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Chrysler LLC's future leadership will be determined by the U.S. government and Fiat SpA (FIATY) if Chrysler succeeds at merging with the Italian auto maker.

Chrysler Chief Executive Officer Bob Nardelli, in a note to employees obtained by Dow Jones Newswires, said a new board of directors will be appointed by the federal government and Fiat once a deal is completed. The majority of the directors will be independent.

"The board will have the responsibility to appoint a chairman," Nardelli said in the letter. "The board also will select a CEO with Fiat's concurrence."

Nardelli's comments clarify speculation on who will control Chrysler if a merger deal with Fiat is completed and what role Nardelli might play in that new company. Cerberus Capital Management LP, a private equity firm, installed Nardelli as Chrysler's leader in August 2007 after acquiring an 80.1% stake in the company from former partner Daimler AG. Fiat CEO Sergio Marchionne said earlier this week that he would be willing to take over as Chrysler's leader if asked.

Chrysler is racing to secure new union cost-cutting deals, reduce its debt and ink a Fiat partnership before the federally mandated April 30 deadline.

The Obama administration said it would not provide Chrysler additional access to low-interest loans if the requirements are not met which could result in the third-largest U.S. auto maker filing for bankruptcy protection.

General Motors Corp. (GM) is facing a June 1 deadline to also win further cost-concessions from its unions and debt holders if it wants to continue receiving access to low-interest loans. The auto maker is also in the process of shedding some of its brands including Hummer, Saturn and Saab. GM executives will update the media on its progress later Friday morning.

Nardelli, who was installed as CEO said seeking cost-concessions from the United Auto Workers and Canadian Auto Workers are "critical" to receiving continued support from the Obama administration. He didn't provide an update on the status of the talks.

The auto maker is also waiting to hear back from its creditors after the U.S. Department of Treasury extended a concessions proposal to the group. The debt holders are expected to respond shortly, Nardelli said.

"As we enter this crucial period, I want you to know that I appreciate your tireless efforts and dedication to the cause of ensuring Chrysler's future success," Nardelli said in the note. "I ask you to stay focused on the job at hand, remain positive about our future and keep supporting one another in everything you do."

-By Jeff Bennett; Dow Jones Newswires; jeff.bennett@dowjones.com; 248-204-5542