Bankrupt PG&E wants to pay bonuses to California executives and staff. Here’s how much
PG&E Corp., struggling to exit Chapter 11 bankruptcy, wants to pay as much as $453 million in bonuses to thousands of executives and employees.
The utility asked a bankruptcy judge Thursday for permission to renew its bonus plan for 2020, saying in court filings that the payouts are needed to help the company implement its “broad vision of a transformed PG&E.”
It characterized the proposed payments not as bonuses but as “incentive based compensation plans” that puts a portion of employees’ pay at risk and is designed to keep them focused on meeting safety and other important targets. PG&E — driven into bankruptcy by billions of dollars in liabilities from the 2017 and 2018 wildfires — said it has revamped the plan to make the payouts heavily weighted toward safety.
Last year, U.S. Bankruptcy Judge Dennis Montali approved a $235 million bonus plan for about 10,000 employees but rejected PG&E’s request to pay bonuses for a dozen executives. In disallowing the executive payments, the judge wrote there was “simply no justification for diverting additional ... funds to incentivize them to do what they should already be doing.”
On Thursday, PG&E outlined two separate plans. One plan would pay cash to about 10,000 workers. The total payout would range from $89 million to $266 million, depending on performance. At the maximum level, the employees would receive an average of $26,600 each.
The second plan would reward 400 executives with stock in PG&E. The total would range from $28 million to $187 million. The executives would get an average of $467,000 worth of stock each under the maximum level.
Bill Johnson, who was hired as PG&E’s chief executive last April, wouldn’t be eligible for either bonus plan. Johnson is being paid at least $6 million a year, but could receive tens of millions of dollars in additional compensation if the company’s stock price rebounds sharply.
“PG&E is redesigning incentive compensation for all eligible employees to align it more closely with safety outcomes for our customers,” the company said in a prepared statement Thursday. “Under the proposed plan, incentive compensation would only be paid if the company meets challenging performance metrics focused primarily on safety and customer experience. In this way, the incentive compensation plan will help enable PG&E’s transformation into a utility of the future as outlined in the company’s (bankruptcy) plan of reorganization.”
PG&E must exit bankruptcy by June 30 to be eligible for a state-run insurance pool designed to buffer utilities from liabilities from future wildfires. PG&E has made deals totaling $25 billion to compensate insurers, fire victims and local governments but its plan still needs sign-off from the Public Utilities Commission.
This story was originally published March 5, 2020 at 12:10 PM.