Asger Risom
Rivian is granting its founder and CEO RJ Scaringe one of the largest compensation packages in corporate history — a deal that could reach $4.6 billion over the next decade.
Rivian is granting its founder and CEO RJ Scaringe one of the largest compensation packages in corporate history — a deal that could reach $4.6 billion over the next decade. The new plan closely mirrors Tesla CEO Elon Musk’s record-setting pay package, tying Scaringe’s rewards to both financial milestones and long-term share performance.
A performance-driven pay plan
Announced Friday, the package replaces a 2021 plan that Rivian’s board deemed unrealistic after shifting market conditions and a steep drop in the company’s share price. The earlier package was linked to Rivian’s stock reaching between $110 and $295 per share. Under the new plan, the range has been reduced to $40 to $140 per share over 10 years.
Scaringe has been granted options to purchase up to 36.5 million shares of Rivian’s Class A stock — roughly 3% of the company — at an exercise price of $15.22 per share, equal to Thursday’s closing price. These options will vest only if Rivian meets both its market valuation goals and new operating income and cash flow targets over the next seven years.
The company also doubled Scaringe’s base salary to $2 million. The board said the package was designed to retain Scaringe and align his incentives with shareholder returns as Rivian aims for profitability.
Following the Tesla model
Analysts view Rivian’s move as part of a broader trend inspired by Tesla’s approach to executive compensation. “While Rivian may not be a direct copycat, there are definitely Elon Musk characteristics that are similar,” said Yonat Assayag, partner at ClearBridge Compensation Group.
Such performance-based packages can generate enormous payouts, but they also carry significant risk. “Ambitious goals sound attractive, but these structures don’t always work out when policies or the economy shift,” said Amit Batish, research director at Equilar.
If Rivian hits all its targets, Scaringe could earn up to $4.6 billion, while shareholders could see roughly $153 billion in value creation, according to Rivian’s estimates.
Focus on growth and the next generation
The company said the plan will keep Scaringe focused on growth and profitability as it prepares to launch the R2 SUV next year, a smaller, lower-cost model aimed at competing with Tesla’s Model Y.
Rivian’s sales have been pressured by the removal of key EV tax credits, which are expected to dampen demand for the rest of the year. The company recently cut about 600 jobs, or 4.5% of its workforce, as part of a broader effort to reduce expenses.
Investor Vitaly Golomb of Mavka Capital, who supports the new package, called it “much more reasonable than Musk’s,” noting that Scaringe currently holds about 2% of Rivian shares compared to Musk’s 13% stake in Tesla.
Expanding into AI
Alongside the pay package, Scaringe will chair Mind Robotics, a newly formed Rivian spinoff developing industrial AI systems. He has been granted one million common units in the venture, giving him up to a 10% economic stake once profits exceed a set threshold.
Rivian remains a shareholder in Mind Robotics, which secured external funding earlier this year. The company described the spinoff as part of its effort to diversify into advanced technology while maintaining focus on its core EV business.
The road ahead
Rivian’s board said the revised compensation plan was developed with input from an independent consultant and designed to better align leadership rewards with long-term investor value.
While the plan may be inspired by Musk’s, it reflects Rivian’s effort to balance ambition with realism — lowering performance hurdles but maintaining high expectations for profitability and sustained growth.
This article is made and published by Asger Risom, who may have used AI in the preparation
