Lordstown Motors has employed a brand new CEO, Daniel Ninivaggi, simply two months after its earlier chief govt and founder resigned after deceptive traders. Ninivaggi comes from an automotive background and just lately wrapped up a seven-year stint as a member of Hertz’s board of administrators, the place he helped oversee the rental automobile firm’s very public chapter and restructuring.
That have might turn out to be useful. Lordstown Motors wants somebody on the helm who can steer the corporate by way of the adversity that lies forward — together with, primarily, surviving previous early 2022, which is when the startup says it expects to ship its first electrical pickup vans and when it would additionally run out of cash except it finds new funding. However Lordstown Motors’ struggles since its late 2020 SPAC merger have additionally performed out beneath an intense highlight, one thing that Ninivaggi seems to have gained some expertise with at Hertz.
Hertz was in disaster mode through the early months of the COVID-19 pandemic, largely because it had borrowed heavily against its fleet of cars. Because the markets dipped, the corporate’s lenders acquired jittery and began fascinated by seizing these vehicles in an effort to recoup what they have been owed. In response, Hertz filed for chapter.
That’s when the actual weirdness began. Hertz grew to become a darling of the booming inhabitants of retail merchants, together with those that had been launched to the inventory market by apps like Robinhood in addition to those that spend their time obsessing over data shared within the r/WallStreetBets subreddit. Individuals have been shopping for Hertz inventory left and proper, post-bankruptcy, regardless of there being almost no chance that the shares they were trading would be worth anything when the corporate was ultimately restructured.
In different phrases, Hertz was a meme inventory earlier than that time period grew to become a part of our shared lexicon. And the corporate tried to take advantage of this by making an attempt to promote even extra shares on to these keen retail merchants, although a choose shortly minimize them off.
As all this was occurring, Hertz’s largest shareholder minimize bait and backed out: billionaire Carl Icahn offered his firm’s stake in Hertz in mid-2020. However Ninivaggi — certainly one of Icahn’s former executives — remained on Hertz’s board. The corporate ultimately emerged from chapter this yr and, to the shock of many, common retail shareholders actually got something in return after all.
Ninivaggi has different automotive expertise past Hertz, principally at firms which can be deep within the provide chain. Whether or not or not Lordstown Motors was extra drawn to that, or to Ninivaggi’s expertise with Hertz’s rollercoaster yr, the cash-strapped startup is paying handsomely to have him run the present. He’ll make an annual wage of $750,000 and is eligible for a yearly bonus of almost $1 million, in response to a submitting with the Securities and Exchange Commission (SEC), and was given an organization inventory bundle at present value round $4.6 million.
In return, he’ll have to assist the startup get its electrical pickup truck into manufacturing, increase extra money (together with following up on the corporate’s plan to hire out area at its manufacturing unit), after which compete in an more and more crowded subject of electrical pickup vans. All this whereas going through down investigations from the Division of Justice and SEC that have been kicked off by his predecessor’s misdeeds.