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Nikola will not support a slate of board nominees proposed by its founder Trevor Milton, putting a dent in his plan to regain influence over the troubled electric truck start-up after he was convicted of fraud last year and sentenced to four years in prison.
Milton, who started Nikola in 2014 and led it as it became a public company that at one point exceeded the market valuation of established carmakers such as Ford, was ousted as chief executive in 2020 but still owns about 4 per cent of Nikola’s shares, a stake currently worth around $37mn.
M&M Residual, an entity belonging to Milton, last month put forward five candidates for election to the company’s board, Nikola said on Friday. The nominees are Cole Cannon, Derek Johnson, Hans Peterson, Paul Southam and Dave Sparks.
The five “have no public company experience, add no skills or experience to the board, and indisputably lack the depth of experience that the current Nikola board members bring to the company”, Nikola said.
Milton can still present his slate to shareholders as challengers to the company’s endorsed nominees despite his fraud conviction for lying to Nikola’s investors about the progress it had made on developing a hydrogen-powered truck.
Nikola reiterated its support for its current board including Steve Girsky, its current CEO, a former General Motors executive who as an investor had helped Nikola list its shares.
Nikola said its current board “comprises a diverse group of reputable, leading experts in their respective fields — from trucking to start-ups to technology to energy, as well as customer service — all integral aspects of company business”.
Milton’s attempt to reinsert himself into Nikola comes even as the company says he owes it $165mn plus interest after an arbitrator ruled in its favour. This includes a $125mn fine Nikola paid to the Securities and Exchange Commission to settle a securities fraud investigation by the regulator.
The sum “remains unpaid, and Nikola is vigorously seeking all legal avenues to recover monies owed to the company by Milton,” it added.
Milton’s tenure at Nikola saw the company list shares through a merger with a special purpose acquisition company backed by Girsky at the height of the blank-cheque company boom. Milton had a large following on social media and often posted about the company’s progress on Twitter, now X.
However, a short seller report released by Hindenburg Research, which showed a Nikola truck rolling downhill rather than moving on its own propulsion, hit the company’s share price and cast a spotlight on Milton’s role in promoting his business.
Milton had drawn comparisons early on to Tesla founder Elon Musk, even naming his truck company after the same famed inventor, but in court prosecutors likened his crimes to those of Elizabeth Holmes, the Theranos founder who was sentenced to more than 11 years in prison after being convicted of fraud.
