce, on the basis of the following criteria:

- qualitative criteria, linked to the role, decision-making power and managerial responsibility and aimed at

identifying top management members, risk takers and personnel involved in control functions;

- quantitative criteria, linked to the thresholds associated with the total gross remuneration level assigned to a

member of staff, in absolute or relative terms, and to the parameters that allow staff to be placed in the same

salary range applicable to top management and risk takers.

The identification process also included the agent in financial activity of which FCA Bank avails itself (Focus par. 11).

Qualitative criteria have been applied considering the Risk Appetite Framework of the Group and Risks specifics to FCA

Bank (in particular, the business model does not include trading book activities and retail/investment banking). Therefore,

in addition to the Senior Management level and the owners of specific functions, Material Business Units and related

managerial roles have been identified.

The application of quantitative criteria, carried out with the R&PC function, led to the identification of a resource

according to quantitative criterion 1b, among 15 individuals overall not yet identified through qualitative criteria and

whose total remuneration is within the same remuneration bracket of identified risk takers.


Cluster RTS Criteria #

1) The staff member is a member

of the Management body in its

supervisory function

Board of Directors Members including Chairman 2 9


of the Management body in its

management function

CEO&GM 1 1


of the Senior Management, held

a Material Business Unit

3

6

10

11 13

4) The staff member is

Responsible and accountable to

the Management Body for the

activites of the independent Risk

management function,

compliance function of the

Internal Audit function 4 3

5) Responsible for Managerial

Business Unit Business Units reporting to Head of Market Italy 8

Heads of Major Markets 17

6) the staff member held a

staff/support function on line

with criteria 9

9 12

7) is within the 0,3% of the

number of staff who have been

awarded the highest total

remuneration in the preceeding

financial year

1. b)

quantitative 1

56

Corporate Credit Director

Head of Risk & Permanent Control

Head of Compliance and Supervisory Relations

Head of Internal Audit

Head of Legal Affairs

Head of Corporate Affairs

Chief Information Officer

Treasury Director

Financial Planning and Analysis Director

Tax Director

Chief Accounting Officer

Fca Bank Italia Affair Manager

Fca Bank Italia Financial Planning & Analysis Manager

ICT - HQ & Italian Market

Head of Human Resources

FCA Bank Italia - HR

JLR Coordinator

Roles

Deputy general manager & Chief Financial Officer

Chief Credit Officer

Head of Sales and Marketing

Head of Dealer Financing

Head of Digital, Process & Data Governance and Procurement

Head of European Markets

Head of FCA Bank Italia (Country Manager Italy)

Head of Business Development

Head of Ferrari Financial Services

Head of Leasys

Head of Win Rent

ALM and Financial Reporting Manager


Risk Takers for the year 20194 are:

Key Personnel Criteria

1 Board Director - President 2

2 Board Director - Chief Executive Officer & General Manager 1

3 Board Director 2

4 Board Director 2

5 Board Director 2

6 Board Director 2

7 Board Director 2

8 Board Director 2

9 Independent Director 2

10 Independent Director 2

11 Deputy General Manager & Chief Financial Officer 3

12 Head of Risk & Permanent Control 4

13 Head of Compliance & Supervisory Relations 4

14 Head of Internal Audit 4

15 Head of Legal Affairs 9

16 Head of Corporate Affairs 9

17 JLR Coordinator 1 b) quantitative

18 Head of Digital, Process & Data Governance and Procurement 3

19 Chief Credit Officer 3

20 Chief Information Officer 9

21 Head of Sales & Marketing 3

22 Head of Human Resources 9

23 Head of Dealer Financing 3

24 Head of European Markets 6

25 Head of Business Development 10

26 Head of FCA Bank Italia (Country Manager Italy) 6

27 Country Manager Germany 8

28 Country Manager France 8

29 Country Manager UK 8

30 Country Manager Spain & Portugal 8

31 Country Manager Belgium 8

32 Country Manager Denmark & Nordics 8

33 Country Manager Poland 8

34 Country Manager Switzerland 8

35 Country Manager Greece 8

36 Country Manager Netherlands 8

37 Country Manager Austria 8

38 Country Manager Ireland 8

39 Head of Ferrari Financial Services 10

40 Head of Leasys 10

41 Head of Win Rent 10

42 Treasury Director 9

43 Financial Planning & Analysis Director 9

44 Tax Director 9

45 Chief Accounting Officer 9

46 ALM & Financial Reporting Manager 10

47 Corporate Credit Director 11

48 FCA Bank Italia Legal Affair Manager 9

49 FCA Bank Italia Financial Planning & Analysis Manager 9

50 FCA Bank Italy Sales & Marketing Manager 8

51 FCA Bank Italia Marketing & Sales JLR Manager 8

52 FCA Bank Italia Dealer Financing Manager 8

53 FCA Bank Italia Retail & Corporate Underwriting Manager 8

54 FCA Bank Italia Credit & Customer Care Manager 8

55 ICT - HQ & Italian Market 9

56 FCA Bank Italia - HR 9

4 On November 23rd, 2018 Board approval


The identified perimeter compared to 2018 does reflect organizational changes i.e.:

Head of European Markets and Business Development is now split in 2 different roles (position 24 and 25);

Head of Rental Italy (Leasys) and Head of Rental Europe is now merged in Head of Leasys (position 40);

Head of Sales Retail and Head of Marketing Retail is now merged in Head of Sales and Marketing Manager

(position 50)

Head of Win Rent is now included, following the acquisition of Win Rent.

The personnel identified are informed of being identified as MRT after the Remuneration Policy Approval.

They also receive the Remuneration Policy, which is published on the website.

