Carlos Tavares has been in the spotlight for some time now. What brought him there is the role he assumed within Stellantis, where he holds the position of CEO at least until 2025. His ambition, clearly, is to retain the prestigious position he holds and, consequently, the rich compensation he enjoys. To do this, however, he will have to deliver to shareholders what he had promised in terms of financial results at the end of the year. Namely, the over seven billion in dividends he had promised. A mission which, however, seems increasingly complicated in light of the group’s results for the first six months of 2024.
Carlos Tavares under pressure due to recent problems of the Stellantis Group
In recent weeks, his management has been strongly criticized first by U.S. unions, which threatened strikes if the agreements made in 2023 are not kept, and then by Italian unions. Stellantis and Carlos Tavares’ strategy seems to be threatening layoffs in order to obtain new funds from governments. To give an example, this happened for the reopening of the Belvidere plant, closed in February 2023, for which Stellantis received more than 300 million dollars from the U.S. government for its restoration. The result? The postponement of the plant’s reopening to a date to be determined.
The same strategy seems to have been used in Italy with the Termoli Gigafactory, where the production of battery cells for electric vehicles is supposed to begin. Here, however, it seems that the government has been smarter. The plant must open first, and then the government will give Stellantis more than 300 million euros as a contribution.
Despite difficulties, Carlos Tavares continues to earn a mountain of money
Carlos Tavares earned a whopping $39.5 million (36.49 million euros) in 2023. This is an impressive figure, which many have criticized, such as UAW President Shawn Fain. The same Tavares who earned this figure in 2023 has cut thousands of jobs in Stellantis plants around the world and plans further layoffs “to cut costs”.
Since its inception in 2021, Stellantis has cut about 15.5% of its staff. This figure includes layoffs, retirements, and incentivized exits for those who agree to voluntarily leave their jobs. 2,500 layoffs are planned at the Michigan plant, which will be added to the 3,500 layoffs in Italian plants. In Italy, about 15,000 workers from various plants scattered throughout the country are subject to temporary layoffs, voluntary exits, forced vacations, or have been fired.
Tavares’ strategy is to reduce costs and maximize profits. But, as Shawn Fain also stated, why not start by cutting his own salary? This is also why the CEO of Stellantis must face the attack from unions. In particular, the one conducted by UAW, which now openly accuses him of not knowing how to manage the group. To assert its rights, UAW threatens to strike for the violation of commitments made by Carlos Tavares in 2023, particularly those related to the reopening of the Belvidere plant.
Tavares’ “mismanagement” reflects in the financial results of the first half of 2024
The group’s operating income, in the period under consideration, has indeed fallen by 40%. A result that would be due in particular to poor sales recorded in North America. Vehicle sales in the region for Stellantis’ main brands, Ram and Jeep, have decreased by at least a third from the first half of 2019 to the same period this year according to Cox Automotive. Moreover, brands like Chrysler, which according to some rumors could be acquired by BYD, and Maserati are in difficulty, so much so that they risk being sold or closed.
These results are so disastrous that they are pushing shareholders to sue the automotive group. These results, moreover, would not justify a salary that seems absolutely disproportionate. To understand this, it’s enough to compare it with that of Renault‘s CEO, Luca de Meo, who must “settle” for 5 million euros.
The same Renault where Tavares began his rise and where, according to rumors, he would like to return. In fact, rumors are intensifying that he is pushing for a merger between Stellantis and Renault. From here, a global group could be born that should be led by Tavares. To have any chance of carrying out this plan, however, he must resolve the situation in the United States.