EXHIBIT I

COVERED EMPLOYEES
2010 Compensation

Company Name: Chrysler Group LLC

Stock Salary Long-Term Restricted Stock

(Performance based: The} (Performance based: Awarded

stock vests at grant and is based on achievement of Total Direct

redeemable in three equal,| objective performance goals. Compensation

annual installments Generally vests after 3 years of | (Cash salary + stock
beginning on the 2nd _|service. Transferability dependent} salary + long-term
Employee ID Cash Salary anniversary of grant.) on TARP repayment.) restricted stock.)

TRPOO! $0) $0 $0) $0
TRPO002 $500,000} $180,000) $340,000 $1,020,000)
TRPOOS $485,000} $145,500) $315,250 $945,750)
TRPO06 $455,000) $150,150) $302,575 $907,725.
TRP009 $410,000 $135,300 $272,650 $817,950)
TRPOIO $410,000 $61,500 $235,750 $707,250)
TRPOI $400,000) $144,000 $272,000} $816,000)
TRPOI2 $405,000 $0) $0) $405,000)
TRPOI4 $385,000 $138,600 $261,800 $785,400)
TRPOI6 $335,000} $110,550 $222,775 $668,325,
TRPOI7 $315,000 $85,085) $200,030 $600,115
TRPOIS $315,000} $85,050 $200,025 $600,075
TRPOI9 $310,704 $0 $0 $310,704)
TRPO20 $310,000 $115,200) $212,600 $637,800
TRPO21 $295,008} $0 $0 $295,008)
TRPO22 $290,004 $104,400 $197,200 $591,604,
TRP023 $280,008 $100,800 $190,400 $571,208)
TRP024 $280,008 $0 $0) $280,008
TRPO25 $310,000 $102,300 $206,150 $618,450)
TRP026 $270,000 $97,200 $183,600 $550,800
TRP028 $265,008 $100,800) $182,900 $548,708
TRPO29 $265,032} $95,412 $180,220 $540,664
TRP030 $265,032 $95,412 $180,220 $540,664
TRPOSS $325,000 $87,750 $206,375 $619,125,

Comparison of 2010 Compensation to Prior Year Compensation

Note I:
binding rights under valid employment contracts, see 31 C.F.

Note 2: The total number of Covered Employees may be Jess than 25 because of separations from service since January 1,

2010.

Annual cash salary rates remain unchanged from 2009 for all Covered Employees.
No Covered Employees with annual cash salary rate over $500,000.
Only one Covered Employee with total direct compensation over $1,000,000.

El

Amounts reflected in this Exhibit do not include amounts the Company has asserted to be payable pursuant to legally
. § 30.10(e)(2).



The 2009 Determinations applied only to those individuals identified by the Company as subject
to the Special Master’s mandatory jurisdiction to review and approve compensation structures
and payments, see id, for 2009 and only with respect to compensation for services provided to
Chrysler for 2009.

On December 14, 2009, the Special Master requested from each remaining Exceptional
Assistance Recipient, including Chrysler, certain data and documentary information necessary to
facilitate the Special Master’s review of the Company’s 2010 compensation structures. The
request required Chrysler to submit data describing its proposed compensation structures, and the
payments that would result from the proposals, concerning each Covered Employee.

In addition, the Rule authorizes the Special Master to request information from an
Exceptional Assistance Recipient “under such procedures as the Special Master may determine.”
Id. § 30.16(d). Chrysler was required to submit competitive market data indicating how the
amounts payable under Chrysler’s proposed compensation structures relate to the amounts paid
to persons in similar positions or roles at similar entities. Chrysler was also required to submit a
range of documentation, including information related to proposed performance metrics, internal
policies designed to curb excessive risk, and certain previously existing compensation plans and
agreements.

Chrysler submitted this information to the Office of the Special Master on January 15,
2010. Following a preliminary review of the submission, on February 2, 2010, the Special
Master determined that Chrysler’s submission was substantially complete for purposes of the
Rule. /d. § 30.16(a)(3)(i). The Office of the Special Master then commenced a formal review of
Chrysler’s proposed compensation structures for the Covered Employees. The Rule provides
that the Special Master is required to issue a compensation determination within 60 days of
receipt of a substantially complete submission. /d.

