Energy Future Holdings Corp., the giant Texas electric company that filed this year for bankruptcy, wants to pay its executives big bonuses.
That’s the word from federal bankruptcy court in Delaware, where the company referred to itself as “one of the best operated companies in the industry.” The foundering company said its bonus program drives its “operational and financial excellence.”
EFH filed for bankruptcy on April 29th in what is one of the largest Chapter 11 cases for a non-financial company in U.S. history. KKR & Co., TPG and Goldman Sachs Capital Partners, who led the $45 billion deal in 2007 that created EFH, had their stakes reduced to less than 1 percent. Many creditors are expected to be wiped out completely.
The bankruptcy came as a surprise to approximately no one. EFH had been losing money for years, the victim of its own bad bet on natural gas prices. When it acquired the former TXU Corp. in 2007, it wagered that rising natural gas prices would elevate wholesale electricity prices. Instead, natural gas prices fell, bringing down the fortunes of the company.
U.S. District Judge Christopher Sontchi in Delaware ruled on Oct. 15th that EFH could reward 26 of its top executives with up to $20 million in bonuses — despite the massive debt load and the historic collapse. Most of the bonuses, if eventually authorized by the company, would go to the top seven executives.
The federally-appointed bankruptcy monitor in the case, U.S. Trustee Roberta DeAngelis, opposed the bonuses. “It appears that the ‘incentive’ targets do not promote enhanced performance because most of them fall below the Debtors’ actual performance in prior years,” DeAngelis wrote.
But Sontchi overruled those objections, siding instead with EFH. The company said its top brass must meet tough performance targets before receiving the payouts.
For more about the bonuses, check out these reports in the Dallas Morning News and the Texas Tribune, found here and here. For more about the bankruptcy, check out the Snapshot report from the Texas Coalition for Affordable Power, found here.