FCA Bank regularly reviews the list of MRTs in order to take into account possible organizational changes and proper

information is provided to the Remuneration Committee. Based on the EBA RTS, employees are considered MRT if they

cover the role for at least 3 months.


5. REMUNERATION STRUCTURE

FCA Bank has set up remuneration systems in line with long-term corporate strategies and objectives, linked to company

results, appropriately adjusted to take into account all risks, consistent with the levels of capital and liquidity required to

deal with the activities undertaken and, in any case, such as to avoid distorted incentives that could lead to regulatory

violations or excessive risk-taking for the Bank.

Pursuant to Article 94 of CRD IV, the fixed and variable components of the total remuneration are appropriately balanced

and the fixed component represents a sufficiently large portion to allow a fully flexible policy on variable remuneration,

also providing for a possible zeroing of the variable component5.

FCA Bank adopts a remuneration composition able to:

- allow flexible management of labor costs, as the variable part can decrease significantly, even down to zero,

depending on the performance actually achieved during the year referred;

- discourage behaviors focused on achieving short-term results, particularly in the case of excessive risk taking.

In general, staff remuneration is subject to periodic review, in order to verify its external competitiveness and internal

adequacy, also taking into account the results of the performance evaluations and the role and responsibilities assigned.

The Remuneration Committee avails itself of a benchmark analysis of the financial sector for the CEO & GM and its

direct reports.

In line with the Bank of Italy Provisions and consistent with the economic, equity and liquidity levels, FCA Bank has

chosen to confirm the ratio between variable and fixed as 1:1 for all personnel, excluding countries or roles where local

laws define a lower limit. The maximum variable remuneration for control functions is equal to 33% of the fixed

remuneration, in line with the regulations in force in Italy. The Head of Human resources, in line with the latest Bank of

Italy update is no longer assimilated to a Control Function. His variable remuneration therefore is not subject to the 33%

limit.

Nevertheless the variable remuneration for the Head of HR is defined ex ante, kept predominantly fixed and subject to

the supervision of the Remuneration Committee. Moreover the Head of Human resources maintains no link to the

Economic metric on his variable remuneration (i.e. CPF equal to 1).

In full compliance with the laws, regulations and labor contracts, the Remuneration Policy of FCA Bank is mainly based

on the following pillars:

- adoption of the Mercer methodology, for the evaluation and comparison of organizational positions of a

managerial or directive nature, through the evaluation of several parameters, including:

• Impact on company performance (levels of responsibility, delegated powers, etc.)

• Communication

• Innovation

• Knowledge

- continuous reference to the trend of market remuneration by sector / level / mandate, through the acquisition of

remuneration surveys and external databases, both national and international, in order to guarantee the

competitiveness of remuneration packages;

- staff evaluation.

5 For these purposes, for the personnel active in financial activities, the recurring component is assimilated to the fixed component and to the variable component, the non-recurring component.


In the FCA Bank Group, there are no "golden parachute" or discretionary pension benefits granted to individual

employees or to limited groups on an individual and discretionary basis. Where there are supplementary company

pension plans, these are intended for all employees or identifiable homogeneous groups, such as all the direct reports of

the organizational structure of a given country.

Employees who work in a company belonging to the FCA Bank Group are not encouraged to engage in speculative

activities and, in particular, the remuneration of employees who work in the trading field complies with the Volcker rule.

Employees are not authorized to perform hedging, pledging or other insurance strategies for their remuneration or for

any other aspect that may alter or reduce the risk alignment effects inherent in the remuneration mechanisms. The

insider trading policy in place is already deemed appropriate and efficient to avoid misconduct on such hedging.

Risk Takers are required to inform the Bank of any security transactions involving direct or indirect investment in special

vehicles linked to FCA and CaSa shares.

Lastly, it should be noted that, in line with current legislation, the remuneration is not paid through vehicles, instruments

or methods that are in any case circumventing the current regulations, with regard, in the case of a group, also to

branches and foreign subsidiaries (wherever established)6.

5.1 Fixed Remuneration

The amount of the fixed component of the remuneration must be:

adequate to reward the contents of the role held by the employee

proportionate to the perimeter of responsibility

and should reflect the previous experience of the individual resources.

The Human Resources function, at least once a year, performs an adequate benchmark with the external market, in

order to verify the competitiveness and the adequacy of the fixed remuneration ensuring that the Bank is able to attract

and correctly involve the best resources.

Also for the year 2019 the following components of the remuneration are considered as fixed elements:

Remuneration based on the level, the role held, the responsibilities assigned, and the specific experiences and

skills acquired by the employee; in Italy it is also based on the contractual agreements defined by the framework

of the "Contratto Collettivo Specifico di Lavoro (CCSL)";

Compensation for the staff employed abroad and receiving a lower remuneration versus the one paid on the

local labor market, for a similar position. This applies via an expatriation package that envisages the following:

contingent differences between the cost of living in the country of origin and the host; reimbursement of the

inconvenience of the transfer/ any expenses incurred by the employee linked to the expatriation; social security

contributions. These components are connected to the expatriation period.

Role indemnity for Heads of Control Functions (Compliance, Risk & Permanent Control, Internal Audit) and

Human Resources - both at central and local level, unless are necessary to comply with labor and supervisory

laws, in order to guarantee adequate independence from the performance of the company / division that directly

oversees. For MRTs, the amounts of these allowances are annually reviewed, approved and reconfirmed by the

6 By way of example: transactions with parties related to the bank or group; payment of bonuses in the form of attribution of significant benefits in kind; remuneration for professional services granted in the form of dividends or other income only formally by way of participation in the capital; remuneration received by staff for tasks undertaken on behalf of the bank with companies or bodies external to the bank or group to which it may belong; etc


Board of Directors, based on possible changes due to the placement of pay (pay-line) or organizational

responsibilities. In any case the component and the relevant amount is tied to the Role. For the remaining

personnel, HR proceeds with an annual report to the Remuneration Committee, when a new appointment has

been made with no link to organizational changes.

