Stellantis, one of the world’s largest carmakers, has found itself under intense scrutiny after shareholders approved a hefty €23.1 million pay package for former CEO Carlos Tavares. The decision came during the company’s annual shareholder meeting held on Tuesday, where 67% of investors backed the controversial compensation plan, despite the company’s disappointing financial results last year.
Breakdown of the Pay Package
The pay deal includes a base salary of €2 million, a €500,000 retirement benefit, and more than €20 million in long-term bonuses. This generous package has sparked backlash among stakeholders and analysts, who say it sends the wrong message during a time of financial strain. Tavares resigned suddenly in December 2024 following a series of disputes with the board of directors.
At the heart of the disagreement was the company’s electric vehicle (EV) strategy. Tavares was a strong advocate for a complete switch to battery electric vehicles (BEVs) by 2030. However, the board preferred a slower transition, fearing the aggressive timeline might hurt the company’s core markets. The clash led to Tavares’ exit just weeks before the company issued a revised profit warning.
Financial Performance Under Pressure
Stellantis financial results for 2024 were significantly weaker than expected. The automaker lowered its margin forecast for 2024 from 10% to as low as 5.5%, signaling operational challenges. Moreover, the company projected a negative free cash flow of up to €10 billion, a major reversal from its earlier guidance. These numbers only intensified concerns about the justification behind Tavares’ multi-million-euro compensation.
Critics, including Allianz Global Investors and French proxy advisory firm Proxinvest, had urged shareholders to reject the pay package. They labeled it excessive and poorly timed, pointing to the company’s financial troubles and Tavares’ abrupt departure. Allianz noted that although the annual bonus was cancelled, Tavares still received €20.5 million in long-term incentives.
This isn’t the first time Stellantis has faced investor resistance. In 2022, more than half of the shareholders (52%) voted against a previous €19.2 million package for Tavares, calling it out of touch with economic realities.
Political Outrage and Industry Impact
The public response has been just as harsh. Italy’s Deputy Prime Minister, Matteo Salvini, strongly criticized the decision. He called the payout “irresponsible,” especially during a time when many European workers face economic challenges.
In the meantime, Stellantis is still without a permanent CEO. Chairman John Elkann has taken on interim leadership while the company searches for a replacement, expected to be appointed by mid-2025. Elkann now faces the dual challenge of guiding the company through economic uncertainties and restoring investor confidence.
Trump’s Tariffs Add More Trouble for Stellantis
Adding further pressure, former U.S. President Donald Trump announced a new 25% tariff on all imported vehicles, effective April 3, 2025. A second round of tariffs targeting auto parts is scheduled to begin May 3. This move is expected to disrupt global carmakers, especially European firms like Stellantis, which rely heavily on overseas production.
Trump did suggest that some companies might receive temporary exemptions. He noted that carmakers needing more time to shift production to the U.S. could potentially be granted relief. However, many analysts are skeptical. They say that building new production facilities or moving operations across borders requires years of planning, something that can’t be accomplished under sudden policy shifts.
Chairman Elkann expressed concern over the new tariffs. He warned that such trade barriers, coupled with strict regulations, pose a serious threat to both American and European auto industries. Still, he welcomed Trump’s comments about possible exemptions and called them a sign of hope for struggling automakers.
A Pivotal Moment for the Carmaker
As Stellantis deals with leadership changes, political challenges, and financial pressure, it faces a crucial period in its history. The company must not only find a new CEO who can align with the board’s strategic vision but also rebuild trust among investors and workers.
For now, the generous payout to Tavares remains a symbol of deeper issues within the company’s leadership and governance. Whether Stellantis can navigate these troubled waters will depend largely on the decisions it makes in the coming months.