Lordstown Motors Will Pay $1 Million To Ex-CEO and CFO Post Resignation
In a filing with the Securities and Exchange Commission (SEC) today, Ohio-based electric vehicle designer Lordstown Motors Corp. (NASDAQ:RIDE) announced that its chief executive officer (CEO), Mr. Steve Burns and its chief financial officer (CFO), Mr. Julio Rodriguez have resigned from all of their roles in the company. Lordstown became the center of attention when short-seller Hindenburg Research alleged in May that the company had inflated its vehicle orders and misled investors about the nature of their contracts. Following their separation from the company, Mr. Burns and Mr. Rodriguez will receive roughly $1 million over the next couple of months, with the CFO also entitled to exercise his stock options due to vest in November.
Lordstown Motors Unlikely To Press Legal Charges Against Former Chief For Allegedly Misleading Investors
The details of Mr. Burns's compensation following his departure from Lordstown are mentioned in the company's SEC filing made earlier today. They reveal several important details, such as the compensation the former CEO will receive after his resignation and whether Lordstown will or will not press any charges against him for any actions taken before the separation and release agreement was signed.
Detailing the compensation that Mr. Burns will receive over the next couple of months, the letter details that he will be paid $750,000 over the course of eighteen months as his base salary.
Specifically, as stated in the letter:
Without prejudice to any rights or claims the Company may have to the contrary under the Amended and Restated Employment Agreement between you and the Company, dated November 1, 2019 (the “Employment Agreement”) or otherwise, all of which are hereby reserved, the Company is willing to offer you, in connection with your termination of employment, an amount equal to $750,000, which will be paid in eighteen (18) equal installments each month during the eighteen (18) months following the Termination Date[EMPHASIS ADDED]in accordance with the Company’s customary policies and normal payroll practices, conditioned upon and subject to your execution and non-revocation of a general release and waiver of claims in the form set forth on Exhibit A hereto (the “Release”) and compliance with all other terms and conditions of the Release and the Employment Agreement.
The letter also lays out that Mr. Burns has been released from any claims Lordstown might have had against him prior to the date it's written on.
Specifically, as it notes:
In addition, contingent upon your execution and non-revocation of the Release, the Company shall (1) reimburse you for your reasonable legal fees incurred in negotiating this letter or the Other Documentation and (2) release you from any claims the Company may have against you based on actions taken prior to the date hereof that the lead independent director of the Company or the chair of the governance committee of the Company have actual knowledge of as of the date hereof[EMPHASIS ADDED].
Mr. Rodriguez's post-retirement compensation is lesser than Mr. Burns's, but he has been allowed to retain the option of vesting his stock options. The specifics of his agreement reveal that the former CFO will be paid $200,000 over the course of the six months and that his options with an exercise price of $1.79 will be allowed to vest on the first day of November this year.
As the letter reads:
. . . .the Company is willing to offer you, in connection with your termination of employment: (i) an amount equal to $200,000, which will be paid in six equal installments each month during the six-month period following the Termination Date[EMPHASIS ADDED]in accordance with the Company’s customary policies and normal payroll practices, and (ii) continued vesting of the Company stock options granted to you with an exercise price per share equal to $1.79, which are scheduled to vest in full on November 1, 2021[EMPHASIS ADDED], in each case, conditioned upon and subject to your execution and non-revocation of a general release and waiver of claims in the form set forth on Exhibit A hereto (the “Release”) and compliance with all other terms and conditions of the Release and the Employment Agreement.
Mr. Burns will be replaced by Ms. Angela Strand, appointed as Lordstown's Executive Chir and who will be responsible for the company's daily operations until a permanent replacement is brought on board. Mr. Rodriguez will be replaced by Ms. Becky Roof, who will serve as Lordstown's interim CFO.
Her appointment comes through an agreement Lordstown has entered with AP Services, LLC. This agreement puts her in charge of overseeing the company's ongoing SEC investigation, managing Lordstown's finances, developing a new business plan and communicating with investors about the need to raise more capital.