Cheng Lu, who was ousted in March as part of an unannounced succession arrangement as CEO of self-driving truck developer TuSimple, is returning to his old role effective immediately, with the company’s co-founders removing all four independent directors from the board, according to a statement and filing at the Exchange Commission late Thursday.
The session drama exited TuSimple in violation of Nasdaq listing rules, which require a majority of independent directors. The company said it will return to compliance before its shares are delisted.
Co-founder Xiaodi Hou, who was ousted as CEO and chairman on October 30, and co-founder Mo Chen, previously chief executive, combined their power as the company’s largest shareholders to oust chairman Brad Buss and three other independent directors – Karen Francis, Michelle Sterling and Reed Werner – of the Council. Only Hou remains, who appointed Chen and Lu to council seats on Thursday.
“No new committee assignments were made [del consejo], including the Government Security Committee,” the filing said. “The Company intends to make committee assignments and meet all Nasdaq and regulatory requirements as soon as possible.”
TuSimple has fired Ersin Yumer as CEO and interim president. Lu quits a paid consulting role to return to his old job.
“I return as CEO of TuSimple with a sense of urgency to get our company back on track,” Lu said in a statement released late Thursday.
Your simple seeks stability
The reinstatement of Lu, a former investment banker who took the company public in April 2021 with former CFO Pat Dillon, is an attempt to stabilize the company. Virtually all of Lu’s management team left before and after Hou assumed the position of CEO and chairman.
TuSimple (NASDAQ:TSP) shares fell 47% on Oct. 31, the first day of trading after Hou was fired. The company gained 18.94% on Thursday, the strongest trading day for the S&P since April 2020. The stock closed at $2.70, a far cry from its 52-week high of $43.79.
“We have navigated turbulence over the past year and it is critical that we stabilize operations, regain the trust of our stakeholders and provide TuSimple’s talented team with the support and leadership it deserves,” said Lu. “I am committed to being open and transparent about our progress.”
TuSimple’s statement makes no mention of the firing of the four independent directors, nor of Hou and Chen’s vote that led to their removal.
The other co-founder returns as CEO of TuSimple
Chen is returning to the board as chairman, a role he resigned in June after Hou took over as CEO and chairman. Chen is a key player in a Chinese-backed startup that helped the previous board fire Hou.
TuSimple said in a filing with the SEC Monday that it contacted the agency and the Committee on Foreign Investments in the United States (CFIUS) following its split from Hou. The board said Hou exercised poor judgment and violated the company’s disclosure rules by working with Chen’s hydrogen transport company Hydron Inc.
TuSimple employees contributed less than $300,000 in labor to Hydron in 2021. But that had to be disclosed to the SEC, the company said. Both the agency and CFIUS are investigating TuSimple.
An Oct. 30 story in the Wall Street Journal said the SEC, CFIUS and FBI were investigating TuSimple and his relationship with Chen and Hydron. TuSimple said she had not been contacted by the FBI as of Monday.
TuSimple cooperates with the SEC and the CFIUS
“The company has cooperated with such investigations and will continue to do so,” TuSimple said in its Monday filing. “In connection with the filing of the Form 8-K, the Company has proactively reached out to CFIUS and is responding to CFIUS requests for additional information regarding the Form 8-K.”
Hou and Chen remain TuSimple’s largest shareholders and their voting share class, which has 10 votes per common share, accounts for approximately 68% of the voting shares.
Editor’s Note: Include the TuSimple explanation