A week after doubling the number of outstanding shares and exposing current holders to dilution, Nikola shares are in retreat. 

Former CEO Mark Russell and the electric truck and hydrogen distribution startup itself are among the sellers, though SEC filings of the sales list the executives for whom the company covered federal withholding taxes on stock awards. The current executives are holding their shares, a Nikola spokesperson said in an email. 

Nikola’s share price (NASDAQ: NKLA) has dropped from $3.39 on Aug. 3 to close Friday at $1.95, down less than 1%.

Former CEO Russell pulls in $8.3 million in a week

Russell was pushed out as CEO in November before his intended retirement in January. He has now converted all his options granted in February 2019 when he joined Nikola as president. He was not renominated as a director this year.

At one time, Russell had more than 8 million options. In cashless transactions this week, he converted 3.63 million of them at a strike price of $1.06 each into total proceeds of $8.3 million. 

Russell owns approximately 40 million Nikola shares in an entity called T&M Residual formed with Trevor Milton, the company founder. Milton faces sentencing in U.S. District Court in Manhattan Sept. 22 on three federal fraud convictions. Russell testified as a prosecution witness in the trial in September.

Russell declined comment Friday on his continuing divestment. After announcing his planned retirement in August, he put into place a 10b-5 with the Securities and Exchange Commission that allowed him to sell predetermined amounts of converted options at certain prices.

That arrangement expired in May. It generated almost daily reports of Russell’s stock sales, prompting the board to move up his planned retirement date.

Michael Lohscheller, hired as president in February 2022, succeeded Russell as CEO. He resigned Aug. 4 because of a family health issue. Steve Girsky replaced Lohscheller. Girsky gave up his role as chairman to become Nikola’s third CEO in less than a year.

On Thursday, Nikola sold 68,985 shares for $135,000 to cover withholding taxes on vested stock grands for Lohscheller. For the top five officers, Nikola sold 290,769 shares for a total of $569,411.

“Our executives here are completely dedicated to the company and its success — and simply are paying taxes,” spokesman Dan Passe said in an email.

$1-a-year salary plan scrapped

The leadership team agreed in May 2021 to take individual salaries of $1 a year for three years in exchange for a chance at huge payouts if Nikola stock hit certain price thresholds.

In April, the board scrapped that plan and agreed to pay cash salaries of $1 million a year to Lohscheller and $600,000 each to the heads of legal, human resources, energy and finance. Restricted stock awards vesting through 2025 were part of the compensation plan. 

The falling share price could reduce how much the company gets for new shares it sells in the open market. 

On the day after the proposal to increase the number of authorized shares was approved by stockholders, Nikola increased the number of shares available through an at-the-market program Citigroup to match the $600 million Nikola needs to scale its hydrogen-powered fuel cell truck production and invest in distribution of hydrogen fuel.

“I’m pretty confident we have the access to capital that we’re going to need to execute the business plan,” Girsky said in a roundtable with reporters last Friday.

Editor’s note: Clarifies that Nikola sold the shares on behalf of executives to cover federal withholding taxes on stock grants.

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