Super-voters override self-driving truck controls

CreateAl Holdings

11/11/2022 17:33

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       NEW YORK, Nov 11 (Reuters Breakingviews) - If only it
weren’t so easy to see what’s behind the latest mess at TuSimple
 TSP.O . The self-driving truck technology developer has
descended into corporate governance chaos after the ousted chief
executive, Xiaodi Hou, turned around and fired the entire board
of directors. The situation was made possible by a dual-class
share structure that gives Hou and his co-founder Mo Chen 59%
voting control despite their far smaller economic stakes.
    The boardroom cleanout, which includes a director installed
as part of a deal with the U.S. government, triggers a potential
delisting from Nasdaq because there’s now an insufficient number
of independent members. TuSimple says it intends to become
compliant, but this debacle deepens the company’s swift reversal
of fortune. TuSimple achieved a nearly $8.5 billion market value
when it went public in April 2021; it’s now worth about $640
million.
    Investors increasingly have been too willing to accept
second-class status and cede power to entrepreneurs. When
capital is dearer and leadership decisions get more
questionable, the risks of such acquiescence inevitably become
clearer. The proliferation of supervoting stock means TuSimple
shareholders won’t be the last to get hit hard. (By Jeffrey
Goldfarb)
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 (Editing by Lauren Silva Laughlin and Amanda Gomez)
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