EV Space Faraday Future Restructuring Leadership

Faraday Future Announces Board Restructuring and Executive Compensation Adjustments

Following an internal investigation, Faraday Future is implementing significant changes to its board of directors and executive compensation structure. The investigation revealed that inaccurate statements were communicated to investors, and a deficiency in prioritizing compliance was identified within the company’s corporate culture, as detailed in a recent regulatory filing.

Investigation Findings and Background

Established in 2014, Faraday Future transitioned to a publicly traded entity in July 2021 through a merger with Property Solutions Acquisition Corp. Shortly after, allegations surfaced from a short seller report, claiming the company had disseminated several inaccuracies.

A special committee of directors initiated an internal review, leveraging the expertise of forensic accountants and independent legal counsel to thoroughly examine the claims.

Key Findings of the Internal Review

The committee’s findings indicated that the role of founder and former CEO, Jia Yueting – currently serving as chief product officer – was understated in company communications.

Furthermore, the reported figure of over 14,000 reservations for the FF 91 vehicle was deemed potentially misleading. Only a small fraction of these, approximately several hundred, were backed by actual payments.

The remaining 14,000 represented unpaid expressions of interest, rather than firm commitments. The review also highlighted the need for improvements to the company’s internal controls related to financial accounting and reporting, necessitating upgrades to both personnel and systems.

Leadership Changes and Accountability Measures

As a direct consequence of these findings, Sue Swenson, previously the audit committee chairperson, has been appointed to the newly created position of executive chairperson.

In this role, she will oversee the senior executive leadership team and spearhead further investigations and corrective actions.

Both CEO Carsten Breitfeld and Jia Yueting will experience a 25% reduction in their respective salaries and will now report directly to Swenson.

Additional Personnel Actions

Brian Krolicki will relinquish his positions as chairman of the board and chair of the nominating and corporate governance committee. He will transition to membership on the audit and compensation committees.

Jiawei (Jerry) Wang, the company’s VP of Global Capital Markets, has been suspended without pay, pending further notice. Jarret Johnson, the general counsel and secretary, is also departing from the company, according to the regulatory filing.

Strengthening Internal Controls

The special committee has authorized measures to bolster internal controls, including the recruitment of a chief compliance officer and the addition of further financial and accounting personnel.

These changes are intended to enhance the company’s governance and ensure greater transparency and accuracy in its financial reporting.