Ancillary payments, governed by Group / company guidelines and addressed to all employees or categories of

employees, which allow benefits not linked to the performance of the Group/Company and which reflect the

prevailing standards within the FCA Group in Italy (for example Company cars) and market standards or

common practices in foreign markets. Any change in the structure of corporate benefits in foreign markets is

subject to approval by the central Headquarters functions.

The above mention classification have been performed in line with regulatory requirements and leveraging on the

support of an external consultant.

The company pursues, if sustained by budget and Company situation, the progressive alignment of the fixed component

of the remuneration of its employees to the market average.

Group's equity and peculiarities are taken into account.

The progressive alignment is performed with regard to new positions taken in the case of internal mobility, if these imply

increasing responsibilities.

5.2 Variable remuneration

The variable component in FCA Bank for staff is linked to the performance of the individual and aligned with the bank's

sustainable performance.

It may include:

- Performance & Leadership Bonus (PLB), the incentive system for the employees with the internal level of

Professional and Manager entitled to variable remuneration;

- “Una Tantum” (one off) payments not directly related to the achievement of specific objectives;

- Entry Bonus recognized upon recruitment (not included within the maximum incidence of variable

compensation) and Signing Bonus awarded during the first twelve months (included within the maximum

incidence of variable compensation);

- Any compensation for new hires linked to the buy-out of the previous employment and agreed at the date of

employment (included within the maximum incidence of variable compensation in line with current regulations);

- Commercial incentives to reward sustainable commercial results;

- Productivity incentives for White Collars and Professionals, as regulated by the employment contract applied by

FCA Bank in Italy, defined for all Group employees, with the procedures and rules defined by the employment

contract.

In line with the most recent regulatory requirement, from the 2019 Remuneration Policy any additional Stability

Agreement and Non-Competition Agreement will be included in the variable component of the Remuneration and

contribute to the definition of the maximum incidence of the variable remuneration on fixed remuneration in line with

applicable regulations.

Stability agreements and non Competition agreements aim to retain qualified persons from the labor market and to

sustain the Group's long-term profitability. These agreements are based on the payment of predefined amounts, granted

to a limited number of employees who undertake to remain in the Bank and - in case of resignation - not to work for

competitors within certain time, geographical and type of activity conditions and not to contact the company's employees

("non-solicitation of employees clause").


In addition the following items do fall within the variable remuneration not linked to performance:

There is a possible use of tax and social security contributions based on local laws, in order to provide

employees with corporate welfare services (e.g. education, health, mortgages, pension funds and in any case

consistent with local laws) and at the same time increase the perceived value of variable remuneration (e.g.

PLB, productivity incentive). In this welfare initiative - shared with the Unions - both employees, professionals

and managers may be involved, if required by local laws. The adherence to this initiative is voluntary and must

be confirmed annually as well as the ex ante choice of the related amount.

There are also some prizes related to the "We Appreciate!" program aimed at recognizing excellent work results

and increasing the culture of recognition in the Bank. Through the program, employees, professionals and

managers (excluding MRTs) can be thanked for their contribution through e-cards or be put forward for awards

by their managers. The final approval is given by the person responsible and the awards are transformed into

points and used for goods and services of a catalog available on the company portal; taxes will be paid

according to local law.

It is a standard practice of the Group to establish ex ante a ceiling to the variable remuneration, through the definition of

specific bonus limits in relation to any performance higher than the target, always taking into account the variable

remuneration limit of 1:1 or lower for the Head of the Control Functions.

In any case, the total variable remuneration is structured in line with the risk-adjusted results obtained and with the

Bank's liquidity and sound levels, and is assigned in line with the ex-ante and ex-post risk alignment measures.

Staff variable compensation is subject to claw-back rules for employees who caused or took part in causing:

Behaviors that have generated a significant loss to the Bank;

The loss of professionalism, integrity and independence requirements;

Fraudulent behavior or gross negligence against the Bank.

The ex post correction mechanisms can not lead to an increase of the initially recognized variable remuneration or of the

variable remuneration which was previously reduced or reduced to zero following the application of malus or claw back

clauses.

Clawback should in particular be applied when the following events lead to significant losses:

the identified staff member contributed significantly to the subdued or negative financial performance:

severe negligence.

Within FCA Bank Group the minimum duration of the period in which claw back clauses are applied is equal to 5 years

for Material Risk Takers (this period begins with the payment of the single portion both up front and deferred) and 3 years

for the remaining personnel.

Furthermore, the Board of Directors may cancel (Malus principle) - always in compliance with the laws and regulations of

the work of each country - the payment of sums accrued in the past or may request the return of amounts already paid in

case of:

- Evidence of misconduct or serious error by the staff member (e.g. breach of code of conduct and other internal

or external rules, especially concerning risks);


- Whether the Bank and/or the business unit in which the identified staff member works registered an alert or an

incident (refer to the Alert System and Communication procedure in place) attributable to staff with variable

compensation;

- Whether the Bank and/or the business unit subsequently suffers an Operational loss incident registered into

Loss Data Collection Base (refer to the Loss Data Collection procedure in place) and attributable to staff with

variable compensation;

- Any authority sanctions where the conduct of the identified staff member contributed significantly to the

sanction.

