Taxpayers Reward Executives for Failure as Green Jobs are Slashed
First Solar, the beneficiary of at least $3 billion in Department of Energy loan guarantees, paid its former CEO $32 million over two years as he stewarded its stock price from $143 to below $100. Today it sells for less than $21-per-share, hitting a 52-week low last week, and yesterday the company announced it would slash global payroll by 2,000 workers in Malaysia, Europe and the U.S.
The Arizona Republic reported Thursday that Rob Gillette, who was terminated as CEO in October, received $16.55 million during the first three months of employment in 2009 (October to December), and then $13.3 million for all of 2010. Last year he made $2.46 million, $1.7 million of which was severance. The newspaper also reported First Solar also paid its eight top executives nearly $16 million last year.
Before yesterday’s news, the company announced in December it would sever 100 employees. Then again later in the month the Mountain Enterprise of Frazier Park, Calif. reported the company fired at least half its employees at its planned Antelope Valley Solar Ranch One facility, which is to receive $646 million backed by taxpayers. Despite First Solar’s troubles, funds began to flow for that loan two weeks ago.
According to DOE’s Loan Programs Office Web site, the $3 billion in loans for AVSR1, Desert Sunlight and Agua Caliente projects were to produce 1,300 construction jobs and 45 permanent jobs. You can do the math.
This follows news that at least two other green energy companies that received taxpayer funds also fattened their executives’ wallets as they laid off factory workers. After it canned 125 employees in November (the Detroit Free Press says 50 have been invited back), electric vehicle battery maker A123 Systems hiked executives’ pay by an average of 36 percent plus stock ownership boosts. And the Toledo Blade reported over the weekend that Willard & Kelsey Solar Group lent five of its executives more than $500,000, and paid them nearly $1 million, before it began manufacturing operations in earnest.
Both A123 and Willard & Kelsey received millions of dollars in grants and incentives from their state governments (Michigan and Ohio, respectively) and from DOE. Among A123’s other noteworthy failures were two recalls of its batteries from Fisker Automotive, a fledgling electric vehicle maker, one of which followed a high-profile breakdown of one of its cars just as Consumer Reports was about to test it. Another battery explosion at General Motors, losses of hundreds of millions of dollars, the downward spiral of its stock price, and an investor class action lawsuit also mar A123’s record, yet last week DOE granted an extension of two years for the company to spend its stimulus grant.
As for Willard & Kelsey, there is no evidence it should have been considered for public funding.
First Solar has its own series of missteps, including what was previously mentioned. A class action lawsuit was filed last month against the Tempe, Ariz.-based company, and also against Gillette and founding CEO Michael Ahearn, who has now returned to replace Gillette. The complaint alleges that the company failed to disclose massive costs it was incurring due to defects in its solar panels, which it said led investors to believe the company’s stock was worth more than its actual value.
Much of the company’s money troubles stem from the thin-film solar panels it is deploying at its government-backed desert sites. The company reported it replaced $125.8 million-worth of panels in the 4th quarter last year, and has set aside $37.5 million to cover future claims. It experienced a drop of $345 million in net sales from the previous quarter as well.
The downturn in First Solar’s value led to Gillette’s firing in October, which 24/7 Wall Street characterized as “strange and sudden.” This followed expenditures of $2.2 million on lobbying since 2007, according to Bloomberg News, which also reported “representatives met Obama administration officials before winning the aid, government records show.” First Solar outspent Solyndra by about $1 million on lobbying during the same period – not great public relations.
Then there are the DOE-funded stimulus recipients who have gone belly-up, laid off workers, or both. Bankrupt Solyndra, recipient of $535 million from taxpayers, is paying big raises and bonuses as it dissolves. Fisker has kept its executive offices staffed while its private fundraisers face an SEC investigation, 65 workers were released in February, and plans for a Delaware plant seem to be dead. And Colorado-based Abound Solar, recipient of a $400 million DOE loan, laid off 280 as it shut down manufacturing for several months – but top officials remain.
Readers of NLPC aren’t surprised to know that all of the above companies, and many others, spent millions of dollars in campaign contributions to help candidates – especially incumbents – who would install government programs to grant or loan funds in support of their projects. Additional sums were dedicated to lobbyists of Congress, the White House and the Department of Energy (and others) in order to gain access to stimulus money.
The still-paid officials of these companies – who with top politicians such as President Obama and Vice President Biden enjoyed media coverage and free attention to their unviable schemes – inflated the hopes of many in places like Michigan, Ohio and Colorado that they would enjoy long employment in the forthcoming “green” sector. Now their bubble is bursting, they are out of work, and now the clean-tech executives will move on to the next prospective crony capitalist plot. Reuters highlighted this week just what a flop the green economy is. It’s despicable.
Paul Chesser is an associate fellow for the National Legal and Policy Center.