Rivian's Stock Price Has Dropped 90%, So Of Course The CEO Just Got A Massive New Pay Package

The idea of owning a Rivian seems pretty amazing. They are such gorgeous cars. All the coolest technology and gadgets. Tons of storage for a family of four with a dog and tons of bags. The rooftop camping rig??!! And it's 100% electric. With a range of up to 420 miles??!!!

On the other hand, they are quite pricey. The R1T starts at $73,000 and easily gets up to $120,000 with add-ons. In the late 1990s, $120,000 bought you a brand new Ferrari.

I have also heard from several Rivian-owning friends that they are a huge pain in the ass to own. One of my friends has seen his Rivian windshield crack THREE times because they are apparently very sensitive. But that's not all. You can't just pop into any old auto body to get a new windshield. First, you need to get on a waitlist for an appointment at a Rivian service center. That waitlist alone might be 6 months long. And then, because there aren't many service centers in the US, you may end up driving several hours to get the work done. The closest one to me is three hours away. Oh, and the price of a new windshield? $4,000.

But they are cool. And I'm sure in 5-10 years, they'll work some of these kinks out.

Rivian was founded by RJ Scaringe in 2009. The company was originally called Mainstream Motors. In 2011, it rebranded as Rivian Automotive.

Rivian went public in November 2021. People were VERY excited and optimistic about the prospects of Rivian as a public company.

Immediately after the IPO, the stock soared to $172 a share, giving a company that had delivered fewer than 1,000 cars a market cap of over $150 billion.

At the time, RJ Scaringe directly owned around 2% of Rivian, so even when the stock price cooled from the brief IPO hysteria, his net worth was $1.7 billion on paper. However, I say "directly" in the previous sentence because, in addition to the shares he outright owned already as founder, before Rivian went public, RJ was given an enormous "moonshot" compensation package that would reward him with more shares if the stock price hit (and stayed at) certain levels. One of those levels was $120 a share, so when Rivian was briefly trading at $130, RJ was worth $3.4 billion on paper.

Copying Elon

RJ's pre-IPO "moonshot" compensation package was very similar to the one Elon Musk received from Tesla back in 2018.

When Elon's plan was forged, Tesla's market cap was $50 billion. Put very simply, the board agreed to give Elon an additional 1% of Tesla every time he boosted the market cap by $50 billion up to $600 billion. He had 10 years to do it. People scoffed at this concept. The numbers were laughable. People thought that, with a little luck, after a decade, Elon would maybe unlock the first milestone level. Yada yada yada, Elon hit every goal and unlocked the full bonus in two years, giving him an additonal 12% stake in the company (which a Delaware judge rescinded, then reinstated, but not until after Elon moved Tesla from Delaware to Texas… we don't need to get into this here…).

Looking to mimic Elon's package, in 2021, Rivian's board granted RJ options to buy 20.4 million shares based on milestones.

• The Low Bar: The stock had to hit $110 (about 40% higher than the IPO price) just for him to get the first chunk.
• The High Bar: To unlock the full 20.4 million shares, the stock had to hit $295.

If RJ had pulled a "Musk" and hit that $295 target, he would have created roughly $188 billion in value for shareholders. In return, his bonus options alone would have been worth north of $5.6 billion. Add that to his original 2% stake, and RJ would have been worth around $10 billion.

So How'd This Work Out?

Not well. Here's a chart of Rivian's stock price over the last five years since going public:

Missing Every Milestone

Your eyes are not deceiving you. Rivian's stock price has dropped around 90% from its IPO. Today, the company's market cap is $20 billion.

What happened? Well ahead of their public offering, Rivian estimated it would make 20,000 cars by the end of 2021. In reality, the company delivered just… 900 cars. That's not a typo. The IPO prospectus estimated that by 2023, they would be making 200,000 cars per year. In reality? In 2023 and 2024, Rivian delivered just 50,000 cars per year.

Put it all together and, RJ Scaringe missed every single milestone from his 2021 comp plan. Making matters worse, just last year, RJ divorced his wife of over a decade. As part of their divorce settlement, he gave her 4 million actual shares and 6 million stock options, which at the time were worth $130 million.

Post-divorce, RJ owns 1.4% of Rivian, which at today's market cap gives him a net worth of around $280 million.

This actually creates an uncomfortable dilemma for a company. How do you motivate a CEO who is very much crucial to the business but is currently operating under a comp plan that is utterly unachievable?

Simple. You throw out the former package and forge a brand new one.

The New Moonshot

In RJ's case, he just received a new compensation package in late 2025 that is—on paper—worth $402.6 million today. To be clear, Rivian didn't just write RJ a check for $400 million; that number is an accounting estimate of a massive new grant of 36.5 million stock options (part of a larger 51-million-share package).

Under the new plan, RJ starts getting rich again if the stock hits $40. If he hits the maximum $140 target, those bonus shares would have a market value of over $5 billion. After paying a strike price, RJ's shares would be worth a net $4.55 billion. Combined with his existing 1.4% stake, RJ would see his net worth rocket from today's $280 million back up to a celestial $7 billion.

Because the stock is currently trading around $16.70, he hasn't hit that first $40 milestone yet. Those 36.5 million options are currently worth $0.

If this feels like a CEO is being rewarded for failing, that's because that's exactly what is happening.

Good gig if you can get it!