PG&E Wants To Pay $235 Million In 2019 Performance Bonuses

Published on


March 8, 2019

Pacific Gas and Electric Co. wants permission from Bankruptcy Court to pay an estimated $235 million in 2019 performance bonuses to thousands of employees — a request opposed by wildfire victims, who want to be paid for the loss of their homes first.

PG&E said in a court filing that the cash payments would be awarded to about 10,000 employees, none of them the most senior executives.

The total amount of the 2019 program could reach $350 million, but PG&E said it has historically never paid out performance bonuses through its short-term incentive program at the maximum level.

The request, which the company wants U.S. Bankruptcy Judge Dennis Montali to consider at a March 27 hearing, comes shortly after the utility’s decision not to award any performance bonuses for last year.

PG&E scrapped the planned $130 million payments, which would have been awarded in March, because of the catastrophic 2017 and 2018 wildfires and the utility’s related decision to file for bankruptcy protection.

But CEO John Simon told employees at the time that the utility planned to seek permission for a performance bonus program this year that could start payments as soon as April.

In its latest request, filed Wednesday, PG&E said the 2019 bonuses would be spread out on a quarterly basis rather than paid in one annual amount. Average payments should be about 15 percent of the base salary for eligible employees, the company said.

“PG&E believes that this at-risk component of our employees’ compensation provides appropriate incentives for our team members to help us achieve our safety and operational goals,” company spokesman Andy Castagnola said in an email. “The 2019 plan was formulated to provide continued market-based compensation and appropriate incentives for participating employees, with a focus on both strong performance and our most important priorities.”

While PG&E has framed the request as a necessary step, it could provoke strong resistance from some of the same groups that opposed the 2018 plan.

“We certainly sympathize with the employees, but bonuses are by definition something that’s paid above and beyond the salary,” said Gerald Singleton, a San Diego County attorney representing victims of a 2015 fire PG&E was deemed responsible for sparking. “You shouldn’t be giving your employees bonuses before you pay the victims. … To me, this is a no-brainer.”

Worker representatives have defended the payouts as an expected part of the normal compensation for the thousands of employees who participate in the company’s short-term incentive program.

John Mader, president of Engineers and Scientists of California Local 20, IFPTE, said the payment program is an industry standard and is “not a gift,” but rather earned compensation for “hard-working employees who are dedicated to safety.”

“We hope that folks will understand that it’s important for retention right now,” said Mader, whose union represents 1,200 people eligible for the program. “Employees have options, and we as a company — we really need these skilled employees. … They’re the ones that are going to design a better system and make it safer.”

PG&E’s formula for awarding this year’s bonuses will be based 50 percent on safety, 40 percent on the company’s financial performance, and 10 percent on customer satisfaction, according to court papers.

The company will factor other considerations into individual payments.

PG&E has in the past also had a performance bonus program that awarded payments in equity, for which about 400 “more senior employees” were eligible, according to court papers. That program won’t be implemented this year, so PG&E wants to adjust target bonuses for eligible employees to include 50 percent of the value of the equity grant they otherwise would have received.

Other bonus-eligible employees who would not have received equity grants even if they were awarded this year would have the target amount of their performance-based pay increased by 25 percent over what they would have received if they got a bonus last year, PG&E said.

Additionally, PG&E wants to be able to supplement payments for 10 percent of the total eligible employees who “substantially exceed certain individualized performance goals.” Those employees could receive a supplemental payment equal to 25 percent of the total value of their performance bonus, PG&E said. The total payments should not exceed $5.5 million, according to the company.

The PG&E board will retain full discretion over the bonus program, including the ability to “reduce or forgo payment entirely,” the company said.

Consumer Watchdog President Jamie Court, who was a vocal critic of the proposed bonuses for last year’s performance, called PG&E’s latest proposal an “outrageous request” that would be a litmus test for whether the bankruptcy judge “is going to be fair or not.”

“It’s premature,” Court said. “Before (PG&E) has a plan to pay the real casualties of this negligence and criminality, it shouldn’t be allowed to pay any more bonuses.”

J.D. Morris is a San Francisco Chronicle staff writer. Email: [email protected]. Twitter: @thejdmorris

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