the Stellantis group, parent company of the Peugeot, Citroën, Fiat and Chrysler brands, assured on Tuesday that the figures provided by the press on Carlos Tavares‘ starting bonuses are “overestimated”. carlos Tavares, one of the auto industry’s highest-paid bosses, was fired Sunday over strategic disagreements.
A Stellantis spokesperson on Tuesday disputed “the various figures published by the media about Mr. Tavares’ starting bonus, which are incorrect and greatly exaggerated.” These bonuses would reach 100 million euros according to an italian newspaper, or 50 million according to the French press.
Stellantis has “a rule of not publishing the starting conditions of its employees out of respect for their private lives, including that of its executives, unless such publication is required by law,” the spokesperson stressed.
518 times the average employee salary
Carlos Tavares’ fixed salary was 2.6 million euros in 2023, but short and long-term bonuses, linked to performance objectives, brought it to 36 million euros, or 518 times the salary of a group employee.
This salary has been controversial every year,going so far as to elicit a comment from the head of state,emmanuel Macron,but shareholders have validated it every year in the face of the group’s record performance.
Carlos Tavares has received almost 80 million euros since his arrival at the helm of Stellantis, according to the group’s annual reports, not counting the first eleven months of 2024.
According to Stellantis’ 2023 annual report, Carlos Tavares will also have to comply with a non-compete clause, which prevents him from taking on equivalent functions at a competitor for one year after his departure, in exchange for financial compensation.
Controversial bonuses
Exit bonuses do not fail to arouse controversy, such as the golden parachute of 14 million euros over three years offered to Michel Combes in 2015 by the telecommunications equipment manufacturer Alcatel-Lucent on the occasion of his departure to take over the management of Numéricable -SFR .
Carlos Tavares’ former boss at Renault, Carlos Ghosn, is fighting in court to recover his pension benefits, even though he left the renault-Nissan alliance following his incarceration in Japan.
How can companies improve transparency in executive compensation to enhance employee trust and morale?
interview: Navigating Executive Compensation in the Auto Industry
Time.news Editor: Today,we’re joined by Dr. Angela Hart, a leading expert in corporate governance and executive compensation, to discuss the recent developments surrounding Carlos Tavares, the former CEO of Stellantis. Carlos was recently dismissed over strategic disagreements.Can you provide insight into what led to this high-profile exit?
Dr. Angela Hart: Certainly! Carlos Tavares has been one of the moast highly compensated ceos in the auto industry, reportedly earning around 36 million euros in 2023, which is 518 times the salary of the average Stellantis employee. His substantial salary has drawn scrutiny not only from the media but also from stakeholders like French President Emmanuel Macron. The strategic disagreements that led to his firing could be attributed to differing views on company direction, especially at a time when the automotive industry is undergoing significant changes due to electrification and sustainability challenges.
Time.news Editor: Stellantis has claimed that media reports regarding Tavares’ starting bonuses are exaggerated. What impact do you think this has on executive compensation transparency and corporate culture?
Dr. Angela Hart: Transparency in executive compensation is vital for maintaining trust and accountability,particularly in publicly traded companies. While Stellantis asserts a commitment to employee privacy, the lack of clarity can breed skepticism among shareholders and employees alike. It’s essential for corporations to strike a balance between confidentiality and transparency, especially when executives receive bonuses that are disproportionate to average employee wages. This situation highlights the ongoing debate about executive pay ethics and the need for perhaps new governance frameworks in the automotive sector.
Time.news Editor: With Tavares’ fixed salary and bonuses totaling nearly 80 million euros as his appointment, how do you see this affecting Stellantis’ workforce morale?
Dr. Angela Hart: High executive salaries juxtaposed against average employee compensation can certainly impact workforce morale. When employees perceive a significant gap—like the one at Stellantis—it can foster feelings of disenchantment and disengagement.Companies need to ensure that their compensation structures reflect performance and contribution across the hierarchy, not just at the executive level. It may also lead to calls for changes in performance metrics or incentive structures that align with collective success rather than just individual achievements.
Time.news Editor: The controversy surrounding exit bonuses is not new, with examples like Michel Combes’ golden parachute at Alcatel-Lucent surfacing periodically. What measures can companies take to mitigate backlash against such payouts?
Dr. Angela Hart: Companies can adopt several best practices to address concerns about executive exit bonuses. First, establishing clear, publicly available policies outlining bonus structures will help remove some ambiguity. Second, involving stakeholders—investors, employees, and even industry experts—in discussions regarding executive compensation could promote a sense of shared governance. tying bonuses to long-term company performance rather than short-term results can better align executive incentives with the interests of the association and its employees.
Time.news Editor: Lastly, Tavares is bound by a non-compete clause that restricts him from working with competitors for a year. How common are such agreements in the industry, and what implications do they hold?
Dr. Angela Hart: non-compete clauses are quite common, especially for high-ranking executives in competitive industries like automotive manufacturing. These agreements serve to protect the company’s confidential facts and strategic advantages. However, they can also restrict talent mobility and limit the overall competitiveness of the industry. The implications can be mixed; while they protect company interests, they can also result in legal disputes and negatively affect an executive’s career trajectory. Some experts argue that such clauses require scrutiny and, in certain cases, reform to ensure they do not stifle innovation or industry evolution.
Time.news Editor: Thank you,Dr. Hart, for shedding light on these pressing issues in executive compensation and corporate governance. Your insights will surely help our readers understand the complexities involved in these arrangements and their broader implications in the auto industry.
Dr. Angela Hart: Thank you for having me! It’s crucial to continue these discussions to foster a better understanding of corporate governance dynamics.
