Stellantis shareholders balk at CEO compensation

Breana Noble
The Detroit News

A majority of voting shareholders of the maker of Jeep SUVs and Ram pickup trucks withheld their support for the remuneration of the automaker's executives during the company's annual general meeting on Wednesday after some, including the French government, questioned the amount being paid to its CEO.

The vote, with 52% of Stellantis NV shareholders saying they were against the agenda item, was an advisory one for the company's board of directors to consider and doesn't directly affect the compensation of executives.

Carlos Tavares

The transatlantic automaker in its annual report filed in February disclosed that the 2021 total remuneration for CEO Carlos Tavares was $21.5 million (19.2 million euro), including $18.9 million (16.8 million euro) in direct compensation. That could make him the highest paid automotive CEO in Europe, though it pales to the compensation his American counterparts receive.

French government spokesman Gabriel Attal during a Tuesday news conference called the figures "not normal," according to Automotive News, and showed the need for more regulations in Europe. The country through the Bpifrance investment bank holds a 6.15% stake in Stellantis and appoints a member on the company's board of directors.

The remark came ahead of a presidential runoff election later this month. Cost-of-living concerns have been a significant campaign issue.

Investment firm Phitrust Partenaires in a statement ahead of the shareholder meeting also questioned Tavares' bonuses, free share plan and long-term remuneration payable, and said it voted against the proposal.

Tavares' 2021 compensation breaks down to a base salary of $2.23 million (1.99 million euro). The remainder is based on performance, including an $8.44 million (7.52 million euro) bonus and a stock grant of $6.25 million (5.57 million euro). He received a special $1.91 million (1.7 million euro) retention benefit.

Because of the merger between Fiat Chrysler Automobiles NV and French automaker Groupe PSA that closed in January 2021 to create Stellantis, the automaker has not disclosed the total compensation for Tavares during his final year leading PSA in 2020. In 2019, Tavares received $8.3 million (7.6 million euros) in compensation at PSA.

Giorgio Fossati, Stellantis' general counsel, during the virtually held meeting from Amsterdam, said Tavares' 2021 base salary was a 17.6% increase from 2020 given the larger size of the combined corporation.

"The theory of compensation is largely driven by overall company performance," Fossati said. "As you compare people for performance analysis with relevant companies in Europe and USA with similar worldwide reach, please keep in mind Stellantis has extraordinary financial results relative to its peers, in particular for a significant merchant and in a challenging industry."

Stellantis surpassed its adjusted operating income margin forecast for 2021, reporting a profit of $15.1 billion. It benefited from cost-cutting efforts and strong pricing because of high demand on low dealership inventories resulting from a global semiconductor shortage.

"It is in the value of Stellantis that we are and will be a meritocracy," said Stellantis chairman John Elkann, scion of the Fiat-founding Agnelli family. "We will pay for performance."

In 2020, Herbert Diess, CEO of Europe's largest automaker, Volkswagen AG, received almost $8.7 million (8 million euro).

Meanwhile, Ford Motor Co. CEO Jim Farley last year received $22.8 million in total compensation during his first full year as head of the Dearborn automaker. General Motors Co. is expected to disclose executive compensation for 2021 later this month. CEO Mary Barra historically has been the highest-paid Detroit Three executive. In pandemic-struck 2020, she received nearly $23.7 million.

During Stellantis' general meeting, shareholders also approved a $3.7 billion (3.3 billion euro) annual dividend to be paid on April 29. Tavares also reiterated that plans remain on track for the company's Dare Forward 2030 strategy shared last month, though the industry faces numerous headwinds at present.

"We are facing the same pattern as 2021, which is a very significant semiconductor supply shortage, which is not becoming better," he said. "It's just reasonably similar to last year. We are facing even stronger inflation on raw materials, which is impacting the financials of this industry. And we will continue to invest significantly in our transformation towards an automotive tech company, both in electrification and also in software."

bnoble@detroitnews.com

Twitter: @BreanaCNoble