Energy Future Holdings Is Fighting to Give Executives at Least $20 Million in Bonuses

By Stephen Young Fri., Oct. 10 2014 at 3:43 PM

Categories: Biz

W.A. Parrish Coal Power Plant

As Brantley Hargrove extensively reported for Unfair Park over the previous two years, Energy Future Holdings, the largest electricity generator in Texas, is a mess. Facing $40 billion in debt, the company filed for Chapter 11 bankruptcy in April and is in the process of selling off one of its most valuable assets, an 80 percent stake in Oncor, the electricity delivery service. EFH was created after TPG Capital, KKR & Co. and Goldman Sachs Group Inc. exercised the largest leveraged buyout in history against what was then TXU.

As EFH has made its way through the Chapter 11 process in a Delaware federal court, it has faced strong opposition to its request to pay more than $20 million, and potentially as much as $40 million, in bonuses to executives.

At hearing held Wednesday and Thursday, EFH presented witnesses who testified that the bonuses were not easy to earn nor were they given simply to retain executives, which bankruptcy law does not allow.

Roberta A. DeAngelis, federal bankruptcy trustee, disagrees. In her brief to the the court, DeAngelis says executives could earn bonuses by meeting business goals that were below the company's actual performance in recent years -- and EFH went bankrupt. DeAngelis says that even EFH Chairman Donald L. Evans has called the incentive targets "lay-ups."

EFH's creditors have agreed to the bonus plan; retaining the employees set to receive the bonuses ensures the stability of the company. Still, according to multiple reports, the judge in the case could still reject the bonuses to protect the Bankruptcy Abuse Prevention and Consumer Protection Act, which disallowed bonuses meant only to get employees to stick around.

The hearing is expected to start again on Wednesday.

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ozonelarryb

Yes, bankruptcy is stabimity that shareholders love.

B school incompetents.

Though a flatline IS stability of a sort.

Montemalone topcommenter

Yes, a failing company must be kept stable.

And who better than the morons that fucked it up in the first place.

$40,000,000.000

Imagine what they'd get if they were a success!

wcvemail

First! and first to say, Stephen, you're showing good breadth of topics, following the human-interest football story with this pithy business story.

ThePosterFormerlyKnownasPaul topcommenter

@bvckvs

It is a wink-wink nudge-nudge type of agreement. It is still a shakedown by the senior executives to keep the gravy train going.

gauss1701

@bvckvs They're not supposed to get money to stick around. And what have they done to EARN this bonus? They can't keep the lines up anymore during a storm. They can't tell you when it MIGHT be fixed. They are always ASSESSING rather than working, and they took this company into bankruptcy.

yars90

@bvckvs umm - there's no story if it's not a bankruptcy. by definition, somebody's not getting paid and the judge has a duty to see the assets are not squandered.

ThePosterFormerlyKnownasPaul topcommenter

@Montemalone

Remember the financial melt down in 2008? We (the US taxpayer) let bonuses be paid to various investment banking employees and officers in order "to keep the best and the brightest around in order to solve the problem."

Yea, right, it was the same "best and brightest" that got into the problem.

It must be nice to be able to unload your business's liabilities off onto the public while enjoying significant gains from your failed enterprise.