Will I write about Stellantis CEO Carlos Tavares every day? Maybe. He’s become the most interesting automotive executive to me and, in some ways, the hardest to pin down. He’s a car enthusiast, but also a cold and almost brutally-focused businessman. He’s also been quite successful over the last few years and has been paid handsomely for it.
Is the robo-taxi game done? Is it over? There were huge investments in the past by automakers and what has become of them? We’re going to take a closer look at some Hyundai-Kia investments and how those have panned out.
You know what’s ended up panning out? Carvana. The company is out with its Q4 earnings and the company probably isn’t going to die anytime soon. Neither will Toyota, though the company’s problems keep compounding.
Happy Friday, y’all, let’s dump.
Carlos Gets $39.5 Million In 2024
If you read the excellent book “Boundless” (co-written by friend-of-the-site Sean McLain) about Carlos Ghosn, the former boss of Stellantis CEO Carlos Tavares when they were at Nissan-Renault, you learn that Ghosn’s ultimate undoing was a strong desire to get paid.
Ghosn basically told Nissan-Renault “Gimme my check, put some respect on the check.” It didn’t happen quickly enough for Ghosn and Ghosn found some, uh, creative ways to pay himself back which, whether fairly or not, Nissan employees used against him.
Tavares was not content to be in Ghosn’s shadow and, ultimately, told everyone that he was ready to be CEO of a Ford or a GM. This didn’t go over well and, reportedly, Tavares was told to apologize. He didn’t, and instead, Tavares quit the company abruptly. It all worked out for Tavares as he did end up being CEO of an American car company, sort of, in the global behemoth that is Stellantis.
Unlike his former boss, I think it would be hard to argue that Tavares isn’t fairly paid. According to a recent SEC filing, the CEO will be getting just shy of $40 million in total incentives (including retirement, et cetera, not cash). His base salary is only about $2.2 million, but toss in short-term incentives and all that other stuff and it adds up pretty quickly.
Why? Well, the company has been extremely profitable and he, like most execs these days, gets paid back handsomely in stock. The company addresses this in the release:
Our philosophy, approach and delivery of remuneration is strongly linked to the Company’s performance and interests of our shareholders. All elements of our compensation structure are market-driven with a significant portion (88.9 percent) of overall compensation (base salary, short-term incentive and long-term incentive) subject to performance risk for our CEO. The long-term incentive, Transformation Award and Shareholder Return Award are aligned with the long-term success and sustainability of Stellantis as it competes in a dynamic industry undergoing a significant transformation driven by electrification and software technologies
If it ain’t broke.
Though, as The Detroit Free Press points out, this is a lot more than what the average Stellantis employee makes:
The average employee compensation at Stellantis in 2023 was $76,193.
That’s not bad, but the real money is apparently in welding sheep.
Is The Robo-Taxi Business A Real Business?
The success of Uber and the, uh, whatever you’d call the massive failure of Cruise, does make me question how much of a future there is for the robo-taxi business, at least in the near term. The fun term for this is Mobility-as-a-Service, or MaaS. So far MaaS businesses like robo-taxis (see: Argo) and scooters have done poorly as actual businesses.
There’s an interesting report out this week from S&P Mobility that talks about Aptiv, the company formerly known as Delphi, which swung hard into MaaS but is starting to reconsider that position. Specifically, Aptiv said it wouldn’t continue supporting its Motional robo-taxi tie-up with Hyundai. Is this a strategic retreat?
Aptiv’s decision was positioned as a strategic maneuver rather than a sign of skepticism toward Level 4 mobility-as-a-service (MaaS) technologies, but it is impossible to fully separate the two sentiments. From this perspective, Aptiv will be reallocating resources to support its impressive near-term growth in advanced driver assistance systems and automated driving of which it is a conventional technology supplier. This shift bolsters the company’s revenues while allowing Aptiv to mitigate the risk associated with continued investment in a technology with uncertain return-on-investment (ROI) timelines.
