After ousting its four independent directors a week ago, the co-founders of autonomous truck developer TuSimple Holdings consolidated their majority voting power under Executive Chairman Mo Chen, skirting Nasdaq rules requiring the naming of new independent directors.
Mo Chen, lesser known than his co-founder Xiaodi Hou, now controls about 59% of the voting power in the company after Hou transferred his super-voting rights to Chen for up to two years.
‘Controlled company exemption’ at TuSimple
The move created a “controlled company exemption,” which means TuSimple does not have to have a majority of independent directors, does not need to have independent directors set compensation for executives and does not require that solely independent directors vote on new board members.
However, because of a national security agreement reached in February with the Committee on Foreigh Investment in the U.S., TuSimple must have a director designated as security director. An audit committee must have at least three independent directors.
In an 8-K filing Wednesday with the Securities and Exchange Commission, the company said it intends to appoint independent directors to those roles as soon as possible.
Hou, fired Oct. 30 by the previous board, remained the only director of the company until appointing Chen as executive chairman and adding Cheng Lu, who returned as CEO, the position that Hou assumed in March in a previously unannounced succession.
TuSimple shares tank amid drama
Hou’s moves to become CEO and chairman and his subsequent sacking seven months later both led to huge drops in TuSimple’s share price.
TuSimple shares closed Thursday at $2.52, just 30 cents above their 52-week low and far below the 52-week high of $42.64.
Ten days after his ouster without cause, Hou and Chen combined their 10:1 super-voting power to remove Brad Buss as lead director and chairman, and independent directors Karen Francis, Michelle Sterling and Reed Werner. That left the company out of compliance with Nasdaq listing requirements.
Yumer departs TuSimple
In the 8-K, TuSimple also said it had removed interim CEO and President Ersin Yumer, paying him a lump sum of $340,800, equal to 80% of his base salary, in exchange for renouncing any claims against the company.
Yumer also gets 18 months of subsidized health care and an additional six months vesting of pending equity awards. Yumer joined TuSimple from rival Aurora Innovation just 16 months ago and had been executive vice president of operations.
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