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Nikola CLO Gets $80 Million Stock Haul After Skipping Salary (1)

March 16, 2021, 10:57 PM; Updated: March 17, 2021, 9:39 PM

Nikola Corp. has given more than $79.6 million in stock to its chief legal officer Britton Worthen, who last year agreed to forego a $250,000 salary at the electric truck and hydrogen fuel cell battery maker.

Nikola disclosed the equity grants to Worthen and five other current and former executives—worth more than $560 million—in a Monday securities filing ahead of a $100 million share sale by the company.

The executives must stay at Nikola through June 2023 to collect the grants, which are pegged to certain share price targets. “None of the share price milestones have been achieved and none of the performance awards have been earned,” the filing said.

The disclosure comes as Phoenix-based Nikola, advised by Pillsbury Winthrop Shaw Pittman, looks to raise money for general corporate purposes, including the completion of a manufacturing facility for its hybrid trucks and fuel cells.

Worthen, who has been Nikola’s top lawyer since late 2015, didn’t respond to a request for comment Tuesday about his pay package, which included $144,231 in base salary prior to Nikola going public last June.

Just ahead of that public listing, structured as a reverse merger with a special-purpose acquisition company, Worthen agreed take a $1 salary in return for stock.

Nikola’s share price soared early on, hitting a 52-week high of $93.99 last June, before tumbling amid investor concerns about company statements. The stock closed at $15.85 per share Tuesday.

The company now faces litigation from shareholders in Delaware who claim that Nikola exaggerated its ability to disrupt the trucking industry.

Nikola acknowledged last month that an internal review conducted by Kirkland & Ellis found that the company’s founder and former chairman, Trevor Milton, made nine inaccurate statements that misled investors.

In September, Milton stepped down from the company, whose president and CEO continues to be Mark Russell, a former Kirkland associate and longtime trucking industry executive. Russell has equity grants in Nikola valued at $159.2 million.

Big Legal Bills

Russell, who Nikola investors reportedly pushed to make CEO before it went public last year, is now tasked with getting some better traction for the trucking startup.

Nikola has said it’s cooperating with Justice Department and Securities and Exchange Commission inquiries into its business practices, probes prompted by a September report issued by short-seller Hindenburg Research LLC.

That report prompted General Motors Co. to scuttle a plan to take an 11% stake in Nikola. GM, which also dropped plans to manufacture a battery-powered Nikola pickup truck called the Badger, did agree to provide its hydrogen fuel-cell technology for use in Nikola’s semi-trucks. Pillsbury Winthrop, Nikola’s primary corporate and securities counsel, advised the company on its agreement with GM, which turned to Paul, Weiss, Rifkind, Wharton & Garrison for outside counsel.

Bloomberg Law data shows that Kirkland has picked up roles advising Nikola on at least eight lawsuits filed against the company in U.S. federal courts within the last year. Nikola disclosed in securities filings this week that Kirkland’s internal review has not yet come to any conclusions about whether inaccurate statements allegedly made by Milton could have “violated any statute.”

Milton’s departure has been costly for the company he started in 2015. Nikola said in securities filings that it had an “increase in legal expenses of $27.5 million primarily related to regulatory and legal matters incurred in connection with the short-seller analyst report” by Hindenburg.

Nikola also said it’s advanced $8.1 million to cover Milton’s attorneys’ fees, of which $1.5 million was paid last year under an indemnification agreement he has with the company. Nikola said it expects to “incur additional costs” related to Kirkland’s internal inquiry and the SEC and Justice Department probes involving the company.

Worthen, Nikola’s legal chief, told Bloomberg Law last June that Milton had personally recruited him to the company.

The former corporate partner at Phoenix-based boutique Beus Gilbert McGroder said at the time that the company employed five in-house lawyers, including himself. In August, Nikola hired corporate contracts counsel Valerie Parzych from DEPCOM Power Inc., a construction and engineering company where she was senior counsel.

(Clarifies GM and Nikola's revised agreement in 13th paragraph. This story was published March 16.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com
John Hughes in Washington at jhughes@bloombergindustry.com

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