Rivian offers its CEO pay package modelled after Musk
According to Reuters, Rivian’s CEO compensation package is tied to share price and financial performance targets. Scaringe is currently believed to hold around two per cent of Rivian. The new plan – if granted in full – includes stock options equivalent to about three per cent of the company. The structure of the deal resembles the arrangements between Tesla and its CEO Elon Musk.
Rivian stated that the plan is designed to retain its founder and keep his focus on growth and profitability. The automaker operates in the US market, has a strategic partnership with Volkswagen, and plans to launch its first mass-market model, the R2, next year.
However, the company’s development and growth plan, linked to the compensation package, is less ambitious than before. The previous roadmap is “unlikely to be met,” according to the carmaker. The reason lies in the broader economic and political climate in the United States, particularly the reduction of key tax incentives for electric vehicles. These unfavourable conditions have put Rivian under pressure: the company recently stepped up its cost-cutting efforts and laid off around 600 employees, representing 4.5 per cent of its workforce.
Under the new pay plan, CEO Scaringe receives options to purchase up to 36.5 million Rivian Class A shares at an exercise price of $15.22 per share. The award will vest if Rivian achieves share price targets between $40 and $140 per share within ten years, along with unspecified operational profit and cash flow targets over a seven-year period.
Tesla and its CEO Elon Musk pioneered this type of compensation structure. Just a few days ago, Tesla shareholders approved Musk’s potential trillion-dollar pay package, also based on a combination of operational and share price targets over a ten-year period.
This article was first published by Cora Werwitzke for electrive’s German edition.
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