The Office of the Special Master’s review of the Company’s proposals was aided by
analysis from a number of internal and external sources, including:

¢ Treasury personnel detailed to the Office of the Special Master, including executive
compensation specialists with significant experience in reviewing, analyzing, designing
and administering executive compensation plans, and attorneys with experience in
matters related to executive compensation;

¢ Competitive market data provided by the Company in connection with its submission to
the Office of the Special Master;

e External information on comparable compensation structures extracted from the U.S.
Mercer Benchmark Database-Executive; and

¢ External information on comparable compensation structures extracted from Equilar’s
ExecutiveInsight database (which includes information drawn from publicly filed proxy
statements) and Equilar’s Top 25 Survey Summary Report (which includes information
from a survey on the pay of highly compensated employees).

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principle, the 2009 Determinations concluded that stock salary may only be redeemable in three
equal, annual installments beginning on the second anniversary of grant, with each installment
redeemable one year earlier in the event Chrysler repays its TARP obligations.

Chrysler proposed a structure for stock salary granted to Covered Employees in 2010
consistent with the requirements of the 2009 Determinations. As described in Exhibits I and II,
stock salary for 2010 may become redeemable in three equal, annual installments beginning on
the second anniversary of grant, with each installment redeemable one year earlier in the event
Chrysler repays its TARP obligations (except for stock withheld or transferred immediately upon
vesting to enable the employee to pay taxes).

3. Annual Long-Term Incentive Awards

The Special Master reviewed Chrysler’s proposed annual long-term incentive awards in
light of the principle that performance-based compensation should be payable “over a relevant
performance period,” id. Based in part upon this principle, the 2009 Determinations require
long-term incentives to be paid in the form of long-term restricted stock, and permit such awards
to be paid if, and only if, objective performance metrics are achieved and the employee continues
to provide services to the company for three years following the date of grant. In addition, as
required by the Rule, this stock may only be redeemed in 25% installments for each 25% of
Chrysler’s TARP obligations that are repaid (except for amounts withheld or transferred
immediately upon vesting to enable the employee to pay taxes).

Chrysler’s proposed annual long-term incentive awards are consistent with the 2009
Determinations, which impose a three year vesting requirement on these awards. Other
Exceptional Assistance recipients also requested that different vesting terms apply in the case of
employees who provide two years of service after the grant of an incentive—the minimum
service period required by the Rule—but retire prior to providing three years of service, which is
the length of service required by the 2009 Determinations. The Special Master has concluded
that succession planning and the timing of individual employees’ retirement dates should not be
unduly dependent on compensation structures in light of the principles that compensation
structures and the amounts payable thereunder should reflect “the current or prospective
contributions of an employee to the value of the TARP recipient” and “the need for the TARP
recipient to remain a competitive enterprise, to retain ... talented employees who will contribute
to the TARP recipient’s future success.” Accordingly, for the foregoing reasons and the reasons
provided in the 2009 Determinations, the Special Master has determined that the long-term
incentive awards described in Exhibits I and I will not result in payments that would be
inconsistent with the Public Interest Standard.

4. “Other? Compensation and Perquisites

The 2009 Determinations generally require that perquisites and “other” compensation
provided to a Covered Employee be limited to $25,000 on an annual basis, and the Proposed
Structures are consistent with this requirement. For the reasons provided in the 2009
Determinations, and as described in Exhibit IT, any exceptions to this limitation will require that
the Company provide to the Office of the Special Master an independent justification for the
payment that is satisfactory to the Special Master. To the extent that payments exceeding this

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(5) Comparable structures and payments. The compensation structure, and amounts payable
where applicable, should be consistent with, and not excessive taking into account,
compensation structures and amounts for persons in similar positions or roles at similar
entities that are similarly situated, including, as applicable, entities competing in the same
markets and similarly situated entities that are financially distressed or that are
contemplating or undergoing reorganization. Jd. § 30.16(b)(1)(v).

(6) Employee contribution to TARP recipient value. The compensation structure and amount
payable should reflect the current or prospective contributions of an employee to the
value of the Exceptional Assistance Recipient, taking into account multiple factors such
as revenue production, specific expertise, compliance with company policy and
regulation (including risk management), and corporate leadership, as well as the role the
employee may have had with respect to any change in the financial health or competitive
position of the recipient. Jd. § 30.16(b)(1)(vi).

