By J.D. Morris and Matthias Gafni, SAN FRANCISCO CHRONICLE
February 22, 2019
Pacific Gas and Electric Co. will not award any of its planned $130 million in 2018 performance bonuses to thousands of employees after deciding the payments were inappropriate in light of the company’s bankruptcy and the wildfires that have killed dozens of people and destroyed tens of thousands of homes.
John Simon, interim CEO of the utility’s parent company PG&E Corp., announced the decision Friday in an internal message to employees that was reviewed by The Chronicle. The payments were set to be awarded next month and about 14,000 employees were eligible, PG&E previously told the bankruptcy court.
PG&E had stressed publicly that it was not seeking to award the bonuses to any of its top executives this year, and union leaders described them as part of the normal pay for the thousands of employees who had participated in the program.
Simon said the decision was “immensely difficult” and his own view on the issue “evolved over time.”
“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 (performance bonuses) in 2018 was not the right thing to do,” Simon said in the email.
While PG&E is scrapping its requested performance pay for last year, the company does plan to seek permission to institute a different kind of program for 2019 which could give employees incentive awards as soon as April, Simon said.
Senior PG&E leaders and the board of directors decided not to move forward with the payments “because to do so would, in effect, put ourselves at the front of the line for that payment ahead of thousands” of other people with claims against the company and creditors “who we currently cannot pay and who must await resolution” of the bankruptcy process, Simon said in the email.
He acknowledged that the decision would be “an unpopular one with our employees.” And one of the company’s top union leaders suggested it was.
“We’re very upset,” said John Mader, president of the Engineers and Scientists of California Local 20, IFPTE, which represents 3,700 professional and technical PG&E employees, about 1,200 of whom receive payments through the short-term incentive program. “I just don’t see how it’s constructive to confiscate employee compensation, especially the people … who try and prevent these kind of tragedies.”
Mader, a PG&E electrical distribution engineer, is personally affected by the company’s decision. He said he worried that the payments would be reduced in bankruptcy and characterized the move to eliminate them entirely as unfair to employees who “didn’t make the decisions” that led to recent wildfires.
State investigators have found PG&E responsible for a series of 2017 wildfires, but not the worst one from that year. The cause of last year’s horrific Camp Fire is still under investigation, but the company’s equipment may be found at fault — a fact acknowledged by Simon in his email.
Consumer Watchdog president Jamie Court had lambasted the performance bonus request and called Simon’s announcement “the least they could do considering fire victims are not getting paid.”
“I think this is just crisis management,” he said. “Clearly, it’s the right decision, but it should have been done in the first place, not after a public shaming.”
PG&E spokeswoman Lynsey Paulo said the company’s decision affected all eligible employees, including senior leaders, and would be relayed to the bankruptcy committees and court.
In his email, Simon explained the short-term incentive program was not guaranteed, and while the measures the company had in place determined they earned such bonuses, he questioned if those criteria were appropriate.
He cited the loss of life and destroyed structures, but also questioned whether such rewards should be given out after the company’s many financial blows, including losing half of its market value, a drop which cost investors more than $10 billion, and filing for bankruptcy.
“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?” Simon asked his employees in his email. “We felt the answer was no.”
All that being said, Simon added that, in March, the company will ask the bankruptcy judge to approve bonuses going forward in 2019, if performance benchmarks are met, potentially paying employees in April, July, October, and January.
The rewards will be based 50 percent on safety, although the company raised “financial stewardship” to 40 percent weight and 10 percent for customer-related measures, Simon said.
The company will also offer merit raises above base pay in March, Simon said.