Through second and third level of controls (R&PC, Compliance and Internal Audit), it is possible to detect any intentional

violations of the rules regarding the assumption of risks or behaviors that do not comply with the Group rules. Any

discrepancy of the rules (assumption of anomalous risks, failure to comply with the regulations and / or internal

regulations) are immediately notified:

by the control functions (Risk & Permanent Control and Compliance) to the manager,

by the manager to the employee.

This notification mentions any dysfunction found, requires the reasons and, if possible, a return to normality. The

response of the employee must be validated by the manager, who will ensure compliance with the action plans (return to

normal), the risk manager for the violation of limits (validation of the return to the limits).

Direct notifications to the worker and the answers given must be filed (for analysis at the end of the financial year) and

monitored by management, the Risk & Permanent Control Manager and the Compliance Manager. Particular attention

must be paid to repeated violations.

6. REMUNERATION OF MEMBERS OF THE BOARD OF DIRECTORS

AND BOARD OF AUDITORS

Non-executive and non-independent directors do not receive any compensation from the company, nor do they receive a

compensation directly and/or significantly influenced by the results of FCA Bank from their own companies. The

independent directors, as well as the statutory auditors, receive an emolument for their services, the amount of which is

defined directly by the Shareholders' Meeting, as required by law. This fee consists of a fixed all-inclusive amount, which

also includes participation in the committees, and is not dependent on the Bank's results. The Managing Director, as the

General Manager of the company, receives a fixed and variable remuneration, as described below for the MRTs. Also in

this case, there are no fees for the chair.

The Statutory Auditors are the recipients of a fixed annual fee, established according to the statutory provisions and valid

for the entire period of their term of office. The members of the Board of Statutory Auditors are not recipients of any

variable component or linked to company results.


7. VARIABLE REMUNERATION OF MATERIAL RISK TAKERS (MRT) Consistent with the principles and values that the Bank intends to pursue through its remuneration policies, the utmost

attention is paid to defining the remuneration of this population, in order to minimize the potential risks for the Bank and

for all the stakeholders.

During the assignment of objectives, the performance goals are aligned with the FCA Bank medium and long term

strategy and Group's Risk Appetite (refer to Risk Appetite Framework) based also on the possibility for each role, to

impact on the various types of risk (e.g. credit, liquidity, etc.).

A specific section has been dedicated to objectives useful for disseminating, promoting and fostering the risk’s culture.

The R&PC function has an active role in verifying the overall consistency of the metrics assigned within the Performance

Leadership Management (PLM) with the metrics identified within the RAF.

It should also be noted that, in line with current regulations, also for the year 2019 the Control Functions, in addition to

the HR function are not recipients of financial and economic objectives underlying their areas and perimeter of control, in

order to avoid conflicts of interest.

7.1 The Performance Leadership Bonus (PLB)

In line with previous years, the incentive system for the MRT population is the Performance & Leadership Bonus (PLB),

deriving from the "PLM" process of the FCA Group. For the remaining personnel, all the rules described in this section

regarding the definition of the amount of the bonus payable are applied, while the rules of greater detail concerning

deferral, malus and payment through financial instruments will not be applied.

The individual bonus and the total variable remuneration are linked to individual and company results (both adjusted for

risk) through the following mechanism:

Where:

- The Eligible Salary is the Actual Gross Annual Remuneration (R.A.L.) actually received in the year of evaluation

by the employee7.

- The Target Bonus is the percentage based on R.A.L. for each individual employee. The employee bonus target

can vary according to their role and anyhow it is set so as not to overcome the 1:1 ratio.

- The Company Performance Factor (CPF) is the degree of achievement of the annual objectives by the relevant

Market / Company / Business Unit, validated by the Finance Function. These objectives - specifying the

weights, objectives, thresholds and percentages of over achievement - are assigned annually on the proposal of

the Remuneration Committee and following the favorable opinion of the RAC and resolved by the Board of

Directors. The CPF also takes into account the achievement of medium long term objectives and alignment with

Bank’s Risk Appetite. At the end of the performance year, the CPF is calculated on the basis of the final figures

and contributes to the above calculation mechanism of the PLB from 0% in case of results below the threshold

up to a maximum of 150% in the case of maximum overachievement.

7 for example, it does not include variable remuneration bonuses, in-kind remuneration, one-off bonuses and extraordinary disbursements in general, reimbursement of expenses and travel and transfer allowances, any result bonuses and fees set for pacts and integrations of the employment contract.


The RAC, supported by the R&PC Function, assesses the adequacy of the metrics and may recommend further

adjustments to the CPF in case of problems of capitalization and liquidity of the Bank. Particular attention is

given to the identification of key risk indicators able to guarantee the sustainability of performance results and

the inclusion of current and future risks in performance measurement.

- The Individual Performance Modifier depends on the evaluation received by each individual employee, based

on the degree of achievement of the individual qualitative and quantitative objectives assigned to the person

within the Performance & Leadership Management (PLM) evaluation process, including risk adjusted indicators

able to incentivize a sound risk management practice on specific individual risks, where applicable, and aligned

with the existing RAF.

A formal review of the risk-adjusted indicators for MRTs is performed by the R&PC function.

