In recent days, there has been renewed discussion about Carlos Tavares, the former CEO of Stellantis, and his severance package. However, we need to add other variables, looking back at the Portuguese manager’s four years at the helm of Stellantis. Each year, Carlos Tavares received a fixed compensation of 2 million euros from the Group formed by the merger between FCA and PSA, for a total of 8 million euros earned as a fixed salary during his four years as CEO.
Carlos Tavares, former CEO of Stellantis, earned astronomical figures compared to other automotive company leaders
According to Italian magazine Corriere della Sera, the most substantial part of his remuneration was not in the annual fixed compensation from Stellantis, but rather in the variable component. Between 2021 and 2024, Carlos Tavares received approximately 106 million euros, which includes the 12 million euro severance package. These were variable amounts allocated to the former CEO based on the results achieved by Stellantis in previous years. Consequently, the total earned by Tavares during his years at Stellantis amounts to approximately 114 million euros.
The practice of calculating variable compensation is widespread among large companies and helps align the decisions made by company leaders with the requirements for proper corporate maintenance.
According to the source, Stellantis took into account at least eight indicators for managing the variable bonuses allocated to Carlos Tavares. Two of these were closely linked to Stellantis’ profitability and accounted for at least 65% of the total: the Group’s operating income and industrial cash flow.
At the same time, the criteria used to establish stock awards for the Group’s top executives were three: electrification of the model range (30%), synergies implemented during each three-year period (40%), and total shareholder return comparison (30%).
This is similar to what all of Stellantis‘ main competitors do. This helps better understand Carlos Tavares’ willingness to consider extensive cuts to production costs and increase the prices of various available models, in accordance with shareholders’ requests who subsequently approved these measures and the remuneration package for the former CEO.
In this way, Stellantis managed to achieve high profits, distributing to its partners, between 2020 and 2023, approximately 23 billion euros, divided into about 16 billion in dividends and over 5 billion in repurchased shares. At the same time, Tavares received steadily increasing compensation, going from 19 million in 2021 to 36 million euros in 2023. However, it should be noted that these positions eventually led Stellantis into periods of difficulty, with 2024 representing the year when the issues that occurred became even more evident.
Now, from Stellantis, Carlos Tavares has obtained, in addition to 23 million euros in salary and a severance package of 12 million euros, the cancellation of the non-compete clause that would have prevented him, for one year, from working for a competing manufacturer or automotive group.