Home » Guess Which CEO Thinks He Should Get 60% More Money After Selling Fewer Cars, Cutting Jobs, And Constantly Bickering With The Italian Government

Guess Which CEO Thinks He Should Get 60% More Money After Selling Fewer Cars, Cutting Jobs, And Constantly Bickering With The Italian Government

Carlos Tavares Top
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What is a company? Is it the value of everything it owns? Everything it knows? Everything it makes? If it’s a public company, the value is ultimately the share price, or at least that’s how you need to think of it if you’re a CEO. This line of thinking can get dangerous (see: Boeing), but it’s logical.

Carlos Tavares, CEO of Stellantis, is nothing if not logical and always seems to have an eye on the share price. The company is in the middle of a harsh transition that’s seen beloved products slowly fade away, once popular brands falter, and seemingly endless turmoil. At the same time, Stellantis has remained highly profitable. Is that enough to hand him a 60% pay increase? Some shareholder advisory firms are saying not so fast.

Vidframe Min Top
Vidframe Min Bottom

Also encouraging a reevaluation is Chinese President Xi Jinping, who is hosting German Chancellor Olaf Scholtz and some car execs in the country.

Do you love the Rennaissance Center in Detroit? I do not love the Renaissance Center in Detroit. But I understand its importance, so I’ll be watching what happens to the building now that General Motors is leaving its long-serving HQ for a new development.

And, finally, Nissan is a little closer to solid-state batteries, which could be a big deal.

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Carlos Tavares Is Fun To Write About

Carlos Tavares Snl
Screencap: SNL

Ford CEO Jim Farley is fun to hang out with because he’s a car nerd and generally pretty affable. He knows how to tell a story. He races cars. The counter-intuitive reality of journalism is that the more fun someone is the less fun they are to write about and, true to form, Farley isn’t a regular character in The Morning Dump.

You know who is a regular character? Carlos Tavares, pictured above with Tom Hanks.

Carlos Tavares is always getting into scrapes. As a CEO he clearly has an idea of what he wants his large, global automaker to be. Specifically, he’s trying to build an extremely efficient car company with a balanced portfolio of products built on a small number of shared platforms that utilize regionally popular brands for extra marketing push.

The problem is that the actual company he sits atop is a mix of three companies that do not have that history. Despite being based in The Netherlands for tax reasons, it’s best to think of Stellantis as the amalgam of three different groups of automakers:

  • Old Chrysler – Whatever is left over from Chrysler/FCA/Cerberus/AMC. While not explicitly state-supported, Chrysler has always vacillated between short runs of profitability and needing some kind of bailout. But Chrysler has Jeep and Ram, two valuable brands.
  • Fiat – Fiat is Italy’s national carmaker, even if it’s not explicitly owned by the Italian government. It also brings with it Alfa Romeo, Lancia, and Maserati, all historic brands whose place in the future is uncertain.
  • Peugeot-Citroën – This is the one automaker that is partially state-supported/owned, which means that Stellantis is somewhat more French than anything.

Making that transition into one company that somehow balances the political desires of those three countries (America, France, Italy) with the realities of global production, supply chains, marketing, et cetera is extremely tough.

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Just yesterday, we wrote about how Tavares was in an argument with suppliers over his cost-cutting and then, a few hours later, how his company was in a spat with the Italian government. This is, I don’t know, the fifth time we’ve written about Stellantis and Italy beefing?

And, yet, Stellantis is highly profitable. Yeah, sales are down in the United States, and Fiat lost its position as the biggest brand in Italy to Volkswagen. Jeep, maybe its most valuable brand, is faltering. And yet… the company is making money, the shares are up, and investors are getting dividends.

All of this is why Tavares was able to claim a 60% increase in compensation to almost $40 million, which is more than 500x what an average Stellantis employee makes. As the CEO of a public company, however, Tavares needs his compensation approved and that’s where the trouble begins.

From Bloomberg via Automotive News:

At Tuesday’s annual general meeting, advisory firms Glass Lewis and Proxinvest are urging investors to vote against approving the €36.5 million ($39 million) total compensation package, up almost 60 percent from 2022 levels. The package includes a new incentive award worth €10 million tied to meeting electrification and software goals. Two years ago, investors rejected Tavares’s pay plan in a non-binding vote after opposition in France.

There’s another part of this article I think that’s important to highlight:

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Tavares, 65, is seeking to make Stellantis leaner to endure in the shift to EVs. The payoff has included a roughly 60 percent share price jump in 2023, even as the company lost ground to rivals in several countries, including France and the U.S., according to forecaster Jato Dynamics.

