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First Solar’s New Clawback Policy Raises the Possibility of an Accounting Restatement
Solar panel maker extends executive compensation clawback policy to include financial restatements, officer misconduct, & improperly calculated incentive targets.
May 4, 2022
First Solar (FSLR), a solar panel maker, has adopted a new executive compensation clawback policy that begs many questions. The company already has such a policy but it appears it only applies to named executive officers. The new plan— adopted in February 2022— extends the clawback policy to former executives. The new policy indicates compensation may be clawed back if:
“...any future SEC or NASDAQ rules require the Company to seek recovery, or (ii) an accounting restatement occurs due to material non-compliance by the Company with any financial requirement as a result of officer misconduct.”
The new policy was disclosed in First Solar’s Proxy Statement which was submitted to the SEC April 15, 2022. Two weeks later, First Solar submitted its latest quarterly filing which contained new language raising concerns over bonus calculations:
“...The Policy was adopted to ensure that incentive compensation is paid or awarded based on accurate financial results and the correct calculation of performance against incentive targets.”
It’s not readily apparent the new policy and language was written with any particular former executive officer in mind. While First Solar has four relatively new executives overseeing operations, manufacturing, and technology, they were promoted from within and appear to be lifers. Likewise, the CEO, CFO, and Chief Commercial Officer have all been with the company since 2016.
Therefore, the new policy may simply be a response to the SEC’s recent focus on executive compensation or the reopening of the comment period related to a possible new executive compensation rule.
If not, the alternatives are rightfully of great concern to investors.
DuDil contacted First Solar and asked that it narrow the possibilities raised by the language in the Proxy and now the latest 10-Q. Specifically, with no high profile executive departures recently to our knowledge, we’ve asked First Solar if the new policy in response to:
1) New SEC or NASDAQ rules
2) An imminent financial restatement
3) Past compensation calculations recently found to have been inaccurate
We’ll update clients when new information develops.
Related: ENPH, SEDG, GNRC, TSLA
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