On its behalf, Stellantis — the auto-making multinational spawned from Fiat Chrysler’s successful merger with PSA Group — has OK’d a €23.1 million (about $25M USD) payout. This pay is indeed for its previous CEO, Carlos Tavares. Tavares had headed the company since it was formed in 2021. In December 2024, he resigned following a massive drop in sales in the US as well as in Europe. His leaving followed a stormy tenure marked by numerous controversies. It was characterized by the frequent introduction and withdrawal of electrification plans and continuous public battle with the board.
The shift to accepting Tavares’ hefty new compensation package only adds insult to injury after recent, rocky tenure of Stellantis shareholders. In 2022, over half of the shareholders who voted, 52% voted against his pay package. This proposal included a base salary of €19.2 million for 2021, excluding long-term incentives. His recent pay package approval has led to renewed discussions about executive compensation in Stellantis. This comes as Tavares has come under fire given his poor performance outcomes.
Controversies Surrounding Tavares’ Leadership
During Tavares’ time at the helm, he faced significant challenges, particularly regarding his vision for the company’s electrification strategy. He pushed for Stellantis to commit to 100% BEV sales in Europe by 2030. This bold counter plan faced backlash from the board and pushback from multiple stakeholders.
Tavares’ leadership on the issue was criticized as the disappointing sales figures rolled in. In late 2024, Stellantis’s surprise profit warning increased the spotlight. His departure was a big surprise, as he had initially agreed to stay in his position until early 2026. Ever since his abrupt resignation, Stellantis had been conducting a succession to replace the leader. They hope to have this process done well ahead of the first half of 2025.
The board has appointed chairman John Elkann as Stellantis’ interim leader. This decision is a strong indication of their commitment to stabilizing the company during this transitional phase.
Financial Breakdown of Tavares’ Payout
Tavares’ total compensation package is €23.1 million. Here’s why the contract includes a €2 million base salary, as well as a €500,000 post-retirement benefit expense. The rest of the payout is more than €20 million. This total originates from a unique long-term incentive package that pays essential personnel for achieving clearly defined goals. This structure has caused many investors and politicians to scratch their heads.
In addition to Tavares’ controversial severance package, critics have taken issue with the… Critics of technocratic governance from politicians like Italy’s Deputy Prime Minister Matteo Salvini are loud. They contend that the level of funding sends the message untenable during these challenging economic times.
“With the current path of painful tariffs and overly rigid regulations, the American and European car industries are being put at risk,” – John Elkann
Investor Reactions and Future Implications
Investors have recently joined the conversation around Tavares’ pay as well. Major investment companies such as Allianz Global Investors and Proxinvest publicly criticized the decision. They claim that executives’ compensation should be more closely aligned with the performance of the companies they run. The firestorm over Tavares’ pay raises deeper issues about what’s wrong with the executive compensation practices of today’s biggest corporations.
Stellantis, meanwhile, drifted onwards in interim leadership. With Tavares’ ambitious electrification targets, the new company must soon make important decisions about where to head in the future. The hunt for a permanent CEO is already on. Like their new leader, the team will have to get creative when maneuvering through the challenges today’s rapidly changing automotive industry brings.
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