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Former chief executive Carlos Tavares and Stellantis agreed an exit pay deal below his €36.5mn package last year, with a large part of his performance-based remuneration lost because of the car company’s declining profits.
An agreement over the structure of his pay was reached over the weekend in a “straightforward” process following Tavares’ resignation, according to two people with knowledge of the talks.
The package would be affected by the company’s poor performance this year, the people said, without elaborating further, adding that the calculations would be finalised later. Tavares’ 2023 package made him one of the car industry’s highest paid chief executives.
Stellantis said 90 per cent of the former chief executive’s remuneration was variable and based on the company’s performance to be calculated at the end of the financial year. “The company is not in a position to know before the fiscal year is closed and numbers are audited,” the company said.
“Even if we knew, we could not disclose it. We do not disclose the compensation of our employees except as required by law, as we respect their right to privacy,” he added.
Tavares abruptly resigned on Sunday following disagreements with the board over strategy, a sharp decline in profits, large cash outflows and falling sales in the US and Europe which prompted two profit warnings.
At a Goldman Sachs event on Wednesday, Stellantis chief financial officer Doug Ostermann told investors that the conflict also stemmed from differences over how the company should interact with suppliers, unions and governments to rebuild trust.
But he added that the longer-term strategic direction would remain the same. “I don’t think there were any real disagreements in terms of long-term strategy,” he said.
Tavares’ pay package jumped 56 per cent last year on record profits at the world’s fourth-biggest carmaker, but was accompanied by job losses and pay cuts for workers in the US and France. His package included €2mn in base salary, more than €2.5mn in benefits and €32mn in short- and long-term incentive payments linked to his performance.
As rumours swirled this week that his pay-off could total €100mn, the owner of the Peugeot, Fiat and Jeep brands responded by saying that “several figures in recent media reports about the financial terms of Mr Tavares’ departure are highly inaccurate and far beyond reality”.
Tavares’ exit package will be made public in Stellantis’ 2024 annual report next year.
The financial terms of his exit have fuelled a heated public debate in Italy, with politicians and unions criticising the company for overpaying the 66-year-old at a time of crisis amid waning demand and potential job cuts.
Tavares would “leave with a rich loot of dozens of millions of euros in spite of the [crisis at Stellantis]”, Italy’s deputy prime minister Matteo Salvini told reporters on Tuesday. Chiara Appendino, a former mayor of Turin, where Stellantis has its Italian headquarters, said it was “indecent” that Tavares walk away with a large exit package as “thousands of workers struggle to make ends meet”.
More than 10,000 Stellantis workers have been furloughed in Italy and production of models such as the Fiat 500 electric version have been put on hold.
Fabrice Jamart, a CGT union representative at Stellantis, said two plants in northern France were also at risk of closure, amid concerns that production would be relocated to lower-cost sites elsewhere in Europe. The company last month said it would close a manufacturing plant in Luton in the UK, putting 1,100 jobs at risk.
People with knowledge of the company said Tavares had tried to reverse the massive cash outflows Stellantis warned of in September through quick, radical measures that other board members believed would hurt the company over the longer term.
Bernstein analysts said Tavares was likely keen to improve the company’s financial performance before he stepped down to create the conditions “for another strong payday as to that received for 2023”.
