Skip to comments.After Layoffs, Execs Get Big Raises at Taxpayer-Funded A123 (Makes batteries for Fisker)
Posted on 02/16/2012 12:17:52 PM PST by jazusamo
A taxpayer-funded electric vehicle battery company, that is considered in great danger due to its dependency on troubled EV company Fisker Automotive, has awarded its top executives big salary increases despite a steep downward trajectory in its stock price.
Massachusetts-based A123 Systems -- whichreceived $279.1 million instimulus money from the Department of Energy, and up to $135 million in incentives from the State of Michigan -- boosted the base salaries of two vice presidents and its chief financial officer on February 8.
Chief Financial Officer David Prystash was bumped 27 percent to $380,000; VP of Energy Solutions Robert Johnsons base salary increased 51 percent from his 2010 level to $400,000; and VP of Automotive Systems Jason Forcier saw his pay rise 32 percent from 2010, to $350,000. The news was first reported by the Boston Web site of Citybizlist.com, which obtained the information from an A123 SEC filing.
A123 had laid off 125 employees in November at its two plants in Livonia and Romulus, Mich. Company officials said diminished production by Fisker led to the cutbacks. A123 had expected to deliver batteries for 7,000 plug-in hybrid Karma models, but faulty wire harnesses in the vehicles reduced Fiskers production to 1,500 for 2011, according to Crains Detroit Business . Also, in December A123 had to repair dozens of its batteries that had been installed in Karmas due to the potential for coolant leaks.
A previous SEC filing explained that A123 CFO Prystash was just hired in May at a base salary of $300,000 plus a $50,000 signing bonus, additional performance bonuses that could reach 150 percent of company financial performance targets, and stock considerations. Prystashs predecessor Michael Rubino was listed with a base salary of $275,000 in 2010, but his total compensation with bonuses and stock options reached over $674,000.
Other SEC records show A123 VPs Johnson and Forcier each had a base salary of $265,000 in 2010, but received more than $744,000 and $739,000 in total compensation, respectively, with bonuses and stock options included. Johnsons total remuneration in 2008 and 2009 was nearly $1.2 million and $800,000 respectively, while Forciers was more than $1.3 million in 2009, the year he was hired.
Also in the Feb. 8 compensation meeting, President and CEO David Vieau received 400,000 additional restricted stock units. Four other top A123 executives, including Johnson and Prystash, collectively received 810,000 of the stock units. A123s compensation committee of its Board of Directors also changed remuneration terms of its top officers should control of the company change hands, which included:
Accelerated vesting of unvested stock option and restricted stock awards equal to 100 percent of the unvested amounts (up from 50 percent).
Payment of base salary for 18 months in case of termination (increased from 12 months).
Payout of target bonuses for the year if terminated.
Continuation of benefits for 18 months if terminated (increased from 12 months).
Included in the new stock perks -- explained as part of an executive retention agreement -- was newly hired (January 23) Chief Operating Officer Ed Kopkowski. Upon his hire he received an annual base salary of $345,000 plus a $125,000 signing bonus, in addition to other incentive bonuses.
As for CEO Vieau, he was rewarded with $1.5 million in total compensation in both 2009 and 2010, up from the $414,000 he received in 2008. Undoubtedly the value of the stock portion of the executives pay has declined with the drop in its share price.
A123s fortunes are tied closely to Fiskers, according to the companys SEC filings. A123 is invested in Fisker, having poured at least $20.5 million in cash and stock equity into the company. The companies also have a multi-year supply agreement for batteries for Fiskers EVs, the Karma and the Nina. Fisker had been awarded a $529 million loan from the Department of Energys Advanced Technology Vehicles Manufacturing Loan Program, but after the company failed to reach milestones in producing the Karma and as it renovated a former General Motors plant in Delaware for production of the Nina, DOE suspended the loan payouts. Fisker has received $193 million thus far, but laid off 65 workers last week and suspended upgrades at the Delaware plant.
If Fisker is not successful in raising additional capital necessary to fund its operations, executing on its strategic plan or does not meet the anticipated demand for our products, A123 told the SEC last year, our revenues and profitability may be materially impacted.
