Lordstown Motors has hired a new CEO, Daniel Ninivaggi, just two months after its previous chief executive and founder resigned after misleading investors. Ninivaggi comes from an automotive background and recently wrapped up a seven-year stint as a member of Hertz’s board of directors, where he helped oversee the rental car company’s very public bankruptcy and restructuring.
That experience could come in handy. Lordstown Motors needs someone at the helm who can steer the company through the adversity that lies ahead — including, mainly, surviving past early 2022, which is when the startup says it expects to deliver its first electric pickup trucks and when it will also run out of money unless it finds new funding. But Lordstown Motors’ struggles since its late 2020 SPAC merger have also played out under an intense spotlight, something that Ninivaggi appears to have gained some experience with at Hertz.
Hertz was in crisis mode during the early months of the COVID-19 pandemic, in large part because it had borrowed heavily against its fleet of cars. As the markets dipped, the company’s lenders got jittery and started thinking about seizing those cars in order to recoup what they were owed. In response, Hertz filed for bankruptcy.
That’s when the real weirdness started. Hertz became a darling of the booming population of retail traders, including those who had been introduced to the stock market by apps like Robinhood as well as those who spend their time obsessing over information shared in the r/WallStreetBets subreddit. People were buying Hertz stock left and right, post-bankruptcy, despite there being almost no chance that the shares they were trading would be worth anything when the company was eventually restructured.
In other words, Hertz was a meme stock before that term became part of our shared lexicon. And the company tried to take advantage of this by attempting to sell even more shares directly to those eager retail traders, though a judge quickly cut them off.
As all this was happening, Hertz’s largest shareholder cut bait and backed out: billionaire Carl Icahn sold his company’s stake in Hertz in mid-2020. But Ninivaggi — one of Icahn’s former executives — remained on Hertz’s board. The company eventually emerged from bankruptcy this year and, to the surprise of many, regular retail shareholders actually got something in return after all.
Ninivaggi has other automotive experience beyond Hertz, mostly at companies that are deep in the supply chain. Whether or not Lordstown Motors was more attracted to that, or to Ninivaggi’s experience with Hertz’s rollercoaster year, the cash-strapped startup is paying handsomely to have him run the show. He’ll make an annual salary of $750,000 and is eligible for a yearly bonus of nearly $1 million, according to a filing with the Securities and Exchange Commission (SEC), and was given a company stock package currently worth around $4.6 million.
In return, he’ll have to help the startup get its electric pickup truck into production, raise more money (including following up on the company’s plan to rent out space at its factory), and then compete in an increasingly crowded field of electric pickup trucks. All this while facing down investigations from the Department of Justice and SEC that were kicked off by his predecessor’s misdeeds.