The board of electric automaker Rivian has restructured the pay package for Chief Executive Officer RJ Scaringe that could net him $4.6 billion over the next decade.
The package only happens if the company meets revenue and stock price targets while Scaringe is CEO. The compensation committee considered several issues, including a 2021 compensation agreement hindered by the company’s stock price that has averaged about $15 per share of late.
“Such factors included Dr. Scaringe's current ownership interest in the Company, the proportion of such ownership interest that was fully vested, the lack of incentive provided by the 2021 CEO Performance Award due to the unlikeliness of attainment of the associated performance goals,” wrote the board in a filing with the Securities and Exchange Commission.
For Scaringe to get the entire $4.6 billion, the “incremental” value of company shares would have to rise nearly $153 billion, according to the filing.
“The 2025 CEO Award is designed to retain and incentivize Dr. Scaringe to execute on the Company’s critical next phase as it progresses its technology road map and launches R2, which the Committee believes is in the best interests of the Company and its stockholders,” said the filing.
Scaringe’s options to buy 22 million shares at the current low price are split into 11 equal batches, or tranches, of shares. The first could become active when Rivian stock hits $40 per share and the options ratchet up in $10 increments to $140 per share.
“If the stock price hurdle for a particular tranche is not met during the 10-year term of the 2025 CEO Award, no portion of that tranche will vest,” said the filing.
Scaringe can buy company shares when stock prices hit levels ranging from 163% to 820% of the current price.
An option to buy up to another 7.25 million shares will vest based on several full-year targets of adjusted operating income over seven years.
The board also doubled Scaringe's base salary to $2 million and gave him a 10% stake in Rivian’s new spinoff Mind Robotics tied to his position as chair of that company’s board. That stake also will have profit and gain vesting targets.
Scaringe's compensation and a recently reported potential $1 trillion package for Tesla CEO Elon Musk come amid an uncertain climate caused by regulatory changes on electric vehicles and rising tariffs.
Rivian makes its electric trucks, vans and SUVs in Normal. It's one of the community's largest employers, though it no longer discloses how many people actually work at its Normal manufacturing plant.