Yep. The report also notes that Hyundai bought ADAS company 42dot last year and reorganized under 42dot, which is focused more on Level 3 than Level 4:
The influence of startup 42dot will play a larger role within Hyundai’s core business, starting with advancements in electrical/electronic architectures, crucial for the redevelopment of its Level 3 technology. This raises a question — will Motional continue to influence Hyundai’s Level 4 ambitions, or will 42dot take on this responsibility? This does not necessarily signify the end for Motional, as it could potentially be retained as a US subsidiary (given the relatively high prospects for robo-taxis) or as the consumer-facing mobility brand in the US market. However, if Hyundai maintains its Level 4 ambitions, it could lead to a significant shift in the organizational structure and positioning of its product/expertise.
Add this to the list of reasons why I’m skeptical of all these investments in Level 4 right now.
Carvana: We’re Not Dead Yet Mother Truckers
At the end of 2022, it sure seemed like used car retailer Carvana was not long for this world, so much so that we started daydreaming about how to repurpose its giant car vending machines. In addition to some questionable business practices that led to a statewide ban from operating physical dealerships in Michigan, the company’s rapid growth came at a huge cost and with huge debt burdens.
In what feels like a story of redemption, the company has been reorganized and simplified a bit, and the company actually posted a net income of $450 million in 2023, compared to a loss of $1.59 billion in 2022.
How’d the company do that?
Carvana said its full-year net income figure was driven by a one-time gain on debt extinguishment of $878 million. Revenue fell 21 percent to $10.77 billion in 2023 as the company traded sales volume growth in favor of improving profitability.
Freakin’ Toyota, Man
There was some internal debate over the headline “Toyota and Daihatsu screwed up so, so, so badly” because a lot of these scandals that seem like huge deals in the moment sort of flame out in a few days as everyone gets excited about Sydney Sweeney eating hot wings, or whatever.
I think time has been good to that call as the company now faces scandals on many fronts, most of which seem to involve the pressure Toyota put on its subsidiaries to produce and the ways (cheating) those subsidiaries responded that pressure.
In addition to widespread shutdowns of Daihatsu plants, Toyota has also had to shut down other plants while the company works with regulators to figure out if its diesel engines are actually in compliance with the law or not.
According to Reuters, Toyota is continuing the shutdown of those plants at least until March, and maybe beyond. Is this over? Are there more subsidiaries with secrets?
There are still more questions than answers.
What I’m Listening To While Writing TMD
True story: I was so excited to get the Beck record “Odelay” in 1996, when I was like 13, that I borrowed my German grandmother’s CD player and insisted on playing it for her. The whole album. My German grandmother, who survived being sent to an ammunition factory as punishment by the Nazis, just sat there quietly while I played the whole Dust Brothers-produced album. All 55 minutes of it, including the secret track you have to wait four minutes for. She didn’t complain. I don’t think she enjoyed it, but she did it, because Gigi loved me. I don’t think “Odeley” is Beck’s best album (that would be “Midnite Vultures”) but it does hold a special place in my heart.
The Big Question
Is Carlos Tavares worth it?
At the risk of getting seriously flamed here, because it might not be a popular opinion. But the answer to your Big Question is Yes, but also No.
First, the answer is No, because you can’t quantify people that way. Is he “worth” more than your loved ones? Of course not. You don’t put a dollar value on people.
However, the answer is also Yes. It’s not the person that’s worth that, it’s the job that is.
My family owns a NAPA auto parts store, and as a result I’ve had the opportunity to personally meet the current and previous two CEO’s of Genuine Parts Corporation, the parent company of the NAPA brand and many other units globally. It’s a big operation. And my experience in these meetings, is that just based on what they know and what are responsible for on any given day, yes they are worth what they are paid.