The Rule provides that the Special Master shall have discretion to determine the
appropriate weight or relevance of a particular principle depending on the facts and
circumstances surrounding the compensation structure or payment for a particular employee. Jd.
§ 30.16(b). To the extent two or more principles may appear inconsistent in a particular
situation, the Rule requires that the Special Master exercise his discretion in determining the
relative weight to be accorded to each principle. Jd.

The Rule provides that the Special Master may, in the course of applying these principles,
take into account other compensation structures and other compensation earned, accrued, or paid,
including compensation and compensation structures that are not subject to the restrictions of
Section 111 of EESA. For example, the Special Master may consider payments obligated to be
made by the Company pursuant to certain legally binding rights under valid written employment
contracts entered into prior to enactment of the statute and the accompanying Rule. /d.

§ 30.16(a)(3).

IV. COMPENSATION STRUCTURES AND PAYMENTS

A. Chrysler Proposals

Chrysler has provided the Office of the Special Master with detailed information
concerning its proposed 2010 compensation structures for the Covered Employees, including
amounts proposed to be paid under the compensation structure for each Covered Employee (the
“Proposed Structures”).

Chrysler supported its proposal with detailed assessments of each Covered Employee’s
tenure and responsibilities at the Company and historical compensation structure. The
submission also included market data that, according to the Company, indicated that the amounts
potentially payable to each employee were comparable to the compensation payable to persons
in similar positions or roles at a “peer group” of entities selected by the Company.

Chrysler’s chief executive officer (the “CEO”) also serves as the chief executive officer
of Fiat S.p.A., a minority shareholder of the Company. According to the Company’s submission,

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The Special Master considered these sources, in light of the statutory and regulatory
standards described in Part III below, when evaluating the Company’s proposed compensation
structures for the Covered Employees for 2010.

IH. STATUTORY AND REGULATORY STANDARDS

The Rule requires that the Special Master determine for each of the Covered Employees
whether Chrysler’s proposed compensation structure, including amounts payable or potentially
payable under the compensation structure, “will or may result in payments that are inconsistent
with the purposes of section 111 of EESA or TARP, or are otherwise contrary to the public
interest.” 31 C.F.R. § 30.16(a)(3) (as applied to Covered Employees of Exceptional Assistance
Recipients, the “Public Interest Standard”). The Rule require that the Special Master consider
six principles when making these compensation determinations:

(1) Risk. The compensation structure should avoid incentives that encourage employees to
take unnecessary or excessive risks that could threaten the value of the Exceptional
Assistance Recipient, including incentives that reward employees for short-term or
temporary increases in value or performance; or similar measures that may undercut the
long-term value of the Exceptional Assistance Recipient. Compensation packages should
be aligned with sound risk management. Jd. § 30.16(b)(1)().

(2) Taxpayer return, The compensation structure and amount payable should reflect the
need for the Exceptional Assistance Recipient to remain a competitive enterprise, to
retain and recruit talented employees who will contribute to the recipient’s future success,
so that the Company will ultimately be able to repay its TARP obligations. /d.

§ 30.16(b)(1)(ii).

(3) Appropriate allocation. The compensation structure should appropriately allocate the
components of compensation such as salary and short-term and long-term performance
incentives, as well as the extent to which compensation is provided in cash, equity, or
other types of compensation such as executive pensions, or other benefits, or perquisites,
based on the specific role of the employee and other relevant circumstances, including the
nature and amount of current compensation, deferred compensation, or other
compensation and benefits previously paid or awarded. Jd. § 30.16(b)(1)(iii).

(4) Performance-based compensation. An appropriate portion of the compensation should
be performance-based over a relevant performance period. Performance-based
compensation should be determined through tailored metrics that encompass individual
performance and/or the performance of the Exceptional Assistance Recipient or a
relevant business unit taking into consideration specific business objectives.

Performance metrics may relate to employee compliance with relevant corporate policies.
In addition, the likelihood of meeting the performance metrics should not be so great that
the arrangement fails to provide an adequate incentive for the employee to perform, and
performance metrics should be measurable, enforceable, and actually enforced if not met.
Id. § 30.16(b)(1)(iv).

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made use of the resources described in Part II. In light of this review, the Special Master has
determined that the principles established for 2009, which reflect the Public Interest Standard
and are set forth in the 2009 Determinations, must continue to govern compensation in 2010.

