Jia Yueting’s FF, the mass-produced car has not yet been put on sale, but the rear executive team has fallen into a new round of power struggle, and now the internal faction battle has ushered in a new episode.
In June of this year, some netizens posted on social platforms that Faraday Future was fighting in-fighting, and Mr. Jia’s FF Top made efforts to replace the chairman of the board of directors (Brian Krolicki) appointed last year, who was elected by PIPE investors to serve on the board of directors The chairman oversees the management. The replacement is Mr. Jia’s lawyer, who will replace Susan Swenson and other board members step by step.
Predictions are being further confirmed.
First, the major shareholder FF Top insisted on expelling independent director Brian Krolicki from the board of directors, and Han Li was the independent director who took over the board of directors of FFIE; second, six Faraday Future employees on behalf of more than 140 employees around the world jointly submitted a letter asking the board of directors Susan Swenson was relieved of both positions as executive chairman and chairman of the board.
There are indications that Faraday Future’s board of directors has aroused strong dissatisfaction among its major shareholders, investors and employees, who demand that the reorganization of Faraday Future’s board of directors escalate again.
Since last year, Faraday Future has encountered a series of events such as being shorted, the stock price plummeting, the earnings report being difficult, the stock facing delisting, and internal high-level turmoil.
Industry analysts said that through a series of incidents in FF, Faraday Future’s infighting is essentially a board of directors seizing power and removing Jiahua. Jia Yueting is trying to restructure the board of directors and regain power. Annual and quarterly disclosures are stuck at the last minute, which is not normal. At that time, the board of directors was suspected of forcing the palace Jia Yueting, and someone inside Faraday Future used a short report to force the palace Jia Yueting. As a result of the short report, Jia Yueting and Bi Fukang lost their power, and the chairman who initiated the investigation was forced to resign as chairman. Jia Yueting and Bi Fukang reported to the chairman that Faraday Future belongs to the board of directors. Jia Yueting lost control of the board and that was the problem.
Interestingly, it is reported that FF infighting even affected the progress of financing.
According to Bloomberg, a shareholder group affiliated with Jia Yueting has called for the removal of a director from the startup’s board. On July 15, the shareholders said in a filing that they offered Faraday Future a lifeline of “at least $100 million” on the condition that the director resign.
According to Faraday Future’s second-quarter financial report, its net loss increased to $142 million, with a cumulative loss of $3.2 billion. As of August 9, 2022, the cash balance was only $52.2 million.
Brian Krolicki was forced to step down as chairman and then expelled from the board, Han Li took over
On August 26, according to a report by PR Newswire, Faraday Future’s major shareholder FF Top Holding LLC (FF Top) sent a letter to the company on Tuesday, local time in the United States, requesting it to provide some books and records. And filed a 13D document with the U.S. Securities and Exchange Commission, asking Faraday Future to provide a list of shareholders to hold a general meeting as soon as possible, again urging the Faraday Future board to take action to remove director and former chairman Brian Krolicki from the board.
FF Top believes: “Over the past year, the company’s operating performance has consistently failed to meet the targets set by the company in its public filings, and the situation has not improved. We believe that this poor performance is largely the result of Because of the failure of Brian Krolicki and the board members allied with him.”
Previously, it was this independent director who initiated an internal investigation that caused Faraday Future’s stock price to plummet, its earnings to be difficult to produce, and its stock to face delisting risks. These operations were considered to be the company’s internal factions competing for control.
FF Top stated in the preliminary proxy statement that although the main reason for Faraday Future’s current financial and operational challenges is due to the lack of corporate governance capabilities of some current board directors, the company is in the process of turning a promising industry concept into reality – That is a critical inflection point for mass production of its revolutionary electric vehicle product, and fundamental changes are urgently needed to deliver on that promise.
FF Top believes that these changes must begin with a board that recognizes the magnitude and urgency of these challenges and focuses on developing a realistic and financially responsible plan to get the company on the right track.
In February 2022, FF said that Brian Krolicki, the head of the company’s top management body, was forced to step down as chairman due to certain weaknesses in the company’s control and culture. It is understood that in August 2021, Brian Krolicki was appointed chairman of FF’s newly formed board of directors, having previously served as vice chairman of the Nevada Department of Transportation (NDOT).
According to people familiar with the matter, Brian Krolicki, as the chairman of FFIE, was mainly responsible for the misjudgment of the situation and the launch of an internal investigation, which led to delays in financial reports and delisting risks. situation.
After Brian Krolicki was expelled from the board of directors, FFTOP has also nominated Han Li, a former partner of the internationally renowned law firm O’Melveny & Myers, as an independent director of the FFIE board of directors.
According to public information, Han Li graduated from Fudan University, and successively obtained a master’s degree and a doctorate from Peking University and Columbia University in the United States. She is a senior business consultant and was the general counsel of the global investment giant Shanda Group.
