PG&E sails into bonus storm

Published on

Financial Times

PG&E, the Californian utility driven to bankruptcy proceedings by the state’s power crisis, drew a storm of criticism yesterday over a request to be allowed to pay top managers Dollars 17.5m in bonuses.

The proposed hand-out is in addition to the Dollars 50m distributed shortly before the company, loaded with debts of about Dollars 9bn, filed for protection from its creditors on April 6.

In a court filing last Friday before the long holiday weekend, and revealed yesterday, the company said the extra bonuses were needed to persuade its senior managers to stay with the group while it worked its way out of bankruptcy.

The plan is for six top-rank executives to be awarded extra payments equivalent to 100 per cent of their annual basic salary. In the case of Robert Glynn, chairman, this would mean an additional Dollars 900,000.

At the lower end of the scale, managers and “attorneys” would get between 25 and 50 per cent of their base pay.

The Utility Reform Network, a San Francisco advocacy group, accused the company of “showering money” on the people responsible for the group’s crisis.

Doug Heller, head of the Foundation for Taxpayer and Consumer Rights, accused the proposed beneficiaries of driving the company into the ground. “It’s horrific and absurd,” he said.

Mr Glynn, for example, rejected an offer from the state government to buy the group’s grid and transmission assets, which Governor Gray Davis claimed would help it stay in business and restore its credit rating from the current “junk” status.

In its filing to the bankruptcy court, PG&E said: “The loss of important personnel due to economic uncertainty or sagging employee morale may threaten PG&E‘s continued provision of safe, reliable and responsive service . . . and jeopardise its reorganisation efforts.”

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