Wave Energy: Little Power, But Big Salaries

Despite it being a bit of a long shot, I’ve always thought the relatively small amounts of taxpayer money going into wave power were worth it. I figured, who knows what the industry, just in its infancy, might grow into? We should support it and see.

But OregonJon, a commenter on a conservative website I stumbled upon, raises a point about some of these subsidies – the ones to Ocean Power Technologies – that I think deserve consideration: Should they be going to a company that pays its executives salaries of nearly a half-million dollars a year?

The OPT PowerBuoy, not in the water (image via Ocean Power Technologies)

The OPT PowerBuoy, not in the water (image via Ocean Power Technologies)

OPT just got $1 million from the U.S. Department of Energy, and it wasn’t the company’s first taste of federal largess: In 2008 it got $2 million and in 2010 it won two $2.4 million awards and another worth $1.5 million. New Jersey and Oregon have helped the company, too.

Looking at the company’s most recent annual report [PDF], it’s clear that it could use the cash: It lost $14.8 million in the fiscal year ended April 30 this year, and $15.2 the year before. The annual report also notes that the company, which first incorporated in 1984 and then began business operations in 1994, “has incurred net losses and negative operating cash flows since inception. As of April 30, 2013, the Company had accumulated deficit of $140.7 million.”

So OPT has never made money. It’s scratching and clawing for every penny it can find to develop its technology.

And it’s paying its executives really big salaries.

I could have known this by reading the publicly traded company’s filings closely, but it took OregonJon to highlight it for me. OPT paid George W. Taylor, its executive vice chairman, $495,962 in salary in FY2013. Charles Dunleavy, the CEO, made $439,676. Brian Posner, who just departed as CFO, pulled in $303,523. There have been bonuses, too. OPT’s high-profile Oregon project, expected to be operating in pilot mode by now, has foundered, and looks like it won’t happen for years, if ever. But somehow in 2012, Taylor and Dunleavy each earned a $98,000 bonus, and Posner got $40,000.

OK, so if the stockholders of OPT – who have seen the share price fall from $18 in 2007 to $10 in 2009 to $1.65 as of Thursday morning – want to shower the company execs with big money, that’s their call. Maybe they think these guys are worth it. But is this the kind of feisty, underfunded, scrambling startup that deserves taxpayer support? What do you think? I hate to feed the knee-jerk, anti-renewables mob out there, but this makes me wonder.

Sports columnist, newspaper desk guy, website managing editor, wine-industry PR specialist, freelance writer—Pete Danko’s career in media has covered a lot of terrain. The constant along the way has been a fierce dedication to knowing the story and getting it right. Danko's work has appeared in Wired, The New York Times, San Francisco Chronicle and elsewhere.

  • Leftcoastrocky

    $100k salary plus stock options would have been far more appropriate where company is getting federal money

    • tb thomas

      Where did you come up with the $100K figure? You think the CEO should get paid the same as PPS pays kindergarten teachers?

      How about this: the CEO invests in the company along with everyone else, pays his own expenses during the startup phase, and if it’s successful (meaning, if it actually results in a profit generating business), he get’s a big bonus and stock options.

      If Charles Dunleavy really believes he can build a successful “wave energy producer”, he should be profoundly grateful to get public funds to back his idea. Very few entrepreneurs ever get the chance to lose $140-million dollars, and they certainly wouldn’t be taking home six-figure salaries and bonuses while they were at it.

      In the real world, investors look for entrepreneurs who are willing to go all-in on their own to create a successful enterprise, and even then they hold their feet to the fire as far as projected results. But when you have a liberal President and his party in control of Congress, they’re more than happy to take cash advances on the national credit card and throw it to their friends in the private-sector (with comensurate expectations when elections roll around).

      This story just makes me sick to my stomach. This country has become a disgrace to itself.

  • tb thomas

    This is crony capitalism, pure and simple. And BTW, “crony capitalism” is a misnomer. It’s really just “cronyism”.

    This President and his party and his liberal sycophants have done absolute zero to reduce carbon emissions, while spreading hundreds of billions of borrowed (or printed) US Dollars around amongst themselves so they can claim to be the “green” party. “Green” is right: the color of money. The corruption is bad enough, the hypocrisy utterly revolting.

  • john shuey

    I would like to see an economist evaluate government investments in the energy sector – and other sectors, like agriculture. But I get it and I think most people do. The recipients should not only have a promising idea but decently run companies, as well. The exception to that would be if valuable research and patents were contractually passed on to the government in the event of business failure. Stockholders should have to subordinate their interests to the government.

  • Keef Wivaneff

    Oh….DON’T GET ME STARTED!

    This company is a SCAM fro Go to Whoa Founder George W Taylor is a LIAR and a con-artist.

    DOCTOR George?

    I kinda doubt it

    IS OPTT simply a bit optimistic or is it something worse?
    Consider this:
    OPTT has been promising to build wave energy farms all over the world
    http://en.wikipedia.org/wiki/Ocean_Power_Technolog
    but has delivered nothing more than broken promises.

    The company executives have been awarding themselves millions of dollar each year in salary, share options and other benefits.
    This money has come out of the $100M raised in the public float and from government grants.

    OPTT is trying to boost its flagging share price by claiming that they will be getting $66M from the Australian government (providing that they can raise a matching amount from private investors AND prove the widget works….fat chance!)

    CEO George W Taylor has been claiming to be a DOCTOR since the start of his involvement with the company.

    Problem is …. he only got his HONORARY degree in 2009
    http://en.wikipedia.org/wiki/Ocean_Power_Technolog

    Back in his days with Princeton research he was just plain ole Georgie.

    ” Ferroelectrics Letters is a separately published section of the international journal Ferroelectrics. Both sections publish theoretical, experimental and applied papers on ferroelectrics and related materials, including ferroelastics, ferroelectric ferromagnetics, electrooptics, piezoelectrics, pyroelectrics, nonlinear dielectrics, polymers and liquid crystals.
    Ferroelectrics Letters permits the rapid publication of important, quality, short original papers on the theory, synthesis, properties and applications of ferroelectrics and related materials.

    ISSN: 0731-5171
    6 issues per volume

    EDITOR
    George W. Taylor
    Princeton Resources,
    P.O. Box 211, Princeton”

    It would not have hurt the share price at IPO time to have a DOCTOR in the house!