After reviewing the Proposed Structures, the Special Master has concluded that they are
consistent with the general principles established in the 2009 Determinations and therefore
consistent with the Public Interest Standard.

The Special Master has determined, in light of the considerations that follow, that the
compensation structures described in Exhibits I and IT to this Determination Memorandum will
not, by virtue of either their structural design or the amounts potentially payable under them,
result in payments inconsistent with the Public Interest Standard.

1. Cash Salary

The Special Master reviewed Chrysler’s proposal with respect to cash salary in light of
the principle that compensation structures should generally be comparable to “compensation
structures and amounts for persons in similar positions or roles at similar entities,” 31 C.F.R.

§ 30.16(b)(1)(v). Based in part upon this principle, the 2009 Determinations required that cash
salaries generally target the 50" percentile, because such levels of cash salaries balance the need
to attract and retain talent with the need for compensation structures that reflect the
circumstances of Exceptional Assistance Recipients.

The Special Master also reviewed Chrysler’s proposal with respect to cash salary in light
of the principle that compensation structures should be “performance-based over a relevant
performance period,” id. § 30.16(b)(1)(iv). Based in part upon this principle, the 2009
Determinations concluded that cash salary generally should not exceed $500,000, other than in
exceptional cases for good cause shown.

After reviewing Chrysler’s proposal, the Special Master has concluded that the proposed
cash salaries are comparable to those amounts for persons in similar positions or roles at similar
entities, and do not exceed $500,000. Accordingly, the Special Master has approved the cash
salaries set forth in the Proposed Structures, as reflected in Exhibits I and I,

2. Stock Salary

The Special Master reviewed the amount of stock salary Chrysler proposed to pay the
Covered Employees in light of the principle that compensation structures should generally be
comparable to “compensation structures and amounts for persons in similar positions or roles at
similar entities.” Jd. § 30.16(b)(1)(v). Consistent with the 2009 Determinations, Chrysler’s
stock salary proposal would place the Covered Employees at or below the 50" percentile of
compensation for persons in similar roles at similar entities. Accordingly, the Special Master has
generally approved the amounts of stock salary set forth in the Proposed Structures. These
amounts are described in further detail in Exhibits I and IT.

The Special Master also reviewed the structure of Chrysler’s stock salary proposal in

light of the principle that compensation structures should align performance incentives with
long-term value creation rather than short-term profits. See id. § 30.16(b)(1)(i). In light of this

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DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

March 23, 2010

Ms. Nancy A. Rae

Executive Vice President~Human Resources
Chrysler Group LLC

1000 Chrysler Drive

CIMS 485-08-96

Auburn Hills, Michigan 48326-2766

Re: — Proposed Compensation Payments and Structures for Senior
Executive Officers and Most Highly Compensated Employees
(“Covered Employees 1-25”)

Dear Ms. Rae:

Pursuant to the Department of the Treasury’s Interim Final Rule on TARP Standards for
Compensation and Corporate Governance, the Office of the Special Master has completed its
review of your 2010 compensation submission on behalf of the senior executive officers and next
20 most highly compensated employees (“Covered Employees 1-25”) of Chrysler Group LLC
(“Chrysler”). Attached as Annex A is a Determination Memorandum (accompanied by Exhibits
Tand ID) providing the determinations of the Special Master with respect to 2010 compensation.
for those employees. 31 C.F.R. § 30.16(a)(3)(i).

The Interim Final Rule requires the Special Master to determine whether the
compensation structure for each senior executive officer and certain most highly compensated
employees “will or may result in payments that are inconsistent with the purposes of section 111
of EESA or TARP, or are otherwise contrary to the public interest.” /d. On October 22, 2009,
the Special Master issued a Determination Memorandum containing principles designed to
ensure that 2009 compensation for Chrysler’s Covered Employees 1-25 satisfies this public
interest standard.

The principles established for 2009 must continue to govern compensation at the five
remaining recipients of exceptional assistance in 2010. I am pleased that Chrysler’s 2010
submission is consistent with these important principles, which are detailed in the attached
Determination Memorandum. Generally, these principles require that:

« There can be no guarantee of any “bonus” or “retention” awards among the compensation
structures approved by the Special Master.

¢ Base salary paid in cash should not exceed $500,000 per year, except in appropriate cases
for good cause shown. A significant portion of each individual’s base salary will be paid


provided by the compensation consultant or any affiliate, including any “benchmarking”
or comparisons employed to identify certain percentile levels of pay. Jd. § 30.11(c).

