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NewsNewslettersTruck TalkTrucking

Truck Talk: Cost of change edition

Stock grants, options and severance pay; rolling into autonomous trucking

This week, we look at the costs associated with changing corporate captains; tiremakers rolling into trucking autonomy and electrification, and static-free AM/FM radio in the Freightliner Cascadia.  

The cost of change

Leadership change can be expensive, both to remove a current CEO and to hire a new one. Here are three recent example as startups and early stage growth companies onboard operating experience in place of visionary or slow-moving leaders:

Lordstown Motors Corp.

The ouster of Steve Burns, the founder of Lordstown Motors Corp. and expatriate founder of Workhorse Group, was relatively cheap. He gets $750,000 spread over 12 severance payments.

His salary was $500,000 a year, doubled from his initial compensation of $250,000 set in November 2019. Burns promised no badmouthing of the startup he launched with considerable help from General Motors Corp. 

He also owns 26% of the stock in the troubled electric pickup truck maker. The 46 million shares were worth about $219 million as of Thursday’s closing price of $4.77. Half of those shares can be sold this October. The rest in October 2022.

Workers with a Lordstown Endurance electric pickup truck body in June 2021 (Photo: Emily Mathews/Pittsburgh Post-Gazette)

Angela Stand, executive chair of Lordstown’s board and interim CEO, is getting $100,000 a month under a five-month contract. She also will receive 50,000 restricted stock units when her term is complete, according to a June 24 Securities and Exchange Commission filing.

Lordstown (NASDAQ: RIDE) last Friday reiterated its “going concern” filing with the SEC, suggesting it may not have enough money to produce its Endurance electric pickup truck.

It is using only 30% of the 6.2-million-square-foot plant where GM built compact Chevrolet Cruze passenger cars until March 2019. Lordstown is looking for tenants to occupy some of the unused space. It also is looking at government loans and non-dilutive private investments and debt to raise money. 

Romeo Power Inc.

Over at startup commercial battery maker Romeo Power, the resignation of CEO Lionel Selwood resulted in payout of a year of his $500,000 salary, Selwood also gets a $400-an-hour consulting gig with a minimum payout of $41,667 a month for six months.

Since leaving Romeo (NYSE: RMO) where he worked for 4 ½ years, Selwood has started a Tampa, Florida-based consultancy called DB Squared Holdings, according to his LinkedIn page.

According to an SEC filing, Selwood’s replacement, veteran automotive executive Susan Brennan, will get $600,000 a year in salary plus a $600,000 signing bonus. She also gets a restricted stock award worth $600,000 when fully vested. Two other stock grants could be worth a total of $6.4 million based on performance and time-based vesting. Brennan also could earn a cash bonus equal to a year’s salary.

Workhorse Group

Bringing veteran auto executive Rich Dauch on board at Workhorse Group (NASDAQ: WKHS) cost the most of the three company changes here. Dauch, the former CEO of Delphi Technologies and in charge during the company’s $3.3 billion sale to BorgWarner Inc. that closed in October 2020, is getting $1 million a year in salary plus a signing bonus of 500,000 restricted stock units and 3 million stock options.

If he can pull Workhorse out of its tailspin — it closed Thursday at $8.70 compared to its 52-week high of $42.96 — Dauch could get a cash bonus of $1.25 million and as much as 5 million additional shares of stock.

Former CEO Duane Hughes, who was making $475,000 a year, got $855,000 in severance pay, roughly the same as he earned in 2020 through his salary and a $384,750 bonus. Workhorse expects Hughes will be at the company through Sept. 30 in some capacity.  

The Workhorse C-Series electric delivery vans are undergoing a design review to add cargo capacity, the company said. (Photo: Workhorse Group)

Lordstown, Romeo and Workhorse are all struggling as electrification stocks continue to be under pressure after heady runups in their prices during last year’s SPAC [special purpose acquisition company] frenzy. SPACs are shell companies that raise money to merge with and take public a private company, often young and with no revenue.

Workhorse, which has been around since 2007 and encumbered by debt from trading shares to hedge funds for operating cash, became a borderline meme stock favored by retail investors. But when the prospects of a multibillion-dollar U.S. Postal Service contract evaporated in February, a steady decline began.

Tunes and tires

Tire companies are rolling full speed into partnerships with autonomous and electric trucking companies. None is more aggressive than Bridgestone Americas, which has deals with Sweden’s Einride and startup Kodiak Robotics as well as electric luxury car maker Fisker.

Einride, which plans to bring its driverless delivery pod system to the U.S., will collect safety and efficiency-related data from Bridgestone’s smart-sensing tires on electric trucks and digital services Einride will provide on a subscription basis. The world’s largest tire and rubber company will become Einride’s launch partner and exclusive tire supplier for Einride in the U.S. market, integrating its advanced mobility technologies into Einride’s onboard vehicle platforms. 

In June, Bridgstone made a minority investment in Level 4 high-autonomy startup Kodiak Robotics. Bridgestone will integrate its smart-sensing tire technologies into Kodiak’s autonomous trucks. The companies will also pilot future mobility technologies to enable safer, more sustainable autonomous operations.

“Advancements in tire-centric technologies are critical to unlocking greater innovation in mobility, while also delivering significant sustainability benefits,” said Paolo Ferrari, Bridgestone’s global chief solutions officer and president and CEO Bridgestone Americas said at the time.

Bridgestone will supply tires to Einride trucks that Einride will provide by subscription to Bridgestone.
(Photo: Bridgestone Americas)

And what of rival Goodyear Tire & Rubber?  It is on board as strategic partner of TuSimpile Holdings, providing tires and repair services for the startup’s autonomous freight network.

Last November, Goodyear and TuSimple formed a collaboration to conduct wear studies designed to understand how autonomous trucks and tires can help better predict maintenance, understand tire longevity and reduce the carbon impact of fleets. The data may also point out the differences between human and autonomous drivers. Goodyear Ventures invested in TuSimple in February.

Could be more of these non-exclusive arrangements coming soon.

Oh, about the tunes. HD Radio Receivers are being added to the digital dash display of the Freightliner Cascadia in the first quarter of 2022. It is a first for commercial trucking, HD Radio  said.

The digital broadcast system for AM and FM radio stations broadcasts a digital signal over traditional radio frequencies. That allows for up to three additional channels of new audio programming with on-screen information like album art, station logos, song and artist info, traffic, weather and critical emergency alerts.


Quote of the week

“In the realm of commercial vehicles, the study shows that long-haul battery electric vehicle semi-tractors, which are the most expensive today due to their large batteries, will become the least expensive powertrain in 2035 as battery prices continue to drop.”

U.S. Department of Energy Argonne National Laboratory study 

That’s it for this week. Thanks for reading. Sign up here to receive Truck Talk in your email on Fridays.

Alan

Alan Adler

Alan Adler is a Detroit-based award-winning journalist who worked for The Associated Press, the Detroit Free Press and most recently as Detroit Bureau Chief for Trucks.com. He also spent two decades in domestic and international media relations and executive communications with General Motors.

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