LORDSTOWN, Ohio (WKBN/AP) – The top two executives at Lordstown Motors have resigned as problems at the Ohio electric truck startup continue to mount.
CEO Steve Burns and Chief Financial Officer Julio Rodriguez stepped down, the company said early Monday, sending shares already down 40% this year tumbling 16% at the opening bell.
“Lordstown Motors has achieved significant milestones on the path to developing the first and best full-size all-electric pickup truck, the Lordstown Endurance. We thank Steve Burns for his passion and commitment to the company,” David Hamamoto said on behalf of the company’s board of directors.
Lordstown Motors and both Burns and Rodriguez entered into separation and release agreements.
Burns’ agreement provides for continued base salary payments for 18 months in the amount of $750,000.
Rodriguez’s agreement provides for continued base salary payments for six months in the amount of $200,000.
The departures come less than a week after Lordstown cautioned that it may not be in business a year from now as it struggles to secure funding to begin full production. In a quarterly regulatory filing, the company said that the $587 million it had on hand as of March 31 isn’t enough to begin commercial production of its full-sized electric pickup, called the Endurance, at the former General Motors plant.
Yet Lordstown ran into trouble not long after it became a publicly traded company last year through a merger with a special-purpose acquisition company. Going public through a so-called SPAC is typically quicker than traditional initial public offerings that are usually handled by major financial institutions.
In January an Endurance pickup truck prototype caught fire 10 minutes into its initial test drive in Michigan. Then the company failed to pay $570,000 in real estate taxes due in early March.
Company shares have been on a sharp, downward trajectory since February and the stock fell below the initial public offering price of around $10 on Monday.
Lordstown named lead independent director Angela Strand as executive chairwoman Monday and said that she will oversee the organization’s transition until a permanent CEO is found. Strand is the managing director of advisory firm Strand Strategy.
“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,” Strand said in a statement. “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.”
Becky Roof, who has been an interim chief financial officer at Eastman Kodak, Hudson’s Bay and Saks Fifth Avenue, was named interim CFO at Lordstown.
“As we transition to the commercial stage of our business — with planned commencement of limited production in late September — we have to put in place a seasoned management team with deep experience leading and operating publicly-listed OEM companies,” Hamamoto said. “We have complete confidence in Angela and Becky, and our expanded leadership team, to effectively guide the company during this interim period.”
The company has hired an executive search firm to seek out a new CEO and chief financial officer.
Also on Monday, the company responded to a scathing March report from the short-selling firm Hindenburg Research, which questioned the number of preorders the company claimed to have received for its marquee Endurance vehicle.
The report spawned four potential class-action lawsuits against Lordstown by investors who claim they were defrauded.
Lordstown said its independent investigation found that the vast majority of the Hindenburg report was unsubstantiated. However, it acknowledged that one potential buyer that made a large number of preorders doesn’t appear to have adequate resources to make those purchases. Other preorders appear too vague or weak to be relied on, the company said Monday.