Rivian Boosts CEO Salary with $4.6 Billion Pay Package

Rivian has announced a significant increase in CEO RJ Scaringe’s compensation, introducing a new package that could total up to $4.6 billion. This decision comes as Rivian prepares for a pivotal phase in its growth as an electric vehicle (EV) company.

Details of Scaringe’s Pay Package

The latest compensation plan, revealed in a recent SEC filing, includes a salary hike from $1 million to $2 million. In addition, Scaringe will have the opportunity to purchase up to 36.5 million shares of Rivian stock.

Performance-Based Stock Options

• The new stock options are tied to performance metrics, aiming to incentivize Scaringe.
• Up to 22 million shares are divided into 11 tranches, accessible if the company meets specific stock-price targets.
• The remaining shares depend on achieving profitability and cash-flow benchmarks by December 31, 2032.

To unlock the maximum potential of this package, Rivian’s stock must rise to $140 per share, an increase of approximately 820% from its recent trading price of $15.23.

Impact on Shareholders

Marina Hoffmann, a spokesperson for Rivian, emphasized that the company’s shareholders stand to benefit significantly. She stated that Rivian investors could see around $32 billion in returns before Scaringe realizes any value from his new compensation package.

• If Scaringe fulfills all conditions of the new compensation package, shareholder value could reach approximately $153 billion.

Modification of Previous Compensation Plan

Rivian’s board decided to replace Scaringe’s previous pay structure due to its ambitious and potentially unattainable goals. Under the old plan, Scaringe could only acquire shares if Rivian’s stock rose to $110 per share. The new plan lowers this threshold to $40 per share, reflecting a more pragmatic approach.

Company’s Future Challenges

The adjustments to the compensation package come as Rivian gears up for the launch of its R2 SUV, which is priced at $45,000. This move aims to broaden its consumer base and enhance sales volume.

Recent financial announcements indicate Rivian is still in a challenging environment. While the company saw a 78% increase in year-over-year revenue, it also reported a substantial net loss of $1.1 billion for the third quarter. Additionally, Rivian announced layoffs impacting more than 600 employees, approximately 4.5% of its workforce, as part of its strategy to scale profitably.

Context Within the EV Industry

Scaringe’s revised compensation package coincided with Tesla’s approval of a lucrative pay deal for CEO Elon Musk, valued at $1 trillion based on achieving an $8.5 trillion market cap by 2035. However, Hoffmann clarified that Musk’s compensation did not influence Rivian’s decision regarding Scaringe’s pay.

This new compensation plan represents Rivian’s strategic intent to retain leadership during critical growth phases and achieve scalability in a competitive EV landscape.