Earlier this month, electrical carmaker Rivian unveiled a $4.6 billion compensation plan for its founder and CEO, RJ Scaringe—a package deal that has drawn comparisons to Tesla’s $1 trillion deal for Elon Musk. Like Musk’s award, Rivian’s plan hinges on a sequence of extremely bold efficiency targets over the following decade, together with lifting Rivian’s inventory value to $140 (it at present trades round $15). In a softening EV market, and with out the monetary momentum or investor fervor that after buoyed Tesla, these targets seem significantly steep.
In an SEC submitting, Rivian’s board mentioned the package deal is designed to retain Scaringe as the corporate enters a “vital subsequent part” and prepares to launch manufacturing of its new electrical SUV, the R2. The compensation plan doubles his annual base wage from $1 million to $2 million and offers him the fitting to purchase as much as 22 million shares throughout 11 tranches if Rivian’s inventory hits particular value milestones. Scaringe can purchase a further 14.5 million shares if Rivian meets revenue and cash-flow targets earlier than 2032. He can train his first tranche at $40 per share. Scaringe at present owns about 1 % of Rivian. If the plan vests absolutely, he may add roughly 3 % extra.
In contrast to Musk’s plan, Scaringe’s award doesn’t require a shareholder vote, as a result of it was issued beneath an already accredited 2021 incentive program. Rivian’s board in the end deemed the unique efficiency objectives as unrealistic, together with a goal that envisioned the inventory hitting $295.
The Tesla story is tough to copy
A lot of Scaringe’s windfall hinges on the success of the brand new $45,000 R2 SUV and the smaller R3, which is anticipated to be priced within the mid-$30,000 vary and has already generated vital shopper curiosity.
Rivian faces a really totally different panorama than Tesla did throughout its early ascent. Tesla benefited from low rates of interest, considerable capital, and an early-adopter growth in EV enthusiasm. Musk additionally rode a wave of distinctive tailwinds—from meme-stock mania to speedy early profitability and a cult-like following—that helped him meet a few of the lofty targets in his famously controversial 2018 pay package deal.
And a profitable EV enterprise is much from sufficient. Since reaching profitability in 2019, Tesla’s excessive inventory value has been more and more buoyed by optimism on its non-vehicle merchandise, akin to software program and robotics.
Rivian’s non-EV prospect is much less clear and seems to be reliant on exterior partnerships. Earlier this yr, the corporate fashioned a three way partnership with Volkswagen Group to develop a scalable “software-defined automobile” structure, with winter testing of a reference automobile deliberate for early 2026. This expertise underpins the upcoming R2 and R3 strains, which Rivian hopes will transfer the corporate into extra inexpensive, higher-volume segments.
However Rivian’s monetary image stays strained. The corporate just lately missed Wall Road earnings expectations, laid off 4.5 % of its workforce in October, settled a $250 million lawsuit over R1 value hikes, and restructured high management. Though Scaringe is well liked by Rivian house owners, he lacks the cult-of-personality benefit Musk enjoys. In the meantime, Rivian faces the identical nationwide cooling in EV demand—exacerbated by cuts in EV tax credit—that’s weighing on each main automaker.
