Photo by Daniel Romero on Unsplash
Rivian just handed its CEO, RJ Scaringe, one of the richest pay deals in the auto industry — and it’s built entirely on performance. If he hits all the goals tied to this new package, it could be worth a jaw-dropping $5 billion.
Let’s unpack what’s happening and why it matters.
What’s in the package?
This isn’t just a bonus for sticking around. Scaringe is getting a new stock-based compensation plan that’s fully tied to Rivian’s future success. The centerpiece: up to 36.5 million stock options that only become valuable if key milestones are met.
And it’s not a free ride. To unlock any value, Scaringe has to:
- Add at least $32 billion in value to the company
- Hit aggressive share price targets between $40 and $140
- Meet specific financial milestones like adjusted operating income and cash flow goals
Until then? He doesn’t see a dollar.
Photo by Iraj Ishtiak on Unsplash
Here’s how the stock price-based parts break down: For every $10 increase in Rivian’s share price starting at $40 (up to $140), Scaringe gets 2 million more shares. That’s 22 million shares total tied just to share price performance.
The remaining 14.5 million shares will only vest if Rivian hits financial targets. For those, he’ll need to pay $15.22 per share to exercise the options — setting up a potential spend of over $555 million just to claim them.
Why now?
Great question. The original performance-based award Scaringe received in 2021 — which could’ve been worth $6 billion — just wasn’t working out.
Back then, Rivian was riding high after its IPO. The stock launched to around $129. But fast forward six months, and it had tumbled below $30. Over the last few years, it’s mostly bounced between $10 and $20.
That made the 2021 performance goals — which required the stock to hit $110, $150, $220, and $295 — nearly impossible to reach.
So Rivian’s board hit pause. They brought in an independent compensation consultant, reviewed everything, and decided to cancel the 2021 performance grant. In its place, they drew up this new deal.
It’s all about incentives
In a statement to TechCrunch, Rivian’s compensation committee put it simply: the 2021 structure left Scaringe with a “lack of incentive.”
The new package, by contrast, is designed to do two things:
- Keep Scaringe around during the company’s next major phase
- Motivate him toward real shareholder value
That “next phase” includes the rollout of Rivian’s eagerly awaited R2 platform and continued advancements in its tech roadmap. The bottom line: If Rivian doesn’t grow dramatically, this pay package won’t either.
And there’s more. Scaringe’s base salary is doubling to $2 million per year. He’s also getting a 10% stake in Rivian’s new spinout, Mind Robotics — another project the company just launched.
So how does this compare?
Photo by Michael Förtsch on Unsplash
This all happened one day after Tesla shareholders approved Elon Musk’s updated $1 trillion pay package — the biggest in corporate history. But unlike Musk’s, Scaringe’s deal didn’t go to a vote among Rivian’s shareholders.
That might raise questions for some. But the company says the award still operates under its already-approved 2021 equity incentive plan, which gives the board power to make these changes.
At the same time, Rivian stresses that shareholders benefit first. If Scaringe maxes out the plan, shareholders could see $153 billion in value creation based on how the targets are structured.
Scaringe’s ownership
Right now, Scaringe owns about 1% of Rivian. That’s down from 2% earlier this year, after he transferred shares to his ex-wife in a divorce settlement.
If he earns all the shares under this new package, he’d boost his ownership by another 3%. But again, that won’t happen unless Rivian grows — a lot.
The big takeaway
This isn’t just a CEO bonus. It’s a massive bet on Rivian’s future, and on the guy who’s been steering the ship since day one. Wall Street has its doubts. But Rivian’s board is clearly all-in on Scaringe.
For the rest of us watching the EV space evolve? It’s a reminder that behind every headline about stock prices and salary packages, the real story is about vision, execution, and whether ambitious goals can become reality.
And in this case, $5 billion says they can.
Keywords: Rivian, RJ Scaringe, electric vehicles, tech industry, CEO pay, stock options, Tesla, Elon Musk, corporate incentives, Rivian R2 platform