The Individual Performance Modifier is determined on the basis of the assessment of the leadership and the

performance of the employee and contributes to the above calculation mechanism of the PLB on the basis of

the following percentages of the PLM matrix:

To guarantee the maximum objectivity of the evaluation and therefore the solidity of the Individual Performance

Modifier, the individual performance assessment process consists of several successive phases:

- Definition of objectives: for each person involved in the "Performance & Leadership Management" (PLM), direct

manager and collaborator agree the annual objectives, qualitative and quantitative, ensuring that these are consistent

with the objectives of the Group’s business and risk strategy, corporate culture and values, long term interests; for the

MRT, at least one individual objective within their own PLM form must be related to the risk culture or management of

the most significant type of risk in their area of responsibility;

- Evaluation of the objectives: each direct leader is called to evaluate the achievement of the objectives and the respect

of the principles of leadership, as defined and recognized within the leadership model of Group;

- Balance and weighting on two levels (professional family and single Market / BU): first at the level of each area /

management and then at company level it is necessary to guarantee the homogeneity of the evaluation criteria within

the different business areas and compliance with a standard assessment distribution.

The final settlement of the PLB to employees, in cash or in instruments, is subject to final approval by the Board of

Directors of FCA Bank. The BoD may cancel/review the PLB, for the entire Group/Market/Company/Business Unit,


based on qualitative assessments8, even if the expected minimum level of achievement of the assigned objectives is

exceeded.

The payment of the upfront and deferred components is not authorized, in case:

the consolidated financial statements is at a loss;

the Bank's solvency or liquidity ratios are in breach or would be in case of variable remuneration pay out (c.d.

Gate and Malus).

The minutes of the Board of Directors always state whether or not the annual bonus is paid out and, as quantitative limits

to be assessed, the risk tolerance thresholds defined within the RAF are used as standard practice.

The Board of Directors may also suspend the payment of variable remuneration, also on an individual basis, in the event

of misconduct with respect to internal and external regulations, as a result of inspections carried out by dedicated internal

control functions or by third-party supervisory authorities.

The R&PC function is also involved in defining the ex-post risk alignment in the payment of the variable bonus: malus

conditions (e.g. The Group's pre-tax profit should have a negative value, the Group Core Tier1 Ratio should be less than

regulatory minimum, as defined by the RAF target) and claw-back conditions (e.g. fraudulent behavior that involve

damage or loss to the Bank).

For the year 2019, FCA Bank confirms the principles of the current Remuneration Policy and a remuneration structure in

alignment with the latest requirements.

The payout scheme for executives and senior management (including the CEO) has been amended to apply, in case of

awarded variable compensation higher than €60.000, a deferral of 40% for 5 years together with the increase to 60% of

the instruments incidence within the deferred component.

For other MRTs eligible to variable compensation (including Control Functions), the payout remains unchanged if the

awarded variable compensation is included within €60.000 e €100.000 (40% deferred for 3 years and paid in cash); in

case the awarded variable compensation is above €100.000, the payout scheme is the same described above for

Executives and Senior Management.

The deferred component increases to 60% for all MRTs in case of variable remuneration higher than €430.000 (25% of

average total remuneration of Italian high earners, collected by EBA as per 31/12/2016).

Bonuses for amounts less than/equal to €60,000 are paid immediately and entirely in cash, considering the amounts

resulting from the application of deferral scheme would be not significant, both as absolute value or as incidence on the

total remuneration, with regard to the individual risk taking appetite.


Please find below the detailed charts:

FCA Bank may also decide not to recognize the deferred amounts, in case of the employee leaving the Company

voluntarily or in any case of interruption of the employment relationship if this is not in contrast with the prevailing local

legislation.

The Board of Directors may suspend the payment of the deferred variable remuneration, also on an individual basis, in

the event of misconduct with respect to internal and external regulations, as a result of inspections carried out by

dedicated internal control functions or by third-party supervisory authorities.


Actual disbursement of the deferred portion of the bonus may decrease, in whole or in part, in the event of:

- occurrence of any event described as a claw-back clause;

- fraudulent behavior on the part of the worker or gross negligence of the employee detected only after the

assessment of the year in question;

- lack of sustainability of payment in terms of capitalization, liquidity, revenues and any other key risk indicator

monitored by the risk appetite framework.

7.2 The other forms of variable remuneration

The ex-ante "sustainability" assessment and the ex-post adjustment mechanism are also implemented in the case of the

assignment of Una Tantum:

The total variable remuneration allocated for 2019 cannot exceed the 1:1 ratio (0.33% for the Heads of the

Control Functions)

The overall mechanism is able to ensure deferral and malus rules, in line with current regulations

The entire variable remuneration, paid and unpaid, is subject to the claw-back clause, as described above.

Entry Bonus can be granted, in case of new hires, at hiring date (not included within the maximum level of variable

compensation) and during the first twelve months (included within the maximum level of variable compensation). The

latter can not be subject to ex-ante conditions (at Group, company or individual level), but are subject to ceilings,

deferral, malus and claw-back, in line with the rules defined by the current Remuneration Policy for the variable

remuneration of Material Risk Takers, unless local regulations impose more stringent rules.

7.3 Financial instruments

According to Regulatory Framework, more than 50% of variable component is balanced among the use of equities,

instruments equity-linked, or, for non-listed banks, instruments whose value represents the economic value of the

company, and, where applicable, other instruments as Tier1 instruments, Tier2 instruments and other convertible

instruments defined by regulation (to be triggered in case of lack of capital).

EBA Guidelines also specify in the case of non-listed institutions the possibility to adopt share-linked instruments (i.e.

phantom plan) or equivalent non-cash instruments.

Considering the size and the ownership of FCA Bank, the Board of Directors decided to use the "stock-value variation of

FCA and CASA shares (50%:50%), using the Bloomberg website as source, wherein adjusted values are available due

to extraordinary events.

The stock values are based on the average of the Shareholders’ stock values (closing values) in the last 30 calendar

days before the first calendar day of the month in which the FCA Bank Board of Directors will be held to approve the

assignment and payment of the bonus. Consequently, at the bonus assignment time, a number of phantom units of both

CASA (50%) and FCA (50%) are assigned to the involved Material Risk Taker, according to the related stock value.