Your typical CEO has a master’s degree, knows the ins and outs of their business down to a surprisingly basic level, is quite adept with a balance sheet, is comfortable speaking live in front of thousands of people, and is comfortable negotiating deals worth billions of dollars with governments and the heads of other powerful global corporations. They are most often fluent in several languages, and spend a LOT of time in hotels and on airplanes. And when they are, they’re working. They’re constantly on notice to solve problems, make decisions and chart the course of the company that will impact thousands of other people. You ever watch an NBA game, and it’s not going well and the coach calls a timeout, and five NBA players come to the bench and the coach has to have something ready in an instant to tell these guys, this is how we’re going to win this game? Being in charge is like that, all the time.
In any given large multinational corporation, there are three, maybe four guys tops, that have the skillset and the desire to be the CEO. So when the talent pool is that small, the price of the job goes up. I’m not saying line workers at Stellantis aren’t skilled, but there are thousands of guys out there that you can train pretty easily to be a serviceable line worker. So the price of the job goes down. Are the line workers as important as the CEO? Arguably yes. But if you want a good CEO, you’re going to have to pay to get a good one. Because realistically they don’t grow on trees. I know people like to think, anyone can be a CEO, it’s not hard. Unfortunately no they can’t, and if they tried most people would be overwhelmed in a matter of hours.
As an aside, the reason we keep getting dopes to run our country, is that the people least qualified to assess anyone’s fitness to be the president, are the ones deciding who gets that job. It’d be like asking the fry cooks who they think should be CEO of McDonald’s. Unfortunately the opposite is cronyism at best and dictatorship at worst, so I guess the system we have is the least of many evils.
Thank you for bringing your perspective and not being afraid to tell the truth.
All true, but it would be just as true if his compensation was 50-fold. I know some people at that level and they are all driven by more than just money. They wouldn’t do it for free, but they thrive on the power and responsibility and attention.
It kind of struck me when I saw what the average Stelantis worker makes. That’s about what I make running a company that has about $500K in revenue per year. Now I expand on what a pita my job is times whatever Stelantis’s revenue is and I come up with a pain in the ass factor that is beyond comprehension.
So, maybe worth it?
I’m partial to Modern Guilt when it comes to Beck albums.
And does ol’ Carlos pay 518 times as much in taxes? If so, then I guess it’s not any of my business. But I highly doubt he does.
He does not.
Big Question Answer: No.
Odelay is awesome but Midnite Vultures is even better?: Yes. This is the best take.
I’m glad you opted to skip playing Midnite Vultures for your grandmother though.
I think companies could get similar results with lower pay. I think fear drives a company’s board to over-pay. If the CEO fails then the board can say “we got the best of the best – look at what we paid them” and they remain on the board. If they were frugal, and got “good enough” for a more reasonable amount and the CEO fails then the board gets replaced because they didn’t get (ie. pay for) the “right person”.
Executive pay is out of control and continues to climb. BUT, nobody seems to care. The courts in DE basically just told Tesla shareholders they were getting screwed by their board and Musk. Musk said, “fine, I’ll just move the company to TX” (because it’s good for Musk, and for no other reasons) and the shareholders just shrugged. As long as they get their cut.
I, too, would accept compensation of “only” $2.2 million.
I like the ideas of tying executive pay to actual performance—good and bad—and the median pay overall, as folks noted below. I get that it’s a big company with big responsibilities, but it really feels like a rising tide only lifts the boats at the top anymore, and cuts only ever affect the people who actually make the products and do the more granular legwork of selling them. Like, if you’re this profitable, you shouldn’t have dragged your feet THAT much in union negotiations. Those employees also deserve to be paid well for their company’s success.
