NEW YORK (
) -- For a man who made somewhere in the neighborhood of half a billion dollars by selling his insider stake in
shares, company founder Michael Ahearn apparently doesn't want any more First Solar stock in his portfolio.
Ahearn returned to First Solar as interim CEO in late October after
. On Thursday, First Solar released details of Ahearn's compensation as interim CEO.
Ahearn will make $500,000 annually, which can be increased annually at the board's discretion -- the board also has the discretion to award any bonus it deems fit -- and Ahearn will receive no equity compensation.
First Solar shares are the biggest loser in the
this year, down 75% based on Thursday's close at $32.86 -- a spectacular crash from its 2011 high of $180 and all-time high of $300 -- and that
When Ahearn rejoined First Solar, one of the issues raised by his return was his lack of "skin in the game," having already sold off the majority of his stake in the company. One would think, given this history and the personal fortune he has made -- and relative to the beating First Solar shareholders have taken this year -- Ahearn and the board might have opted for the Vikram Pandit-Citigroup model of a $1 CEO salary until the ship is righted, so to speak.
"I didn't understand why Ahearn's salary wasn't the nominal $1 per year. The guy sold half a billion worth of First Solar shares and even after taxes that's a nice payday and so I don't understand why he would take a salary at all," said Paul Leming, solar analyst at Ticonderoga Securities, who generally has a favorable view of Ahearn and the steps he has taken since returning to First Solar.
Leming added, "After selling half a billion worth of shares, I think he has had enough of that."
To put Ahearn's pay in the grander scheme of CEO compensation, it's still a pittance. The oft-cited example of egregiousness in corporate America when it comes to pay is the outgoing CEO of
Isenberg took home $109 million over the past 3 years during which his company underperformed peers. He also is receiving a $100 million "contingent liability" payment for retiring this year. The new Ahearn contract with First Solar includes no severance in the event of his dismissal. So compared with Isenberg's compensation, Ahearn is being paid what amounts to $1 in Wall Street terms.
As Leming notes, Ahearn has no skin left in the game, and to some degree, being the founder of First Solar makes his comeback tenure a matter of rehabilitating reputation. But Ahearn is not just working to rescue the reputation of the company he founded, he's also trying to salvage some value for the company's biggest shareholder.
The Walton family of
owns the largest chunk of First Solar stock, and Ahearn is as much bailing out what remains of their investment, as he is the company and its broader shareholder base. The Waltons have been selling out of First Solar for years, typically when the market has allowed them to sell in a range between $120 and $150 per share.
Ahearn recently laid out his plans for the company, scaling back spending, moving away from subsidized markets, and developing sustainable economies in solar in places including China and India. He didn't do enough to enter the running for
in 2011, but Leming describes the problems he faces at First Solar as close to "insurmountable."
The market has been rife with rumors that the only thing Ahearn can do as CEO that would be a success would be
to fetch a decent price
for the Waltons and the rest of the shareholder base in a sale.
Given the bleak outlook in solar and Ahearn's own commentary that his turnaround plan may take until 2014 to be realized, though, Ahearn and the Waltons may have little leverage in negotiating a sale at a premium. One thing is certain, though, any sale price won't matter to Ahearn as far as his First Solar holdings.
-- Written by Eric Rosenbaum from New York.
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