CEO, CFO at Lordstown Motors resign; interim leaders appointed
LORDSTOWN — Two top executives at Lordstown Motors Corp. are out with hefty severance packages less than one week after the beleaguered electric-truck startup told federal regulators substantial doubt surrounds its ability to stay in business over the next year.
No reasons were given for the resignations of founder / CEO Steve Burns and Chief Financial Officer Julio Rodriguez, but the moves come in tune with an admission by the company that statements regarding preorders for the truck, the Endurance, were inaccurate and an earlier revelation that production this year could be stunted.
The company announced the departures Monday shortly after releasing the results of a special committee investigation into a damning March 12 short-sellers report by New York-based Hindenburg Research.
The committee’s investigation identified issues with the accuracy of some statements regarding preorders.
Following the news, shares of the company’s stock fell 19 percent throughout the day to close at $9.26 per share. Shares already are down about 40 percent for the year.
According to the company, the executive changes come as Lordstown Motors “begins to transition from the R&D (research and development) and early production phase to the commercial production phase of its business.”
Last week, the company told the U.S. Securities and Exchange Commission it needed more money to launch commercial scale production of the truck and disclosed its doubt to remain a “going concern,” an accounting term that means a company has the financial wherewithal to meet its obligations.
Last month, Burns said the company would cut in half its 2021 production estimate to about 1,000 units without additional capital, which the company is trying to secure. He cited higher-than-anticipated spending to complete a beta program, conduct vehicle validation tests, secure production parts and equipment and the need to use third-party engineering resources as reasons for increased research and development expenses and capital expenditures.
Also last week, the company in an SEC filing stated it plans to issue more than 2.3 million shares of Class A common stock to fund operations. The company would receive about $43 million, according to a preliminary prospectus.
The resignations of Burns and Rodriguez are effective immediately. Burns has also stepped down from the company’s board of directors. Burns could not be reached for comment.
Appointed to take their place in the interim were lead independent board director Angela Strand, 52, as CEO, and Becky Roof, 65, managing director of managing director of AlixPartners LLP, a global consulting firm, as chief financial officer.
Lordstown Motors has engaged an executive search firm to identify a permanent CEO and CFO.
According to a filing with the SEC, Burns’ separation agreement calls for him to be paid $750,000 over 18 months.
The same filing states the separation agreement with Rodriguez gives him $200,000 over six months and continued vesting of certain outstanding stock options with an exercise price per share of $1.79.
“As we transition to the commercial stage of our business — with planned commencement of limited production in late September — we have put into a place a seasoned management team with deep experience leading and operating or publicly-listed OEM (original equipment manufacturer) companies,” said board director David Hamamoto in a news release.
Hamamoto is former chairman of DiamondPeak Holdings Corp., the special- purpose acquisition company with which Lordstown Motors merged in October to become a publicly traded company.
The release states Strand is managing director of Strand Strategy, an advisory firm specializing in technology, business strategy and organization development across multiple sectors.
She has been a Lordstown Motors board director since October 2020 and lead independent director since April.
According to an SEC filing, Strand was a founder and senior executive of Chanje, a joint venture between Smith Electric Vehicles and FDG Electric Vehicles Ltd. from 2016 to 2017, and a founder of In-Charge, an electric vehicle infrastructure solutions provider.
From 2011 to 2015, Strand was vice president of Workhorse Group Inc., the Cincinnati-area-based electric vehicle technology company founded by Burns.
Guy Coviello, president / CEO of the Youngstown Warren Regional Chamber, said the organization looks forward to working with Strand.
“She has very impressive credentials and should help take Lordstown Motors to the next phase of its evolution.”
Burns, said Coviello, was “instrumental in putting Voltage Valley on the map.” Voltage Valley is the nickname given the local region because of the investments in and hope and prosperity surrounding the electric-vehicle industry.
“We thank him for that and wish him well on his next venture,” Coviello said.
Roof, a certified public accountant, has been interim CFO at Eastman Kodak, Hudson’s Bay Company, Saks Fifth Avenue and Aceto Corp., a publicly traded generic pharma and specialty chemical company, according to the release.
Lordstown Motors also named former Lordstown Motors interim chief brand officer Jane Ritson-Parsons, as chief operating officer. Ritson-Parsons, 58, became brand officer in April. Before that, she served as group executive, Global Brand Marketing at Hasbro Inc. from 2008 to 2018, according to the SEC filing.
Said Strand, “We remain committed to delivering on our production and commercialization objectives, holding ourselves to the highest standards of operation and performance and creating value for shareholders. Along with the management team, I will continue to work closely with them and the board to execute on Lordstown’s vision for the future of electrified transportation. I am excited to lead the passionate and dedicated team of Lordstown employees and to work with our valued customers, suppliers, investors and partners and to hosting Lordstown Week, which commences on June 21.”