During her career, Han Li has handled multi-billion-dollar high-end M&A and financing transactions, venture capital and private equity investments, fund investments, as well as overseeing public company disclosures and corporate compliance programs in multiple jurisdictions.
It should be pointed out that the documents submitted by FFTOP show that the FF board of directors has been asked to cooperate with the newly appointed independent director Han Li to review Brian Krolicki’s behavior during his tenure as a board member, and emphasized that during his tenure as a board member, he caused shareholders’ interests. significant loss.
Industry insiders familiar with the operation mechanism of U.S. listed companies said that the FFIE board of directors had no board members with professional legal background before. Han Li’s senior legal background and experience in the governance of listed companies in China and the United States are important reinforcements for the FFIE board of directors.
Executive chairman accused of improper control of company and board of directors, employees collectively petition for his removal
According to the predictions of netizens, after the former chairman of the board of directors was expelled from the board of directors, the FF management will replace other board members such as Susan Swenson step by step.
Leifeng.com learned that this prediction seems to be about to become a reality.
According to news from Asia Technology Telecom on August 26, an internal petition by Faraday Future’s global employees calling for the dismissal of the company’s executive chairman Susan Swenson was recently leaked. In the petition, the employees expressed a collective strong demand that 1. Susan Swenson herself resign on her own accord before August 26, resigning as executive chairman, chairman of the board and director of FFIE. 2. If it refuses to resign voluntarily, the board of directors is required to convene a board meeting before August 28 to remove Susan Swenson from all positions in the management management and the board of directors. At the same time, an extraordinary shareholders meeting will be held as soon as possible to remove Susan Swenson from the directorship.
This petition has once again brought the electric car maker, which has been at the center of the storm, into the headlines again.
Investors close to FF revealed that 6 Faraday Future employees, representing more than 140 colleagues around the world, sent a petition to the Faraday Future Board of Directors and global shareholders, asking the company’s board of directors to remove Susan Swenson from the two positions of executive chairman and chairman of the board, and to convene shareholders. General Assembly to remove his directorship.
The petition claims that Susan Swenson, as the first person responsible for Faraday Future’s board of directors and operational decisions, as well as the company’s first legal person, should be responsible for all kinds of negligence, malfeasance, breach of due diligence, misconduct, and mistakes in the year since Faraday Future’s listing. actions, unjust enrichment, and possibly even violations of the law. At the same time, the interests of shareholders and employees are greatly lost, the company’s fertility is seriously damaged, the order users lose confidence, the core talents are continuously lost, the budget is seriously overrun, the cost is seriously out of control, the company’s funds are seriously wasted, the delivery of FF 91 products is continuously delayed, and financing has been delayed. responsible for a series of catastrophic operating results.
The petition pointed out that FF’s listing bell allowed 800 employees around the world, all shareholders and investors to enjoy a brief moment of highlight. In the past year, the stock price has plummeted from the highest point of $14.82 to $1.65, and the market value has evaporated by nearly 90%. Especially in the past six months, the interests of employees have been greatly harmed. The stock price has fallen below the exercise cost of most employees, and our investors have suffered heavy losses. We must remove Sue and hold him accountable before the company can regain its success.
The letter also mentions that Susan Swenson, with the cooperation of possible relevant associate members, led to disastrous results in the operation of the company through improper control of the company and the board of directors. During her tenure as chairman of the special committee of the board of directors, Sue conducted a series of unfair and inappropriate investigations and rectifications against the company and its key executives. During his tenure as chairman of the board’s audit committee, the goal of filing an S-1/A in October 2021 was not met. Until he became the executive chairman in early February, the S-1/A was still delayed and has not been completed, which made normal equity financing impossible and brought huge legal litigation risks to the company. For example, the latest financing reserve announced recently shows that the cost of equity for new investors is far from being the right price. Equity of all shareholders. What’s more, it has always put many shareholders on the opposite side. These are also important reasons for the disastrous operating results of the company. This incompetence and disguised exploitation of the interests of employees, shareholders and investors must stop immediately.
It is worth mentioning that there is an important information disclosed in this petition. That is, the FF board is currently investigating multiple anonymous whistleblower letters.
In response to the investigation, employees made further demands in a petition. The requirements indicate: 1. Regarding the four directors Sue Swenson, Scott Vogel, Jordan Vogel, Brian Krolicki and possibly related agencies including external law firms and financial companies Kirkland & Ellis Moelis & Companv and AlixPartners, improper control of the company and the board of directors, improper enrichment and transfer of benefits, malicious promotion Bankruptcy, ultra-low price and excessive stock issuance, significant dilution of existing shareholders’ rights including employees and reorganization in disguised form, as well as all other possible suspected violations of laws and regulations, need to announce the results of the investigation immediately. 2. In the investigation of the above-mentioned whistleblower letter, we suspect that Sue and his associates may abuse their powers and violate the principle of independent investigation, including instructing their cronies to investigate the initiation of the entire investigation, including Sue himself, on behalf of the company, and the establishment of the investigation team. A series of misconduct and suspected violations of laws and regulations may exist in the investigation process and results to conduct further independent investigations.
