Welcome to the 2024 Annual Meeting of Stockholders for Workhorse Group Inc. Our host for today's call is Rick Dauch, Workhorse's Chief Executive Officer and a Director of the company. At this time, all participants will be in a listen-only mode. I will now turn the call over to your host. Mr. Dauch, you may begin.
Good morning, ladies and gentlemen. I'm Rick Dauch, Workhorse's Chief Executive Officer and a Director of the company. I'm pleased to welcome you to the Workhorse 2024 Annual Meeting of Stockholders. I will be serving as chairman for this meeting. On behalf of the company, I want to welcome you and thank you for attending this meeting of the stockholders. I would like to introduce Jim Harrington, our Chief Counsel and Chief Compliance Officer, and our directors, including our Chairman Ray Chess and my fellow directors Jacqueline Dedo, Pamela Mader, Bill Quigley, Scott Miller, and Dr. Jean Botti. I would also like to introduce Scott Devenny from the accounting firm of Grant Thornton, the company's independent public accountants. During the question-and-answer period following the discussion of the matters we voted on, I will respond to appropriate questions you may have.
The meeting is called to order, and the polls are now open. Jim Harrington will act as secretary of the meeting. I'll turn to Jim now for some procedural matters.
Thanks, Rick. Ken Frank has been appointed as Inspector of Election for this meeting. Mr. Frank has taken the customary oath of office, which will be filed with the permanent records of the meeting. By attending the meeting virtually, you are asked to record your appearance. The company has already given the Inspector of Election the proxies previously received from stockholders. The Board of Directors set the close of business on March 15, 2024, as the Record Date for stockholders entitled to notice of and to vote at this meeting. As of the Record Date, 314,606,266 shares of common stock were outstanding, each share being entitled to one vote on all matters properly before the meeting.
The affidavit of mailing prepared by an employee of Broadridge Financial Solutions certifying to the timely mailing of the notice of the meeting to all stockholders of record on the Record Date is available for inspection by the stockholders. Under the company's bylaws, the majority of the shares entitled to vote, present or represented by proxy, constitutes a quorum. A quorum is necessary to conduct business at the annual meeting. You will be considered part of the quorum if you have voted by proxy. Abstentions and Broker Non-Votes count as shares present at the annual meeting for purposes of determining a quorum. A tally by an Inspector of Election indicates that a quorum is present, and the meeting will therefore proceed. The presence of a quorum will be confirmed by an Inspector of Election when he completes his tally of the proxies and ballots.
A final count of the exact number of shares present will be included in the minutes of this meeting and will be filed on Form 8-K with the SEC.
The meeting has been called to: 1) Consider and vote upon the election of directors to serve until the next annual meeting of stockholders, 2) Consider and vote upon, on an advisory basis, the compensation of the company's named executive officers, which we refer to as the Say-on-Pay proposal, 3) Consider and vote upon, on an advisory basis, the frequency of voting on named executive officer compensation, which we refer to as the Say-on-Frequency proposal, 4) Consider and vote upon a Reverse Stock Split of our outstanding shares of common stock by a ratio of any whole number between 1-for-10 and 1-for-20 at any time prior to August 30, 2024, to be determined at the discretion of the Board of Directors for the purpose of complying with the Nasdaq Listing Rules, 5)
Consider and vote upon the proposed issuance of the maximum number of shares of our common stock underlying our Senior Secured Convertible Notes and Warrants to purchase common stock, 6) Consider and vote upon the ratification of the Audit Committee selection of Grant Thornton LLP as our independent auditors for the year ending December 31, 2024, and 7) To transact such other business as may properly come before the meeting.
Directors will be elected by a plurality of the shares of common stock present and voting, in person or by proxy, at this meeting. For the Say-on-Frequency proposal, the frequency that receives the highest number of votes will be deemed to be the frequency selected by our stockholders. The receipt of the affirmative vote of a majority of the shares present and voting on the matter is required to approve all of the other proposals. This meeting will take up separately each of the items of business. I request that any discussion in connection with an item be limited to that item. Following completion of discussion on all the items, voting on each item will take place. While the votes are being counted, Rick will provide some remarks and then entertain questions. The first order of business is the election of directors, as set forth in the proxy statement.
