French Government Claims Stellantis CEO's Pay Is Suspect

Matt Posky
by Matt Posky

France has grown suspicious of Stellantis CEO Carlos Tavares’ compensation, which the government has dubbed irregular and indicative of a need for further financial regulations in Europe. The issue doesn’t appear to have much to do with where the money is coming from, but rather the size of his current payment package.

Tavares oversaw the merger between PSA Group and Fiat Chrysler Automobiles in 2021 while he was still CEO of the former company. Having previously climbed the ranks at Renault, the executive has served as chairman of PSA’s management board since 2014. Now heading Stellantis, Tavares is positioned to receive roughly $20.5 million in compensation for 2021. In addition to that, he’s reportedly eligible for a stock package worth an extra $34.7 million and long-term compensation of about $27.2 million — which the French government believes is too much.

The country has a long history of getting directly involved in domestic industry, something other auto-producing nations like to pretend is wholly unique to France. It presently holds a 6.2-percent take in Stellantis via public investment bank BPIfrance.

“Obviously, these are not normal figures,” government spokesman Gabriel Attal, said of the numbers on Tuesday.

Phitrust, an investment group that’s highly focused on Environmental, Social, and Governance (EGS) compliance, shared the compensation figures in a recent press release, saying that it formally opposed approving Tavares’ pay package.

From Philtrust:

Calculated according to the methodology of the French Autorité des Marchés Financiers (AMF) or AFEP-MEDEF French Code, based on the IFRS fair value at the date of grant in force in all major French groups, the total amount of the remuneration of the CEO of Stellantis granted for 2021 would amount to €66 million.

This amount of remuneration leads us to ask questions publicly to the shareholders who vote them and to the public authorities who hold a share of responsibility in this scheme: let us recall that the French public bank BPI holds 6.15 [percent] of Stellantis’ capital.

Is this remuneration, which is the highest of the large companies in France (and probably of the listed groups in the European Union), justified for a person who is not the creator of the company, but is only its manager and therefore does not take any risk or financial penalty or assume any personal responsibility, especially as the merger of the two groups is not yet completed?

Automotive News crunched some numbers to determine that Tavares would technically be entitled to receive more than 220 million euros by 2026, assuming he achieved every goal laid out in his compensation incentive plan. But the updated payout for 2021 alone would still make him one of the highest (if not the highest) paid automotive executives in Europe.

More recently, the outlet noted some similarities between the situation with Tavares and how the French government handled former automotive executive ( now internationally wanted fugitive) Carlos Ghosn prior to his ousting from the Renault–Nissan–Mitsubishi Alliance. Arrested at Tokyo International Airport in November of 2018, Ghosn was accused of having under-reported his salary while repeatedly misusing company assets. Though the plot thickened after it was discovered that Nissan had been in the midst of a massive coup d’état, muddying the waters of the investigation and tarnishing the reputations of numerous executives.

It’s a little early to declare anything about what’s happening over at Stellantis, especially if it’s to be as wild as the scandal involving Ghosn. However, it is curious that the government seems so perturbed with Tavares’ compensation when General Motors CEO Mary Barra earned $23.7 million in 2020, despite declining revenues, in the United States. While corporate big wigs have seen their compensation rates go up by at least 940 percent since 1978 (vs just 12 percent for the average worker), it is a little strange to see France singling out a lone executive without issuing claims of illicit financial activity. From the sound of things, the government simply feels like the automaker has gone overboard with the planned payout.

Though it might not matter because the firm appears to be moving ahead as planned.

Today, Stellantis said it would be “taking note” of the feedback resulting from the advisory vote on the remuneration report and would take extra care to explain in the 2022 remuneration report exactly how this vote had been taken into account. This comes after the tally revealed that around 52 percent ended up voting against the 2021 executive remuneration report for senior managers.

“It is our conviction as a board that in a meritocracy, rewarding on the basis of performance criteria is a fundamental element of our policy,” Chairman John Elkann shareholders. “We will take on this vote which is, again, a recommendation.”

Meanwhile, Tavares said the company expected sales to be up (or at least stable) in all of its major markets for 2022, adding that the forecast for the end of 2021 should be cash positive.

[Image: By Frederic Legrand COMEO/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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2 of 11 comments
  • FreedMike FreedMike on Apr 13, 2022

    Narrow lapels and wide tie? His pay isn't the only thing that's suspect.

  • ToolGuy ToolGuy on Apr 18, 2022

    Something tells me that if someone were to do a careful study of Warranty Expense for Chrysler/Dodge/Jeep/Ram over the past 39 months, you might just find that Carlos Tavares is earning his keep and then some.

  • Dave M. The Outback alternates between decent design and goofy design every generation. 2005 was attractive, 2010 goofy. 2015 decent. 2020 good, but the ‘23 refresh hideous.Looking forward to the Outback hybrid in ‘26…..
  • Lorenzo Subaru had the ideal wagon - in 1995. The Legacy Outback was a straight two-box design with rear quarter and back windows you could see out of, and was available in brown with a 5-speed manual, as God and TTAC commenters intended. It's nice they're not raising prices, but when you've lost the plot, does it matter?
  • Bkojote Remember a month a go when Cleveland wanted to create a more walkable Cleveland and TTAC's 'BIG GOVERNMENT IS THE PROBLEM' dumbest and dullest all collectively crapped their diapers? Here's the thing- look on any American highway and it's littered with people who don't /want/ to be driving or shouldn't be. Look at every Becky on her phone during the morning commute in her Tucson, look at every Brad aggro driving his 84 month loan GMC. Hell look how many drivers nowadays can't even operate a headlight switch. You expect these people to understand a stoplight? In my neighborhood alone 4 people have been rear ended at lights from someone on their phone. Distracted driving over the past 10 years has spiked, and it's only going to get worse unless Becky has an alternative, because no judge is going to pull her license when 'she needs it to get to work!' but heaven forbid she not check fb/tiktok for 40 minutes a day.
  • Scott Shouldn't the The Italian Minister for Business be criticizing The Milano for being too ugly to be Italian?Better use of resources doing that....
  • Steve Biro Frankly, while I can do without Eyesight and automatic start-stop, there is generally less B-S with Subarus in terms of design, utility and off-road chops than with many other brands. I just hope that when they adopt Toyota’s hybrid system, they’ll also use Toyota’s eCVT.