Fiat Chrysler to Pay Ferrari Chairman Montezemolo €26.95m Severance
Luca Cordero di Montezemolo will receive a €26.95 million package after stepping down as Ferrari chairman, with half paid by early 2015 and the rest spread over 20 years.
Fiat Chrysler Automobiles has agreed to pay outgoing Ferrari chairman Luca Cordero di Montezemolo a severance package totalling €26.95 million ($34.78 million) following his resignation in September 2014. The payment follows Montezemolo’s decision to step down after more than 20 years leading the Italian sports car manufacturer. His departure came after public disagreements with Fiat Chrysler CEO Sergio Marchionne over Ferrari’s future direction and the performance of its Formula One team.
Fiat Chrysler's Severance Deal with Montezemolo
Breakdown of the Severance Package
Fiat Chrysler confirmed that Montezemolo will receive €13.25 million as a lump sum by 31 January 2015. This payment is made in exchange for his agreement not to compete with Fiat or its affiliates until March 2017. The remaining €13.71 million, which is equivalent to five times his annual salary as Ferrari chairman, will be paid out in instalments over the next 20 years. This extended payout structure is designed to reinforce Montezemolo’s compliance with the non-compete agreement. The total €26.95 million severance is one of the largest awarded to a European automotive executive at the time, reflecting Montezemolo’s long tenure and influence at Ferrari.
Leadership Change at Ferrari
Montezemolo’s resignation was the result of mounting tensions with Sergio Marchionne regarding Ferrari’s strategic direction. Marchionne had publicly advocated for increasing Ferrari’s production beyond the previous self-imposed cap, a move Montezemolo resisted in order to maintain the brand’s exclusivity. The leadership change was confirmed shortly after both executives had denied that a split was imminent. Montezemolo officially stepped down as chairman on 13 October 2014, with Marchionne taking over the role in addition to his responsibilities as Fiat Chrysler CEO. This consolidation of leadership came as Fiat Chrysler prepared for further integration and possible changes in Ferrari’s production strategy.
Conditions Attached to the Payout
A key condition of Montezemolo’s severance is the non-compete clause, which prevents him from joining or advising rival automotive manufacturers or related businesses until March 2017. The structure of the payout, with a significant portion distributed over two decades, is intended to ensure long-term compliance with this agreement. Details of the arrangement were disclosed in Fiat Chrysler’s official statements to investors and the press, highlighting the importance of the transition for both Ferrari and the broader Fiat Chrysler group.
Montezemolo’s Next Steps
At the time of his resignation, Montezemolo indicated that he was considering new opportunities. Among these was the possibility of becoming chairman of Alitalia, the Italian airline. While the CEO of UniCredit, one of Alitalia’s main shareholders, described Montezemolo as a strong candidate for the role, no formal announcement had been made as of October 2014. Montezemolo stated that he would make a decision about his future after officially leaving Ferrari.
Context: Executive Severance in the Automotive Industry
Montezemolo’s severance package stands out not only for its size but also for the conditions attached. Executive severance agreements in the automotive sector often include non-compete clauses and structured payments, especially when the departing executive has played a significant role in shaping a brand’s identity. In Montezemolo’s case, the terms reflect both his long-standing contribution to Ferrari and the strategic importance of ensuring a smooth transition as the company faces new challenges and opportunities under Marchionne’s leadership.
Implications for Ferrari and Fiat Chrysler
The leadership change at Ferrari marks a significant moment for the company and its parent group. Marchionne’s decision to increase Ferrari’s production could alter the brand’s market positioning, potentially expanding its customer base but also risking its traditional aura of exclusivity. The integration of Ferrari more closely into the Fiat Chrysler group may also have implications for the company’s future product development and motorsport activities. Observers in the industry will be watching closely to see how Marchionne’s strategy unfolds and how Ferrari’s identity evolves in the coming years.
Sources and Further Reading
- Fiat Chrysler official press releases (September–October 2014)
- Industry news reports from September 2014
- Statements from UniCredit regarding Alitalia’s chairmanship
