Rivian CEO RJ Scaringe Receives $5 Billion Stock Award
Rivian, the electric vehicle manufacturer, has recently announced a new performance-based stock award for its founder and CEO, RJ Scaringe. This award has the potential to be worth around $5 billion if all specified goals are achieved, as per a recent filing.
Additionally, Scaringe’s annual salary has been doubled to $2 million, and he has been granted a 10% stake in Rivian’s latest spinout, Mind Robotics.
Comparison to Tesla CEO Elon Musk’s Compensation
This news comes shortly after Tesla shareholders approved a compensation package for CEO Elon Musk, potentially valued at $1 trillion, making it the largest in corporate history. Unlike Musk’s pay package, Scaringe’s compensation does not require a shareholder vote.
The compensation committee of Rivian’s board of directors decided to cancel a similar-sized performance award given to Scaringe in 2021 due to the unlikelihood of him meeting the required goals. The new award is being issued under the existing 2021 equity incentive plan.
Details of the Performance Award
The previous 2021 performance award for Scaringe consisted of stock options that vested based on stock price increases. However, due to fluctuations in Rivian’s stock price, it became challenging for Scaringe to access the full value of the award.
As a result, the compensation committee opted to replace the old award with the new performance-based stock option to provide a stronger incentive for Scaringe.
Key Points of the New Award
The new performance award entails Scaringe receiving up to 36,500,000 shares based on achieving specific milestones. He has a decade to unlock the full amount, potentially owning an additional 3% of the company upon completion.
The award is structured to ensure that the options only vest when Rivian delivers significant value to its shareholders. Scaringe must contribute to adding $32 billion in value to the company before receiving any monetary benefits.
Furthermore, a significant portion of the stock options is tied to stock price hurdles, with additional options linked to adjusted operating income and cash flow targets.
This strategic move aims to motivate Scaringe to lead Rivian through its critical next phase as the company advances its technology roadmap and prepares for the launch of R2.
Overall, the new performance-based stock award highlights Rivian’s commitment to retaining and incentivizing its CEO to drive value creation for the company and its shareholders.