Discretionary Incentive Compensation Plan - Daimler Chrysler Corp.

May 6, 1998
 
 
                              CHRYSLER CORPORATION
                   DISCRETIONARY INCENTIVE COMPENSATION PLAN
 
1. PURPOSE
 
The purpose of the Chrysler Corporation Discretionary Incentive
Compensation Plan (the "Plan") is to encourage the continued and energetic
efforts of officers and key salaried employees ("Employees") of Chrysler
Corporation ("Chrysler") and its subsidiaries (Chrysler and its 
subsidiaries are referred to collectively as the "Corporation") on 
behalf of the Corporation by enabling them to share in the profits of 
the Corporation, in accordance with the resolution adopted by the 
Stockholders of Chrysler at their Annual Meeting on April 16, 1929, as 
amended and as it may be further amended from time to time (the 
"Stockholders' Resolution").
 
2. INCENTIVE COMPENSATION COMMITTEE
 
The Board of Directors of Chrysler (the "Board") will appoint not less 
than three Directors, none of whom will be entitled to receive funds 
or securities pursuant to any Incentive Plan (as defined in the 
Stockholders' Resolution) of Chrysler, to be an Incentive Compensation 
Committee (the "Committee") to administer this Plan. All of the members 
of the Committee will be "disinterested persons" (which term as used 
herein shall have the meaning ascribed to it in Rule 16b-3 under the 
Securities Exchange Act of 1934, or in any amendment thereof in effect
at the relevant time). The Committee may designate a Secretary, one or 
more Assistant Secretaries and an Administrator, none of whom
need be Directors of Chrysler. The Committee will have authority, in 
its discretion, to prescribe, amend, and rescind rules and regulations 
relating to this Plan.
 
3. INCENTIVE COMPENSATION FUND
 
For each fiscal year the Board will authorize and approve the amount to 
be provided out of the earnings of the Corporation for such fiscal year 
for purposes of this Plan, the Chrysler Corporation Incentive 
Compensation Plan, and the Chrysler Corporation Long-Term Incentive 
Plan (collectively, the "Plans"), not to exceed the amount permitted 
by the Stockholders' Resolution, and will authorize and direct the 
proper officers of the Corporation to set aside the amount and to add 
to it (a) any amount authorized and approved by the Board for
any prior fiscal year but not previously awarded and (b) any amount 
awarded for any prior fiscal year that has been forfeited. The sum of 
those amounts (or such part thereof as the Board may determine should 
be made available for awards for any fiscal year) will be the 
Incentive Compensation Fund for that fiscal year (the "Fund"). Any 
part of the Fund that the Board determines shall not be made
available for awards for any fiscal year will be carried forward and 
may be awarded in a subsequent fiscal year.
 
4. PARTICIPANTS
 
     The committee, in its sole and absolute discretion, has full power to
determine by salary, salary grade, salary band, classification, or otherwise,
the Employees (including those who have joined the Corporation or retired or
died or have been granted a leave of absence or were laid off during the year)
who may participate in the Plan in any year ("Participants").
 
5. AWARDS
 
     Each year the Committee may award under this Plan to each Participant such
share of the Fund as the Committee shall determine (below called an Award). The
Award to a Participant may be based on an

 
assessment of the Participant's individual performance during the year, or on
corporate performance, or both, as the Committee may determine.
 
     The Committee shall have full and final authority in performing these
duties, but shall report to the Board the share of the Fund awarded under this
Plan.
 
6. PAYING AND EARNING OUT OF AWARDS UNDER THIS PLAN
 
     Awards under this Plan shall be paid to Participants in one lump sum,
unless the Committee, in its discretion, determines that an Award shall be paid
in installments.
 
     A Participant will have earned out under this Plan an Award payable in one
lump sum, or the first installment of an Award payable in installments, if his
or her employment with the Corporation has been continuous (a) up to the date of
payment of the Award payable in one lump sum, or of the first installment of the
Award payable in installments, as the case may be, or (b) up to the date of the
Participant's retirement or death if he or she should retire or die before the
date of such payment, or (c) up to the date the Participant was granted a leave
of absence if such leave of absence was granted before the date of such payment,
or (d) up to the date the Participant was laid off if he or she was laid off
before the date of such payment. A Participant will have earned out a subsequent
installment if his or her employment with the Corporation has been continuous up
to and including (a) the December 31 immediately preceding the date the
installment is payable, or (b) the date of the Participant's death if he or she
should die before such December 31, or (c) such date as the Corporation may
determine under all other circumstances.
 
