FCA execs Manley, Palmer eligible for millions in Stellantis retention awards, documents show

Fiat Chrysler Automobiles CEO Mike Manley and CFO Richard Palmer will be eligible for cash retention awards worth tens of millions of dollars after FCA merges with PSA Group to form Stellantis, company filings show.

According to the documents, Manley and Palmer will receive the payments for certain possible role changes in the merged company, including specifically if they are not appointed to the Stellantis board of directors. 

The latter change is already certain, as neither has been nominated to serve on the 11-member Stellantis board, which will be led by FCA Chairman John Elkann. Manley has served on FCA’s board of directors since July 2018 and Palmer since April 2019.

FCA and PSA shareholders on Monday approved the terms of the Stellantis merger, including the designated board members. The approval clears the way for the merger to close on Jan. 16 and for Stellantis shares to be publicly listed on Jan. 18 in Europe and on Jan. 19 in the U.S.

PSA CEO Carlos Tavares, who will also be CEO of Stellantis, will be a board member. PSA shareholders will appoint six members, while FCA shareholders will appoint five.  

According to calculations by Automotive News Europe, Manley could receive up to 51.4 million euros ($62.7 million) as a cash retention award, based on his latest published base salary, the number of FCA performance share units and FCA restricted share units granted to him within his incentive plan and on the value of FCA’s share price on Dec. 30.

Palmer will receive a similar treatment for his FCA shares as given to Manley, plus a part of the award equal to four times his annual base salary; his cash award could reach a total of up to 16.6 million euros ($20.3 million), according to ANE  calculations.

Elkann said last month that Manley would serve as the head of Stellantis’ Americas region, which includes Latin America and North America. FCA currently divides the region into two businesses, with one executive overseeing Latin America and another North American countries, including the U.S., where nearly all of FCA’s recent profits have been generated.

Palmer is seen by financial analysts and people close to the Stellantis merger as the front-runner to become CFO of the new company. The British executive has been CFO at Fiat Chrysler since 2011, working alongside the late CEO Sergio Marchionne, who died in July 2018. 

He was part of the team that managed the merger between Fiat and Chrysler and the FCA stock listing in the U.S. Palmer also managed FCA’s move to the Netherlands.

Palmer has experience with stock market regulations in the U.S. and Italy, where FCA shares are listed, and in the Netherlands, where it is supervised by the authority on financial markets AFM. PSA shares are listed only in France. Stellantis shares will be listed in the US (New York), France (Paris) and Italy (Milan). 

The Stellantis merger prospectus, issued in November, says that for both Manley and Palmer the cash retention award will replace the rights they had under FCA's Equity Incentive Plan, with a "qualifying termination of employment, with accelerated vesting of all outstanding awards under the plan and severance payments as contemplated by their employment agreement as applicable," in case of "certain changes in role following the closing of the Merger (including no longer serving as a member of the board of directors)."

The cash retention award to both executives is "payable on a specified date after closing of the Merger upon the satisfaction of certain conditions," the prospectus says. 

These are the provisions in the prospectus:

• With respect to Manley, the cash retention award will replace, effective as of the closing of the Merger, his outstanding FCA performance share units and FCA restricted share units, with such portion of the retention award calculated based on the value of such awards at the closing of the merger.
• Replace certain other severance rights, with such portion of the retention award equal to one time his annual base salary.
• Provide a recognition award with a value equivalent to approximately five times his annual base salary. 

A spokesman for FCA did not immediately respond to request for comment on the awards.

Giorgio Fossati, FCA's general counsel, said earlier on Monday that Manley and Palmer would not receive the awards if they left FCA before the merger closed.

"Payment will be made at a future date with the intent that the executive remains with the company," he said in response to a question at the shareholders' meeting, adding that payment "generally will be not forfeited if the executive leaves the company.” 

He did not offer any details on Monday about conditions that Manley and Palmer would need to meet at Stellantis after the merger's closing to receive the retention awards. 

Other FCA executives eligible to receive a one-time cash award are Pietro Gorlier (head of Europe, Middle East and Africa region and Mopar), Antonio Filosa (head of Latin America region), Mark Stewart (head of North America region), Davide Grasso (Maserati CEO) and Giorgio Fossati (FCA general counsel). The prospectus did not indicate the size of these cash awards, which are not connected to board of directors positions, as none of these executives serve on the FCA board.