“There’s a contract between the company and myself, just as there are contracts for soccer players and for Formula 1 drivers,” Tavares told reporters visiting a plant in northern France on Monday. “Also, 90 percent of my salary depends on the company’s results — this goes to show they aren’t that bad.”

Glass Lewis specifically objected to the extra €10 million incentive award for work that it views as “intrinsic” to an executive’s duties.

That’s not unfair. Isn’t it the job of an automotive CEO to make sure its car company is ready for the EV transition? Why should that be a bonus?

Anyway, car company execs named Carlos never have issues related to being fairly compensated so I’m sure this will all go super well.

German Chancellor In China To Try And Normalize Relations

Xi And Scholz
Source: Instagram

The European Union is not pumped about all of these cheap Chinese EVs being shipped to Europe, but the cold-slash-hard reality is that Europe needs China and China needs Europe and all the ongoing arguments, while sincere, are not likely to change that.

One of the countries most tied to China is Germany, which is why German Chancellor Olaf Scholz is doing a tour of the Asian nation with Chinese President Xi Jinping.

Per Reuters:

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“China’s exports of electric vehicles, lithium batteries and photovoltaic products have not only enriched global supply and alleviated inflationary pressure, but also contributed greatly to the response to climate change and green and low-carbon transformation,” Xi told Scholz.

“(Germany and China) should be vigilant against rising protectionism, look at the issue of production capacity objectively and dialectically from a market-oriented and global perspective,” Xi said.
Scholz has been cautious about pushing away China, an important market for Germany, saying the EU should not act out of protectionist self-interest.

I love the “look at the issue of production capacity objectively and dialectically” line. China is theoretically a Communist country, but that line kinda gives away the whole game right? The Chinese government needs a strong economy to keep its population placated and access to foreign markets and exports are key to doing that. At the same time, Germany has to sell some Maybachs, so it all works out for everyone (well, minus some light slavery).

This line also reminds me of the importance of a Liberal Arts education. An engineering class will teach you how to do something, and that’s important, but a philosophy class might help you understand why you should (or shouldn’t!) do it.

GM Is Leaving The Rennaissance Center

Ren Cen2
Photo: GM

GM’s giant, 1970s-era high-rise complex in Detroit is called the Rennaissance Center and it’s a key part of the city’s skyline. It’s also a terrible design. Trying to get in a meeting at the Renn Center is like being stuck in an MC Escher drawing where you never end up on the right floor but somehow always end up in a damn Starbucks.

Anyway, GM is leaving the Renaissance Center for a new Dan Gilbert project, which makes sense, but what happens to the old building?

From The Detroit News:

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GM, Bedrock and the city also will take a year to consider the right future for the Renaissance Center, which could include commercial, residential or mixed uses, Barra said. She declined to commit to GM’s ownership of the building long-term, saying, “We’re wide open.” Duggan said they’ll look at potential corporate opportunities, smaller tenants and even suggested the city could look at consolidating multiple offices it has throughout the city in the Renaissance Center if it saves money. He added that the state is looking at research and development incentives for the site.

“I’m not sure what the right combination of uses is, but we have the right leaders,” Duggan said. “Nobody knows more about reusing buildings than Dan Gilbert. He’s done one after another.”

Hear me out: Laser Tag.

Nissan Thinks It’s Gonna Make Solid State A Thing

Nissan Solid StateNissan got out early in the EV revolution with the Nissan Leaf but, for various reasons, kinda stumbled. Rather than be the best company in the current EV revolution, Nissan is trying to do what other automakers are doing and skipping ahead to solid-state batteries.

Hans Greimel went on a tour of Nissan’s impending solid-state plant, and it’s interesting to see the timeframe:

Initial volumes will be limited to several tens of thousands of cells, enough to power only a handful of prototype vehicles, executives said during an April 16 tour of the facility.

But the pilot run will gradually scale up to about 100 megawatts per year, or enough for about 1,000 to 2,000 EVs, depending on the battery size, said Executive Vice President Hideyuki Sakamoto, Nissan’s global manufacturing chief.

After mass production begins in the fiscal year ending March 31, 2029, volume could eventually reach between 3 to 30 gigawatts a year.

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Framed
Framed
2 months ago

Hey Matt, did you copy this part from a press release: “But the pilot run will gradually scale up to about 100 megawatts per year…”? It should be “megawatt-hours per year.” I’m wondering if it’s the company that doesn’t know their own metrics or the journalists. (The article you linked is behind a paywall.)