¢ Provide to Treasury an annual disclosure of any perquisite whose total value for
Chrysler’s fiscal year exceeds $25,000 for each of the Covered Employees, as well as a
narrative description of the amount and nature of these perquisites, the recipient of these
perquisites and a justification for offering these perquisites (including a justification for
offering the perquisite, and not only for offering the perquisite with a value that exceeds
$25,000). Id. § 30.11(b).

e Ensure that any incentive award paid to a Covered Employee is subject to a clawback if
the award was based on materially inaccurate financial statements (which includes, but is
not limited to, statements of earnings, revenues, or gains) or any other materially
inaccurate performance metric criteria. Chrysler must exercise its clawback rights except
to the extent that it is unreasonable to do so. /d. § 30.8.

© Chrysler was required to adopt an excessive or luxury expenditures policy, provide that
policy to Treasury, and post it on Chrysler’s website. If Chrysler’s Board of Directors
makes any material amendments to this policy, within ninety days of the adoption of the
amended policy, the Board of Directors must provide the amended policy to Treasury and
post the amended policy on its Internet website. /d. § 30.12.

¢ Except as explicitly permitted under the Rule, Chrysler is prohibited from providing
(formally or informally) tax gross-ups to any of the Covered Employees. Jd. § 30.11(d).

e Chrysler’s chief executive officer and chief financial officer must provide written
certification of the Company’s compliance with the various requirements of Section 111
of EESA. The precise nature of the required certification is identified in the Rule.

Id. § 30.15 Appx. B.

VI. CONCLUSION

The Special Master has reviewed the Proposed Structures for the Covered Employees for
2010 in light of the principles described in the 2009 Determinations, which in turn reflect the
Public Interest Standard. On the basis of that review, the Special Master has determined that the
Proposed Structures submitted by Chrysler are consistent with the 2009 Determinations.

The Special Master has separately reviewed the compensation structures set forth in
Exhibits I and IT in light of the principles set forth at 31 C.F.R. § 30.16(b). Pursuant to the
authority vested in the Special Master by the Rule, and in accordance with Section 30.16(a)(3)
thereof, the Special Master hereby determines that the compensation structures set forth in
Exhibits I and IT, including the amounts payable or potentially payable under such compensation
structures, will not result in payments that are inconsistent with the purposes of Section 111 of
EESA or TARP, and will not otherwise be contrary to the public interest.

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limitation have already been made to a Covered Employee in 2010, those amounts should be
promptly returned to the Company.”

5. Non-Qualified Deferred Compensation

For the reasons provided in the 2009 Determinations, and as proposed by Chrysler,
Covered Employees will not accrue in 2010 additional amounts under supplemental executive
retirement plans and other “non-qualified deferred compensation” plans, as described in
Exhibit I.

6. Severance Plans

For the reasons provided in the 2009 Determinations, the Company must ensure that 2010
compensation structures for these employees do not result in an increase in the amounts payable
pursuant to these arrangements.

V. CORPORATE GOVERNANCE

As noted in Part II] above, the Rule requires the Special Master to consider the extent to
which compensation structures are “performance-based over a relevant performance period,” 31
C.E.R. § 30.16(b)(1)(iv). In light of the importance of this principle, the Special Master required
as part of the 2009 Determinations that Chrysler take certain corporate governance steps to
ensure that the compensation structures for the Covered Employees, and the amounts payable or
potentially payable under those structures, are consistent with the Public Interest Standard.

The Special Master has determined that these same corporate governance requirements,
which are detailed in Section V of the 2009 Determinations, must continue to apply in 2010.
Among other requirements, Chrysler must:

¢ Ensure that employees are prohibited from engaging in any derivative or similar
transaction with respect to Chrysler stock that would undermine the long-term
performance incentives created by the compensation structures set forth in Exhibits I
and IT.

¢ Maintain a compensation committee comprised exclusively of independent directors,
which must discuss, evaluate, and review with Chrysler’s senior risk officers any risks
that could threaten the value of Chrysler. Jd. § 30.4; id. § 30.5.

