LOS ANGELES - Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE), an electric vehicle and mobility company, has announced a proposed settlement in a series of stockholder derivative lawsuits. The settlement, if approved by the court, includes corporate governance reforms and a payout for legal fees and expenses.
The derivative actions, consolidated under Lead Case No. 2:22-cv-01570-CAS-JC, allege that certain individuals breached their fiduciary duties by making false and misleading statements between January 28, 2021, and April 14, 2022. These statements pertained to the involvement of Yueting Jia in the company post-merger and the number of reservations for Faraday's flagship vehicle, the FF 91.
Under the proposed settlement, Faraday Future commits to maintaining specific corporate governance reforms for three years. The board, with independent members, has approved these reforms, deeming them in the company's best interest. The board also acknowledged that the plaintiffs' efforts led to the adoption and implementation of these reforms, which are expected to benefit the company and its shareholders.
The settlement stipulates that Faraday Future's insurers will pay $775,000 to the plaintiffs' counsel for attorney fees and expenses, subject to court approval. Additionally, up to $2,000 may be awarded to each of the five plaintiffs as service awards from the fee amount.
A hearing to consider the fairness and adequacy of the settlement is scheduled for November 4, 2024, at the United States District Court for the Central District of California. Stockholders do not have the right to individual compensation from this settlement, and final approval will bar them from contesting the settlement or pursuing related claims.
Faraday Future, which describes itself as a pioneer in the AI TechLuxury market, continues to focus on advancing electric vehicle technology and promoting its vision of a shared intelligent mobility ecosystem. The information provided in this article is based on a press release statement.
In other recent news, Faraday Future Intelligent Electric Inc. announced significant changes to its executive compensation packages and implemented a 1-for-40 reverse stock split. The company also modified its debt agreements to ease cash obligations and expanded its authorized common stock from 463.3 million to 4.17 billion shares.
Faraday Future's CEO Matthias Aydt and Chief Product and User Ecosystem Officer Yueting Jia have seen adjustments to their compensation. Aydt will now receive an annual base salary of $700,000, a discretionary target bonus of the same amount, and a one-time recognition bonus of $500,000. Jia's annual base salary has been increased to $680,000, with a discretionary target bonus of $816,000, and a similar one-time recognition bonus of $500,000.
The company's financial developments include a revenue of $0.8 million and a net loss of $432 million for fiscal year 2023, a decrease from the previous year's loss of $602 million. Faraday Future also raised approximately $300 million through convertible notes and other financing methods.
In addition, the company witnessed the resignation of board member Li Han, who is expected to continue contributing in an advisory capacity. Lastly, Faraday Future resumed its Start of Delivery Second Phase with the delivery of the latest FF 91 2.0 model. These are among the recent developments as Faraday Future continues to navigate the competitive electric vehicle market.
InvestingPro Insights
As Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE) navigates through its legal challenges and corporate governance reforms, the financial metrics and market sentiment surrounding the company provide a clearer picture of its current standing. According to real-time data from InvestingPro, Faraday Future has a market capitalization of approximately $49.33 million. The company's Price / Book ratio, as of the last twelve months leading up to Q2 2024, stands at a low 0.33, potentially indicating that the stock is trading below the company's net asset value.
However, it is essential to note that Faraday Future is grappling with significant financial headwinds. The company's gross profit margin over the same period is reported at a staggering negative 7096.57%, reflecting substantial costs relative to its revenue. This aligns with one of the InvestingPro Tips which highlights that Faraday Future operates with a significant debt burden and may have trouble making interest payments on its debt. Additionally, the company's stock has experienced substantial volatility, with a one-year price total return as of the same date showing a drastic 99.34% decline.
Despite these challenges, analysts anticipate sales growth in the current year, which could be a silver lining for the company's future prospects. For investors and stakeholders, these insights and additional InvestingPro Tips, which currently number over 20 for Faraday Future, offer in-depth analysis and could be instrumental in making more informed decisions. The full suite of tips, including observations on the company's cash burn rate and valuation multiples, can be found on the InvestingPro platform.
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