Rivian Takes a Page Out of Tesla's Playbook – Is it the Right Move?

Core Viewpoint - Rivian Automotive is adjusting its CEO compensation package, which, while significant, is structured differently than Tesla's and aims to align with performance goals [2][5][10] Group 1: CEO Compensation Changes - Rivian has replaced the previous performance-based award for CEO RJ Scaringe with a new plan worth up to $4.6 billion over the next 10 years [5][6] - The new compensation is "entirely at risk," with stock options becoming exercisable only upon achieving rigorous performance goals [6][8] - Scaringe's potential share ownership would amount to about 5% of Rivian if all targets are met, compared to Elon Musk's potential 25% stake in Tesla [8] Group 2: Performance Metrics and Market Context - The previous compensation package included share price milestones that were deemed unfeasible, ranging from $110 to $295 [7] - Rivian's new plan includes more attainable share price milestones between $40 and $140, alongside operating income and cash flow targets [6][9] - The company is focusing on growth and profitability as it prepares to launch the R2 SUV, which is expected to compete with Tesla's Model Y and enhance sales [9][10] Group 3: Market Reaction and Financial Data - Rivian's stock price has seen a decline of 7.96%, currently trading at $15.09, with a market cap of $19 billion [7] - The company recently laid off approximately 4.5% of its workforce, which may affect investor sentiment regarding the new compensation package [8]