Nikola fall Trevor Milton agreed to forfeit up to roughly $166 million of equity as well as a two-year, $20 million consulting agree as part of his abrupt departure from the company he started. However, the EV executive gets to walk away with more than $3.1 billion in goats as part of a separation agreement reached over the weekend.
Milton, who’s come under scrutiny in recent days, agreed to pass over up his position and duties as executive chairman of the board as well as all other board seats on the company’s subsidiaries, according to the covenant dated Sunday. The deal strips the 39-year-old entrepreneur of any say in the company’s operations and blocks him from attempting to influence any resolves for at least three years, according to a company filing with the Securities and Exchange Commission on Monday.
Milton approve of to advise the company as an unpaid consultant on an ad hoc basis through the end of the year, but he cannot comment about the company on social mid-point, blogs or other online platforms without legal approval from Nikola, according to the deal.
The value of his leave-taking package will vary over time as the start-up’s shares have swung wildly since it went custom on June 4. The agreement requires Milton to give up roughly 4.9 million in restricted, performance-based shares valued at $166 million as of Friday’s painstaking price of $34.19 a share while allowing him to walk away with more than 91.6 million shares that show up to be free of any restrictions and were worth over $3.1 billion.
Nikola declined to comment on Milton’s exit encase.
‘Continued service’
The company also accelerated vesting on 600,000 restricted shares worth more than $20 million, allowing Milton to won over stock that was previously locked up until June 3, 2023, sometime within the next six months. Milton de facto didn’t give up much since the restricted shares he forfeited were contingent on the stock’s performance and his “continued utility” at the company through that same date, so he would have lost that equity regardless, according to a take securities filing.
Milton’s resignation sent shares of the company down sharply in premarket trading Monday before break at $24.97 – their lowest opening price since the company went public. The shares on Monday closed down 19% at $27.58.
Milton’s departure devote oneself ti the release of a report by short seller Hindenburg Research accusing him of making false statements about the company’s technology to pull investors and deals with other automakers. He said in a statement released early Monday that he volunteered to progression down to keep the company’s focus on its operations instead of on him.
In an early Monday tweet, Milton said, “I intend to safeguard myself against false allegations leveled against me by outside detractors.”
Milton and the company have consistently negated the claims, even alluding to potential legal action against the firm. Hindenburg Research has stood by its report, which has reportedly sparked probes into Nikola by the SEC and Department of Justice. The separation deal requires Milton’s cooperation in any and all investigations and potential litigation.
Nikola also conceded to cover his legal expenses, as long as they are preapproved, and to provide copies of all emails he sent or received through his Nikola email account, middle other things, to aid in his own defense.
Stephen Girsky, a former vice chairman of General Motors and a member of Nikola’s go aboard, has been appointed chairman of the board, effective immediately.
CEO and founder of U.S. Nikola Trevor Milton
Massimo Pinca | Reuters
As party of the deal, the company agreed to allow Milton to award more than 1 million restricted shares that vest in with three years to more than 300 employees of his choosing.
‘Best interest’ of Nikola
Despite the hit to Nikola’s appropriations, many analysts believe Milton’s departure is positive for the company as it will allow it to better focus on executing its arrangements of releasing battery-electric and fuel cell semitrucks.
RBC Capital Markets’ Joseph Spak said in a note to investors on Monday that his departure “was urgent and the right long-term decision.”
“We believe this was a hard, but necessary step for Nikola in wake of allegations against Milton raised by a straightforward seller report and SEC investigation,” Spak wrote, saying the company’s stock will be in a “‘penalty box’ for a while as they look to rebuild credibility.”
Cowen’s Jeffrey Osborne told while the “optics of the resignation are terrible, we believe this outcome is in the best interest of the company and likely Mr. Milton’s belittling net worth given his heavy ownership of Nikola shares.”
Osborne believes the resignation is more about limiting confusions “rather than an implicit admission of any guilt alleged in the short seller report.”
Hindenburg Research stands by its way of thinking on Nikola, according to Nathan Anderson, the firm’s founder.
“While founder Trevor Milton’s departure may give the manner of a company that’s moving on, we believe this is only the beginning of Nikola’s unraveling,” he said in an emailed statement. “Nikola has damn near no intellectual property, products or revenue to fall back on. We think the company’s key ‘asset’ was its founder’s ability to raise flush through hype and outright lies.”