Hustler Words – Rivian, the electric vehicle manufacturer, has unveiled a new performance-based stock award for its founder and CEO, RJ Scaringe, potentially valued at a staggering $5 billion if ambitious goals are met. This move, revealed in a recent filing, arrives hot on the heels of Tesla shareholders approving a colossal compensation package for Elon Musk.
In addition to the potential stock windfall, Scaringe’s annual salary is being doubled to $2 million. He’s also been granted a 10% stake in Rivian’s newly formed spinout, Mind Robotics.
Interestingly, Scaringe’s compensation package won’t be subject to a shareholder vote, unlike Musk’s. Rivian’s compensation committee previously cancelled a similar performance award granted to Scaringe in 2021, citing the "unlikeliness" of him achieving the required targets. The 2021 award, consisting of over 20 million stock options, was tied to significant increases in Rivian’s share price.
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Following its IPO in November 2021, Rivian’s stock soared to around $129 but subsequently plummeted, trading between $10 and $20 for the past few years. This downturn made it exceedingly difficult for Scaringe to unlock even a portion of the 2021 award, prompting the compensation committee to replace it with the new incentive plan.
Rivian stated that the previous award created a "lack of incentive," leading to the decision to issue a new one. In a statement to Hustler Words –, Rivian explained, "This new award is designed to retain and incentivize RJ to execute on the Company’s critical next phase as it progresses its technology roadmap and launches R2."
Rivian emphasizes that Scaringe won’t benefit from the award unless he significantly increases shareholder value. The company claims Scaringe must add $32 billion in value to Rivian before receiving any payout, with shareholders potentially seeing $153 billion in value creation if all milestones are achieved.
The new performance award grants Scaringe access to a maximum of 36.5 million shares. He has a decade to meet the milestones, and if successful, he would own an additional 3% of the company. Currently, Scaringe owns approximately 1% of Rivian.
The majority of the stock options, 22 million, are linked to stock price targets. Scaringe will earn 2 million shares when Rivian’s stock reaches $40, and then another 2 million shares for every $10 increase up to $140.
The remaining 14.5 million stock options are contingent on Rivian achieving specific adjusted operating income and cash flow targets. Scaringe will need to pay a strike price of $15.22 per share to exercise these options, potentially totaling around $555 million.
Sean O’Kane, a reporter covering the transportation industry, contributed to this report.
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