Faraday Future is overhauling its board, cutting pay for two top executives and suspending at least one other, following an internal investigation that determined that employees made inaccurate statements to investors and that its “corporate culture failed to sufficiently prioritize compliance.” according to a regulatory file.
Faraday Future, which has had a long string of controversies since its founding in 2014, became a publicly traded company in July 2021 following the merger with Property Solutions Acquisition Corp. number of inaccurate statements. An internal review conducted by a special committee of directors and leveraged the experience that a forensic accounting firm and independent legal counsel soon followed.
The committee found that company officials underestimated the involvement of founder and former CEO Jia Yueting, who is now chief product officer. The review also determined that the company’s statement that it had received more than 14,000 reservations for the FF 91 vehicle was potentially misleading because only several hundred of those reservations were paid for. The remainder, which totaled 14,000, were indications of unpaid interest. The company’s internal controls over accounting and financial reporting also require an upgrade of personnel and systems, the reviewers found.
As a result, Sue Swenson, who was the chair of the audit committee, was appointed to a new position of executive chair. She will oversee the senior executive leadership team and continue to direct further investigations and remediation.
CEO Carsten Breitfeld and Yueting will receive a 25% pay cut and will report directly to Swenson. Brian Krolicki will step down as chairman of the board and chairman of the nominating and corporate governance committee and will become a member of the board’s audit and compensation committees. Jiawei (Jerry) Wang, Vice President of Global Capital Markets of the company, will be suspended without payment until further notice in relation to the matters mentioned below, effective immediately and Jarret Johnson, General Counsel and Secretary, “will be separated from the Company, in accordance with with a regulatory filing.
The special committee also approved the strengthening of internal controls, including the hiring of a compliance officer and the hiring of additional financial and accounting support.