Cheng Lu, ousted as CEO of autonomous truck developer TuSimple in an unannounced succession plan in March, is returning to his former role effective immediately, and the company’s co-founders removed the board’s four independent directors, according to a Securities and Exchange Commission filing late Thursday.
The boardroom drama left TuSimple in violation of Nasdaq listing rules that requires a majority of independent directors. The company said it will return to compliance before a delisting of its stock would occur.
Co-founder Xiaodi Hou, fired as CEO and chairman on Oct. 30, and co-founder Mo Chen, formerly executive chairman, combined their super-voting power as the startup’s largest shareholders to broom Chairman Brad Buss and three other independent directors — Karen Francis, Michelle Sterling and Reed Werner — from the board. That left only Hou, who named Chen and Lu to board seats Thursday.
“No new [board] committee assignments have been made, including for the Government Security Committee,” the filing said. “The company intends to make committee assignments and to be in compliance with all regulatory and Nasdaq requirements as soon as possible.”
TuSimple removed Ersin Yumer as interim CEO and president. Lu gives up a paid adviser role to take back his old job.
“I’m returning as TuSimple’s CEO with a sense of urgency to put our company back on track,” Lu said in a statement released late Thursday night.
Tu Simple seeks stability
Restoring Lu, a former investment banker who led the company public with former CFO Pat Dillon in April 2021, is an attempt to stabilize the company. Practically the entire leadership team under Lu departed before and after Hou assumed the roles of CEO and chairman.
TuSimple (NASDAQ: TSP) shares fell 47% on Oct. 31, the first trading day after Hou’s firing. The company gained 18.94% Thursday on the strongest trading day for the S&P since April 2020. Shares closed at $2.70, far off their 52-week high of $43.79.
“We’ve dealt with turmoil this past year, and it’s critical that we stabilize operations, regain the trust of our stakeholders and provide the talented team at TuSimple with the support and leadership they deserve,” Lu said. “I am committed to being open and transparent on our progress as we move forward.”
The TuSimple statement did not mention the sacking of the four independent directors, nor the vote by Hou and Chen that led to their ouster.
Other co-founder returns as TuSimple executive chairman
Chen returns as executive chairman, the role he gave up in June after Hou took over as CEO and chairman. Chen is a major player in a China-backed startup that contributed to the former board’s terminating Hou.
TuSimple said in an SEC filing Monday that it reached out to the agency and the Committee on Foreign Investment in the United States (CFIUS) after its parting with Hou. The board said Hou exercised poor judgment and violated company disclosure rules in working with Chen’s hydrogen trucking startup, Hydron Inc.
TuSimple employees contributing less than $300,000 in labor to Hydron in 2021. But that needed to be disclosed to the SEC, the company said. The agency and CFIUS are both investigating TuSimple.
An Oct. 30 story in The Wall Street Journal said the SEC, CFIUS and FBI were investigating TuSimple and its relationship with Chen and Hydron. TuSimple said that as of Monday, it had not been contacted by the FBI.
TuSimple cooperating with SEC, CFIUS
“The company has cooperated, and will continue to cooperate, with such inquiries,” TuSimple said in its filing Monday. “In connection with the filing of the Form 8-K, the company proactively reached out to CFIUS and is responding to requests from CFIUS for additional information about the subject of the Form 8-K.”
Hou and Chen remain TuSimple’s largest shareholders and their class of voting shares, which counts 10 votes for every common share, accounts for about 68% of the voting shares.
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