Bonuses totaling about $30 million were paid out in March to executives of Aquila Inc., a utility and energy-trading company based in Kansas City.
A month later, Aquila announced that 500 employees would be laid off, in a bid to save about $35 million.
Aquila's chairman, Richard Green Jr., defends the bonuses and his own compensation in an interview published Thursday by the Kansas City Star.
Green said his $10.3 million in total compensation reflected the company's performance in 2001, when it was doing well. He said that to judge last year's executive pay against what has happened to the company this year, when its stock has dropped to record lows, is like comparing apples and oranges.
He also told the Star that part of his pay was in stock, which is down sharply. After reaching a high of $37.55 in May of last year, it started to decline shortly afterward, first because of declining energy prices and then due to the demise of another energy trader, Enron Corp.
The number of layoffs announced by the company now total more than 1,000, and it plans to wind down its energy trading operation, according to the Star.
Green said he had no plans to return any of his pay, which included roughly $7.1 million in cash.
"To start a scenario where everyone starts to feel a moral obligation when they get their bonuses that they need to start thinking about giving them back is a precedent that I think would not be healthy to set for any organization," Green said.
He also said: "Clearly, in 2002 there are not going to be those bonuses because the performance is not there."
Green told a Senate committee this week that Aquila played by the rules but got caught up in the aftermath of Enron's problems. Especially damaging, he said, were reports that Enron and some other trading firms had manipulated power prices in California. That was a blow to the entire industry, he said.
"Irrespective of a company's track record or its soundness, a crisis of confidence exists, especially from the capital markets," Green testified.
