Используйте оператор вызова &
:
& 'C:\Program Files\a folder with many spaces in the title\bin\cwebp.exe' $img.FullName '-o' $outputName
или с исполняемым путем в переменной:
$dir = "path/to/directory"
$images = Get-ChildItem $dir
$exe = "C:\Program Files\a folder with many spaces in the title\bin\cwebp.exe"
foreach ($img in $images) {
$outputName = Join-Path $img.DirectoryName ($img.BaseName + ".webp")
& $exe $img.FullName '-o' $outputName
}