TuSimple Holdings, a self-driving vehicle startup that recently went through a U.S. national security review, after ousting its interim chief executive officer November 1, also removed most of its board.
Investors constituting a majority of the voting stock removed four independent directors, according to a filing November 10, and interim CEO Ersin Yumer was replaced by Cheng Lu, who led the company until quitting in March.
The moves consolidate control under co-founders Mo Chen and Xiaodi Hou, the sole continuing board member. Chen was named chairman, according to the filing, while Lu was added to the board.
The reshuffling could raise concerns withing the U.S. government. One of the ousted board members, Reed Werner, was named to the board at the same time the company reached an agreement with the federal government following a review by the Committee on Foreign Investment in the U.S (CFIUS). That interagency panel reviews the national security implications of foreign investments.
Werner served as head of a government security committee that TuSimple established in April as part of the agreement with CFIUS.
Shares of the company reversed an early drop to trade up 5% to $2.83 as of 10:16 a.m. November 10 in New York. The stock is down about 92% this year.
The past months have been marked by internal investigations and nonstop management churn at TuSimple. Lu left in March and was replaced by Hou, who was fired in late October when the board discovered some employees were working for a company with Chinese connections. Yumer took over as interim CEO at that time.
Hou, who also served as chairman and chief technology officer, was removed after the board’s audit committee found that TuSimple employees spent paid hours working on matters for Hydron Inc., a firm with significant operations in China. Mo Chen started Hydron.
Hydron was founded by Chen to develop hydrogen-powered freight trucks with autonomous capabilities.
Under the agreement with the U.S. government, two directors left TuSimple’s board. Charles Chao and Bonnie Yi Zhang of Weibo, an affiliate of China’s Sina Corp., were forced to step down. In addition, TuSimple had to come up with a technology control plan to make sure certain data didn’t go to its Asian subsidiary that the autonomous trucking company is now selling.
The investors acting to oust the board November 10 were identified in the filing as White Marble LLC, White Marble International Ltd., Gray Jade Holding Ltd., THC International Ltd. and Brown Jade Holding Ltd.
In addition to Werner, the three other directors who parted ways with TuSimple are Brad Buss, Karen Francis, Michelle Sterling. Without any independent directors, TuSimple is no longer in compliance with Nasdaq listing rules, according to the filing. The company intends to get back into compliance.
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