Bankrupt PG&E cancels $130 million in bonuses after barrage of protests

Feb. 25-- Feb. 25--PG&E, jolted by outrage and protests from wildfire victims and others, has jettisoned $130 million in proposed bonuses for 14,000 workers -- including some management employees -- according to an internal company memo.

The initial proposal for the bonuses was floated in connection with PG&E's $51.7 billion bankruptcy case, which the company initiated in late January to help it ward off a forbidding mountain of debts and wildfire-related liabilities.

Soon after that, though, PG&E was lambasted on a host of fronts for its plans to pay the bonuses, known as a short-term incentive program, or STIP.

"The more I stepped back and thought about the impacts the wildfires have had on so many people outside our company, regardless of fault, the more I came to believe paying STIP in 2018 was not the right thing to do," PG&E Interim Chief Executive Officer John Simon wrote in a memo distributed to company employees.

Wildfire victims and critics of PG&E pilloried the embattled and disgraced utility for effectively ensuring that thousands of company employees would be paid $130 million ahead of any compensation for those who suffered due to the Northern California wildfires of 2017 and 2018. PG&E has now relented in the face of the public condemnation.

"It's unfortunate the executive suite has to react to public shaming and criticism to do the right thing," said state Sen. Jerry Hill, whose district includes parts of Santa Clara County and San Mateo County, as well as San Bruno, the site of a fatal 2010 gas explosion that PG&E caused. "But this is a step in the right direction."

A PG&E labor union, Engineers and Scientists of California Local 20, criticized the company's decision to torpedo the bonus proposals.

"The union believes that zeroed-out STIP payments for rank and file employees do nothing to address the terrible losses of fire victims," said John Mader, a PG&E electrical distribution engineer and president of Local 20.

The union warned that PG&E's decision could hurt recruitment and employee retention efforts.

"Employees' earned compensation for the ongoing and essential work done at PG&E should not be confiscated by management as a symbolic gesture to offset the bankruptcy's harm to creditors," Mader said.

The decision equates to less pay than anticipated in the total direct compensation packages for the affected employees, who are all salaried workers and don't get paid overtime, according to the labor union. Total direct compensation for employees and executives can typically include a combination of items such as basic salary, bonuses, short-term incentive programs, stock options, direct awards of stock and miscellaneous pay such as employee perks.

The bonuses were part of an incentive program previously approved by the board of directors that would pay out bonuses if the employees met a set of already determined targets and goals. Public safety, employee safety, customer service and financial performance were the four key metrics in the short-term incentive program.

"We count on those payments for mortgages or rent, child care or college tuition," said Kevin Langenberger, a senior project controls analyst with PG&E. "This is not for a fancy new car or exotic vacation. We met and exceeded individual performance goals set by the company. Yet now we are being forced to pay the price for management decisions that we had no hand in."

San Francisco-based PG&E intends to propose a new bonus program for 2019, if the bankruptcy court approves the plan. A U.S. Bankruptcy Court hearing is scheduled for this week to decide numerous proposals related to the company's Chapter 11 filing, including the 2018 bonuses that now have been scuttled.

"This decision is a needless and demoralizing blow, especially when top ranking officials are getting raises and large severance packages," Mader said.

Geisha Williams, PG&E's former chief executive officer, was sent packing in mid-January with a $2.5 million cash severance even though she was at PG&E's helm in 2017 and 2018, two years when disastrous and deadly infernos roared through Northern California, including some blazes that have been linked to company equipment.

PG&E has yet to disclose the 2018 pay packages for its top management, including the executive compensation for former CEO Williams.

Payments to a top boss who presided over a disaster isn't a new occurrence for PG&E.

In 2010, PG&E caused a deadly explosion when a gas pipeline ruptured in San Bruno, a blast blamed on the utility's shoddy maintenance, flawed record keeping and lazy oversight by the state Public Utilities Commission. Peter Darbee, who was chief executive officer before and after the blast, was enriched with a $34.8 million golden parachute, despite being in charge at the time of the explosion.

"Looking at the whole picture, can we say we met the spirit of our plans for the year? Considering the impacts of the wildfires, should we be paying ourselves for our performance last year? We felt the answer was no," Simon stated in the letter.

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