Musk and Tavares stick to their enormous pay packages

Though automakers face headwinds over stalled EV adoption and need to make drastic cuts, Tesla CEO Elon Musk and Stellantis CEO Carlos Tavares will receive exorbitant salaries this year. Carlos Tavares’s approved record remuneration of 36.5 million euros is sparking a political debate in France.

The compensation package of the Portuguese leader of Stellantis ranks him as the highest-paid automotive CEO among legacy brands. His astronomical salary of 36.5 million euros was already proposed last month but needed to be officially approved at the shareholder’s meeting this week.

There’s ground for the bonus, as the value of the company has doubled since its creation in 2021, and Tavares is deemed to have successfully prepared its fourteen brands for the energy transition, according to the board.

An American thing?

As the French government is a 6% stakeholder in Stellantis and has representatives on the company’s board of directors, the salary has evoked left-wing opposition. Tavares earns 518 times more than the average employee at Stellantis.

Last year, Emanuel Macron advocated a cap on CEO remuneration at the European level over Tavares’ paycheck. Still, his high pay is more a reflection of American capitalist practices based on extraordinary bonuses and stock rewards.

His European counterparts at Mercedes and BMW earn much less (between 6 to 10 million euros). Stellantis realizes 52% of its sales in North America, while CEOs like Apple’s Tim Cook (99 million euros) or Alphabet’s Sundar Pichai (220 million euros), with overseas headquarters, earn much more than Tavares.

These strong regional differences are also witnessed at Tesla. The EV maker wants to re-present a substantial compensation package for CEO Elon Musk to its shareholders at the upcoming general meeting.

This proposal, initially approved in 2018 but recently overturned by a judge, aimed to award Musk with Tesla shares over ten years. The package was valued at an estimated 56 billion dollars (52 billion euros), a figure that didn’t sit well with all shareholders. The judge ruled that they were misinformed about the board.

Unlucky timing

Despite the court’s decision, Tesla’s board reiterates its support for the plan, crediting Musk’s leadership and vision as pivotal to the company’s success. The timing, however, is unlucky.

Faced with increased competition in key markets like the US and China—where local manufacturers, especially BYD, are now leading –Tesla announced to cut 10% of its workforce, explaining the need to reduce costs and address role duplications across its global operations.

The backdrop for these corporate manoeuvres includes a notable 37% drop in Tesla’s share price since the start of the year.