Money for Tavares excessive, or is it?

 Money for Tavares excessive, or is it?

Carlos Tavares, the CEO of Stellantis said “the EV cost burden is 'beyond the limits' for automakers”, in other words, it is impossible to turn Stellantis into an EV company. And yet the Dare Forward 2030 plan asks him to do so with 75 models (sic) and 5 mln car sales/yr. The sacrifice of his happy life to achieve this will be ‘compensated’ for with €220 million if he succeeds. Tavares already earns more than twice as much as the next legacy car CEO in Europe, Diess, i.e. €19 mln versus €8 mln. CEO Zips of BMW got €5.3 million and Kelanius of Mercedes-Benz had to make-do with €5.9 million.

This situation raised quite a few eyebrows in Paris where excessive CEO payments are severely frowned upon and not a few people want to limit them. Fortunately for Tavares, his paymaster is a Dutch holding company. But the question remains. Why? How come? Here’s the straight yet convoluted answer.

Most important point to realize is that Tavares has a reputation of turning loss-making car companies into profitable ones. None of the other CEO's in EU has that.  He did so with Nissan, with PSA and Opel. This is his leverage in negotiating with the supervisory board of Stellantis.

Another point is that Tavares got sick of the people who were his bosses. They performed nothing much themselves but got credit for Tavares efforts. His bosses used to talk the stock price up for take-over purposes and then get immensely rewarded for that even though their actions did nothing for the company, its employees or society. Mary Barra, the CEO of GM got US$21.6 in 2021, or €19 million, which is not even much by American standards. One might ask, for what? GM performed miserably last year on the transition front and may go down in flames if their approach to the future is not rigorously changed. But Barra did a brilliant job of talking up the stock price thereby preventing it from crashing and giving major shareholders an opportunity to cash out. She also ‘closed’ the UAW ‘kompromat’ Biden for GM (see picture), a major feat which will come in handy in the coming years when GM needs to fleece the American tax payer in order to stay afloat.

It seems Tavares is genuinely concerned with the company, contrary to other CEO's with the exception, perhaps, of Diess. This makes him stand out.

And there is a factor seldom talked about. Look at Stellantis from the perspective of supervisory board members and major stock holders, like the French state and large investors on Wall Street and the Agnelli family members. E.g. the latter are dependent for their livelihood on dividends from Stellantis. No profits means no dividends. In such cases you want a person in charge that is a proven profit maker. This may be the source of the opposition to Diess who wanted to sacrifice short-term profits for speed of turn-around to BEV and was almost fired because of it. He was demoted and German family members that live off dividends are terrified Diess will lead them into years of losses, have put a family friend, Ralf Brandstätter, in place to keep an eye on him and to keep him in check. These shortsighted playboys and playgirls do not understand that their inheritance may have been dissipated into thin air within the next five years if nothing is done today to produce EVs in a profitable way. Demand for ICE cars is already fallig off a cliff where BEVs are available. It is the Nokia scenario all over again. 

These rich kids can’t help it. When one has been raised in immense wealth and have had nothing but fun all of one’s life and one only dwell in circles with similar people, when your prime concern is to beinvited to the next fabulous party and buy that painting at Sotheby's and have your house redecorated in order to impress your peers, then some weird kid in a far land across a wide pond with a stutter and a child called "X" making EVs and changing the world is not on your radar screen except perhaps when you wonder why he did not come to your fabulous million euro bash last year. 

You see, the people who really make this world go round seldom if ever dwell in these rich but useless and boring old-money circles where silly parties and vacuous values reign that have no relevance to anyone except to themselves and the suppliers that live off them. 

That’s why Tavares is paid so much.

Charles van der Hoog

philosopher of culture and corporate image magician

#Tavares #CarlosTavares #Stellantis #Tesla #EnergyTransition #Civilisation

Amsterdam, March 14, 2022