Saturday, July 31, 2021 Dan O'Brien
EV Manufacturer Workhorse Group Parts Ways With CEO
YOUNGSTOWN, Ohio – Workhorse Group Inc., a Cincinnati-based electric vehicle manufacturer that is a 10% stakeholder in Lordstown Motors Corp., said Friday it has replaced President and CEO Duane Hughes.
The company said Friday that Richard Dauch, former CEO of Delphi Technologies, would assume his new position at Workhorse effective Aug. 2. He will also join the company's board of directors.
According to a regulatory filing with the U.S. Securities Exchange Commission, Hughes' departure is not "a result of a disagreement or dispute with the company," Workhorse said. Hughes will receive severance payments totaling $855,000 and other benefits. He will also be retained to serve in "certain transitional capacities" through Sept. 30, according to the filing.
Dauch will receive a base salary of $1 million per year plus a signing bonus of 500,000 shares of restricted stock and $3 million in stock options. He is also eligible of an annual cash bonus with a target of 125% of his base salary provided certain metrics are met.
Shares of Workhorse closed slightly lower on Friday, down 1.7% to $11.54 per share. The company specializes in manufacturing electric-powered last-mile delivery vehicles. The company also reported that it was suspending its production guidance for the rest of the year.
Hughes took over as president in February 2019 upon the resignation of founder and CEO Steve Burns, who several months later established Lordstown Motors.
Lordstown Motors and Workhorse subsequently signed a deal in which Workhorse would supply the EV startup with technology related to a new electric pickup design in exchange for a 10% stake in the company.
Lordstown Motors is preparing to launch its first product, the all-electric Endurance pickup, by the end of September.
Workhorse this year was among the finalists for a potential multibillion-dollar, 10-year contract to supply the United States Postal Service with its next generation of delivery vans.
Instead, USPS awarded the contract to Oshkosh Defense, a subsidiary of Oshkosh Corp. based in Oshkosh, Wisc. In June, Workhorse filed a lawsuit against USPS, alleging the selection process for the contract was bias. The company has asked the U.S. Court of Federal Claims to nullify the contract and issue an injunction to prevent it from taking effect.
Such a deal could have potentially brought more work to Lordstown Motors, which purchased General Motors' former Lordstown factory in November 2019. Lordstown anticipated performing some contract manufacturing for Workhorse there.
The management shakeup at Workhorse is similar to recent developments affecting Hughes' old boss, Burns, at Lordstown Motors.
On June 14, Lordstown Motors announced Burns and Chief Financial Officer Julio Rodriguez had resigned from that company. Angela Strand was named executive chairwoman and Becky Roof the new CFO.
A week earlier, the company said in a regulatory filing that it didn't have enough liquidity to bring the Endurance to full commercial production. Lordstown Motors has also confirmed that it is under investigation by the SEC and the U.S. Department of Justice regarding the company's merger with blank check company DiamondPeak Holdings Corp. and whether Lordstown Motors executives exaggerated preorders of the Endurance.
Lordstown Motors on Tuesday announced it had secured an equity purchase agreement potentially worth $400 million with a hedge fund managed by New Jersey-based Yorkville Advisors.
However, the lifeline wasn't enough to stanch Lordstown's plummeting share price during the week, at one point hitting a 52-week low of $6.06 per unit.
Shares of Lordstown, which trades under the ticker symbol RIDE, nosedived 14.5% over five days, closing at $6.24 on Friday.
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