Stellantis Profit-sharing Formula: Everything You Need to Know

Stellantis emerged when Fiat Chrysler Automobiles (FCA) and PSA Group joined forces in 2021. This global powerhouse in the automotive industry marked significant strides in automotive innovation and collaboration.

On top of this, with its progressive approach to employee welfare, Stellantis introduced a profit sharing formula: a strategic move that aligns employee interests with corporate success.

This article dives into the complexities of this formula; offering insights for companies aiming to adopt a similar culture of shared success and employee engagement.

Whether you're exploring profit-sharing models for your organization or simply curious about Stellantis's profit sharing approach, this is your comprehensive guide!

What Is The Stellantis Profit Sharing Formula?

Before we dive into Stellantis's formula, let's briefly discuss what profit sharing is.

Profit sharing (PS) is a powerful business strategy where companies share a portion of their profits with their employees. This incentivized approach is a way to reward employees for their contributions toward the business's success.

It's monitored and assessed against predetermined operational benchmarks. The profits are distributed among eligible workers based on the organization's profitability over a set period.

Companies, like Stellantis, determine this eligibility based on an employee's salary, job role, or other internal factors. The profit split can be paid in various ways, such as:

• Cash bonuses
• Contributions toward retirement plans (e.g. 401 (k) plans)
• Company stock options

It acts as a motivational tool to boost employee engagement and morale. It also contributes to fostering a collaborative company culture. Workers are compensated above their base salaries and staff turnover rates are kept to a minimum.

One of the key benefits of profit sharing is that it's a win-win situation for employers and employees.

Businesses align company goals with their employees, who in turn, feel more motivated to work harder to reach these performance expectations. When employees feel valued and compensated for their efforts, they're more likely to keep giving their best.

Stellantis's profit sharing formula has encapsulated this concept well.

Its innovative approach to employee compensation incentivizes its employees and acts as a commitment to Stellantis's workforce - where everyone's success is intertwined.

In saying this, each company is different in terms of industry, corporate culture, financial health, and how they generate and plan to distribute profits. But, by using Stellantis's approach (and PS formula), you too can foster a collaborative, productive, and engaged team!

Who is eligible for Stellantis's profit sharing program?

• Full-time and permanent, part-time (US) hourly workers are eligible from their first day of employment.

How is the Stellantis Profit-Sharing Formula Calculated?

Here's how the 2023 Stellantis profit-sharing formula works and how they distribute profits - before tax - among their workers:

1. Calculate the eligible profit share amount (EPSA): Stellantis uses its North American Adjusted Operating Income (AOI) Margin. They publicly reported this percentage - for the 2022/2023 period - to be 16.4%.
2. 16.4% x 100 x $900 (adjusted from the previous year of $800) = $14,760 (Eligible Profit Share Amount per employee)
3. Create payout fund: Combine the total eligible profit sharing amounts for all employees to form the overall payout fund. This is what the company needs to set aside (based on its financial health) for PS payouts.
4. If there are two groups of employees (those with 1,850+ compensated hours and those with less); calculate each group individually.
5. Example: Group 1 has 27,269 employees (working 1,850 hours)
6. 27,269 x $14,760 (EPSA) = $402.5 million
7. Example: Group 2 has 13,391 employees (working less than 1,850 hours)
8. 13,391 x $14,760 (EPSA) = $142.8 million
9. Then, add these amounts together to get the total payout fund amount.
10. 402.5 million + 142.8 million = $545.3 million (payout fund)
11. Determine payouts per hour:
12. Stellantis's profit sharing factors in the total compensated hours (CHs) for all of its employees of the two groups. From the above example, this totals 81.27 million CHs.
13. The total payout fund ($545.3 million) is divided by the CHs (81.27 million) = $6.71 hourly payout.
14. Calculate individual payouts: Employees with varying CHs receive a payout based on this formula: CHs x payout per hour ($6.71) = Individual profit sharing partner payout
15. Example: Employee A has 2,500 CHs x $6.71 = $16,775
16. Example: Employee B has 500 CHs x $6.71 = $3,335

This thorough calculation formula ensures a fair and transparent profit distribution across Stellantis's diverse workforce, aligning efforts with rewards.

