Update: Lordstown Motors Stock Closes Up Nearly 18% on News of New CEO
YOUNGSTOWN, Ohio — Lordstown Motors Corp.’s appointment Thursday of Daniel Ninivaggi as its new CEO has sparked renewed confidence among investors in the electric-vehicle startup.
Ninivaggi’s appointment sent shares of Lordstown Motors soaring more than 25% by 11 a.m., providing a much needed rally for the company, which saw its stock crash to a 52-week low of $4.77 on Aug. 19.
Before the bell sounded Thursday morning, RIDE stock was up about 20% in pre-market trade at $6.44 per share. Trading opened at $6.67 and hit a high of $7.79 around 10 a.m. before dipping back down to just shy of $7.
At the close of trading Thursday, the last trade closed at $6.49, or up 17.79% from the close Wednesday at $5.51 per share. Volume Thursday was extremely high — 137,228,700 shares.
“I believe the demand for full-size electric pickup trucks will be strong and the Endurance truck, with its innovative wheel hub motor design, has the opportunity to capture a meaningful share of the market. With an absolute focus on execution, I look forward to working with the talented Lordstown management team, our suppliers and other partners to bring the Endurance to market and maximize the value of our assets,” said Ninivaggi in a prepared statement.
Under his employment agreement, Ninivaggi will earn an annual base salary of $750,000 and will be eligible for an annual bonus equal to 125% of his base salary. As CEO, he will receive an award of 700,000 stock options with an exercise price equal to the closing price on the business day immediately following his effective date.
He will also receive 700,000 restricted stock units, which will vest on each of the first, second and third anniversaries of the grant date.
According to the employment agreement, Ninivaggi is authorized to continue serving as chairman or member of the board of directors for Garrett Motion Inc. and on the advisory board of Metalsa, provided those duties don’t interfere with his duties as CEO of Lordstown Motors.
Ninivaggi is the former CEO of Icahn Enterprises L.P., a diversified holding company controlled by Carl C. Icahn, and has served in a variety of senior leadership positions in the automotive and transportation industries. He began his automotive career at Lear Corp. and is former co-chairman and co-CEO of Federal Mogul Holdings Corp.
In a release issued Thursday morning, David Hamamoto, chairman of the board search committee, said the board is enthusiastic about Ninivaggi’s appointment.
“We are impressed with his broad automotive background, track record, strategic thinking, and team-oriented leadership talent,” Hamamoto said. “Furthermore, his capital markets expertise and investment proficiency will be invaluable in navigating the company through its commercial ramp-up, capital allocation and growth phase. We unanimously concluded that he has the optimal combination of skills and public company experience to lead Lordstown Motors at this time. On behalf of the entire board, I’d like to thank Angela Strand who successfully served as executive chairwoman during the CEO transition period and will continue as non-executive chair going forward.”
Ninivaggi takes over from Angela Strand, who was appointed executive chairwoman of the company’s board of directors after former CEO Steve Burns and Julio Rodriguez, former chief financial officer, resigned their positions. Burns’ departure followed a “going concern” notice issued by the company in its restated 2020 earnings report, warning it might not have the capital needed to continue in business through 2022.
Strand will continue as nonexecutive chair of the board.
Lordstown Motors hit a rough patch in maintaining the confidence of investors since the March release of a scathing short-seller report by Hindenburg Research, which alleged company executives exaggerated the number of preorders for the Endurance, the all-electric pickup under development at the company. The report also stated the company was short on cash and didn’t have the resources to produce the Endurance.
Even a $400 million equity deal announced in July with YA II PN, LTD, a hedge fund managed by Yorkville Advisors Global LP in Mountainside, N.J., didn’t seem to have much impact. A day after the announcement, shares plunged 9%.
Shares improved 9.5% after trading on Aug. 20, however, when the company demonstrated the capabilities of the Endurance at the Northeast Chapter of the American Association of Airport Executives’ Annual Conference, at the Burlington Airport in Burlington, Vt. The Endurance was the only EV pickup truck featured at the show, which ran Aug. 15 through 17.
Currently, Lordstown Motors anticipates limited production of the Endurance to begin in late September and expects to complete vehicle validation and regulatory approvals in December and January. Commercial deliveries of the vehicle are expected to begin during the second quarter of 2022.
Last month, the company acknowledged receiving two subpoenas from the Securities and Exchange Commission for documents related to Lordstown Motors’ merger with DiamondPeak, a special purpose acquisition company.
Additionally, the company has acknowledged it had no firm orders for the Endurance, and prosecutors from the U.S. Attorney’s Office for the Southern District of New York is investigating the company.
Copyright 2023 The Business Journal, Youngstown, Ohio.