Is there a motion with respect to the election of directors?
I nominate the following persons named in the proxy statement for election as directors of the company to hold office, subject to the provisions of the bylaws, until the next annual meeting of stockholders and until their successors are duly elected and qualified: 1) Ray Chess; 2) Rick Dauch; 3) Jacqueline Dedo; 4) Pamela Mader; 5) Bill Quigley; 6) Scott Miller; and 7) Jean Botti.
I second the nominations.
As there are no further nominations, I will entertain a motion that nominations be closed.
I move that nominations be closed.
Second the motion.
Is there any discussion on the motion? The motion has been carried, and I hereby declare that the nominations for directors are closed. We will now proceed with the consideration of the compensation of our named executive officers. Is there a motion with respect to the approval of compensation?
I move the adoption of the following resolution, Resolved, that the company's stockholders approve on an advisory basis the compensation of the company's named executive officers as disclosed in the proxy statement for the 2024 annual meeting of stockholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission.
I second the motion.
Is there any discussion on this motion? We will now proceed with the consideration of the Say-on-Frequency proposal. Is there a motion with respect to this proposal?
I move for the adoption of the following resolution, resolved, that the company's stockholders determine on an advisory basis whether the advisory vote on executive compensation of the company's named executive officers should occur every 3 years, every 2 years, or every year.
I second the motion.
Is there any discussion on the motion? We will now proceed with the consideration of the approval of the Reverse Stock Split as described in Proposal 4 of the Proxy Statement. Is there a motion with respect to the proposal?
I move for the approval of a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-10 and 1-for-20 at any time prior to August 30, 2024, to be determined at the discretion of the Board of Directors for the purpose of complying with Nasdaq listing rules, subject to the board's discretion to abandon such reverse stock split.
I second the motion.
Is there any discussion on the motion? We will now proceed with the consideration of the approval of the proposed issuance of the maximum number of shares of our common stock as described in Proposal 5 of the proxy statement. Is there a motion with respect to the proposal?
I move for the approval, for the purpose of Nasdaq listing rule 5635(d), of the proposal issuance of the maximum number of shares of our common stock underlying our A senior secured convertible notes and B warrants to purchase common stock as described in Proposal 5 of the proxy statement.
I second the motion.
Is there any discussion on the motion? We will now proceed with the consideration of the ratification of Grant Thornton LLP as the company's independent auditors for the year ending December 31, 2024. Is there a motion with respect to the ratification of Grant Thornton?
I move the adoption of the following resolution, Resolved, that the Audit Committee selection of Grant Thornton LLP as the company's independent auditors for the year ending December 31, 2024, is hereby ratified and approved.
I second the motion.
Is there any discussion on this motion? The polls are now open for voting. As previously noted, all proxies have been given to the inspector of election, and we ask that all voting online at this meeting be finalized. You need not vote if you have previously voted. As all stockholders or their proxies have cast their ballots, the polls are now closed. I instruct the inspector of election to count the votes and submit the tally. While the votes are being counted, Rick will take this opportunity to make some brief remarks and respond to questions received online.
You're interrupting sometime.
Rick, maybe your mute.
Sorry about that. During the course of 2023, the entire Workhorse team, engineering, supply chain, manufacturing, and functional expertise, launched three different products: the W4 CC, the W750, and the W56 step van. We started production for all of them in our Union City, Indiana, manufacturing complex. Additionally, we essentially completed revitalizing our manufacturing at technical facilities during the year. Most crucial during the year was the successful testing, validation, and start of production for the future lifeblood of the company, the W56 step van in Q4. Unfortunately, we have also made some tough decisions about our cost structure as demand has lagged in key segments due to various market issues, including lack of clarity around CARB ACF regulation, voucher payment timing, and infrastructure availability across the country.
