Rivian canceled Chief Executive Officer RJ Scaringe’s existing stock options and replaced them with a significantly larger performance-based package potentially worth more than half a billion dollars, according to a regulatory filing.
The SEC filing with new pay package was submitted late Friday, less than 24 hours after Tesla shareholders overwhelmingly approved Elon Musk’s contested compensation plan.
The electric vehicle maker’s compensation committee approved an option to purchase up to 36.5 million shares at $15.22 each — representing a net increase of 16.1 million shares compared to the 2021 award it replaces.
At the grant date closing price, the award carries a face value of approximately $556 million, though Scaringe will only realize gains if the company’s stock price appreciates substantially and financial targets are met.
The board also doubled Scaringe’s base salary to $2 million from $1 million annually.
The company reported last week third-quarter revenue of $1.56 billion, above Wall Street’s consensus estimate of $1.49 billion and up from $1.16 billion a year earlier.
The revenue increase was mainly driven by higher deliveries in the July–September period, when Rivian achieved its best quarterly results of the year, delivering 13,201 vehicles.
Timing Follows Musk Compensation Victory
The announcement comes amid renewed scrutiny of executive pay packages in the electric vehicle sector.
On Thursday, Tesla shareholders approved Musk’s landmark compensation deal with 75% of votes cast, potentially adding as much as 12% to his stake and giving him control of roughly 25% of the company’s shares if all ambitious targets are achieved.
Replacing Failed Incentives
The move effectively scraps a January 2021 performance award covering 20.4 million shares that the committee determined had become unlikely to vest.
The original award’s performance goals proved unattainable as Rivian‘s stock has plunged roughly 90% from its November 2021 peak following its initial public offering, pressured by production challenges, mounting losses, and a difficult funding environment for unprofitable EV manufacturers.
“The lack of incentive provided by the 2021 CEO Performance Award due to the unlikeliness of attainment of the associated performance goals” factored into the committee’s decision, according to the filing with the Securities and Exchange Commission.
Aggressive Performance Hurdles
The new compensation structure demands extraordinary results. The award divides into two components:
Up to 22 million shares vest across eleven tranches tied to stock prices ranging from $40 to $140 per share — representing premiums of 163% to 820% above the $15.22 exercise price.
Achievement requires the stock to maintain each price level for 120 consecutive trading days within ten years. The highest tranches carry extended seven-year vesting schedules rather than five.
Full vesting at the highest price targets would create approximately $153 billion in shareholder value above Rivian’s current market capitalization, the company stated.
An additional 14.5 million shares depend on hitting undisclosed targets for adjusted operating income and cash flow from operations by December 31, 2032.
The metrics are measured annually, with the first milestone unlocking 1.25 million shares and subsequent targets unlocking 3 million shares each.
Retention Amid Critical Phase
The compensation committee, advised by independent consultants, designed the package to retain Scaringe through what it characterized as a “critical next phase” as Rivian advances its technology roadmap and prepares to launch the R2, a mass-market SUV crucial to the company’s path to profitability.
The committee considered Scaringe’s current ownership stake, the portion already vested, and market data for comparable executives at similar companies.
It stated it does not intend to grant additional discretionary equity to Scaringe during 2026.
All awards remain subject to the CEO service requirement—Scaringe must continue as chief executive on each vesting date — and contain clawback provisions allowing forfeiture for cause or under the company’s compensation recovery policy.
Subsidiary Stake
Separately, Scaringe received 1 million fully vested common units in Mind Robotics LLC, a newly formed subsidiary, representing up to 10% economic interest once the entity exceeds specified profit thresholds.
The award, approved by independent directors, relates to Scaringe’s service as board chair of the robotics venture.
Rivian shares closed at $15.22 on November 6, the grant date.
