David Hall, the largest holder of outstanding common stock of Velodyne Lidar, Inc. (NASDAQ:VLDR) (“Velodyne Lidar” or the “Company”), today issued the below open letter to the Company’s Board of Directors (the “Board”):
Members of the Board,
I am pleased that following my calls for meaningful leadership changes at Velodyne Lidar, Dr. Anand Gopalan decided to resign as Chief Executive Officer and a director. Though I believe this represents a first step in the right direction, the root of poor business management and the anti-stockholder culture at Velodyne Lidar remains. This is why today, I am calling on Chairman Michael Dee and director Hamid Zarringhalam to resign from the Board. I believe that both of these individuals have breached stockholders’ confidence and destroyed significant value in the Company.
Since being installed on the Board via a merger with Graf Industrial, a special purpose acquisition company (“SPAC”), Mr. Dee has spearheaded major business decisions that leave him responsible for the Company’s nearly 80% stock price decline, in my view.1 Despite this poor performance and Mr. Dee’s lack of relevant skillsets or public company board experience, the Board recently elevated Mr. Dee to the position of Chairman.
In addition to Mr. Dee’s lack of relevant skillsets to serve on the Board, stockholders should be aware that he is currently deeply embroiled in litigation at PureCycle Technologies, Inc., relating to his role as Chief Financial Officer following its merger with a SPAC with disastrous results. Mr. Dee is facing serious accusations of misleading investors and fraud.
Beyond his unsettling track record, I am deeply concerned that Mr. Dee and the Board are considering transferring Velodyne Lidar’s sophisticated Alpha Prime lidar manufacturing know-how and associated trade secrets, the crown jewels of the Company’s IP portfolio, to Nikon, which is moving into the lidar space with, among other things, its recent partnership with Aeva, a Silicon Valley startup founded to develop lidar technology. I question how moving the best of the Company’s portfolio of technology to Nikon benefits Velodyne’s stockholders whatsoever. It seems as if this move greatly benefits director Hamid Zarringhalam, an executive employee of Nikon, who is acting within a disabling conflict of interest in making decisions that seemingly benefit Nikon, when he should be focused on what is best for Velodyne Lidar and its stockholders.
We are aware that during a recent conversation discussing the decline in Velodyne Lidar’s valuation, Mr. Zarringhalam commented, “I don’t care about the stock decline because I don’t own any.” This statement reveals a complete lack of professionalism and alignment with stockholders. Clearly, the Company is in serious need of ethical directors with public company and high growth tech experience to help turn around the anti-stockholder culture that pervades the current Board.
As directors of a public company, Messrs. Dee and Zarringhalam should be working for the good of Velodyne Lidar and its stockholders by asking management questions about the cash burn (which reached an alarming $70 million this quarter), engineering milestone achievements, new product schedule and customer satisfaction metrics. As the largest stockholder in Velodyne Lidar, I have repeatedly requested information from the Company regarding the facts and circumstances that led to the significant decline in value. The Company has repeatedly declined to provide critical reports and information on grounds of “privilege.” I will continue to act in stockholders’ best interests by requesting documents and information so that we can get to the bottom of the mismanagement that is adversely affecting the Company.
Though the Board now has an opportunity to help improve Velodyne Lidar by identifying an independent, high-integrity Chief Executive Officer with significant technology and public company board experience, the reality is that this will not fix the Company’s broken corporate governance. I am calling for Messrs. Dee and Zarringhalam to resign from the Board so that new blood can join the boardroom to help the Company revitalize its culture and return to its position at the forefront of lidar technology innovation.
Founder of Velodyne Lidar, Inc.
1 Velodyne Lidar’s stock price declined from $30 in September 2020 to $6.17 on August 20, 2021.