SolarCity's founders will earn $1 a year, lay off workers ahead of Tesla takeover
SolarCity will soon have fewer employees to carry out chairman Elon Musk’s clean-energy dreams for the California solar installer.
SolarCity cofounders Lyndon and Peter Rive this week announced a “realignment” that will involve laying off an unspecified number of workers by the end of this year, according to an Aug. 17 regulatory filing.
The Rive brothers, who are also Musk’s cousins, agreed to whittle their annual salaries down from $275,000 each to $1 per year, the legal minimum salary. The company told investors it expected to take charges of $3 million to $5 million for severance costs related to the layoffs.
SEE ALSO: Elon Musk wants SolarCity to build "solar roofs" as Tesla CEO eyes takeover
SolarCity, the biggest U.S. solar installer, is facing slowing demand for its rooftop solar installations.
The company last week posted another unprofitable quarter and said its debt had increased to $3.35 billion. Solar installations may drop over 15 percent in the next quarter to 170 megawatts of panels, down from 201 megawatts in the second quarter.
Image: The Washington Post/Getty Images
News of the layoffs comes after Musk, SolarCity’s top shareholder, unveiled a plan to make “solar roof” modules that serve as roof shingles, instead of separate panels affixed to the roof. The company will also develop a storage system that could help the main electric grid to run more smoothly and reliably.
SolarCity’s realignment also arrives as the company prepares to be sold to Tesla Motors, Musk’s electric car company, for $2.6 billion. Musk proposed the deal earlier this summer, explaining it was part of his broader vision to build a clean energy powerhouse — one that allows customers to produce solar energy on their rooftops, charge batteries in their garage and drive electric vehicles powered only by the sun.
Some analysts, however, have been more skeptical of Musk’s rationale and questioned whether the move isn’t just an attempt to bolster Musk’s business empire. The billionaire entrepreneur holds a 21.3 percent stake in Tesla and a 22.2 percent stake in SolarCity.
Image: Getty Images
Other experts have previously observed that the timing of the Tesla-SolarCity deal couldn’t be worse, given that both companies are years away from profitability and both are quickly burning through cash.
Pavel Molchanov, an analyst at Raymond James Financial Inc., told Bloomberg that SolarCity’s potential layoffs “are not at all surprising” given the company’s lower demand outlook.
He said the Rives' $1-a-year salaries were “a symbolic move, an appropriate one in my view, but still mostly symbolism,” Bloomberg reported.
