Rivian gives RJ Scaringe a new pay package worth up to $5 billion

Rivian has given its founder and CEO RJ Scaringe a new performance-based stock award that could ultimately be worth about $5 billion if all key goals are met, according to a new report. Deposit.

Scaringe’s salary was also doubled to $2 million annually, and he took a 10% stake in the newest company, Rivian. spinout The filing shows that Mind Robotics.

This announcement comes just one day after Tesla shareholders voted to approve a compensation package for its CEO, Elon Musk. It could be worth $1 trillion – The largest in the company’s history.

Unlike Musk’s pay package, Scaringe’s package is not subject to a shareholder vote. The compensation committee of Rivian’s board of directors rescinded a similar-sized performance award given to Scaringe in 2021 as part of a company-wide stock incentive plan adopted that year. The new award is being issued under the same 2021 stock incentive plan already approved.

The committee decided to cancel the 2021 performance award in part due to the “unlikeliness” that Scaringe would be able to achieve the required goals. The 2021 award consists of 20,355,946 stock options that vested in part based on increases in stock prices. Six years after the grant date, if Rivian’s stock price exceeds $110, $150, $220, and $295, Scaringe will be able to purchase stock options in the corresponding tranches for just $21.72.

Rivian stock rose to about $129 after its IPO in November 2021. But it fell to about $30 over the next six months, and has spent the past few years typically trading between $10 and $20. That made it difficult for Scaringe to get even a portion of the 2021 prize, let alone the total value of about $6 billion, according to the company. (Scaringe was granted another 6.8 million stock options that vest 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.” Therefore, the Compensation Committee decided to replace the old award with this new award.

“After review and input from an independent compensation consultant, the compensation committee eliminated the 2021 performance bonus for our CEO, 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 retain and incentivize RJ to execute on the company’s critical next phase as it advances its technology roadmap and launches R2.”

Similar to how Tesla presented its new award to Musk, Rivian also said that Scaringe’s performance grant is “structured in a way that ensures options vest only if the company delivers significant value to our shareholders.” The company noted that Scaringe would not receive a single dollar from the award before he helped add $32 billion of value to Rivian, and that shareholders would see “$153 billion of value creation” if he hits all milestones.

The maximum number of shares available to Scaringe under the New Performance Award is 36,500,000. He has 10 years to achieve the milestones that will unlock the full amount, and if he does, he will own an additional 3% of the company. (Scaringe currently owns about 1% of Rivian, down from about 2% earlier this year after he transferred part of his holdings to his ex-wife as part of a divorce settlement.) It was first reported by TechCrunch.)

The majority of these stock options – 22 million – are tied to new stock price bumps. Scaringe will gain 2 million shares once Rivian stock hits $40, then another 2 million shares for every $10 increase until the stock price is $140.

The remaining 14,500,000 stock options are closed until Rivian reaches certain revised operating income and cash flow targets. Scaringe would have to pay a strike price of $15.22 per share to exercise those options — a potential total of about $555 million.