That being said, that is a big $2.2m item in the annual company budget that could be halved if you hit rough times, Stellantis—and he’d still have $1.1m in base salary. Granted, Stellantis seems to be doing okay aside from Hornets in Predicaments and the weird lack of product over at Chrysler, so the rest of this comment isn’t about them right now, but over in the journo world where I’m constantly seeing colleagues get laid off, budgets get axed and outlets close through the mismanagement at the top of the company? If an executive leads a company into a place where they’re thinking about axing a bunch of jobs, their pay really should be the first thing to suffer cuts instead. It’s a lot easier for a highly paid exec to weather rough times and pay cuts than it is for a rank-and-file employee making exponentially less.
Beck’s best album is definitely The Information.
I was waiting for the punchline and it just never came. Your comment was apparently completely serious. Wild
Capitalism! always rationally rewarding labor to it’s social value. Our friend Carlos here, making 38,000,000 million dollars is frankly alot of money. Especially say compared to the average New Haven police officer who makes around 84,000 a year. Now if we all 394 sworn police officers currently employed by New Heaven, their payroll is around 33,096,000. So, is this guy truly worth the entire New Heaven police department plus an extra five million dollars. IDK, giving birth to the Dodge Hornet doesn’t seem as valuable as being the entire police force of Mid-sized city. And that maybe we overvalue and overcompensate people in certain cooperate jobs as almost this legacy of Feudalism. As when the persons who had extensive capital to start early cooperation’s were often land holding nobles or those that wanted to be. So when we got around to taking all the fun and servitude of being a Lord. They compensated themselves by creating a myth that a person in charge, such as CEO needs to be make as much as the entire police department of the third largest city in Connecticut because its tough going to meetings all the time.
> 38,000,000 million dollars
Back of the envelope says that’s $38,000,000,000,000 and it is indeed a lot.
Stellantis made $20 billion in profit last year alone, they shared 1.9 billion Euros across 242,000 eligible employees. 38k of them were in the USA and got checks of $13,360.
https://www.detroitnews.com/story/business/autos/chrysler/2024/02/15/stellantis-profit-sharing-checks-uaw-2023-earnings/72595398007/
This is a huge amount more than the payroll of a police dept.
Is he worth it? Maybe he is.
on the average earnings of workers at Stellantis, is that counting average full time for the full year employees or does that also include part time / partial year employees?
Just too bad Stellantis cars suck 🙁
That’s the part I don’t get. How are they making money?
By cutting costs.
They made $20 billion last year alone.
Concerning Carvana, what comes to mind is the Japanese film, Madadayo. From IMDb is this tidbit, “Every year his students celebrate his birthday, issuing the question “Mahda kai?” (not yet?), just to hear Uehida-san’s answer “Madada yo!” (No, not yet!)”. It was on TCM a while back and I just finished watching it last week.
Psst – it’s “Odelay”.
Chill, my guy. He said it wasn’t his favorite album. Of course he doesn’t know how to spell it.
Hah, I can’t believe I got that wrong! There’s actually an old interview with Stephen Malkmus where he says the Beck album took so long to come out that the name “Odelay” stands for “Oh, Delay.”
True story: I was voted most likely to look like Stephen Malkmus in my senior year of high school (1996). It didn’t come true because I went bald in my 20s and grew a beard. However, Stereopathic Soulmanure is still my favorite Beck album. Satan Gave Me a Taco cracks me up to this day!
Do you think the CEO has more or less than 518 times the amount of influence of the average employee on the value shareholders see in the company? Do you think it would be more or less than 518x as hard to find a replacement for him? Corporations exist to provide value to the stockholders. That is the only reason they exist. The CEO is at least 518x as important to make that happen as the average employee. CEOs get paid a lot because they are valuable to the company and good ones are hard to find. You could not do his job, and neither could 99.9% of Stelantis employees. Stop this pandering nonsense about CEO salary.
If a line workers screws up, it is noticed immediately. The further up the chain, the longer it takes to realize the screw up, and the more it takes to correct it. At the top, CEOs and the like make decisions that take years to reveal whether they made good plans or not. Their compensation should lag behind the consequences of their actions. If they plans work, great pay them well. If their plan fails, they get nothing beyond base pay. The way it works right now is that they get the big bucks regardless if their plans work or fail.
