The NFL is considered a copycat league because if one team figures out a way to stop your offense one week, you can guarantee that the next team you play will try the same tactic the following week.
Using tactics that have been proven to work is a logical strategy in sports, and electric vehicle maker Rivian is taking that philosophy and applying it to its own business.
Last week, over the objections of proxy advisory firms, Tesla shareholders awarded CEO Elon Musk a pay package that could potentially pay him $1 trillion over the life of the deal.
According to the pay package, Musk essentially has 10 years to increase Tesla’s valuation from about $1 trillion to $8.5 trillion.
Tesla performance benchmarks for Elon Musk
- 20 million Tesla vehicles delivered
- 10 million active FSD subscriptions
- 1 million bots delivered
- 1 million Robotaxis in commercial operation
- $400 billion of Adjusted EBITDA over four separate quarters (current $4.2 billion)
Proxy advisor firm Institutional Shareholder Services said there were “unmitigated concerns” about the award’s size and design. Fellow advisory firm Glass Lewis said the pay plan warrants “significant concern” due to the potential dilution of shareholder power.
Nevertheless, more than 75% of Tesla shareholder votes were cast in favor of the measure.
On Nov. 7, Rivian “copied” Tesla’s approach with its own CEO.
Rivian gives CEO $4.6 billion pay package modeled after Elon Musk
On Nov. 7, Rivian’s SEC filing indicated that it was canceling the performance-based award previously approved for CEO RJ Scaringe in 2021 in favor of a new pay plan worth as much as $4.6 billion over the next 10 years.
The new payment plan is “entirely at risk,” and the 36.5 million shares underlying the stock options only become exercisable “upon the achievement of what the committee determined to be rigorous, challenging, pre-established performance goals over a multi-year period.”
Related: Rivian sends harsh message to workers with latest decision
Scaringe will have the opportunity to purchase the shares at an exercise price of $15.22 per share if Rivian achieves stock price milestones ranging from $40 to $140 per share over a 10-year period, in addition to meeting operating income and cash flow targets.
The 2021 deal, which had 16 million fewer shares, was scrapped because the company stated that the share price targets, ranging from $110 to $295, weren’t feasible.
Rivian shares closed the Nov. 7 session at $15.23 per share. The stock is up 15% year to date.
Scaringe would be awarded approximately 3% of Rivian’s shares should he meet all of his targets. He currently owns about 2% of the firm. Musk would own 25% of Tesla if he meets all the terms of his deal.
“RJ’s starting position makes this package much more reasonable than Musk’s,” Vitaly Golomb, managing partner at Mavka Capital and a Rivian investor who approved of the plan, told Reuters.
Rivian shareholders would gain $153 billion in value, according to the news organization’s calculations.
Rivian will lay off more than 600 workers due to falling demand
Rivian is planning to lay off more than 600 workers over the coming weeks, as the company responds to a pullback in electric vehicle demand now that the $7,500 federal tax credit has expired.
Rivian is cutting about 4% of its head count. At the end of last year, the company had about 15,000 employees.
Related: Rivian reveals concerning shift in consumer behavior
This is the second time the company has conducted layoffs in as many months. In September, Rivian announced a smaller round of layoffs, affecting 1.5% of its workforce.
At the time, the company said the move was intended to reduce costs ahead of the launch of its more affordable R2 SUV in 2026.
Rivian reports uneven Q3 results
Rivian benefited from the end of the $7,500 EV tax credit as the rest of the industry did, but the company expects the rest of the year to be rough.
Revenue rose 78% year over year to $1.56 billion, topping analyst estimates of $1.5 billion. The company reported a profit of $24 million, reversing a loss from a year ago.
The company maintained its full-year adjusted EBITDA loss outlook of $2 billion to $2.25 billion and capital spending of up to $1.9 billion.
“In Q3, we continued to make significant progress across our strategic priorities which includes R2 and our technology roadmap,” Scaringe said. “Over the long term, we believe the automotive industry will be fully electric, autonomous and software-defined. We continue to believe that Rivian’s vertically integrated technologies and direct-to-customer ownership experience position our company to build a category-defining brand with a strong product portfolio for the U.S. and European markets.”
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