¢ Ensure that the compensation committee discloses to Treasury an annual narrative
description of whether Chrysler, its Board of Directors, or the committee has engaged a
compensation consultant during the past three years; and, if so, the types of services

* Chrysler has identified certain employees subject to expatriate arrangements providing for the payment of certain
“other” compensation in excess of this limitation. The Special Master has reviewed these arrangements and has
concluded that such payments, not to exceed $275,000 per employee, are consistent with the Public Interest
Standard.

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Fiat has and will continue to provide for the CEO’s 2010 compensation, and Chrysler has not
proposed to pay the CEO any compensation in 2010.'

1. Cash Salary

Chrysler proposed freezing cash salaries at 2009 levels.

2. Stock Salary

Chrysler proposed that certain Covered Employees receive stock salary for 2010 in
amounts up to $180,000. Consistent with the 2009 Determinations, and as required by the Rule,
these stock units would be fully vested upon grant, but would only be redeemable in three equal,
annual installments beginning on the second anniversary of grant, with each installment
redeemable one year earlier if Chrysler repays its TARP obligations.

3. Annual Long-Term Incentive Awards

Chrysler proposed that most Covered Employees would receive annual long-term
incentive awards in amounts up to $340,000. Under the proposal, these employees would be
eligible to receive awards representing up to one third of their total 2010 compensation, payable
in long-term restricted stock units that generally would vest only if the Covered Employee
remains employed by the Company on the third anniversary of the grant date. As required by the
Rule, these awards would be paid only in 25% installments for each 25% of Chrysler’s TARP
obligations that are repaid.

4. “Other” Compensation and Perquisites

Chrysler proposed payments of “other” compensation, as well as perquisites, to the
Covered Employees. These proposed payments varied in value.

5. Non-Qualified Deferred Compensation

The 2009 Determinations also require that Covered Employees not accrue additional
amounts under “non-qualified deferred compensation” plans (with the exception of employee-
funded elective deferral arrangements). Chrysler’s proposal for 2010 is consistent with this
requirement.

B. Determinations of the Special Master

The Special Master has reviewed the Proposed Structures in detail by application of the
principles set forth in the Rule and described in Part III above. The Special Master’s review also

"In December 2009, Chrysler sought approval to provide the CEO with stock salary for his 2009 service as a
director of the Company. The Special Master subsequently issued a written determination on December 23, 2009
approving, subject to certain conditions, the stock salary proposed by Chrysler. See Letter to Nancy Rae (December
23, 2009), available at

http://www. financialstability.gov/docs/20091223%20Chrysler%20Supplemental%20Determination%20Letter.pdf.

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ANNEX A
DETERMINATION MEMORANDUM

I. INTRODUCTION

The Emergency Economic Stabilization Act of 2008, as amended by the American
Recovery and Reinvestment Act of 2009 (“EESA”), requires the Secretary of the Treasury to
establish standards related to executive compensation and corporate governance for institutions
receiving financial assistance under the Troubled Asset Relief Program (“TARP”). Through the
Department of the Treasury’s Interim Final Rule on TARP Standards for Compensation and
Corporate Governance (the “Rule”), the Secretary delegated to the Office of the Special Master
for TARP Executive Compensation (the “Office of the Special Master”) responsibility for
reviewing compensation structures of certain employees at institutions that received exceptional
financial assistance under TARP (“Exceptional Assistance Recipients”). 31 C.F.R. § 30.16(a);
id. § 30.16(a)(3). For these employees, the Special Master must determine whether the
compensation structure will or may result in payments “inconsistent with the purposes of section
111 of EESA or TARP, or...otherwise contrary to the public interest.” Jd. § 30.16(a)(3)(i).

Chrysler Group LLC (“Chrysler” or the “Company”, one of five remaining Exceptional
Assistance Recipients, has submitted to the Special Master proposed 2010 compensation
structures (the “Proposed Structures”) for review pursuant to Section 30.16(a)(3)(i) of the Rule.
These compensation structures apply to five employees that the Company has identified for 2010
as senior executive officers (the “Senior Executive Officers,” or “SEOs”) for purposes of the
Rule, and 20 employees the Company has identified as among the most highly compensated
employees of the Company for purposes of the Rule (the “Most Highly Compensated
Employees,” and, together with the SEOs, the “Covered Employees”).

The Special Master has completed the review of the Company’s Proposed Structures for
the Covered Employees pursuant to the principles set forth in the Rule. /d. § 30.16(b)(1). This
Determination Memorandum sets forth the determinations of the Special Master, pursuant to
Section 30.16(a)(3)(i) of the Rule, with respect to the Covered Employees.

