Rivian has given founder and CEO RJ Scaringe a new performance-based stock award that could ultimately be worth about $5 billion if all key targets are met, according to a new archiving.
Scaringe’s salary is also being doubled to $2 million a year and he was given a 10 percent stake in Rivian’s newest spinout Mind Robotics, the filing shows.
The announcement comes just one day after Tesla shareholders voted to approve a $1 trillion compensation package for CEO Elon Musk — the largest in company history.
Unlike Musk’s pay package, Scaringe’s package is not subject to a shareholder vote. Rivian’s board compensation committee canceled a similarly sized performance award given to Scaringe in 2021 as part of a company-wide equity incentive plan approved that year. The new award is issued under the same, already approved 2021 share incentive plan.
The committee decided to cancel the 2021 performance award in part due to the “unlikely” that Scaringe could meet the required targets. The 2021 award consisted of 20,355,946 stock options that vested in part based on stock price increases. Six years after the grant date, if Rivian’s stock price exceeded $110, $150, $220 and $295, Scaringe could buy the stock options in corresponding installments for just $21.72.
Rivian’s stock soared to around $129 after its IPO in November 2021. However, it fell to around $30 over the next six months and has typically traded between $10 and $20 in recent years. That has made it harder for Scaringe to access even part of the 2021 prize, let alone the total value of about $6 billion, according to the company. (Scaringe received another 6.8 million stock options that simply vested over time in the 2021 award that were not tied to performance, and the company says they have not been canceled.)
In the filing, Rivian wrote that this created a “lack of motivation.” So the compensation committee decided to replace the old award with this new one.
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“Following a review and recommendation by an independent compensation consultant, the Compensation Committee canceled our CEO’s 2021 Performance Grant and issued a new performance stock option and increased our CEO’s base salary,” Rivian said in a statement to TechCrunch. “This new award is designed to sustain and motivate RJ to execute the Company’s critical next phase as it moves forward on its technology roadmap and launches R2.”
Similar to how Tesla presented its new award to Musk, Rivian also said the performance grant to Scaringe is “structured in such a way that it ensures that options vest only if the company delivers significant value to our shareholders.” The company pointed out that Scaringe won’t see $1 of the award before he helps add $32 billion in value to Rivian, and that shareholders will see “$153 billion in value creation” if he hits all the milestones.
The maximum amount of shares available to Scaringe under the new performance award is 36,500,000. He has 10 years to hit milestones that unlock the full amount, and if he does, he’ll own an additional 3% of the company. (Scaringe currently owns about 1% of Rivian, down from about 2% earlier this year, after transferring some of his assets to his ex-wife as part of their divorce settlement, as TechCrunch first reported.)
The majority of those stock options – 22 million – are tied to new hurdles in stock prices. Scaringe will earn 2 million shares once Rivian’s stock hits $40, and then another 2 million shares for every $10 increase until the share price hits $140.
The remaining 14,500,000 stock options are locked until Rivian achieves certain adjusted operating income and cash flow targets. Scaringe will have to pay an exercise price of $15.22 per share to exercise those rights – a potential total of about $555 million.
