According to the Financial Times, Carlos Tavares and Stellantis have reportedly reached an agreement on a severance package that is lower than the €36.5 million package planned last year for the now former CEO of the group. Last year, much of his compensation was tied to performance, which was negatively impacted by the automaker’s reduced profits. According to sources, the severance agreement was reached “simply” during the weekend, immediately after his resignation.
Carlos Tavares and Stellantis have already reached an agreement on his severance after his resignation
Tavares’ package for 2023 was affected by the company’s financial performance falling below expectations, although final calculations will be completed at year-end. Nevertheless, his package made him one of the highest-paid CEOs in the automotive industry. Stellantis explained that 90% of Tavares’ compensation was variable and based on company performance, and that final numbers would only be verified at the end of the fiscal year. The company also specified that it could not disclose compensation details unless required by law, to respect employees’ privacy rights.
Tavares suddenly resigned on Sunday following disagreements with the board over strategy, a sharp decline in profits, significant cash outflows, and falling sales in the United States and Europe, which led to two profit warnings. On Wednesday, during a Goldman Sachs event, Stellantis CFO 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. However, he added that the long-term strategic direction would remain the same. “I don’t think there were real disagreements in terms of long-term strategy,” he said.
The Stellantis CEO’s compensation increased by 56% in the last year, reaching a total of approximately €36.5 million. This compensation package consisted of €2 million in base salary, €2.5 million in benefits, and €32 million in performance-linked incentives, during a period marked by record profits for the world’s fourth-largest automaker.
This increase was controversial, considering that during the same period, the company implemented salary cuts and staff reductions, especially in the United States. The situation generated further controversy when rumors circulated about an alleged €100 million exit package, promptly denied by Stellantis, which described such figures as “highly inaccurate and far from reality.” The actual details of the exit package will be made public in the 2024 annual report.
According to sources, Tavares had proposed severe cost-containment measures that some board members believed could compromise the company’s future. Bernstein analysts suggest these actions were aimed at improving financial results before his resignation, possibly to secure compensation comparable to that of 2023.