IL. BACKGROUND

On June 15, 2009, the Department of the Treasury (“Treasury”) promulgated the Rule,
creating the Office of the Special Master and delineating its responsibilities. The Rule requires
that each Exceptional Assistance Recipient submit proposed compensation structures for each
Senior Executive Officer and Most Highly Compensated Employee. 31 C.F.R. § 30.16(a)(3)(i).

On October 22, 2009, after reviewing submissions of proposed compensation structures
from the Company, the Special Master issued determinations regarding 2009 compensation
structures, and amounts potentially payable thereunder, for Chrysler’s senior executive officers
and certain most highly compensated employees (the “2009 Determinations”). The 2009
Determinations included principles designed to ensure that 2009 compensation for the applicable
employees would not “result in payments that are inconsistent with the purposes of section 111
of EESA or TARP, or are otherwise contrary to the public interest.” 31 C.F.R. § 30.16(a)(3).

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EXHIBIT Il
TERMS AND CONDITIONS OF PAYMENTS AND STRUCTURES
CONSISTENT WITH THE PUBLIC INTEREST STANDARD

The following general terms and conditions shall govern the compensation structures described in Exhibit I. The
Special Master’s determination that those structures are consistent with the Public Interest Standard is qualified in its
entirety by the Company’s adherence to these terms and conditions.

¢ Salary payments. Cash and stock base salaries reflect the annual rate for the employee and are effective as of
January 1, 2010, and in the case of stock salary are payable on a nunc pro tunc basis from that date. To the extent the
Special Master’s determinations for 2010 reduce an employee’s previous cash or stock salary rate, payments in excess
of that rate prior to the date hereof must be offset by reductions to prospective 2010 cash salary payments or to any
stock salary payable with respect to 2010.

© Stock compensation generally. For purposes of the Determination Memorandum, “stock” compensation includes
common stock and stock units. Notwithstanding any transferability restrictions applicable to any stock compensation
described in the Determination Memorandum, (1) an amount of stock sufficient to cover an employee’s tax
withholding obligations may become immediately transferable to the extent necessary to satisfy the employee’s
obligations, and (2) to the extent permitted by the Rule, stock may become immediately transferable upon an
employee’s death or separation from service resulting from disability, as defined in the Company’s broad-based long-
term disability plan.

© Stock salary. Stock salary must be determined as a dollar amount through the date salary is earned, be accrued at the
same time or times as the salary would otherwise be paid in cash, and vest immediately upon grant, with the number
of shares based on the fair market value on the date of award. Stock granted as stock salary may only be redeemed in
three equal, annual installments as described in the Determination Memorandum. Whether a nunc pro tunc grant or
payment that is labeled stock salary is considered salary or a bonus for purposes of the Rule is determined based on all
the facts and circumstances.

© Long-term restricted stock. Long-term restricted stock may only be granted upon the achievement of objective
performance criteria developed and reviewed in consultation with the Office of the Special Master. The compensation
committee must certify (1) the achievement of such criteria, and (2) that the grant of incentives is appropriate in light
of Chrysler’s overall circumstances at the time. Such stock must be forfeited unless conditioned upon the employee’s
continued employment through the third anniversary of grant, unless a termination of employment results from death
or disability; provided, however, that all or a portion of such stock (or similar stock granted with respect to 2009
service) may, for good cause certified by the Company’s compensation committee, continue to vest if the employee
retires on or after the second anniversary of the grant date. The term “retirement” must meet an objective standard
established in consultation with the Office of the Special Master.

© Other compensation and perquisites. No more than $25,000 in total other compensation and perquisites may be
provided to any Covered Employee, absent exceptional circumstances for good cause shown, as defined by pertinent
SEC regulations.

© Supplemental executive retirement plans and non-qualified deferred compensation plans. No amounts may be
accrued under supplemental executive retirement plans, and no Company contributions may be made to other “non-
qualified deferred compensation” plans, as defined by pertinent SEC regulations, for 2010. For the avoidance of
doubt, neither the foregoing limitation nor the corresponding limitation in the 2009 Determinations (1) applies to
employee-funded elective deferral arrangements, or (2) precludes continuing recognition of age and service credit for
Company employees for the purposes of vesting in previously accrued benefits under any plans referred to in this
paragraph.

