Ousted TuSimple co-founder says frustrated employees came to him

Hou was fired Oct. 31 as CEO by independent directors he fired 10 days later by using his Class B super-voting shares.

Hou: ‘So-called investigation was retaliation’

“I believe that the so-called investigation was retaliation instigated by TuSimple’s Chairman and CEO in response to my disagreements over several decisions,” Hou wrote. 

The chairman is Hou’s TuSimple co-founder, Mo Chen. Hou in November transferred his voting rights equal to about 30% control to Chen for the next two years. Chen holds about 59% of TuSimple voting power.

Hou said in his post he was “openly critical” of the company’ slowing development of Level 4 high-autonomy technology. Level 4 can operate without a human driver in the cab. TuSimple was the first to demonstrate a driverless truck over an 80-mile route on Interstate 10 from Tucson, Arizona, to near Phoenix in December 2021.

In an interview on Tuesday, Lu told FreightWaves that TuSimple will begin single-route driverless commercial runs on I-10 between Tucson and Phoenix in 2024.

Hou said he refused to support Lu’s compensation package. That included a $450,000 salary, a cash bonus of $400,000 and a $9,000 monthly housing allowance. Lu also would get $15 million in cash severance if he is ousted again, or if there is a change in control of TuSimple. TechCrunch reported that Hou abstained from voting on the pay package.

Ousted over ‘lack of transparency’

Hou was ousted by the previous board over what it said was a “lack of transparency.” Hou did not tell the previous board about TuSimple employees performing work for Hydron Inc.. Hydron is a Chinese-based company Chen launched to make hydrogen-powered autonomous trucks.

He said he honored his responsibility as a board member in dealing with employees.

“I am regularly approached by current TuSimple employees who are disappointed with the current leadership and direction of the company,” Hou wrote. “They come to me because we were a family, and we still are. 

“Over the past few months, many employees reached out to me for my advice about their careers and the changes at the company. Many asked about my own plans. In every engagement, I stayed true to my responsibilities and duties as a director.

“I believe that TuSimple’s latest attack stems from a concerted effort to blame me for the low morale among talented employees and from management’s fear of what I could accomplish on my own.”

TuSimple cash update and new director appointments

Separately, TuSimple in an SEC 8-K filing on Wednesday said it:

• Had about $1 billion in cash and short-term investments at the end of 2022. The company has not filed its required audited 10-K for the year because it is in the process of hiring a new auditor after KPMG quit over reputation concerns about TuSimple in late 2022.
• Expects to save $55 million to $65 million in cash compensation from the layoffs of 350 workers in December. 

The company also announced two new independent directors, including  J. Tyler McGaughey,  the former day-to-day overseer of the U.S. Treasury Department’s Committee on Foreign Investment in the United States (CFIUS). TuSimple signed a National Security Agreement with CFIUS following a CFIUS investigation in 2021.

McGaughey will be responsible for overseeing TuSimple’s compliance with federal legal and regulatory requirements.

Zhen Tao, a senior partner at investment firm Third Square Capital Management, also joins the board. She will serve on the board’s audit committee, which is nearing the end of an investigation of Hou over dealings with Chen’s Hydron startup when Hou was TuSimple CEO between March and October 2022.

Related articles:

TuSimple co-founder quits board amid investigation

Co-founder gets voting control of TuSimple

As layoffs loom, TuSimple CEO protected by $15M in severance cash

Click for more FreightWaves articles by Alan Adler.