The co-founders of Electric Last Mile Solutions Inc. have resigned following an internal investigation that discovered the top executives purchased equity in the company at substantial discounts to market value shortly before the commercial electric vehicle startup went public via a merger with a special purpose acquisition company, Forum Merger III Corp.
President and CEO James Taylor and Chairman Jason Luo both resigned effective immediately following the internal investigation conducted by a special committee, according to a regulatory filing posted late Tuesday. The filing decimated the stock price of the company, which trades under the ELMS ticker symbol on Nasdaq. The stock price, which closed at $5.59 yesterday, has since dropped nearly 40% and is now trading at $3.36.
Shauna McIntyre, who briefly held top positions at lidar companies Ouster and Sense Photonics, has been appointed interim president and CEO and Brian Krzanich has been tapped as non-executive chairman of the board.
Taylor and Luo aren’t walking away empty handed, despite their actions. Electric Last Mile Solutions (ELMS) reached a settlement agreement with Taylor that includes him acting as a consultant to the company for two years with an annual wage of $300,000. Taylor will also retain his 2021 cash bonus and health benefits. In return, Taylor will surrender 1.8 million shares of the company’s common stock.
Luo will also serve as a consultant to the company for a period of two years, but will receive no additional compensation. Luo will have to surrender 6 million shares of the company’s common stock and must pay an additional amount of cash and stock, at his option, totaling $10 million in value, with any stock value based on a VWAP calculation. Luo will retain his health benefits.