Lordstown Motors has employed a brand new CEO, Daniel Ninivaggi, simply two months after its earlier chief government 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 may turn out to be useful. Lordstown Motors wants somebody on the helm who can steer the corporate by means 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 until 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 throughout the early months of the COVID-19 pandemic, largely as a result of it had borrowed closely in opposition to its fleet of vehicles. Because the markets dipped, the corporate’s lenders obtained jittery and began fascinated about seizing these vehicles with a view to recoup what they have been owed. In response, Hertz filed for chapter.
That’s when the true weirdness began. Hertz turned 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. Folks have been shopping for Hertz inventory left and proper, post-bankruptcy, regardless of there being virtually no probability that the shares they have been buying and selling could be value something when the corporate was finally restructured.
In different phrases, Hertz was a meme inventory earlier than that time period turned a part of our shared lexicon. And the corporate tried to benefit from this by trying to promote much more shares on to these keen retail merchants, although a decide 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 — one in all Icahn’s former executives — remained on Hertz’s board. The corporate finally emerged from chapter this 12 months and, to the shock of many, common retail shareholders truly obtained one thing in return in spite of everything.
Ninivaggi has different automotive expertise past Hertz, largely at firms which can be deep within the provide chain. Whether or not or not Lordstown Motors was extra interested in that, or to Ninivaggi’s expertise with Hertz’s rollercoaster 12 months, 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 practically $1 million, in keeping with a submitting with the Securities and Alternate Fee (SEC), and was given an organization inventory package deal presently value round $4.6 million.
In return, he’ll have to assist the startup get its electrical pickup truck into manufacturing, increase more cash (together with following up on the corporate’s plan to lease out house at its manufacturing facility), after which compete in an more and more crowded discipline of electrical pickup vans. All this whereas dealing with down investigations from the Division of Justice and SEC that have been kicked off by his predecessor’s misdeeds.