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Fiat Chrysler Says SEC, US States Join EPA Diesel Car Probe

March 1, 2017
Scrutiny escalates of Fiat Chrysler vehicles that environmental regulators have said violate pollution laws.

Fiat Chrysler Automobiles NV (IW 1000/20) said the U.S. Securities and Exchange Commission and states’ attorneys general are investigating its diesel models, as scrutiny escalates of vehicles that environmental regulators have said violate pollution laws.

Following U.S. Environmental Protection Agency allegations in January that Fiat Chrysler put software in Jeep and Ram diesel models allowing them to exceed pollution limits, the automaker received “various inquiries, subpoenas and requests for information,” according to a regulatory filing Tuesday. The demands have come from authorities including the U.S. Department of Justice, the SEC and several states, the Italian-American carmaker said.

The EPA stopped short of calling the software Fiat Chrysler used in about 104,000 Jeep Grand Cherokee and Ram 1500 models a “defeat device,” which Volkswagen AG admitted to using in a scandal that’s cost the German company about 22.6 billion euros (US$23.9 billion). Fiat Chrysler’s U.S.-listed shares have fallen 1.1% since the EPA issued its notice on Jan. 12, as investors have questioned the extent of the similarities between its case and Volkswagen’s, whose stock is down 14% since its emissions manipulation emerged in September 2015.

'Unadulterated Hogwash'

Separately in the filing, Fiat Chrysler said Chief Executive Officer Sergio Marchionne collected about $12 million in total compensation last year, midway through what the auto-industry dealmaker has billed as his final five-year plan for the company. Marchionne, 64, has disputed the EPA’s allegations, calling them “unadulterated hogwash.”

Marchionne received a salary of about $4 million and a bonus worth $7 million, according to the filing. He also received non-cash benefits, such as insurance premiums and tax services, worth about $1 million. The total pay package compares with about $11.1 million in 2015.

The CEO has been revamping Fiat Chrysler’s lineup by eliminating the Dodge Dart and Chrysler 200 passenger cars while investing in the profitable Jeep sport utility vehicle line to eliminate net debt by the end of his plan in 2018. Marchionne has said he intends to retire after that.

The compensation figures were reported in euros in an annual filing and converted to dollars at the average 2016 rate of about $1.11. Fiat Chrysler’s shares slipped 0.2% last year in New York trading, outperforming the 30-member Bloomberg World Auto Manufacturers Index. Fiat Chrysler stock traded in Italy declined 0.6% to 10.27 euros as of 9:13 a.m. Wednesday in Milan.

This year, Marchionne is due to receive a bonus of about $6.5 million based on the company’s 2016 performance, according to the filing.

For 2015, General Motors Co. paid CEO Mary Barra $28.6 million and Ford Motor Co. paid CEO Mark Fields $18.6 million. The companies have yet to report compensation for their top executives for 2016.

By Jamie Butters

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Licensed content from Bloomberg, copyright 2016.

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