Rivian just gave its CEO a $5B pay package
What's the story
Rivian, the electric vehicle manufacturer, has awarded its founder and CEO RJ Scaringe a fresh performance-based stock award. The new package could be worth as much as $5 billion if all the underlying goals are met. In addition to this, Scaringe's annual salary has been doubled to $2 million. He has also been given a 10% stake in Rivian's latest spinout Mind Robotics.
Award details
New performance-based stock award replaces old one
The new performance-based stock award has been issued under the already-approved 2021 equity incentive plan. This replaces a performance award given to Scaringe in 2021 as part of a company-wide equity incentive plan adopted that year. The decision to replace the old award with this new one was made by Rivian's compensation committee after considering input from an independent compensation consultant.
Stock fluctuations
Rivian's stock price has seen significant fluctuations since IPO
Rivian's stock price peaked at around $129 after its November 2021 IPO, but fell to around $30 in the following six months. It has since traded between $10 and $20. These fluctuations have made it difficult for Scaringe to access even part of his 2021 award, which was worth some $6 billion. However, he did receive another non-performance-based grant of 6.8 million stock options that vest over time as part of the original package.
Award structure
Performance grant structured to benefit shareholders
The new performance grant is structured so that the options only vest if the company delivers significant value to shareholders. Scaringe won't see any monetary benefit from this award until he helps create $32 billion in value for Rivian. If all milestones are met, shareholders will see a whopping $153 billion of value creation.
Specifics
New performance award tied to stock price hurdles
The new performance award gives Scaringe a maximum of 36.5 million shares over a period of 10 years. If he meets all milestones, he would own an extra 3% of the company. The majority (22 million) of these stock options are tied to new stock price hurdles, with Scaringe earning two million shares for every $10 increase up to $140 per share.