Lordstown Motors taps Hertz board member to straighten the ship

Lordstown Motors has hired a new CEO, Daniel Ninivaggi, just two months after the previous CEO and founder resigned after misleading investors. Ninivaggi has an automotive background and recently completed a seven-year stint as a member of Hertz’s board of directors, where he helped oversee the very public bankruptcy and restructuring of the rental car company.

That experience can come in handy. Lordstown Motors needs someone at the helm who can steer the company through the adversities ahead — including, primarily, surviving beyond early 2022, when the startup says it expects to ship its first electric pickup trucks. and when it also runs out of money, unless it finds new funding. But Lordstown Motors’ struggles since the SPAC merger in late 2020 has also played out in an intense spotlight, something Ninivaggi seems to have had some experience with at Hertz.

Hertz was largely in crisis mode during the early months of the COVID-19 pandemic because it had borrowed heavily against its fleet. When the markets fell, the company’s lenders got nervous and started thinking about impounding those cars to get back what they owed. In response, Hertz filed for bankruptcy.

Then the real madness started. Hertz became a darling of the burgeoning population of retailers, including those introduced to the stock market by apps like Robinhood, as well as those who spend their time on obsessive information shared in the r/WallStreetBets subreddit. People bought Hertz stock left and right, after bankruptcy, despite there being… almost no chance that the stocks they traded would be worth anything when the company was finally restructured.

In other words, Hertz was a meme stock before that term became part of our shared lexicon. And the company tried to take advantage of this by trying to sell right more shares directly to those eager retailers, though a judge quickly cut them off.

While all this was happening, Hertz’s largest shareholder cut off and pulled out: Billionaire Carl Icahn sold his company stake in Hertz mid-2020. But Ninivaggi – one of Icahn’s former executives – remained on the Hertz board. The company finally came out of bankruptcy this year and, to the surprise of many, regularly private shareholders did get something in return.

Ninivaggi has other experience in the automotive industry besides Hertz, mostly with companies that are deep in the supply chain. Whether Lordstown Motors was more drawn to that, or Ninivaggi’s experience with Hertz’s roller coaster year, the cramped startup pays hefty to let him run the show. He earns an annual salary of $750,000 and is eligible for an annual bonus of nearly $1 million, according to a filing with the Securities and Exchange Commission (SEC), and received a package of shares of the company that is currently worth approximately $4.6 million.

In return, he must help the startup get its electric pickup into production, raise more money (including following the company’s plan to lease space at the factory), then compete in an increasingly crowded place. field of electric pickup trucks. All while facing Justice Department and SEC investigations initiated by his predecessor’s misdeeds.