Tom T
Tom T
2 months ago

A CEO, or any other employee, should get paid the highest amount they are able to negotiate. Period. If its 50k or 50 million. If you think a CEO should agree to a lower pay, just because, then you should also encourage the line worker to lower their salary when the company struggles. Journalists are by nature leftists so I am not surprised to see this idiotic stuff about ‘ 500x the wage of a worker’. It comes off as the frustrated rant of an ignorant unemployable. We are comparing 2 different things. Should a multi million dollar stamping press cost the same as a electric assembly impact wrench? A corporation always tries to make $ for the shareholder (which could be anyone who has any type of retirement investment) by lowering costs so if they are consistently paying top $$ for something it is because they have no choice. You need to pay for talent, and if your talent is being able to operate opposable thumbs, then that’s worth 50k, if your talent is engineering and you are able to calculate material stress loads (Autocad does that for you anyways) then you are worth 150k. If your talent is being able to steer a large multinational company while appeasing and playing ball with various investors, creditors, media, regulators, governments,etc, then that’s worth millions.

BolognaBurrito
BolognaBurrito
2 months ago
Reply to  Tom T

1) It’s not “just because”. It’s directly because under his tenure the company has performed worse.

2) Your whole entire thing about “get paid the highest amount” possible is true, but you make the assumption that the board has the same incentive to pay the CEO well or above a “fair” wage as they do to make sure regular employees are. These board members know where their bread is buttered; it’s a whole good-ol’-boys club.

3) Your whole rant about 500x misses the entire point. You’ve conveniently ignored the historical averages of pay compensation of CEO’s to employees. No one is saying CEO’s don’t deserve to be paid well above the average employee. What is questioned is why CEO pay has been ballooning while employees hasn’t. Imagine if 40 years ago your stamping press went from costing 50x the price of a impact wrench, to now it costs 500x. Wouldn’t you begin wondering why?

Framed
Framed
2 months ago
Reply to  BolognaBurrito

Excellent!

Mark Witriol
Mark Witriol
2 months ago
Reply to  Tom T

That’s how it should work in a public company. On many cases it doesn’t. The CEO stacks the board with his friends, or hires a consulting firm to say he is worth the money, based on hopes from the consulting firm of new/continued business from CEO.

Defenestrator
Defenestrator
1 month ago
Reply to  Tom T

You clearly have a solid grasp of economics 101, supply and demand. A pity you didn’t continue on to the subsequent classes where they discuss more complex topics like BATNA and asymmetric information.

Manwich Sandwich
Manwich Sandwich
2 months ago

 What should GM do with the Renn Cen?”

Well given there is a housing shortage, I say convert most of it to residential. The ground floors should be used for commercial/retail use.

Geoff Buchholz
Geoff Buchholz
2 months ago

Has no one considered a Bass Pro Shops for the atrium?
And maybe a zipline overhead?

Schrödinger's Catbox
Schrödinger's Catbox
2 months ago

Tavares – I see his point, but I also see the other side too. Just no. Be happy with what you get for doing your job.

RenCen – tear it down. The building has always been a bad fit for Detroit. Build something that better reflects the rebirth of this city.

H4llelujah
H4llelujah
2 months ago

As a Mopar/ Jeep guy that makes a living selling thier products, here’s the sad sum-up of Stellantis, at lease from the Chrysler side of it.

Stellantis is a company full of car-enthusiasts that desperately want to design and build cool shit, but they are run by a group of money enthusiasts who desperately want to re-create what Diamler did to Chrysler in the late aughts (strip them of all R&D, product, and soul, to just make money, only this time, do it successfully.

It’s such a shame. I miss Sergio.

Maxzillian
Maxzillian
2 months ago
Reply to  H4llelujah

Stellantis right now really feels like they’re focusing on and celebrating short-term gains while ignoring likely long-term losses.

Manwich Sandwich
Manwich Sandwich
2 months ago
Reply to  H4llelujah

Sergio was good at first. But when he turned into Mergio, he sucked by discontinuing Dodge/Chrysler products with no replacements.

10001010
10001010
2 months ago

What should GM do with the Renn Cen?

Dude, I live in Houston, we’re still trying to figure out what to do with the Enron towers and the Astrodome.

Urban Runabout
Urban Runabout
2 months ago
Reply to  10001010

You could host hurricane refugees.
Oh – wait….

Ben
Ben
2 months ago

This line also reminds me of the importance of a Liberal Arts education. An engineering class will teach you how to do something, and that’s important, but a philosophy class might help you understand why you should (or shouldn’t!) do it.

I’m counting this as a COTD since I posted a similar thing about 3 weeks ago: https://www.theautopian.com/dont-blame-marques-brownlee-or-any-journo-if-fisker-goes-bankrupt/comment-page-1/#comment-342342

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