Rivian CEO RJ Scaringe Should Be Fired, But Can’t Be
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Rivian (NASDAQ: RIVN | RIVN Price Prediction) has fumbled the ball at least twice recently as the company launches what it calls the “affordable” R2. Most versions of the SUV cost $55,000 to $60,000. At least that it is $20,000 or more below its current model R1S and R1T
Lease prices for the R2 range from $800 to $1,100, depending on which analysis is used to set the number. Many potential buyers think it is too high.
Just after the launch, Rivian laid off 2% of its 15,700-person workforce. Scaringe did not take a pay cut to save the company money or to show any sympathy. His new pay package is for $403 million. According to the FT, “The founder of electric-truck maker earns about 13 times more than next best-paid American auto executive”
Rivian’s stock is down 88% in the last five years, while the S&P 500 is 60% higher.
As we have often written on these pages, Rivian produced 10,236 vehicles in the first quarter of the year. It delivered 10,365. Rivian lost $416 million in Q1.
But, for those of you who don’t know how a corporate structure can be set up so that the CEO can hold their job permanently, Rivian has a dual share arrangement. There is the common stock, and then there are the Class B shares. The Class B shares have 100% voting power and control of the company. Scaringe can’t ne fired.
Several other famous companies and dozens of others have similar voting structures. These include Ford (NYSE: F), The New York Times, Alphabet (NASDAQ: GOOG), and Meta (NASDAQ: META). The notion that shareholders have a say in governance or board selection is false.
Scaringe is more clever than he is successful–at least at running Rivian.
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