SunPower Corporation (NASDAQ:SPWR) CEO Tom Werner is a man of faith in his own company, deciding to cut his salary now while holding on to the hope that the future will compensate him. That’s a strong message, but what is it intended for?
A $1 salary
Sometimes company chiefs go to great lengths to try to make investors take their promises seriously. In the case of SunPower CEO Werner, the reason he has decided to voluntarily cut his cash salary to a negligible $1 is that he wants to boost investor confidence.
He is telling investors that he is responsible for the performance of SunPower Corporation and he is willing to make sacrifices to ensure that the company performs as required. That sacrifice means that for the rest of 2016, Werner’s cash salary together with cash bonus will only add up to $1.
Where is the reward?
With that salary cut move, Werner is telling shareholders in SunPower that they are in it together. While announcing the voluntary salary reduction, the CEO said that he believes that the performance of the company will improve and when that happens, shareholders, including him, will be rewarded.
SunPower’s CEO is foregoing pay at a time when the company has also announced some austerity measures, which means actual spending cuts as opposed to the term we often here with governments, which only means slower spending growth. The company said it will cut about 15% of its workforce, thus eliminating about 1,200 positions. The move is expected to enable the company to adjust its manufacturing and power plant businesses.
SunPower has lowered its financial performance outlook for 2016. Instead of revenue in the band of $3.2 to $3.4 billion that was earlier guided, the company now sees revenue coming in the vicinity of $3 to $3.2 billion. On top of that, SunPower is expecting a loss of about $25 to $175 million in 2016. But the earlier guidance called for breakeven or a profit of about $50 million for the year.
For 2Q2016, SunPower Corporation posted adjusted EPS loss of $0.22 with adjusted revenue coming in at $401.8 million, indicating an increase of 6.7%. The company’s top line and bottom line figures exceeded consensus estimates that called for revenue of $345.08 million and EPS loss of $0.24.