Signed – victim of the bad decisions of the CEO of HP Fiorina
That’s how everyone is paid. If a line worker screws up, they still get paid for it. I may do work today that costs the business millions in 5 years. But, I got paid for it and may or may not be around if something like that happens.
And, executive pay usually DOES lag, for years. It’s stock options on a vesting schedule.
The pay a CEO takes home this year is based on their salary plus options they exercised that were earned years ago. The rest of the numbers you hear about is the current value of the stock options that may or may not be worth anything in 3 years when they can be used.
Not saying it feels good to see people get paid when we might not be, but it doesn’t mean it’s wrong.
While I can understand this line of reasoning, I don’t believe it’s constructive. First, that CEO does not have a union behind them, and is living under a constant sword of Damocles. One bad interview, or some freak market trend, and they’re blacklisted forever. Further, whereas a line worker has a relatively simple set of instructions to perform their job, the CEO has myriad responsibilities and tensions, all of which require judgement.
There are two distinctions that matter in an employee’s compensation; P&L Responsibility (whether the outcome at the bottom line matters), and judgement calls (how much liberty an employee has to make a choice). A line worker will have practically none of either of these. A CEO has almost complete autonomy, but total responsibility. That is why the suicide rates and addiction rates are so high, and that’s why they get paid like they do.
CEOs can be grating, and it takes a specific type of person to run a major corporation. But their pay is absolutely hooked to the value they provide (as is evident by the disaster that you alluded to with the Fiorina years), and they live with that.
The real issue moving forward is that we have allowed every industry to underpay or offshore workers to the point that the only people making any money are executives, institutional investors, or lenders. We’re all down here squabbling about executive compensation, when we should be fighting for wages, and a stronger regulation of daytrading and hairbrained capital markets.
> One bad interview, or some freak market trend, and they’re blacklisted forever.
Nah. See Jeff Nardelli, for example. They live in rarefied circles where they’ll always be able to find $$$$ work.
It’s not for me to decide on what a CEO’s pay is. It’s between the company (Board) and the CEO’s request. Do I think it’s a shit load of money, yep. Is 1 person worth it when in actuality they are just a figure head and do little for day to day operations, nope.
Stop with the commie mindset. If you can argue that someone else doesn’t deserve their pay anyone can just as easily (actually much easier) argue that neither do you. The only pay you deserve is the one you agreed to.
I don’t get it either.
What makes anyone “worth it” or not? Too often it seems like the attitude is “if you make more than me, you’re overpaid” which strikes me much more as jealousy than actual economic analysis.
I had hoped this attitude would be left at the old place.
It’s a publicly traded company!
I’m curious what that has to do with anything.
If shareholders/the board are truly unhappy with executive compensation, they can make a move and change CEOs. After all, if we’re being realistic, the $39M is coming out of their pockets more than it is from the workers.
I guess I wonder where the line is. The editorial slant of the site is 100% in favor of the union workers striking for as much pay as they can get. Which is fine. But then why shouldn’t Tavares then go for as much as he can get too? He’s not extorting that money from Stellantis or committing crimes to get it; it’s a contract agreed to in good faith and approved by the board.
“After all, if we’re being realistic, the $39M is coming out of their pockets more than it is from the workers.”
I’ve rarely read something as dumb as that quote, pretty sure you’re overpaid.
As a reminder, there would be no 39millions in their pocket, to pay this guy (that i see way too often chilling on historic races paddocks, for someone tht works 24/7) without the workers.
And they made 20 Billion USD (world wide) last year, which they shared 1.9 Billion in profit sharing schemes to 242,000 eligible employees world wide.