The timing of the executive pay raises at A123 may interest Congressional investigators who are also looking at DOEs loans to Solyndra, as well as the agencys overall Green loan and grant programs. Were their actions intended as greater protection for their executives in the case of a sale or bankruptcy of the company?
A123 competitor Ener1, whose fortunes were tied to EV maker Think Global (much like A123 is linked to Fisker), declared bankruptcy January 26. The announcement about Fiskers loan and financing troubles came on February 6, and then A123s compensation committee met on February 8, a day after its stock price fell from $2.65 to $2.285. The next day Forbes ran a story wondering whether the Fisker/A123 difficulties would produce two Solyndras for the price of one, and respected analyst Theodore ONeill of Wunderlich Securities wrote in a research article that A123 is facing a doomsday scenario. ONeill reduced his rating on A123 to Sell from Hold, with a new target of 50 cents, down from $3, Forbes reported. Then A123s stock price tumbled to $1.88 at closing on Feb. 9, the biggest drop in more than two years . It closed yesterday at just over $2.00. At one time it had traded at over $20 and was near $10 a year ago, but the company has never made money, suffering net losses of $85.8 million in 2009, $152.6 million in 2010, and $172.8 million through three quarters last year.
Despite other investors criticisms of ONeills analysis, pointing out A123s other contracts, Wunderlich has not backed away from its sell advice.
Investors in both A123 and Fisker are wealthy supporters of Democrats, as NLPC has documented. Vieau gave then-Senator Barack Obama $2,300 three weeks before he was elected president in 2008, and has given $5,000 to the Democratic Senatorial Campaign Committee during the last two years, according to the Center for Responsive Politics. Vieau and another A123 co-founder, Gilbert Riley, Jr., have given Massachusetts Sen. John Kerry $8,000 for his Senate campaigns in recent years. Vieau also gave $3,900 to Rep. Ed Markey, D-Mass., who was the chief co-sponsor of the Waxman-Markey climate legislation a couple of years ago. Vieau was also featured in a 30-second spot in late 2009 to promote energy and climate legislation promoted by President Obama and his fellow Democrats.
So far, through the end of 2011, A123 has received nearly $127 million of the $249.1 million it was awarded. The company informed DOE that because of diminished market demand, this has given rise to continued delay in the commencement of construction activities on its Michigan plants, which led to the 125 layoffs. Meanwhile A123s executives appear to be padding their bank accounts, perhaps before the next shoe drops.
Paul Chesser is an associate fellow for the National Legal and Policy Center.
Gee I wonder how much money these Execs are donating to political campaigns, PACs and superPACs.
The two bigshots have supported Kerry and Markey, end of article, but I’d bet they’ve given thousands more than that to Obama & Co.
friends of Obama
from your pocket to his friends.
politicians give your money to their friends and donors.... how is this not graft?
In my view it’s most definitely graft, the old pay to play scam.
Thanks Army Air Corps
The list, Ping
Let me know if you would like to be on or off the ping list
After reading the road test on the Fisker Karma in the last (March 2012) issue of Car and Driver, I submitted this commentary to the editors:
“If Fisker was a company funded by private investors rather than US taxpayers (and yet unborn citizens as far as the eye can see), I would salute them — at least for their bravery if not for their brains. But having blown 529 million to produce a heavy awkward inconvenient electric sled that looks like Ollie, (of Kukla, Fran and...) all I can foresee is bankruptcy in Fisker’s future. Solyndra II. Even if they find 1250 Hollywood-type idiots at the asking price of $104,000 + or -, Fisker will still owe us the taxpayers about 380 million. What are those suckers who bypassed a Mercedes going to do in two or three years when “Ollie is broke? It’s a bit too heavy for wall art.
The Green stupidity rolls on....”
...their reward was for a successful heist of taxpayer cash...which We the People have continued to allow happen.
Not only does the dam* car require Federally bestowed taxpayer dollars ...buts its dam* power source requires half as much yet again.
Both the battery and the vehicle are simply better dressed, 21st Century versions of the oldest technological cons-with Congress and We the People as the sucker/mark.
You’re dead on the money. Same goes for the Chevy Volt and all EV’s.
If a company can manufacture a product that the public wants, can afford, and that company is not subsidized by taxpayers nor the buyers given tax credits to buy the product, more power to them.
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