Then at the bonus payment time CASA and FCA phantom units are multiplied respectively by their related stock value

and the final amount is defined summing them.

The holding period is set in 1 years both for the up-front and deferred quota.

Furthermore, the paid value will be linked to the increase or decrease unit value, subject to the loss absorbency in case

of necessity to recover the solvency or liquidity ratios to new regulatory provisions prior the payment (both during

deferrals and retention).


8. REMUNERATION OF THE HEADS OF CONTROL FUNCTIONS The variable compensation of the Heads of the Control Functions, as required by the regulations, do not reflect the

quantitative or financial performance of the Company, which they control, and refer exclusively to the fulfillment of their

specific duties, with particular emphasis on risk management and the correct and complete implementation of the

necessary controls. The individual objectives are not linked to the commercial and economic results of the Bank, whose

tendency must be monitored by them, in order to avoid potential conflicts of interest. The Heads of the Control Functions

are therefore individually evaluated on the performance of their responsibilities in their specific roles and no economic

objective will be included in their PLM assessment schemes. The PLB is calculated by establishing the CPF at "1" and

therefore without any effect on the calculation mechanism, in order to improve the independence of the Heads of the

Control Functions9. Therefore, the bonus of these resources is the result of the multiplier effect of the Target Bonus for

the Eligible Salary, as already described, for the Individual Performance Modifier. As for the disbursement of all the

PLBs, the bonuses for these resources are also subject to approval by the Board of Directors. The maximum amount of

variable remuneration is equal to 33% of the fixed salary, as previously described. The materiality threshold applies to

personnel belonging to the control functions.

9. REMUNERATION OF THE REMAINING PERSONNEL The fixed remuneration is the main component of the compensation for the general workforce of the Bank and must be

sufficient in itself to reward the contents of the role played by the individual, and proportionate to the perimeter of

responsibility, tasks and previous experience of the individual resources.

The ratio between variable and fixed remuneration established is 1:1 for all resources.

Variable remuneration can include:

- PLB, as described in the paragraph above for the purposes of calculating the amount (the rules of greater detail

do not apply), used within the FCA Group for positions not subject to commercial incentives, excluding the

White Collar employees framed by an internal level of FCA Bank lower than that of "Professional";

- Productivity incentive for White Collars and Professionals, as regulated by the Employment Contract applied by

FCA Bank in Italy, established for all Group employees, with procedures and rules defined by the employment

contract;

- Commercial incentives, applied to commercial figures or similar operating figures, whose performance can still

be assessed on the basis of precise quantitative indicators;

- Una Tantum or Entry Bonus in case of external recruitment and classified as described in paragraph 5.2. FCA

Bank may also resort to the payment of wages in kind, of limited value, for example to reward those employees

who took part in strategic and relevant projects for the bank itself.

9.1 Sales Incentives

For the Sales staff of FCA Bank and its subsidiaries, or for similar roles, there are substitutive schemes for variable

incentives with respect to that of "PLB". The maximum percentage on the RAL of this incentive or any other variable

component ascertained cannot exceed the maximum levels of variable remuneration envisaged for the highest level of

MRTs and in any case it remains lower than the 1: 1 limit.

Internal equity is considered in the maximum amount.

9 Head of Human Resources maintain CPF equal to “1”


The structure of the objectives and mechanisms for the balancing and settlement of these commercial incentives can

vary, and is communicated to employees from year to year; the same incentive schemes are usually different market by

market, so as to ensure their alignment with the local commercial and management strategies of FCA Bank.

Aimed to address individual behaviors to fairness and integrity principle, the sales incentives are linked to commercial

results and also "malus" clauses in case of fraudulent behavior of the individual of serious failures in their functions, in all

countries where this is not in contrast with the principles of national contracts or with the local legislation. Claw-back

clauses apply in the case of events described above.

Objectives and relevant targets are set at the beginning of the evaluation period.

Finally, in the event of significant difficulties in the Bank's capitalization, lack of liquidity or other proven operational

reasons, the Managing Director or the Board of Directors may at any time suspend the provision of all commercial

incentives, regardless of whether or not they are achieved.

10. TERMINATION PAYMENTS ("SEVERANCE")

Severance payments do not exceed the limits established by current regulations and / or national collective agreements

in force in the event of termination. If the regulations in force and / or the collective contacts in force do not provide for

such limits, severance payments, in addition to the notice period, do not exceed two years. In compliance with the

provisions of the Bank of Italy, the maximum severance limit has also been defined in absolute terms. This amount does

not exceed € 500,000.

For managerial personnel the collective agreements applicable to FCA Bank10 clearly set the number of monthly

payments to be provided to beneficiaries on the basis of their age and seniority and is signed in a resolution agreement.

This component is mandatory under the employment contract agreement, it will not be subject to the mechanisms and

provisions defined by EBA (EBA / GL / 2015/22) and the Bank of Italy (Title IV, Chapter 2, Section 3, of Bank of Italy

Circular No. 285/13) concerning severance payments / golden parachute.

For all employees, including managerial personnel any other payments, not included in the previous definitions in

addition to the notice period, are:

regulated in line with the provisions of the Bank of Italy for severance;

treated as variable remuneration;

set taking into consideration the financial situation of the bank

included within the applicable maximum incidence of the variable compensation on fixed compensation, except

for payment defined under non competition agreement (until 1 annuity of fixed remuneration)

paid in line with the applicable provisions defined for Material Risk Takers or other employees.

