SolarCity has kicked off a mass restructuring of its business ahead of the completion of its sale to Tesla. In a company filing, SolarCity said the cost of the process would be between $3m and $5m, most of which would consist of severance benefits to employees who are being let go. At the end of last year, SolarCity had 15,000 employees.
As a symbolic gesture, the company’s co-founders Lyndon Rive, CEO, and Peter Rive, CTO, announced that they would be taking a pay cut from $275,000 to $1. In a statement to USA Today, a spokesperson for SolarCity said the company fully expects to grow again in 2017, but must reduce costs in the short term to be in a position to do so. In its filing, SolarCity blamed lower guidance for solar panel installations than previously expected. Earlier in August, SolarCity said it planned to install between 900 and 1,000 MW worth of panels, down from initial expectations of between 1,000 and 1,100 MW.
Elon Musk, who is the owner of Tesla, Chairman of SolarCity, and cousin to Lyndon and Peter Rive, described the deal as a ‘no-brainer’ that would help fight climate change
The future of SolarCity seemed to have been sealed in August. Tesla announced it would acquire the company in June, with the details being finalised this month in an agreement worth $2.6bn. Elon Musk, who is the owner of Tesla, Chairman of SolarCity, and cousin to Lyndon and Peter Rive, described the deal as a ‘no-brainer’ that would help fight climate change.
It’s not the only case of a symbolic CEO pay cut in the solar energy sector in recent weeks, as CNBC reported Tom Werner, the CEO of rival solar panel maker Sun Power, recently announced he would be taking a $1 salary to make amends for a significantly lower profit guidance for 2016, and to boost investor confidence.
In a separate filing, SolarCity also announced it would be issuing $124m in bonds, according to Reuters. The bonds are carrying a higher interest rate than any previous offering from SolarCity at 6.5 percent.