We have taken steps across the organization to aggressively reduce costs and cash uses in an effort to continue to complete the transition from technology startup to a full-fledged commercial EV OEM while continuing to deliver world-class products, services, and value for our customers and stakeholders. During Q1 of this year, we completed a reduction in force of approximately 20% of our total workforce, excluding direct labor. In Q2 of this year, our executive officers agreed to defer 20% of their salaries. In April, we temporarily furloughed 73 employees at our Union City factory. We also restructured the Aero business from a design and manufacturing drone business to drones as a service model and are working to consummate a sale to a third party during Q2, 2024.
What supports our conviction in Workhorse's future in the medium-duty commercial EV truck market is the firsthand feedback we are receiving from our potential customer base, multiple customers. We recently received a major order for 141 of our W4 CC chassis for the important California market. Furthermore, the W56 has been described by last-mile delivery firms that have tested our truck during multiple week demonstrations this year as being best in class. While we currently have orders for 68 W56 step vans in hand now, we look forward to converting this interest in the W56 into further orders as we work through 2024. Finally, in the last month, we entered into agreements to add three new dealers to our network for a total of 12 dealer partners representing our product portfolio across North America. Now I'll answer some of your questions that have been submitted to us online.
The first theme in your questions is around our progress in commercial vehicle sales. Again, we announced that the company recently received orders for 141 W4 CC trucks and that 30 of them were shipped in the current quarter. In addition, we have received orders for a total of 68 W56 trucks today, and demo performance of this truck with last-mile delivery companies has been extremely good. Unfortunately, demand has lagged in key markets due to various market challenges, including the lack of clarity around CARB ACF enforcement, voucher payment timing, and infrastructure availability. Finally, we've been active in adding new dealers to our network, and we'll continue to do so. At Workhorse, all hands are on deck to focus on driving sales as we move into through 2024. The second bucket of your questions is centered around share price concerns.
Let me say that the board of directors and I are well aware of the share price movements and the direct impact on our fellow shareholders. One of the proposals on the agenda is a reverse stock split, which, if it is approved by shareholders, should enable Workhorse to reestablish Nasdaq listing compliance for share price. Finally, a third area of questions being asked is about the current status of our strategic position of our Aero business. Recall, we announced in Q4 2023, that we would evaluate strategic alternatives for the drone business. As a result of this review, we have taken two major steps to reposition Aero. First, we decided to move to a drone as a service model. And second, we are working with a third party to complete the divestment, and I would expect that we would close this transaction in the current quarter, so.
I'd like to turn it back over to Jim now this time, so.
Thanks, Rick. The inspector of election has reported that the following nominees have received the highest number of votes for election as directors: Ray Chess, Rick Dauch, Jacqueline Dedo, Pamela Mader, Bill Quigley, Scott Miller, and Dr. Jean Botti. The proposal for the company to hold a say-on-pay vote every year has received the highest number of votes. In addition, a majority of the shares present and voting have been voted in favor of all of the other proposals set forth in the proxy statement. I therefore declare that Ray Chess, Rick Dauch, Jacqueline Dedo, Pamela Mader, Bill Quigley, Scott Miller, and Dr. Jean Botti have been elected members of the board of directors to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified.
I declare that the advisory vote in favor of the say-on-pay proposal is approved and that the advisory vote on the say-on-frequency proposal is to hold a say-on-pay vote every year. I further declare that the reverse stock split authorization, as described in Proposal 4 of the proxy statement, is approved. I further declare that the proposed issuance of the maximum number of shares of our common stock, as described in Proposal 5 of the proxy statement, is approved. And finally, I declare that the stockholders have ratified and approved the audit committee selection of Grant Thornton LLP as the company's independent auditors for the year ending December 31, 2024. The inspector of election will file his certificate with respect to the results of the voting in the company's minutes of the meeting.
Is there any other business to be brought before the meeting? If there is no other business, I will entertain a motion to adjourn the meeting.
I move the meeting be adjourned.
I second the motion.
All those in favor of the motion, please indicate by saying aye. Those opposed, no. The motion is carried, and the annual meeting of the stockholders of Workhorse Group, Inc., is adjourned. Thank you for your attendance.
This now concludes the meeting. Thank you for joining, and have a wonderful rest of your day.