Of which just over half a billion went to 38,000 eligible USA employees.
https://www.stellantis.com/en/news/press-releases/2024/february/stellantis-employees-rewarded-nearly-1-9-billion-worldwide-for-2023-performance-totaling-6-billion-since-company-creation
https://www.detroitnews.com/story/business/autos/chrysler/2024/02/15/stellantis-profit-sharing-checks-uaw-2023-earnings/72595398007/
I had hoped you were left at the old place too.
No such luck, my overpaid self will be here annoying you forever
Counterpoint: anyone defending CEO pay is hoping to get on the bandwagon. The resource hoarding is feudal. These people do not add 500x value to their companies, especially if you use quarterly market bullshit as a measure.
Thinking a ludicrous amounts of income inequality are bad isn’t communism, it’s common sense.
But does that inequality in income reflect a commiserate inequality in responsibility? Put another way. Do you want a guy who will work for $400,000/year (a typical salary for the president of a small, private four-year college) running ~$190,000,000,000.00/year company with 272,000 employees?
This isn’t an either/or situation. It’s about finding a balance. I’m actually not at all opposed to people who provide vital, highly skilled services getting paid well at all. It doesn’t bother me in the slightest that neurosurgeons can make 7 figures, for example.
What does bother me is disparity that is this ludicrous. There comes a point where the value of the work becomes dramatically overinflated. Do I think Mr. Tavares should be working for $400,000 a year? No. That’s ridiculous.
As someone who’s in a leadership position themself I definitely understand that greater responsibility means greater stress. I’m at the highest level I’ve been at professionally right now and it’s easily the most work and the most stress I’ve ever had to manage by a country mile. It’s also the most money, as I take home nearly 50% more than the median salary for someone with my credentials.
However, that doesn’t mean that a CEO and other C suite people are worth 3-500 times as much as the average household takes home. That’s ridiculous, especially when the average household in the US brings in about $70,000 and economic conditions are continuing to deteriorate for pretty much everyone other than the top 10% or so of earners.
I guarantee your average paramedic has a significantly more stressful and intense day to day experience than freaking Carlos Tavares or Mary Barra does. Unlike some other folks I’m not going to say their skills and work aren’t valuable-they definitely are. But they’re not doing 500 times the amount of work or shouldering 500 times the amount of stress that their average employee is, and this level of wealth and resource hoarding by the .1% has serious negative consequences for our society and has throughout human history.
That’s where I’m coming from, if that makes sense. I don’t mind the people at the highest levels of their fields being wealthy. I do mind when they’re so egregiously overcompensated that it’s harming our society.
Considering the median Stellantis UAW worker makes right around $100k a year, what would you say would be an appropriate annual compensation for the CEO? A million a year would only be 10x more than said median employee.
It’s exceedingly rare that anyone who throws out “commie” as an insult does so in a way that works, or even demonstrates that they understand the term.
That certainly wasn’t one of those rare cases.
No filthy rich people are going to see this comment and bring you into the club, bro
I write on the Internet, and plenty of people have argued publicly that I don’t deserve the pay that I do. The difference, in this case, is that he’s the CEO of a public company with many shareholders and so his performance and compensation is very much an issue for them. This isn’t a commie mindset, this is the cornerstone of modern market Capitalism.
Can I negotiate my pay with a board of people who know that I will be on the board that negotiates their pay? Executive pay is out of control because executives know what they pay other executives will later benefit them.
To make it more fair, perhaps Union employees from other car companies should be on a board that determines the wages given to Union employees at Stelantis.
No one is worth even half of that much
Sportsball talk radio just entered the chat.
There’s a Japanese Baseball player who strongly disagrees. $700m over 10 years, although he is deferring most of it, he is still getting it.
Stellantis made 20 Billion USD worldwide last year and shared 1.9 billion euros with 242,000 employees. Just over half a billion was shared in the USA across 38,000 eligible employees.
The numbers are staggering, so is his salary. I don’t think we get to decide whether it is right or wrong. his employers are okay with it. Shouldn’t we celebrate his success?
