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

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.

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.

Carlos Tavares Is Fun To Write About

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.

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:

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

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:

“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

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:

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 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: