Portuguese businessman and CEO of auto giant Stellantis, Carlos Tavares, attends the inauguration of eDCT Assembly Plant in Mirafiori Stellantis' factory in Turin, on April 10, 2024. Image Credit: AFP

Milan: Stellantis shareholders on Tuesday approved the compensation paid to the carmaker's top management, including a package worth up to 36.5 million euros ($38.8 million) for CEO Carlos Tavares.

Total remuneration for Tavares rose 56 per cent compared to the previous year.

Although Stellantis is one of the most profitable companies in the industry, the CEO's compensation has drawn criticism at a time when the Franco-Italian automaker is seeking to cut costs and reduce its labour force as part of its EV transition.

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Speaking at a corporate event in France on Monday, the Portuguese CEO defended his remuneration, saying it was part of a contract between him and the company, "as for a football player and a Formula 1 driver." "Ninety percent of my salary is made determined by the results of the company, so this proves that the company's results are apparently not too bad," he told reporters.

In a consultative-only vote, on Tuesday around 70 per cent of Stellantis shareholders voted in favour of the 2023 executive remuneration report for senior managers at the annual general meeting (AGM) of the world's fourth largest carmaker by sales.

Tavares' compensation package includes 13 million euros in long-term incentives linked to specific performance targets, which therefore might not be achieved and paid in full.

Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis had both recommended that Stellantis shareholders vote against Tavares compensation for 2023.

The carmaker earlier this year agreed with Italian unions voluntary redundancy packages for around 3,000 workers , some 7.5 per cent of its workforce in the country.

It has also announced layoffs for 600 workers on time contracts in France and for 400 U.S. salaried employees in its engineering/technology and software organisations.

Stellantis, whose brands include Fiat, Peugeot and Jeep, has rewarded its employees worldwide with a total of 1.9 billion euros for the group's performance in 2023.

Stellantis investors approved Tavares' remuneration package last year but rejected it at the 2022 shareholders meeting, leading the company to bring changes to its remuneration policy.

The rejection in 2022 came in the run-up to the French presidential elections, when both President Emmanuel Macron and his far-right challenger Marine Le Pen strongly and openly criticised Tavares's compensation.

France has a 6 per cent stake in the carmaker and is represented on its board.