Executive compensation was already a lightning rod at Stellantis. With the multinational auto giant increasing its CEO’s pay opportunity by 50%, laying off thousands of workers in the wake of the UAW strike, and boosting dividend payouts after strong financial performance, shareholders have a lot to consider at the 2024 AGM.
With thousands of companies holding AGMs during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the AGMs taking place in the coming week that were previously highlighted by Controversy Alerts, and look deeper into the situation at Stellantis. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts April 15 — April 19, 2024
April 16 Stellantis N.V.; Controversy Alert issued March 26
April 18 The Toronto-Dominion Bank; issued April 1
April 19 Keppel Ltd; issued April 3
April 19 Wilmar International Ltd; issued April 3
Deep Dive: Stellantis N.V.
As a multinational automaker trading in the U.S., Italy and France while incorporated in the Netherlands, it’s perhaps unsurprising that Stellantis’ compensation practices have been a lightning rod for shareholder opposition since the company was formed from a 2021 merger of Puegeot SA and Fiat Chrysler Automobiles NV. Over that same period, cross-pond gaps in pay structure and quantum have generated lots of discussion, especially amongst European companies who see themselves competing with U.S. peers – and amongst their shareholders.
After Stellantis’ advisory remuneration report failed to achieve majority support at the 2022 AGM, the company engaged with investors and implemented significant structural changes, making all long-term incentives subject to performance and removing payouts for sub-median TSR performance. The response resonated, at least with some investors, and support for the ongoing pay program improved to 73% in 2023. However, that’s still a notable level of opposition, particularly amongst free float shareholders: excluding Exor’s ~14% stake, over one-third of votes were against the remuneration report.
While the company once again engaged with shareholders to understand why, this time around its response appears to have focused on justifying the practices that have caused concern rather than changing those practices. The company states that it has “improved our message as to how our global footprint is reflected in benchmarking our executive compensation with our peer group and how our incentives reflect the Company’s bold strategy to transform itself to a sustainable mobility tech company” — in other words, why executives at a Dutch-incorporated automaker should be paid in line with executives at U.S. tech companies.
Those justifications are all the more relevant ahead of the 2024 AGM given that CEO Carlos Tavares’ pay opportunity increased by approximately 55.6% in FY2023, to €36,494,025. We note that the increase in the CEO’s target pay opportunity includes a significant award of €10 million as well as €4,293,090 in connection with the Shareholder Return Incentive.
Increases on this scale would likely raise eyebrows among certain shareholder constituencies in and of themselves. In this case, the company’s recent decisions to terminate the employment of thousands of workers at its plants in Michigan and Ohio, along with hundreds of job cuts in France and thousands of temporary layoffs in Italy, may put even more focus the alignment between Stellantis’ executive remuneration practices and stakeholder experience, in addition to causing potential reputational risk.
Investors will have to weigh the increase in executive pay and worker layoffs against a 15.7% increase in dividend per share, an 11.8% increase in earnings per share in the year under review, and a significant increase in the share price following the announcement of the job cuts and broader UAW settlement.
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