     A Participant whose employment with the Corporation is terminated other
than by death will not thereafter earn out under this Plan any installment of an
Award payable in installments unless the Corporation expressly consents in
writing to waive the condition of continuous employment with the Corporation,
and the Participant thereafter will earn out each installment only if up to and
including the December 31 immediately preceding the date the installment is
payable the Participant neither (a) takes other employment or renders services
to others without the written consent of the Corporation, nor (b) conducts
himself or herself in a manner adversely affecting the Corporation, the
determination by the Committee that a Participant has so conducted himself or
herself to be final and conclusive.
 
     Any installment which a Participant fails to earn out under this Plan shall
be forfeited and included in the Fund for a subsequent year.
 
     Nothing in this Plan shall prevent the Corporation from discharging or
requesting the resignation of any Participant.
 
     An Award payable in one lump sum, or the first installment of an Award
payable in installments, shall be paid to the Participant on such date as the
Committee shall determine, and if the Participant complies with the conditions
for earning out a subsequent installment, it shall be paid to him or her on such
date in the year in which it is payable as the Committee shall determine.
 
     Any lump sum payment or installment earned out under this Plan and payable
to the Participant who is deceased shall be paid to his or her legal
representative in such manner and at such time as it would have been paid to the
Participant were he or she then alive and in the employ of the Corporation.
 
7. FORM OF PAYMENTS UNDER THIS PLAN
 
     The Committee in its sole and absolute discretion shall determine for any
year whether under this Plan the lump sum payment or the installment of any
Awards payable in that year shall be paid in cash or in shares of Chrysler
stock, or partly in cash and partly in shares of Chrysler stock, the shares to
be shares held by the Corporation in its treasury or purchased by the
Corporation in the market for distributing in place of cash, the shares to be
valued for this purpose in accordance with the Stockholder's Resolution, with
cash in place of fractional shares.
 
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8. DEFERRAL OF PAYMENT
 
     A Participant may voluntarily elect to defer receipt of payment under this
Plan of all or any part of an Award payable in one lump sum or of any
installment of an Award payable in installments upon such terms and conditions
as the Committee may prescribe.
 
9. COSTS
 
     All costs of administering the Plan shall be borne by the Corporation and
shall not be charged against the Fund.
 
10. PAYMENTS UPON A CHANGE IN CONTROL
 
     Notwithstanding any other provisions hereof, if a "Change in Control" (as
defined in paragraph 10(B) hereof) of Chrysler shall occur, the following shall
be paid, in cash, no later than the tenth day following such Change in Control:
(a) all unpaid installments of an Award payable in installments under this Plan,
(b) all voluntary deferrals made by a Participant under this Plan (except
deferrals made into the Chrysler Corporation Salaried Employees Savings Plan and
the Chrysler Corporation Salaried Employees Supplemental Savings Plan, which
deferrals will be governed by the terms of such Plans), and (c) all unpaid
Awards made (including any made pursuant to paragraph 10(A) hereof) for any
completed fiscal year which preceded the Change in Control.
 
     A. MAKING AWARDS FOR COMPLETED YEARS. Upon the occurrence of a "Potential
Change in Control" (as defined in paragraph 10(C) hereof), if there is any
completed fiscal year of the Corporation for which the audited financial
statements of the Corporation are available and for which the Board has not yet
determined the Incentive Compensation Fund and/or for which the Committee has
not yet determined the Awards, such determinations and the payments of any
Awards so determined shall be made as soon as reasonably possible.
 
     B. CHANGE IN CONTROL DEFINITION. "Change in Control" shall mean a change in
control of Chrysler, which shall be deemed to have occurred:

          (i) if any Person (as defined below) is or becomes the Beneficial 
     Owner (as defined below) of securities of Chrysler representing 20% or 
     more of the combined voting power of Chrysler's then outstanding 
     securities (unless the event causing the 20% threshold to be crossed in 
     an acquisition of securities directly from Chrysler); or
 
          (ii) if during any period of two consecutive years beginning after 
     June 7, 1990, individuals who at the beginning of such period constitute 
     the Board and any new Director (other than a Director designated by a 
     Person who has entered into an agreement with Chrysler to effect a 
     transaction described in paragraph (i), (iii) or (iv) of this Change in
     Control definition) whose election or nomination for election was approved
     by a vote of at least two-thirds (2/3) of the Directors then still in
     office who either were Directors at the beginning of the period or whose
     election or nomination for election was previously so approved, cease for
     any reason to constitute a majority of the Board; or
        