The updated internal procedure aimed at regulating end-of-service payments, in addition to those paid within the

collective agreement, will be submitted to the Remuneration Committee for approval.

10 Employment Contract for FCA Companies and CNH Industrial Executives. Furthermore, the art. 7, Part VI, provides for the termination of the employment relationship at the union, pursuant to Art 412, 3 of the Code of Civil Procedure.


11. EXTERNAL NETWORKS The placement of FCA Bank services takes place through sellers of goods and services (the dealer networks).

This activity does not constitute an agency activity in financial activities or credit mediation (pursuant to Legislative

Decree 141/2010) because the promotion and conclusion of the loan contracts offered by the FCA Bank sales network is

aimed solely at purchasing the goods and services of the FCA Group or other car manufacturers.

The network remuneration system, although based on commercial indicators, embeds the criteria set by laws and

regulations. In particular - to link this remuneration to long-term objectives and to contain legal and reputational risks -

there are "malus" clauses in the case of proven fraudulent conduct detrimental to customers or the Bank itself, which

determine damage and / or payments in any way by the Bank.

FCA Bank employs an agent in financial activity for the placement of its products. The principles envisaged in the

Remuneration Policy apply to such personnel as far as they are enforceable. Specifically, a balance between recurrent

and non-recurring components is implemented.

The contractual conditions existing between FCA Bank and the financial agents provide for "constant" commissions in

their gradation correlated to the rate, and are considered as a recurring component of the remuneration, in line with the

regulatory provisions and market practices. That part of remuneration, additional to the remuneration received for the

typical activity of the agent is linked to, for example, to increase in net sales volumes, exceeding product benchmarks

and launching new products and is considered non recurrent and subject to clawback.


SECTION II QUALITATIVE AND QUANTITATIVE REPORT 2018 COMPENSATION CYCLE 2018 The 2018 Remuneration Policy has been deployed in continuity with 2017, taking into consideration the evolution of the

regulatory framework in the financial services industry, economic and business challenges.

With specific reference to the Regulatory environment on 26t October 2018, Bank of Italy published the latest update on

remuneration and incentive policies and practices (Circular No. 285, Part I, Title IV), in implementation of Directive

2013/36 / EU (Capital Requirements Directive - CRD IV) - reflecting also the EBA 2015/22 Guidelines on "sound

remuneration policies" published on June 27th, 2016 and the EBA 2016/06 Guidelines on Remuneration Policies and

practices relating to the sale and supply of retail banking products and services, published on September 28th, 2016

effective from January 13th, 2018.

The overall governance model leverages the contribution of control functions. The Risk and Permanent Control function

has been required to perform an ex-ante independent advice on risk takers assessment process and risk-adjusted

metrics able to ensure the alignment between the Remuneration Policy and Risk Appetite Framework, in addition to the

assessment to verify compliance with the regulatory framework performed by the Compliance Function.

The Board of Directors validated the document “2018 Remuneration Policy” for FCA Bank on March 30th, 2018,

including the results of the identification process for Material Risk Takers, while it was approved by the Shareholders in a

meeting held on March 30th, 2018. Similarly, the various Board of Directors of the Subsidiaries’ Banks approved – where

applicable - the related remuneration policies, always in full compliance with local laws and regulations.

In terms of company performance objectives, they were assigned and linked to both Shareholders’ objectives and

specific Markets’ business results, including risk adjustment measures able to align results to capital requirements and

liquidity and long term objectives.

All functions responsible for the remuneration policy preparation, implementation and control have been involved:

• The Human Resources function prepared the Remuneration Policy in line with reward, people strategy and

regulatory framework;

• The Compliance & Supervisory Relations function assessed the alignment to legislation, regulations, internal

policies;

• The Risk & Permanent Control function verified the coherence with Risk Appetite Framework and the risk alignment

of Material Risk Taker identification and exclusion process;

• The Internal Audit function reviewed alignment of practice to policies and regulatory framework;

• The Board of Directors held on February 21st, 2018 approved the 2017 results and the related estimate of the

overall variable remuneration and individual bonus linked to Company and individual performance. As required by

the Remuneration Policy and the regulatory provisions, the variable remuneration of control functions is not linked

to company performances but only to function objectives;

• The Board of Directors and finally Shareholders meeting received the disclosure on 2018 remuneration policy

implementation.

AUDIT PARAGRAPH EXTRACT


GOVERNANCE AND COMPLIANCE – REMUNERATION COMMITTEE The Remuneration Committee is a Board Committee and was set up by the Board of Directors held on March 23rd 2016,

coherently with banking supervisory regulation concerning corporate governance (Circular 285 of Bank of Italy and

further updates in accordance with EBA Guidelines on Sound Remuneration Policies in force).

The Remuneration Committee, formed in accordance with article 11 of the Articles of Association in compliance with

Supervisory Regulations, is composed by 3 non-executive directors, 2 of whom are independent.

One of the two independent directors is the Chairman of the Committee and the Human Resources function acts as

Secretary of the Committee.

All members meet the professional requirements, in accordance with current regulations and regulatory provisions. Some

members have specific technical know-how on the matters covered by the Committee.

The connection with risk issues is ensured by the presence in the Remuneration Committee of the two members of the

Risk and Audit Committee, including the current Chairman.

The responsibilities of the Committee are listed in the paragraph 4.5

In 2018 the Remuneration Committee met 7 times. The meetings lasted about an hour and a half.

Each meeting of the Remuneration Committee is recorded by the secretary (i.e. Human Resources). The percentage of

participation is 100% for all 4 non-executive directors.