United Auto Workers (UAW) and Stellantis Profit Sharing: A Closer Look

The United Auto Workers (UAW) union plays a pivotal role in Stellantis's PS dynamics, advocating for fair wage distribution within the automotive industry (including among Stellantis employees). 43,000 Stellantis employees are represented by UAW.

Role of UAW in Profit Sharing

• UAW is an automotive union that advocates fair compensation within the industry - particularly for Stellantis employees.
• Through negotiations, the UAW ensures that salary and bonus packages (including profit sharing) are fair and reflective of the workforce's performance.
• The union's involvement ensures that the wealth generated by the company is equitably distributed among its workers.

How UAW Members Benefit from Stellantis Profit Sharing

• In 2021, Stellantis confirmed profit sharing payouts of $14,670 (EPSA) for all UAW-represented workers. These calculations were a direct outcome of 2019 contract negotiations.
• The specific amounts vary based on the hours each employee worked - as shown in the above calculation examples.
• These calculations show the highest EPSA in Stellantis's PS 35+ year history - outshining those from Ford (EPSA =$7,377) and General Motors (EPSA= $10,250)!
• This reflects the hard work and commitment of UAW workers, despite challenging times marked by the pandemic and parts shortages.
• "Employees are the heart of Stellantis. It is thanks to their continued focus on execution and excellence that we were able to achieve record results in our first year as Stellantis" - Carlos Tavares, Stellantis CEO, 2022.

UAW's Influences on the Profit-Sharing Formula

• The union works on behalf of its members to negotiate collective bargaining agreements with Stellantis.
• This was seen in the 2019 contract negotiations whereby UAW fought for a revised PS formula to ensure a more equitable sharing of profits. UAW acknowledged the vital contribution of UAW workers to Stellantis's success with brands like Jeep, Chrysler, and Dodge.
• These agreements define many aspects of workers' employment contracts, including:
• Pay scales
• Health benefits
• The method and amount of profit sharing

Stellantis Financial Performance and Its Impact on Profit Sharing

Stellantis has shown an impressive financial trajectory since the introduction of profit sharing incentives.

Overview of Stellantis's Financial Performance

• Stellantis releases earning reports bi-annually, as opposed to quarterly.
• North America is by far the company's most profitable region.
• The company reported significant net profit and revenue increases in 2021, compared to 2020.
• The new profit sharing formula of 2019 led to a $100 contribution increase, whereby employees received $900 (from $800) per 1% of North American profit margins.
• Negotiations also removed the $12,000 per employee limit.
• The average payout for 2020 equaled $8,010, which was a 12% increase from the previous agreement.

How Financial Performance Affects Profit Sharing

• UAW's involvement in the 2019 contract negotiations transcended to a profit sharing high for employees in more than three decades.
• While the maximum EPSA is $14,670, the actual amount employees receive varies depending on the number of hours worked.

Stellantis Employee Benefits: Beyond Profit Sharing

Here's a glance at how Stellantis goes beyond its profit sharing formula:

Overview of Stallantis Employee Benefits

• Stellantis sets an industry benchmark with its range of employee benefits by prioritizing the well-being and job satisfaction of its workforce.
• Beyond profit sharing benefits, Stellantis offers competitive healthcare packages, retirement plans, and flexible work arrangements, amongst others, for its workers.

How Profit Sharing Enhances Employee Benefits

• By aligning individual success with company goals, profit sharing acts as a catalyst that encourages employee engagement, dedication, and long-term commitment.
• Stellantis's unique profit-sharing formula is a model that rewards their workplace, fostering a sense of ownership and pride amongst teams.
• Stellantis's commitment to cultivating a company culture that values its employees' contributions and celebrates their achievements is a model many businesses can adopt.

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