CAPSTONE TURBINE CORPORATION (NASDAQ:CPST) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)Reduction in Base Salary of Executive Officers and Change in Bonus
On March 24, 2020, Capstone Turbine Corporation (the “Company”) announced that, to a business plan in response to the global COVID-19 pandemic (the “Business Plan”), each of Mr. Darren R. Jamison, its Chief Executive Officer, Frederick S. Hencken III, its Chief Financial Officer and Chief Accounting Officer, and James D. Crouse, its Chief Revenue Officer, will voluntarily accept reductions to their base salaries of 25%. These reductions will be effective as of April 1, 2020, for a period of 90 days thereafter. Additionally, payment of any bonuses under the Company’s Annual Incentive Plan for the year ended March 31, 2020 to the Company’s leadership team, including Mr. Jamison, Mr. Hencken and Mr. Crouse, if earned, will be in equity in lieu of cash.
Item 7.01Regulation FD Disclosure.
On March 24, 2020, the Company published the press release which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
This information is intended to be furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 8.01Other Events.
On March 24, 2020, the Company announced that, to the Business Plan, it will furlough or reduce the pay of 70% of its direct workforce beginning on March 30, 2020. The affected employees will continue to be employees of the Company and receive employee benefits, including medical benefits. The furloughed employees will not receive direct compensation from the Company during the furlough period, which will last between 45 and 90 days, depending on employee, but will be immediately eligible for unemployment benefits.
The Company expects the ongoing, global economic impact from the COVID-19 pandemic to have an adverse impact on its revenue and adjusted EBITDA for the fourth quarter of Fiscal 2020 and also may have an adverse impact on the Company’s financial condition and results of operations for the first quarter of Fiscal 2021. Although the Company is currently attempting to take all reasonable steps to mitigate the impact of the COVID-19 pandemic, the COVID-19 pandemic will negatively impact its net income and adjusted EBITDA in Fiscal 2020, which includes losses related to new product order delays for ongoing projects, backlog pushouts in the oil and gas markets, witness test cancellations due to travel restrictions, supply chain shortages caused by vendor manufacturing plant shutdowns, increased logistics costs caused by flight cancellations, border shutdowns and lack of personnel to move freight, and anticipated order cancellations, among other challenges. The Company may also be unable to comply with the financial and other material covenants under its debt and other material agreements, and may not be able to negotiate waivers or amendments to such material agreements in order to maintain ongoing compliance. In addition, if the Company experiences any additional unexpected delays in the resumption of its full production capacity or incurs additional unanticipated costs and expenses as a result of the COVID-19 pandemic, such production delays and unanticipated costs and expenses will have a further adverse impact on the Company’s business, financial condition and results of operations in Fiscal 2020 and 2021.
Item 9.01. Financial Statements and Exhibits