          (iii) upon the approval by the stockholders of Chrysler of a merger or
     consolidation of Chrysler with any other corporation (other than a merger
     or consolidation which would result in the voting securities of Chrysler
     outstanding immediately prior thereto continuing to represent (either by
     remaining outstanding or by being converted into voting securities of the
     entity surviving such merger or consolidation), in combination with voting
     securities of Chrysler or such surviving entity held by a trustee or other
     fiduciary pursuant to any employee benefit plan of Chrysler or such
     surviving entity or any subsidiary of Chrysler or such surviving entity, at
     least 80% of the combined voting power of the voting securities of Chrysler
     or such surviving entity outstanding immediately after such merger or
     consolidation) if, and only if, such merger or consolidation is
     ultimately consummated; or
 
          (iv) if the stockholders of Chrysler approve a plan of complete
     liquidation or dissolution of Chrysler or an agreement for the sale or
     disposition by Chrysler of all or substantially all Chrysler's assets.
 
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     For purposes of the definition of Change in Control in this paragraph
10(B): (a) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as supplemented by Section 13(d)(3) of the Exchange Act, provided, however, that
Person shall not include (i) Chrysler, any subsidiary of Chrysler or any other
Person controlled by Chrysler, (ii) any trustee or other fiduciary holding
securities under any employee benefit plan of Chrysler or any subsidiary of
Chrysler, or (iii) a corporation owned, directly or indirectly, by the
stockholders of Chrysler in substantially the same proportions as their
ownership of securities of Chrysler; and (b) a Person shall be deemed the
"Beneficial Owner" of any securities which such Person, directly or indirectly,
has the right to vote or dispose of or otherwise has "beneficial ownership" of
(within the meaning of Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding (whether or not in writing);
provided, however, that (i) a Person shall not be deemed the Beneficial Owner of
any security as a result of an agreement, arrangement or understanding to vote
such securities (x) arising solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and the applicable rules and regulations
thereunder or (y) made in connection with, or to otherwise participate in, a
proxy or consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable provisions of the Exchange Act and the
applicable rules and regulations thereunder, in either case described in clause
(x) or clause (y) above, whether or not such agreement, arrangement or
understanding is also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report), and (ii) a Person engaged
in business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of forty
days after the date of such acquisition.
 
     C.  POTENTIAL CHANGE IN CONTROL DEFINITION.  A "Potential Change in
Control" shall be deemed to have occurred if the conditions set forth in any one
of the following paragraphs shall be satisfied:
 
          (i) Chrysler enters into an agreement, the consummation of which would
     result in the occurrence of a Change in Control;
 
          (ii) Chrysler or any Person (as defined in paragraph 10(B) hereof)
     publicly announces an intention to take or to consider taking actions which
     if consummated, would constitute a Change in Control;
 
          (iii) any Person who is or becomes the Beneficial Owner (as defined in
     paragraph 10(B) hereof), directly or indirectly, of securities of Chrysler
     representing 10% or more of the combined voting power of Chrysler's then
     outstanding securities, increases such Person's beneficial ownership of
     such securities by 5% or more over the percentage so owned by such Person
     on the date hereof; or
 
          (iv) the Board adopts a resolution to the effect that, for purposes of
     this Plan, a Potential Change in Control has occurred.
 
11. INTERPRETATION
 
     The Board shall have full power and authority to interpret and construe
this Plan and its interpreting and construing of this Plan and acts pursuant to
this Plan in good faith shall be final and conclusive. The Board may correct any
defect or supply any omission or reconcile any inconsistency in such a manner
and to such an extent as it shall find expedient to carry this Plan into effect,
and it shall be the sole and final judge of the expediency. If any such
interpreting or construing shall involve a question of law, the Board may rely
and act upon the opinion of counsel (who may be counsel to Chrysler) on the
question of law.
 
12. EFFECTIVE PERIOD
 
     The Plan shall become effective, upon approval by the Board, beginning
December 1, 1994, and shall remain in effect until terminated as provided in
Paragraph 16.
 
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13.  AMENDMENT AND TERMINATION
 
     At any time the Board may amend, alter or terminate this Plan (consistent
with the Stockholders' Resolution) as the Board shall deem advisable; provided,
however, that the Board may not: (a) without the approval of the holders of a
majority of the shares of Common Stock of Chrysler voting on the matter,
increase the total amount that under the Stockholders' Resolution may be
provided out of the earnings of the Corporation for incentive compensation and
(b) without the approval of the holders of a majority of the shares of Common
Stock of Chrysler issued and outstanding, issue shares of Chrysler stock for
distributing in place of cash; and provided further, however, that terminating
or amending this Plan shall not terminate the right of any Participant to earn
out and thereby become entitled to receive, in the same manner as if this Plan
had not been terminated or amended, any unpaid installment of an Award made to
him under this Plan prior to the terminating or amending of this Plan.
 
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