During 2018 the key topics and arguments of the Remuneration Committee were:

February and March: identification of Material Risk Takers; definition of the Remuneration Policy; identification

of the annual objectives at the HQ level and the market plan (CPF) for the purposes of the PLB incentive

system and variable remuneration system; retributive structure of key officers and possible alignment actions;

degree of achievement of the 2017 CPF and related aggregate and individual PLB for CEO & GM and its direct

carryovers;

April and June: guidelines for remuneration policies and relevant pay action plan deployment;

October - December: update of Hr governance activities procedure; Mercer Methodology on IPE and

benchmark analysis; identification of Material Risk Takers in line with organizational changes made and 2019

MRT; assessment of the new regulatory requirement and first hypothesis of implementation.

The Remuneration Committee has access to all the information and corporate functions as required for performing its

duties, and for this purpose relies on the support of the corporate head office structures.

In 2018 the Remuneration Committee availed itself of the services of Willis Towers Watson in implementing the New

Bank of Italy requirement for the 2019 Remuneration Policy as well as for remuneration benchmarking.


VARIABLE REMUNERATION COMPONENTS AND MAIN RESULTS

In the below tables is reported the aggregate remuneration paid during 2018, in line with the detailed level required by

Bank of Italy. FCA Bank has applied the ratio between variable and fixed as 1:1. (0,33% for Heads of Control Functions)

and payments have been made both up-front and deferred by cash in case of Material Risk Takers’ variable

remuneration higher than 60.000 €. Financial instruments have not been applied due to no bonus higher than 100.000€.

In 2018 variable remuneration has regarded mainly Performance & Leadership Bonus (the other component is the Sales

Incentives one) linked to individual target achievements and personal attitudes / behaviors as well as to annual

objectives achievement by each relevant Market/Company/Business Unit. Such objectives have taken partly into account

shareholders’ targets and partly the FCA Bank consolidated result, have been defined as closely as possible with FCA

Bank’s multi-year strategies and are Risk-adjusted.

The Group's consolidated results for 2018 amounted to 26.8 €/bn in terms of the portfolio at the end of the period (23.9

€/bn billion in 2017), 547.6 €/mn million in terms of pre-tax profit, an increase of approximately 26.8 €/mn (+ 5%)

compared to the previous year and the Common Equity Tier 1 ratio (CET1) of the banking group set at 12.45% at 31

December 31st, 2018 (11.98% at December 31st, 2017).

Disclosure on variable compensation linked to the 2018 performance will be included in the information on the

remuneration for next year, due to pay-out deadlines. The estimated variable remuneration amounts to be paid are

decreased compared to the ones paid out in 2018. In line with the Remuneration Policy approved for 2018, they will

include deferments and rules of malus and claw-back.


QUANTITATIVE TABLES Table 1 (Aggregate remuneration 2018 by Business Area)

Geographical perimeter Number of Participants* Fixed Remuneration (EUR) Variable Remuneration (EUR)**

Italy 690 29.438.347 € 3.986.348 €

Major Markets 656 35.969.345 € 1.837.576 €

Other EU Markets 336 15.933.136 € 848.772 €

*Employees belonging to Companies outside the banking area are not included

** Up front payments of 60% of Material Risk Takers bonuses are included in case of amounts exceeding €60.000, based on 2017 performance

*** France, Germany, Spain and UK Table 2 (Aggregate remuneration 2018 by MRT category)

Upfront

(Cash)

Deferred

(Cash)

Upfront

(Financial

Instruments)

Casa***

Upfront

(Financial

Instruments)

FCA***

Deferred

(Financial

Instruments)

Casa

Deferred

(Financial

Instruments)

FCA

Deferred

Component

relating to 2016

competence

(Cash)

Board of Directors* 10 150.000 € - - - - - - -

Senior Management 11 1.552.005 € 296.453 € 84.620 € 1.697 1.930 1.131 1.287 78.683 €

Responsible for the Control Functions 4 446.677 € 100.656 € 25.008 € - - - - 8.343 €

Other Material Risk Takers**** 31 3.398.518 € 699.881 € - - - - - 17.227 €

****Data does not include Remuneration accounted on Companies not belonging to FCA Bank SpA Group perimeter

** The information on the variable remuneration linked to 2018 performance will be included in the information on the remuneration next year, due to timing of

approval of the payment

*** The indicated phantom units numbers are determined using the value of €11.769 for the Credit Agricole share ans € 10.3491 for the Fiat Chrysler Automobiles share,

defined in line with methodology illustrated in the Remuneration of Policy of reference, for a total of € 61.584,926 for the upfront portion and € 26.630,9355 for the

deferred portion

Variable Paid - year 2018 **

Material Risk Takers Category

Numbers of

participants

(2018)

Fixed

Remuneration*

***

* The Chief Executive Officer and General Manager is included in the Senior Management for his executive role

Furthermore it should be noted that: • There are no new guaranteed variable and early termination agreements for the MRT categories • No severance have been paid to MRT • There are no remunerated individuals € 1m or more in 2018

Table 3 (Individual total compensation for members of the Board and Deputy General Manager (*)

Chief Executive Officer and General Manager (**) (***) Giacomo Carelli 270.527 €

Chief Financial Officer and Deputy General Manager (***) Franco Casiraghi 253.591 €

Indipendent Director 1 Paola DeVincentiis 75.000 €

Indipendent Director 2 Andrea Giorio 75.000 €

* Chairman and other non executive directors receive no emoluments from the Company

** Expatriaton Allowance amount equal to €75.612 not included

*** Variable amounts concern upfront and deferred cash payments.

Personnel Category Name and SurnameTotal Gross Fixed 2018

and variable

2018 AUDIT SUMMARY REPORT

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