© Qualified Plans. For the avoidance of doubt, the Special Master has determined that participation by the Covered
Employees in broad-based, tax-qualified retirement and health and welfare plans is consistent with the Public Interest
Standard, and amounts payable under such plans are not counted against the $25,000 limit on other compensation and
perquisites.

E2


Pursuant to the Interim Final Rule, Chrysler may, within 30 days of the date hereof,
request in writing that the Special Master reconsider the determinations set forth in the
Determination Memorandum. If the Company does not request reconsideration within 30 days,
these initial determinations will be treated as final determinations. /d. § 30.16(c)(1).

Very truly yours,

Kenneth R. Feinbs
Office of the Special Master
for TARP Executive Compensation

Enclosures

cc: Holly E. Leese, Esquire
Lawrence Cagney, Esquire


in the form of stock that will immediately vest, in accordance with the Interim Final Rule,
but will only be redeemable in three equal, annual installments beginning on the second
anniversary of the date stock salary is earned, with each installment redeemable one year
early if Chrysler repays its TARP obligations.

Total compensation for each individual must be appropriate when compared with total
compensation provided to persons in similar positions or roles at similar entities, and
should generally target the 50th percentile of total compensation for such similarly
situated employees.

If — and only if — grants of incentives are appropriate in light of Chrysler’s
circumstances at the end of 2010 and a particular Covered Employee achieves objective
performance metrics developed and reviewed in consultation with the Office of the
Special Master, the employee may be eligible for a long-term incentive grant. These
incentives must be granted in restricted stock that will be forfeited unless the employee
stays with Chrysler for at least three years following grant, and may only be redeemed in
25% installments for each 25% of Chrysler’s TARP obligations that are repaid. Long-
term incentive grants must not exceed one third of a Covered Employee’s annual
compensation.

Any and all incentive compensation paid to these employees will be subject to recovery
or “clawback” if the payments are based on materially inaccurate financial statements,
any other materially inaccurate performance metrics, or if the employee is terminated due
to misconduct that occurred during the period in which the incentive was earned.

“Other” compensation and perquisites, and supplemental executive retirement plans,
must remain subject to the limitations described in the 2009 determinations.

As noted above, Chrysler’s submissions are consistent with these important principles,

and the compensation structures approved by the Special Master for 2010 are comparable to the
approved structures for 2009. In particular, cash salaries will be frozen at 2009 levels.

As described in the attached Determination Memorandum, Chrysler must also continue to

observe the following prescriptions described in the Special Master’s 2009 determinations:

The achievement of any performance objectives must be certified by the Compensation
and Leadership Development Committee of Chrysler’s Board of Directors, which is
composed solely of independent directors. These performance objectives must be
reviewed and approved by the Office of the Special Master.

The employees will be prohibited from engaging in any hedging or derivative
transactions involving Chrysler stock that would undermine the long-term performance
incentives created by the compensation structures.

Chrysler may not provide a tax “gross up” of any kind to these employees.

These requirements are described in detail in the attached Determination Memorandum.


Pursuant to the Interim Final Rule, Chrysler may, within 30 days of the date hereof,
request in writing that the Special Master reconsider the determinations set forth in this
Determination Memorandum. The request for reconsideration must specify a factual error or
relevant new information not previously considered, and must demonstrate that such error or lack
of information resulted in a material error in the initial determinations. If Chrysler does not
request reconsideration within 30 days, the determinations set forth herein will be treated as final
determinations. /d. § 30.16(c)(1).

The foregoing determinations are limited to the compensation structures and employees
described in Exhibits I and II, and shall not be relied upon with respect to any other employee.
The determinations are limited to the authority vested in the Special Master by Section
30.16(a)(3)(i) of the Rule, and shall not constitute, or be construed to constitute, the judgment of
the Office of the Special Master or Treasury with respect to the compliance of any compensation
structure with any other provision of the Rule. Moreover, this Determination Memorandum has
relied upon, and is qualified in its entirety by, the accuracy of the materials submitted by the
Company to the Office of the Special Master, and the absence of any material misstatement or
omission in such materials.

Finally, the foregoing determinations are limited to the compensation structures described
herein, and no further compensation of any kind payable to any Covered Employee without the
prior approval of the Special Master would be consistent with the Public Interest Standard.

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