Rivian’s founder gets $4.6bn deal tied to growth, profit, stock gains

Rivian Automotive has approved a massive $4.6 billion pay package for its founder and CEO, RJ Scaringe,  one of the richest in corporate history, as the company fights to stay competitive in the fast-moving electric vehicle (EV) industry.

The 10-year deal mirrors Tesla CEO Elon Musk’s record-breaking plan, tying Scaringe’s compensation to new profit and cash-flow goals, along with stock-price milestones between $40 and $140 per share.

“While Rivian may not be a direct copycat, there are definitely Elon Musk characteristics that are similar,” said Yonat Assayag, a partner at ClearBridge Compensation Group. “It’s not to keep up with Musk, but inspired by Musk’s award.”

Keeping the founder focused on growth

Rivian says the new pay structure aims to align Scaringe’s rewards with shareholder returns, while motivating him to guide the company toward profitability. The company is betting on Scaringe’s leadership to steer it through cost cuts, layoffs, and the upcoming launch of the R2 SUV, a smaller and more affordable model aimed at competing directly with Tesla’s Model Y.

“RJ’s starting position makes this package much more reasonable than Musk’s,” said Vitaly Golomb, managing partner at Mavka Capital and a Rivian investor. “If Rivian hits all its targets, shareholders could gain up to $153 billion in value.”

Rivian’s board also doubled Scaringe’s base salary to $2 million, saying the decision came after consultations with independent experts.

A package built for tough times

The award gives Scaringe options to buy 36.5 million shares at an exercise price of $15.22, nearly matching Thursday’s closing price. The previous 2021 plan tied to stock prices as high as $295 was canceled for being unrealistic amid slowing EV demand.

Rivian shares have dropped nearly 90% since their 2021 IPO, reflecting investor concerns over production costs and shrinking U.S. tax incentives for EV buyers.

To stay afloat, the company recently cut about 600 jobs, or 4.5% of its workforce, and pushed forward on cost reduction measures.

Still, analysts say linking executive rewards to performance, rather than tenure, may help drive confidence. “These kinds of pay packages sound bold, but they can motivate long-term value creation if targets are realistic,” said Amit Batish, director at research firm Equilar.

Expanding beyond cars

Beyond Rivian’s EV line, Scaringe will also chair Mind Robotics, a new AI-focused Rivian spinoff developing industrial automation technology. He was granted 1 million common units, which could give him up to 10% ownership once the business turns profitable.

Rivian says this venture could open new revenue streams outside its vehicle business, boosting investor confidence in its innovation drive.

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