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Former CEO Carlos Tavares and Stellantis agreed last year on a severance package of no more than 36.5 million euros, but the car company’s declining profits mean they will lose much of their performance-based compensation. It became.
An agreement on the salary structure was reached over the weekend in a “simple” process following Tavares’ resignation, two people familiar with the talks said.
The people said the package would be affected by the company’s poor performance this year, but gave no further details, adding that the calculation would be finalized in the future. Mr. Tavares’ 2023 policy makes him one of the highest-paid CEOs in the auto industry.
Stellantis said 90% of the former chief executive’s compensation was variable compensation and based on the company’s performance calculated at the end of the financial year. The company said it was “not in a position to know before the financial year ends and the numbers are audited.”
“Even if we knew about it, we couldn’t make it public. Because we respect the privacy rights of our employees, we do not disclose employee remuneration unless required by law,” he added.
Tavares abruptly resigned on Sunday following disagreements with the board over strategy, a sharp decline in profits, large cash outflows and declining sales in the U.S. and Europe, which prompted two profit warnings. caused it.
At a Goldman Sachs event on Wednesday, Doug Osterman, Stellantis’ chief financial officer, told investors that the conflict is a sign of how the company is working with suppliers, unions and governments to rebuild trust. He said it also stems from disagreements over whether he should be involved.
However, he added that the long-term strategic direction remains unchanged. “I don’t think there were any substantive differences of opinion on long-term strategy,” he said.
Tavares’ pay package rose 56% last year due to record profits at the world’s fourth-largest automaker, but it also came with job losses and pay cuts for employees in the United States and France. His package included a basic salary of 2 million euros, benefits of more than 2.5 million euros and short- and long-term incentive payments based on performance of 32 million euros.
Amid rumors this week that his remuneration could total €100m, the owner of the Peugeot, Fiat and Jeep brands said: ‘Recent media reports regarding the financial terms of Mr Tavares’ departure “Some of the numbers reported are highly inaccurate and widely divergent.” Beyond reality. ”
Tavares’ departure package is expected to be made public next year in Stellantis’ 2024 annual report.
His financial terms have sparked a fierce debate in Italy, with politicians and trade unions insisting that the 66-year-old be given too much money at a time of crisis when demand is likely to fall and job cuts are likely. The company has been criticized for paying wages.
Italian Deputy Prime Minister Matteo Salvini told reporters on Tuesday that Tavares “will return home with rich spoils of tens of millions of euros, despite (the Stellantis crisis)”. Chiara Appendino, former mayor of Turin, where Stellantis’ Italian headquarters is located, said Tavares would leave with a huge exit package at a time when “thousands of workers are struggling to make ends meet”. called it “disrespectful.”
More than 10,000 Stellantis employees have been furloughed in Italy, and production of models such as the electric version of the Fiat 500 has been suspended.
Fabrice Jamaat, head of Stellantis’ CGT trade union, said two factories in northern France were also at risk of closure due to concerns that production would be moved to other lower-cost locations in Europe. said. Last month, the company announced it would close its manufacturing plant in Luton, England, putting 1,100 jobs at risk.
A person familiar with the company said Mr. Tavares wanted to address the huge cash outflow that Stellantis warned about in September by taking swift and drastic steps that other board members believed would harm the company in the long term. It is said that he tried to reverse the situation by taking measures.
Bernstein analysts said Mr. Tavares was likely intent on improving the company’s financial performance before resigning to set the stage for “another high salary in 2023.” said.
