Stellantis shareholders have approved a €23.1 million payout for former CEO Carlos Tavares, despite criticism from investors, politicians, and analysts. The decision was made during the company’s annual meeting in Amsterdam on Tuesday, with around 67% of investors backing the generous pay package. This comes as Stellantis grapples with declining profits and a challenging outlook for 2024. The approval has sparked controversy, especially given the financial difficulties the company is currently facing.
Key Details of Tavares’ Payout
The €23.1 million package includes a €2 million base salary and €500,000 in post-retirement benefits. In addition, Tavares secured more than €20 million in long-term incentives linked to performance goals. The pay package is substantial, particularly as Tavares stepped down in December following disappointing sales figures in both Europe and the United States. During his tenure, Stellantis struggled with profitability, leading to a lowered forecast for the company in 2024. Stellantis now expects an operating margin of just 5.5% to 7%, with a negative cash flow projected between €5 billion and €10 billion for the year.
Critics argue that the large payout is undeserved, especially considering Tavares’ abrupt resignation amid declining performance. Many believe the decision to reward Tavares with such a significant sum despite the company’s financial downturn sends the wrong message to both investors and the public.
Investor Backlash and Criticism from Politicians
Before the vote, investment firms Allianz Global Investors and Proxinvest urged shareholders to reject the payout, calling it excessive. They pointed out that Tavares’ forced resignation and the company’s weak results should have disqualified him from receiving such a generous package. Allianz particularly highlighted the fact that the cancellation of a bonus due to losses had not affected the bulk of the €20.5 million in variable pay.
The payout has also drawn the ire of politicians, including Italy’s Deputy Prime Minister Matteo Salvini, who criticized the deal as inappropriate given the company’s financial struggles. This is not the first time Stellantis has faced backlash over Tavares’ compensation. In 2022, more than half of shareholders rejected his €19.2 million package, highlighting ongoing concerns about the company’s leadership and executive pay.
Tavares’ Clashes with the Board Over EV Strategy
Carlos Tavares, who led Stellantis for several years, had a vision for the company that included a rapid shift toward electric vehicles (EVs). Tavares was a strong proponent of fully electrifying Stellantis’ European operations by 2030. However, the company’s board did not fully support this aggressive approach and preferred a more gradual rollout of electric vehicles. This difference in vision led to Tavares stepping down earlier than expected, despite plans to stay on until 2026.
The departure of Tavares comes at a critical time for Stellantis, as the automotive industry faces increasing pressure to transition toward electric vehicles amid tightening environmental regulations and changing consumer demands.
Tariff Uncertainty and Its Impact on the Auto Industry
As Stellantis navigates its leadership transition, the company is also grappling with uncertainty surrounding U.S. tariffs on imported cars and parts. On April 3, former U.S. President Donald Trump imposed a 25% tariff on car imports, with a second round of tariffs on car parts set to begin on May 3. While Trump hinted that exemptions might be possible for automakers looking to relocate production to the U.S., analysts warn that shifting manufacturing operations takes years, and companies cannot afford to make long-term investments without a stable and predictable trade policy.
Stellantis Chairman John Elkann expressed concerns that tariffs and rigid trade rules could threaten both the U.S. and EU auto sectors. He welcomed discussions about potential tariff reprieves but stressed the need for regulatory clarity to ensure the long-term sustainability of the industry. The ongoing tariff uncertainty poses a significant challenge for automakers, who rely on global supply chains and cross-border production to remain competitive.
Stellantis’ Search for a New CEO
Stellantis is continuing its search for a new CEO, with a goal of appointing a successor by mid-2025. Sources close to the process have indicated that five candidates are currently on the shortlist. As the company navigates a period of leadership transition and industry-wide challenges, the next CEO will have to address Stellantis’ financial difficulties, guide the company through the ongoing EV shift, and manage the uncertainties posed by international trade policies.
The appointment of a new leader will be critical for Stellantis as it works to regain investor confidence and achieve its strategic goals. Until then, the company faces an uphill battle to stabilize its operations and secure a competitive position in the global auto market.
