Where Did Those First Solar Subsidies Go? $32 Million went to their Failed CEO
It would be impossible to trace all the ways taxpayer money ends up in the coffers of solar manufacturers like First Solar. Most of First Solar's money has been made selling panels in Germany to solar plants that, by law, can rape electricity customers with prices 10-15x higher than the market price for electricity. First Solar also benefits more directly from direct subsidies, loan guarantees, "retraining" subsidies and even government Ex-Im Bank loans to sell panels to itself. While First Solar vehemently denies it is a subsidy whore, it is telling that when Germany began to cut its solar feed-in tariffs, First Solar's stock price fell from over $300 to around $20. Just watch day to day trading of First Solar stock, it does not move on news about its efficiency or productivity, it moves on rumors of changes in government subsidies.
Let's look at one subsidy. In 2010, the Obama administration gave First Solar a subsidy of $16.3 million, ostensibly to help open a new plant in Ohio. But it is interesting that this private company, which apparently could only raise the $16.3 million it needed by taking it by force from taxpayers, had plenty of money to pay its CEO. In the 13 months leading up to its $16.3 million taken from taxpayers, First Solar paid its new CEO $29.85 million!
Rob Gillette, the ousted CEO of First Solar Inc., earned more than $32 million in compensation from the struggling company for his two years of service, according to a regulatory filing Wednesday.
Gillette came to First Solar from Phoenix-based Honeywell Aerospace in October 2009 and was fired by the Tempe-based solar company's board of directors in October 2011....
Most of his compensation came in the three months of 2009 that he worked, when his total compensation, including salary, bonus, stock and options awards and other perks, reached $16.55 million. In 2010 his total compensation was $13.3 million, and last year he earned $2.46 million, which consisted of $763,000 in base salary and a $1.7 million severance.
Yep, they can't scrape up $16.3 million of their own money for a factory but they can find $30 million to give to an unproven CEO they eventually had to ride out on a rail.
By the way, I don't know Mr. Gillette, but I was once an executive at Honeywell Aerospace for several years. I can tell you that it's a great place to find an executive who is focused on process to manage large complex organizations in a relatively stable business where manufacturing, logistics, and schmoozing large buyers is important. It is a terrible, awful place to seek an executive for a fast growing business that needs to rapidly shift business strategies and where grinding through the process gets the wrong answer 12 months too late.
Ted Rado:
The USG has made just about everyone into whores, not just solar companies. Professors get huge grants to study nonsense. Companies get huge subsidies to build plants that are a joke ex subsidies. Dream up a rediculous scheme and get DOE money. Nobody does an engineering study to see if, assuming it works, it will be viable. Just shove money out the door.
As a secondary effect, this becomes self-perpetuating. Once a prof (or a company) advocates some scheme and spends jillions of dollars, they cannot back down without their reputation being in tatters. The politicians must perpetuate the idea so as not to reveal their incompetence or dishonesty. Look at ethanol. The pols are locked in.
If a movie was made about the entire alternative energy thing, it would be so unbelievable that no one would want to see it. We CAN'T be this stupid!! The movie must be a hoax!
By the way, all this is nothing new. Thirty years ago, I was at a meeting re coal drying. The originator of the meeting commented that we all knew that drying low-btu coal was uneconomical but the DOE was doling out $300 million to push the idea, and we should get a piece of the action. A whole industry has built up to milk the USG for stupid projects. To call people that do this whores is being charitable. They are thieving whores. What does that make the pols? Thieving pimps?
Those of us who speak out against this stuff are branded as negative, against progress, wanting to stay in the stone age, and worse. Diogenes would have a tough time finding the honest man in this environment. To say Warren's piece hit a raw nerve is an understatement.
April 11, 2012, 9:13 pmMark:
I get into lots of arguments about executive compensation, but frankly, I think it is too high across the board, and I do not see how shareholders can tolerate it.
I understand that much of the compensation is in stock options, and that shareholders are essentially "rewarded" if the CEO does well. But, the numbers are out of proportion because the CEO does not share downside risk. That is, if the stock goes up then the CEO makes tens or even hundreds of millions, shareholders are happy. But, if the stock goes down, the CEO does not pay the shareholders back an equivalent sum.
I understand that there is a continuous hunt for "talent", but these compensation packages are out of touch with reality. This CEO would have taken the job at 1/5th the compensation, maybe even 1/10th. But because of the back-scratching nature of executive compensation (one group of executives setting the compensation of another), the shareholders are being duped.
April 11, 2012, 9:46 pmAnonzmous:
Mark,
If private company A pays its CEO too much, that's the shareholders' problem. The CEO is taking their profits, and the shareholders can vote him out of his job....or sell their shares and be done with him.
But if company B gets its money from the public trough, then it is the taxpayer's problem. By force of law, we are paying the Rob Gillettes of this world whether we want to or not. We can't influence the Board, and we can't sell our shares.
On another topic -- I looked over at Opensecrets.org -- First Solar was a bipartisan lobbyist, perhaps tiled to the Repubs. I was surprised, but should not have been. Pepsi, Coke, whatever.
April 12, 2012, 4:57 amBFD:
How much of that tax payer money became campaign bribes? And you though money laundering was illegal.
April 12, 2012, 5:48 amme:
It is absolutely always an outrage when the heads of organizations that failed miserably are handsomely rewarded using tax payer moneys. Here are a few more examples: http://www.commoncause.org/site/pp.asp?c=dkLNK1MQIwG&b=4923233
Executive compensation in America is fascinating. Is the market for CEO-grade talent really so competitive that no company can even play in it if they do not offer five times lifetime earnings of average workers per year in compensation? And is the job truly so difficult that a significant portion of CEOs completely tank the companies they are running?
April 12, 2012, 7:08 amme:
I ought to point out that this similarly applies to non-profit organizations. Think TSA - here we have a huge costly organization that does nothing but hassle travellers needlessly, hampering free commerce.
http://tsaoutofourpants.wordpress.com/2012/04/10/tsa-admits-1b-nude-body-scanner-fleet-worthless/
April 12, 2012, 7:10 amMesa Econoguy:
This is exactly why lawsuits are needed/imminent to stop this taxpayer abuse.
April 12, 2012, 3:25 pm