SunPower Slashes Executive Salaries and Withdraws 2020 Guidance in Response to Coronavirus

SunPower on Wednesday announced several belt tightening measures
and slashed executive salaries, citing uncertainty related to
COVID-19. The company said the efforts would save up to $50 million
as it navigates an unpredictable 2020.  

The distributed solar and storage company also withdrew the
guidance it offered in February for full year 2020, with GAAP
revenue at $2.1 to 2.3 billion and between 2.5 and 2.75 gigawatts
shipped during the year. The company still plans to finalize its
separation from its international manufacturing arm, which will
become a company called
Maxeon Solar Technologies
, in the second quarter of the
year.

In the meantime, the salaries of CEO Tom Werner and SunPower
Technologies CEO Jeff Waters, who will lead Maxeon once the split
closes, will drop by 30 percent (they’ll still make a healthy
$420,000 per year). Pay for executive vice presidents of various
divisions of the company will drop 25 percent, to range from
$251,250 to $326,250. “Progressive” salary cuts trickled from
the top through to senior managers, with managers and less senior
employees currently insulated from the changes. The company also
froze hiring and promotions and is delaying investments to
transition some manufacturing to its newer Maxeon 5 technology.

Werner framed the changes as a proactive attempt to financially
prepare for the worsening impacts of the coronavirus in the
U.S. Globally, cases of the virus reached 414,179 on Wednesday,
with deaths topping 18,000. As epicenters of the virus expanded
beyond solar manufacturing centers in China and began to
proliferate in the U.S., SunPower’s concerns evolved from
equipment supply to consumer demand.

The company last week began discussing ways to “reduce the
likelihood that we had to impact employees, particularly employees
that couldn’t afford to be impacted,” Werner told Greentech
Media. Though the company has not cut any jobs, Werner acknowledged
“the world is changing very fast” and other workers may be
impacted as infections continue to spread. In Q4 2019 SunPower
said it already expected losses of up to $195 million in
2020. 

Drops in demand for SunPower’s service have so far overlapped
with areas with issued shelter-in-place orders and the regions most
impacted by the virus, such as New York. Seven percent of the
world’s cases are now in New York,
according to the New York Times
. Due to the rapidly rising
number of cases in the state and public safety measures instituted
to stem the increase, Werner said both residential and commercial
installations have been somewhat restricted, though most solar
companies are treating employees as “essential,” which means
they can continue working under jurisdictional shutdowns.

Werner hinted at a coming advisory from the New York State
Energy Research and Development Authority that may limit the
company’s activity in the state. NYSERDA did not respond to
immediate request for comment on the potential guidelines.

In California, which instituted a statewide shelter in place
order on March 19, SunPower is working through its pipeline but
anticipates a potential cliff in demand.

“So far we’ve had enough backlog and enough constructive
things for our field teams to do in California, but that won’t go
on indefinitely,” said Werner.

Nationwide, the company’s “leading indicators,” which
measure possible future demand, show dips between 5 and 30 percent.
Werner said the “super dynamic” situation makes it difficult to
quantify actual decreases in demand at this time.  

The pandemic that’s upending lives and industries across the
globe comes at a pivotal moment for SunPower. The company, which
logged
two profitable quarters in 2019
, is in the process of
streamlining its balance sheet, rehabilitating its finances and
reorienting as a pureplay residential solar, storage and services
provider.

Werner said SunPower is acting now to avoid as much disruption
as possible to those efforts.

“We’re making the cost reductions we are so we can stay on
the path we were on previously, in terms of de-levering our balance
sheet,” he told GTM. “We’re very fortunate that we have been
working hard on our balance sheet and simplifying our financials.
We are less dependent on capital markets and the capital markets
right now are very unstable.”

Source: FS – GreenTech Media
SunPower Slashes Executive Salaries and Withdraws 2020 Guidance in Response to Coronavirus