When the government/judges run companies

Bonuses given after raises at Solyndra

Worker incentive paid during bankruptcy

WILMINGTON, Del. — Several of the nearly two dozen employees at bankrupt solar panel maker Solyndra LLC who were approved for bonuses Wednesday had months earlier received pay raises as high as 70 percent, a fact the company never disclosed in its request for bonus cash.

The company's bankruptcy attorneys sought permission for the bonuses in a court hearing, arguing that the extra cash is needed to keep key employees from fleeing only to be replaced by more expensive outside consultants.

With little chance of stable employment and officials moving to liquidate assets, the workers needed to wind down the company have little incentive to stay, the Solyndra attorneys argued.

But an attorney for fired Solyndra workers railed against the plan, saying several of the proposed bonus recipients had received significant salary increases even after the company went bankrupt.

The disclosure drew sharp criticism from U.S. Bankruptcy Judge Mary Walrath, who called it "shocking" that the company had not disclosed the pay raises in its bonus request.

Solyndra attorney Bruce Grohsgal defended not including that information in the bonus request, saying the raises were given as part of the company's ordinary course of business since the employees had taken on more responsibilities.

"There was no thought we were hiding something," he said.

He also said the employee who received a 70 percent raise was earning less than $70,000 in base salary but had taken on many new responsibilities.

Solyndra sought the bonuses weeks ago, raising the ire of Republican members of Congress who called on the Obama administration to oppose the extra payments. The Justice Department filed no opposition to the request.

While disturbed at what she called a lack of disclosure, Judge Walrath approved the bonuses after learning that a creditors committee did not object after negotiating a lower payout than the nearly half-million dollars first sought.

She said she also took into account the testimony of a compensation specialist who said that the bonuses were in line with market rates.

The names of the bonus recipients were not disclosed.

In the reduced bonus plan, 20 employees would received no more than $368,5000 combined. Fifteen of the 20 bonus recipients earned salaries of $100,000 or more.

But Scott Leonhardt, a lawyer representing fired employees, said several of the employees had also received hefty bonus payments in the year before the bankruptcy.

Two others in line to receive bonuses had months earlier received pay raises, after the bankruptcy, that raised their salaries by more than 50 percent, he said.

Solyndra's chief reorganization officer, R. Todd Neilson, testified that the bonus plan was his idea, a move that was made after Solyndra lost its executive vice president, Ben Bierman. He quit to take another job, Mr. Neilson said.

Mr. Neilson said the bonus money would provide incentives for key employees, mostly in engineering and finance, to stay with the company. He said none of the employees was in top management or had any control over Solyndra.

But Mr. Leonhardt said the company's liquidation wouldn't benefit anyone other than "insiders" such as Argonaut Ventures and bankruptcy professionals.

Argonaut is the investment arm of a charitable foundation headed by Oklahoma businessman George Kaiser, who was a fundraiser for Barack Obama during the 2008 presidential campaign.

Under the previous bonus plan, one employee was eligible for up to $50,000 in extra cash, but now the maximum bonus payout is $30,000. In explaining why the names of the employees were not included in bankruptcy filings, Mr. Grohsgal cited privacy reasons and concern that they could be harassed.

He said the proposed bonuses were "fairly modest" incentives and that the decision to provide earlier raises was based on "normal business practices." He said the employees were assuming greater responsibilities and had been promoted. He also defended the decision not to disclose the pay raises in the motion for bonuses, but said there was no attempt at hiding any information.

He said the figures had already been provided to a creditors committee.

Asked if he thought about seeking court approval for the earlier pay raises, Mr. Neilson, who has been a restructuring officer in other bankruptcy cases, said the decision varies from case to case.

"Under certain conditions I would, under certain other conditions I wouldn't," he said.