Perhaps for robo-taxis to be a viable business, they need to use all of the sensors and tech for extra uses while driving around to generate more revenue. Report expired license plate tags, issue parking tickets, etc. Maybe they could even use facial recognition software, and if they locate someone with an outstanding arrest warrant, run them down, pin them under the car, call the authorities, and collect a reward? That could be right up their alley, and I’m sure would not bring any more controversy to the topic.
To paraphrase the immortal words of Roberto Duran during a beat down from Sugar Ray Leonard, “No MaaS, No MaaS.”
No, Carlos Tavares is not worth that much. But then, neither is DeSeanWatson, Taylor Swift concerts, Tom Cruise movies, Donald Trump branding, Air Jordans, or Elon Musk’s cars. When did that ever stop people from overpaying?
“We tie CEO pay to company performance” means he makes too much on a bad year and an obscene amount on a good year.
Isn’t Carvana just a giant subprime loan operation?
Yup! They’re basically a nationwide buy here pay here lot with a flashy gimmick. I’ve occasionally poked around on their site and their financing rates are hilariously, shamelessly, overtly terrible. Unfortunately they continue to do somewhat decent business because folks that are credit challenged/not as financially savvy get treated like shit by traditional dealerships, which makes the online/no human interaction process very appealing.
Folks wind up paying $60,000 over 8 years for a $20,000 used Rogue and capitalism marches on.
On another site I read Caravana makes an average of over $5k per vehicle sold.
I call them the Ticket Master of used cars.
Matt, I know I’ve said this before, but I just really love how you perfectly balance having fun and being a bit silly, with actually reporting the news in a journalistic, factual way.
It’s this kind of irreverence that you guys have here while still being a good source for car news and community that makes me really, really hope this site thrives and survives for a very long time.
I do love apples, thank you Matt!
No one is worth that much, period.
https://en.wikipedia.org/wiki/Executive_compensation_in_the_United_States
While I agree it’s excessive, what is the right amount for that position.
I do think there should be bonuses related to company profitability, as should everyone in the company.
I would love to see CEO pay based on median employee pay. I don’t know where you’d put that, but capping it to some multiple of median pay would encourage wage growth for everyone, rather than just the executives. If he made 10x the average employee (that’s cited, so I’m using it instead of median), he’d be at 760k. 100x is 7.6 million.
I struggle to believe a CEO deserves 100x a worker’s wage, and he’s well beyond that.
I think I’m okay with 7 figures and a small percentage of net profit.
I honestly don’t know how to make a pay structure for that kind of position.
but a strongly believe that everyone should get a share of the profits as a percentage based on their income.
What amazes me is how much sports stars make. that Japanese baseball player getting $700m over ten years. although the bulk of it is been deferred he should still get the full amount…
Sports isn’t really analogous, though. The career is short, the risk of career-ending injury is high, and the contracts are short. Furthermore the athlete is the product/value, unlike a CEO. Now are sports in general worthy of the money poured in? As a nerd I’d argue no.
I’m with you on the risk of injury ending a career (or life) short. Then I googled the length of a CEO tenure and got this.
“The data reveals 39% of S&P 500 CEOs have tenures ranging from one to five years, and 28% maintain tenures falling between five to 10 years. Interestingly, these two percentages alone account for over 50% of the CEOs involved in this study, indicating a majority of them serve for 10 years or less”.
from here, I have not read it all.
https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/#:~:text=The%20data%20reveals%2039%25%20of,for%2010%20years%20or%20less.
So it would appear that two thirds of the S&P 500 CEO’s stay for less than 10 years. I’d also go as far as to say that if they are poor performers then there’s a lot more people negatively impacted and possibly out of work, than a baseball team.
