Asian Tech Press (Aug 19) -- California-based EV maker Faraday Future (NASDAQ:FFIE) has taken a significant step forward in its global partner team's move to join forces to restructure the board of directors.
FF Top Holding LLC, a major shareholder of Faraday Future, filed the PRE 14A with the U.S. SEC on Wednesday afternoon (Los Angeles Times), submitting a preliminary proxy statement and blue proxy card for a special meeting of shareholders to remove Faraday Future's former chairman Brian Krolicki as a director.
This follows the approval by Faraday Future's board to hold a special meeting of shareholders and to vote on the removal of Brian Krolicki, and the filing of a preliminary proxy statement with the SEC. The EV maker expected the company to set the date for the special shareholders' meeting after the SEC approves the proxy statement.
FF Top is an indirectly owned subsidiary of FF Global Partners LLC, which is jointly owned by two dozen FF global partners and former executives, and managed by the FF Global Executive Committee, consisting of six individuals.
The major shareholder and FF have filed proxy statements for the special shareholders' meeting, and the only issue at the meeting is the removal of Krolicki from the board, which means that the FF Global Partners team has made a breakthrough in its efforts to restructure the Faraday Future board.
In the year since its IPO, derelictions of duty and non-performance of Faraday Future's board of directors, especially by a small group of independent directors, has also led to unanimous dissatisfaction among its global partners, executive team and internal employees.
In the proxy statement, FF Top further pointed out that although Krolicki was a director nominated by the major shareholder, it originally intended to use its rights under the shareholders' agreement to remove him from the Faraday Future board, citing his lack of due diligence and incompetence during his tenure as chairman and independent director, as well as a series of poor decisions made previously without regard to shareholders' interests, including launching an internal investigation.
However, FF Top said that due to Krolicki's refusal to resign and the Faraday Future board's earlier refusal to cooperate, he will be removed from the board through proxy voting at a special shareholders' meeting, and it is also a legitimate authority under corporate law for all shareholders to make judgments and decisions.
The Faraday Future board, driven wrongly by then Chairman Brian Krolicki, hastily formed a special committee chaired by independent director Susan Swenson and launched an internal investigation due to a short seller report by a small and little-known firm, according to media reports.
The internal investigation, which lasted more than six months, not only consumed a significant amount of corporate resources, but also directly impacted the stated timeline for delivery of its flagship luxury electric vehicle FF 91.
Ironically, the investigation rejected almost all of the allegations in the short seller report, but took the opportunity to punish several executives, including Faraday Future's Chinese founder Yueting Jia and CEO CEO Carsten Breitfeld, for unfounded reasons.
Moreover, according to public documents, Susan Swenson seized the opportunity to become Faraday Future's executive chairperson and grabbed millions of dollars in compensation after the board announced the results of its internal probe, and remedial measures in February, forcing Jia and Breitfeld to report to her. Such a layman in the auto industry, who has been retired for more than a decade, directly controls the highest decision-making power of the Faraday Future's board of directors and corporate operations.
In addition, Jordan Vogel, former CEO of Faraday Future's SPAC listing partner PSAC, became the Lead Independent Director on the Faraday Future board, a position specifically created for him. And his elder brother Scott Vogel took on the role of Chairman of the Audit Committee and the Nominating and Corporate Governance Committee of the Board at the company.
Brian Krolicki, despite being nominally removed from the role of chairman, still retains the status of independent director and has become the person acting in concert with the above three directors on almost all key board decisions.
Some industry insiders commented that Faraday Future, a highly innovative U.S. smart electric vehicle company with top-notch products, technology and team, has been controlled by a small group that includes Scott Vogel, who specializes in bankruptcy and restructuring, Jordan Vogel from the real estate industry, Susan Swenson, who has been retired for over 10 years, and Brian Krolicki, who has little experience in business operations and only specializes in political manipulation.
The founder of Faraday Future, Yueting Jia, who created the lagship product FF 91, Breitfeld, father of the BMW i8, and a team of Faraday Future's elite executives from the automotive, internet and technology industries have been struggling under the leadership of a small group of lay directors.
Fred Destin, founder of Stride.VC, a seed-stage fund based in London, quoted a Silicon Valley proverb in an interview in 2018, "Good boards don't create good companies, but a bad board will kill a company every time."
Judging from the business results in the first year since the IPO, the Faraday Future board, controlled by a small group of independent directors, is taking the promising company into a dangerous situation step by step.
What's more, according to an insider familiar with Wall Street, Scott Vogel is a bankruptcy expert on Wall Street and has served as a director of several listed companies, and has teamed up with U.S. law firm Kirkland & Ellis LLP, financial advisory firm AlixPartners and other intermediaries to bring a number of promising listed companies into the mud of bankruptcy, and the two companies have been recommended by Scott Vogel to be Faraday Future's service providers.
Multiple Scott Vogel-driven bankruptcy cases accessible through public information online, also confirm the veracity of the source's claims.This may also be an important reason why Faraday Future's global partners and executive team rose up to reorganize the company's board of directors starting with the removal of Brian Krolicki.
Prior to that, Faraday Future announced a $52 million investment from U.S. institutional investor ATW Partners, a financing that gave FF some some breathing space in the face of cash flow difficulties, but at a high cost and on extremely tough terms.
Sources close to the matter said that the financing negotiation led by Faraday Future's major shareholder FF Top have also made good progress, with up to $600 million still the target for the funding round.
It is the only way for Faraday Future to get through the crisis and get back on track, industry insiders pointed out, by thoroughly restructuring the board of directors and removing the small group of laymen and even malicious independent directors that have been pushing for bankruptcy in the board.