Finally, these employees said that they will report the relevant content and evidence collected to the board of directors and regulatory authorities by whistleblowing in their real names. If the above requirements are not met, further escalation actions will be taken.
High-level purge: Jia Yueting was severely cut power, and cron Wang Jiawei was out
On October 7 last year, less than 4 months after Faraday Future successfully landed on the US stock market, FF was shorted by J Capital Research (Meiqijin Investment Consulting Company), a short-selling agency. The short-selling report highlighted that Jia Yueting may still control the FF company through direct holding, holding positions, hiring relatives, etc. Wang Jiawei, then the vice president of FF global capital markets, is Jia Yueting’s nephew.
In response to the short-selling report, Faraday Future established a “Special Committee of Independent Directors” to conduct an internal investigation. Subsequently, the FF Automobile Investigation Committee announced the results and announced a major board reshuffle.
The survey report stated that the company “underestimated Jia Yueting’s involvement in FF”. Because the investigation found that as early as 2019, Jia Yueting announced his resignation as CEO of FF and transferred to FF’s CPUO (Chief Product & User Experience Officer), but Jia Yueting controlled the development of FF by placing relatives within the FF management. It has a strong voice inside.
In response to this, in February this year, FF carried out a major purge of executives.
Among them, FF has newly established the position of executive chairman of the board of directors. Susan Swenson, one of the former members of the board of directors of FF, is appointed. Bi Fukang and Jia Yueting both report to him. At the same time, Jia Yueting and Bi Fukang have their salaries reduced by 25%.
Jia Yueting reported to the executive chairman of the board of directors, which was equivalent to a downgrade of the official, which was regarded by industry insiders as Jia Yueting’s reduction of power.
Several other core FF executives have also been punished to varying degrees. Brian Krolicki was forced to step down as FF’s chairman and chairman of the board to become a member of the board’s audit and compensation committees; Jordan Vogel stepped down from FF’s governance and nomination committees to serve as lead independent director. In addition, Scott Vogel became the Chairman of the Board of Directors’ Audit Committee, Corporate Governance and Nominating Committee, and Jarret Johnson, Vice President, General Counsel and Secretary, left the company. And Jia Yueting’s cronie, Wang Jiawei, vice president of FF Global Capital Markets, was immediately suspended without pay.
This high-level change, on the surface, is to explain the short-selling incident, but it is actually one of the results of the factional struggle within FF.
But obviously, Jia Yueting’s power cut is not the end, but the beginning.
Two months later, in April of this year, Faraday Future publicly announced the dismissal of Jia Yueting as an executive officer.
The regulatory filing states that Jia Yueting will continue to serve as chief product officer and report to the executive chairman. However, Jia Yueting’s role will be limited to focusing on products and mobile ecosystems, the Internet, artificial intelligence and advanced R&D technologies, and he will no longer hold the executive position of executive officer.
Just two days before Jia Yueting was “slaughtered”, Wang Jiawei, one of FF’s core executives and vice president of the capital department, resigned from FF.
According to sources close to FF, the conflict between the FF board of directors and the management team dominated by Jia Yueting has escalated, and the influence of the founding team of Chinese executives represented by Jia Yueting on FF has been severely weakened.
According to various information, Wang Jiawei is Jia Yuefang’s son, and Jia Yuefang and Jia Yueting are siblings. Wang Jiawei is not only Jia Yueting’s nephew, but also FF’s CFO. Wang Jiawei studied at Central University of Finance and Economics and New York University in the United States. He was only in his 30s. After graduating from college in 2014, he worked for LeTV. In 2018, he became the vice president of FF Global Capital Markets.
According to the listing documents, Wang Jiawei directly enjoys 7.87 million FF exercisable options and 4.1 million conditionally exercised options, totaling about 12 million shares. The point is that the exercise price of each option is less than $0.36, which is almost free. In addition, Wang Jiawei also enjoys 9.1 million share options in “FF Global”, the actual controlling company of FF, and thus indirectly holds FF shares.
Epilogue
In the eyes of the outside world, after Jia Yueting and Wang Jiawei’s faction quit the core management one after another, the infighting of FF seems to gradually become clear.
However, judging from the recent incidents of FF Top’s strong request to kick Brian Krolicki out of the board of directors, to let Han Li from Jia Yueting’s faction background, and Susan Swenson’s petition to be dismissed, the contradiction between the FF board of directors and the management, and the power struggle of high-level factions The war is far from over.
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