On the bright side Stellantis employees got to share in 1.9 Billion Euros of variable pay (whatever that is) and profit sharing. which I think should have been mentioned in the article.
https://www.stellantis.com/en/news/press-releases/2024/february/stellantis-employees-rewarded-nearly-1-9-billion-worldwide-for-2023-performance-totaling-6-billion-since-company-creation
and this
https://www.freep.com/story/money/cars/chrysler/2024/02/15/stellantis-profit-sharing-checks-uaw-members-2024/72586634007/
Sports and entertainment pay boggles the mind. You have people basically paying to participate at the low levels, up to amounts most people won’t make in a lifetime at the highest levels. I have trouble even contemplating how to approach those industries’ pay structures.
I do think profit-sharing is a good plan for everyone, but a $2.2 million base salary hitting $40 million seems excessive.
Well, Stellantis did make $20 Billion last year…
And they shared 1.9 Billion Euros across the world wide employees.
https://www.stellantis.com/en/news/press-releases/2024/february/stellantis-employees-rewarded-nearly-1-9-billion-worldwide-for-2023-performance-totaling-6-billion-since-company-creation
and.
https://www.freep.com/story/money/cars/chrysler/2024/02/15/stellantis-profit-sharing-checks-uaw-members-2024/72586634007/
Yeah, the Dodgers need help with their budget and winning more game. He wants to win a world series and be set up for his next 10 lives living in the lap of luxury.
I’m not saying he doesn’t deserve the money based on how much better he is at playing the game then anyone else in the history of the sport.
So, last year alone Stellantis made $20 billion. Or 20x what Ohtani is going to generate. They shared 1.9 billion Euros across 242,000 eligible employees, world wide
https://www.stellantis.com/en/news/press-releases/2024/february/stellantis-employees-rewarded-nearly-1-9-billion-worldwide-for-2023-performance-totaling-6-billion-since-company-creation
and
https://www.detroitnews.com/story/business/autos/chrysler/2024/02/15/stellantis-profit-sharing-checks-uaw-2023-earnings/72595398007/
If I counted the zeros right that’s just over half a billion to U.S. employees.
Does one guy deserve $40m? umm maybe? I’m more inclined to say yes this morning than I was last week.
The problem comes in when you think of a 100 employee company having the same median pay as a 100,000 employee company. A company with 100 people is much harder to run than one with 100,000 people.
At the end of the day, the owners of the company decide what to pay their executives. And the majority of public company CEO pay is stock-based, so it doesn’t even really cost the company anything (sometimes) to just generate more stock to give to the CEO.
Sort of. The stockholders get to have an advisory vote on the issue, but the board decides. But, sure. Doesn’t mean that the CEO is worth the money. And the inflation of CEO pay vs employee pay can certainly lead people to wonder how much CEOs are really worth.
Sort of. Diluting the stock isn’t ideal, and issuing large quantities of new stock generally requires a vote by shareholders. So companies often buy stock to award (or to counter the dilution). Since these stock awards vest over a few years, they can spread the cost or dilution across those years, which helps, but it’s not really free, generally.
We have minimum wage laws. There’s nothing stopping us from enacting laws that would restrict massive CEO payouts. Or at least going back to a tax structure that disincentivizes such large payouts. In the 50s, we had top tax rates as high as 91%. The effective rate after various ways to avoid paying the full rate was much lower, (with some estimating that the richest paid about 45%) but still significantly higher than today’s top rate of 37% (which isn’t actually what gets paid, especially since capital gains make up a lot of the highest incomes and are taxed at much lower rates).
The problem with this line of reasoning is that anyone with the chops to run an international automaker (which is really better described as a multi-national) could be making that much or more out in the private markets. There’s a lot of money flying around, and you have to pay someone enough to be interested. Besides, I haven’t heard a peep from the Agnelli family about how much he’s getting paid.
And these CEOs wonder why nobody is buying their expensive EVs…
We just need to wait for it to trickle down. Obviously he will buy 518 vehicles since he makes 518 times as much, right? That’s how the economy works.
“the company actually posted a net income of $450 million in 2022, compared to a loss of $1.59 billion in 2022.” Huh?