Part two of a three-part series.
Ecotality “is a great example of the stimulus act doing what it was supposed to do,” explained company spokeswoman Jeanine L’Ecuyer in May of 2010. “ETEC was teetering. It was a company trying very hard to stay in business. This grant has created jobs and put this company back on track.”
eTec was the North American subsidiary of Ecotality, which received $115 million in two stimulus grants through the Energy Department to manufacture electric vehicle charging stations. The parent company is now under investigation by the Securities and Exchange Commission. Yesterday, Scribe posted a subpoena sent to former eTec CEO Donald Karner in December.
L’Ecuyer’s statement is indicative of a larger strategy at Ecotality that appears to have banked on receiving taxpayer support (the accuracy of her stimulus assessment will be explored in part three). Indeed, in the first half of 2010, the DOE grants accounted for more than half of Ecotality’s revenues, and the company posted net losses of $12.3 million.
It is perhaps unsurprising, then, that the company enjoys some notable political connections, and awarded a seven-figure bonus to at least one top executive contingent on receiving taxpayer funds.
Total compensation for Jonathan Read, Ecotality’s chief executive, increased more than ten-fold from 2008 to 2009, from under $400,000 to more than $4.1 million. That increase included a $75,000 bonus and a $10,000 salary hike, but the bulk came in the form of stock awards worth about $3.7 million.
“Our performance target for 2009 was to secure executed stimulus contracts valued at $20,000,000 or more on or before October 1, 2009, which was achieved,” Ecotality explained in an SEC disclosure form filed in August of 2010. “As a result of these stimulus contracts, Mr. Read received a bonus of 673,506 shares of our common stock for achieving the first management incentive target.”
Leveraging a political environment with unprecedented affinity for the electric vehicle industry was a top priority for Ecotality, and it paid off.
In 2006, when Read was brought on as CEO, he must have looked an appealing candidate for a company looking to land federal subsidies. His son Colin, who Scribe briefly discussed in part one, was the assistant finance director for the 2006 congressional campaign of then-Arizona State Senator Harry Mitchell (D).
Mitchell won in 2006, and eventually sat on the Science and Technology Subcommittee on Technology and Innovation, and the Transportation and Infrastructure Subcommittee on Highways and Transit – both key panels for Ecotality’s purposes.
During Mitchell’s House race, he held a joint fundraiser with Slade Mead, a State Senate colleague and candidate for superintendent, at the home of then-governor Janet Napolitano. The following year, Ecotality elected Mead to its board of directors.
Mead and Jonathan Read collectively donated nearly $8,000 to Mitchell’s campaign, according to the Center for Responsive Politics. Mitchell voted for the stimulus bill, though it is not clear that he specifically advocated for the Ecotality grants.
But Mitchell did request nearly $2 million to replace buses in Tempe, AZ with plug-in hybrid electric vehicles, which need charging stations. Ecotality, meanwhile, has installed 19 such stations in Tempe through the EV Project, the DOE program through which the company received its pair of grants.
These facts paint the picture a company whose business strategy was intertwined with the politics of “green energy.” As the size and scope of government grows, the beneficiaries are necessarily those with the most and best political connections. Ecotality certainly fits the bill.