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Key takeaways

  • RJ Scaringe, CEO of Rivian, has received a new compensation package worth $4.6 billion (€4 billion) over a ten-year period. The plan replaces an earlier agreement with unrealistic share price targets.
  • The revised plan contains lower share price targets and performance-based criteria, such as company revenue and cash flow goals.
  • Scaringe owns about 3 percent of Rivian, compared to Elon Musk’s 13 percent stake in Tesla.

Rivian Automotive, the manufacturer of electric delivery vans and SUVs, has announced a substantial compensation package for CEO RJ Scaringe. The package could amount to as much as $4.6 billion (€4 billion) over the next ten years. The plan, which runs for ten years, reflects the trend of tying executive compensation to significant market potential, similar to the structure used at Tesla for Elon Musk.

The revised plan replaces a previous agreement that was considered unattainable due to its stringent share price objectives. Rivian acknowledges the challenges posed by factors such as the phasing out of key tax incentives for electric vehicles and the need to implement cost-saving measures. The adjusted milestones for Scaringe include lower share price targets, ranging from $40 to $140 (€34 to €121) per share over ten years. In addition, there are new goals for operating result and cash flow for the next seven years.

Targeted incentives for growth

The program incorporates elements from Musk’s compensation structure at Tesla but is tailored to Rivian’s circumstances. The lower share price targets and new performance indicators are intended to encourage Scaringe to drive growth and profitability. This is crucial for the launch of the more affordable R2 SUV, which will directly compete with Tesla’s Model Y.

Scaringe’s new package includes options to purchase up to 36.5 million Rivian Class A shares, representing around 3 percent of the company. This stands in contrast to Musk’s stake in Tesla, which currently amounts to about 13 percent and could potentially rise to 25 percent as part of his new compensation agreement.

Transparency

The Board of Directors decided to revise Scaringe’s compensation package, reflecting the changing landscape of executive pay. At the same time, it places greater emphasis on aligning rewards with the creation of shareholder value. The involvement of an independent compensation advisor underlines Rivian’s commitment to transparency and accountability in its remuneration practices. (jv)

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