Solar panel installer SolarCity said Wednesday executives’ salaries will be slashed from more than $200,000 to just $1 per year because of the dire solar installation outlook.
The solar panel producer’s Chief Executive Officer Lyndon Rive, and his brother, Chief Technology Officer Peter Rive, requested to have their salaries ratcheted down to $1 from $275,000, in an attempt to put the company in better financial standing. The executives agreed to the reduction, SolarCity said in a regulatory filing.
“It’s a symbolic gesture, but it’s appropriate,” Raymond James analyst Pavel Molchanov said.
The decision to reduce the executives’ salaries, as well as cut operating costs, come shortly after the California-based company agreed to a $2.6 billion buyout offer from electric vehicle maker Tesla Motors, both of which were founded by techno-entrepreneur Elon Musk.
The merger was a controversial one, according to analysts and Tesla shareholders.
CtW Investor Group, which holds about 200,000 shares of Tesla, requested Tesla shake up its board of directors after it was discovered in June that six out of seven board members with the solar panel company have direct connections with Musk.
The group said the market’s “hostile reaction” to the SolarCity deal was induced, in part, by the group’s recognition that Donald Kendall, chief executive of investment management firm Kenmont, is the only person on the SolarCity board without deep-rooted ties to Musk.
The Rives are Musk’s cousins. Lyndon Rive told reporters that he would be recusing himself from the “decision-making process” as well, and said the offer to buy SolarCity represented a value of between $26.50 and $28.50 a share.
The move to reconfigure the Rives’ salaries also comes as SunPower, SolarCity’s chief rival, said CEO Tom Werner would see his salary and bonus change to $1 for the rest of the year as the company restructures.
SolarCity and SunPower are likely reacting to stiff financial headwinds slamming the solar panel industry.
Another solar company, SunEdison, is on the verge of complete collapse, as the bankrupt company was forced to stiff shareholders as its debts outweigh assets by at least $1 billion. Judge Stuart Bernstein said in Aug. 12 decision announcing SunEdison’s shareholders won’t get an official voice in the bankruptcy.
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