VIDEO: Failed A123 Execs Ask for Bonuses
NLPC Associate Fellow Paul Chesser was a guest on Fox Business Network's The Willis Report on October 24. Here's a transcript:
Tracy Byrnes: All right. Well, it was not too long ago, President Obama blasted Wall Street fat cats and their shameful bonuses.
President Barack Obama: You guys are drawing down 10 million, 20 million bonuses after America went through the worst economic year that it's gone through in decades?
President Barack Obama: There will be time for them to make profits and there will be time for them to get bonuses. Now is not that time.
Tracy Byrnes: Seems to be a very different story though for one of Obama's failed green energy bets. A handful of execs who helped drive electric car battery maker A123 Systems into the ground, now want over million worth of bonuses. This despite some 280 million dollars in government grants they already wasted. All right. Well, here to break it all down, Paul Chesser, associate fellow at the National Legal and Policy Center. Paul, egregious is putting it lightly if you ask me, but let's set, we've got to set this up, right?
Paul Chesser: That's right.
Tracy Byrnes: So A123 got 249 million dollar grant from the Department of Energy in 2009 and then filed for bankruptcy?
Paul Chesser: Right. They got this stimulus grant to refurbish two plants in Michigan. They hired, I don't know, a few hundred people, laid off a few hundred people. And they've been a failure ever since. They've had two recalls of their batteries which have affected other stimulus recipients like Fisker Automotive, Smith Electric Vehicles. So it's kind of been a domino effect and these executives have run the company into the ground. They've taken beyond the 249 million for those two plants. They had 30 million for another stimulus project and a couple of other smaller ones. And what have they done with the money? You know, they've run the company into the ground. It's been a, it's been a big failure.
Tracy Byrnes: Now, the stock was at 25 dollars. It's now trading at eleven cents. It's about to be delisted by the NASDAQ. But they've been getting bonuses, it seems, for a bunch of years now. And the president, CEO, we are looking at 60 thousand dollar bonuses. You know, 25 thousand dollar bonus for the CFO. And they're still looking for more money, aren't they?
Paul Chesser : Well, what happened, you know, I believe it was after the first recall with Fisker. They started seeing their stocks dropped precipitously earlier this year. We've had an IPO back in '09. It was at, went up as high as 26 dollars. It's been downward ever since. And what they had, it looked like what was an emergency meeting of the executives and they boosted their parachutes from payouts of 12 months worth of salary to 18 months worth of, worth of salary and getting the bonuses immediately paid out if the company changed hands, which is on the verge of happening with this bankruptcy filing, with probably Johnson Controls taking over the company.
Tracy Byrnes: So this is totally premeditated then. These guys are like basically milking the company...
Paul Chesser: Yes. Absolutely.
Tracy Byrnes: ...for all they could until it went down onto the ground. And this is taxpayer dollars that they're milking though.
Paul Chesser: Yeah. Well, these are, every one of these green companies, they are in business because of government taxpayer help. With wind energy companies, they're saying that they can't exist without the wind production tax credit. They're lobbying hard for it, go out of business. Electric vehicle companies, as you know, the Detroit Free Press a few months ago reported that the battery industry was over-stimulated, even with the cars that were coming out. The cars aren't selling. The batteries are not needed. And so therefore, you've got companies like another one like LG Chem where the, where the employees just sit around playing cards instead of working on manufacturing batteries.
Tracy Byrnes: And yes, even Ener1 got a 118 million in grants from the DoE and they filed for bankruptcy as well. So what does this mean for the future of green? I mean, it's very hard for these companies to compete with China. We continue to subsidize. They're never going, they're never going to make it on their own.
Paul Chesser: Well, you know, China's an excuse. If this company, if A123 couldn't have made it on the hundreds of millions of dollars that were given to them and, you know, which also helped attract private investment, you know, that's their problem. And now, looking to China. There's a Chinese company that wanted to buy into A123 as well. But, you know, green is no matter how, it's obvious how much, no matter how much money government pours into it, it's not going to work especially with electric vehicles. The Volt's not selling. The Nissan LEAF's not selling. The battery companies are suffering. And all these employees who've been given new hope that used to work in the auto industry and they've moved over here with new hope that they would have jobs for the foreseeable future, they're being left disappointed. It's really, really sad, actually, the result of all this.
Tracy Byrnes: Right. Well, until you find me a place to plug the thing in, I'm going to be the girl that forgets to do it overnight at home. So that means I don't have a car in the morning. So I don't see how it's going to take off.
Paul Chesser: Well, don't worry, they'll subsidize the charges for you too.
Tracy Byrnes: Yes, I'm sure. Paul Chesser, National Legal and Policy Center associate fellow. Thank you so much for sharing your thoughts.
Paul Chesser: Great to be with you.
Tracy Byrnes: All right. Well now, we want to know what you think. Here's our question tonight - and it's a simple one: "Should bankrupt green companies be allowed to give out bonuses?" Don't giggle. Giggle later. Logon to GerriWillis.com and vote on the right-hand side of the screen and we'll share the results with you at the end of tonight's show.