SDG&E; Denies Severance Plan Is a Defense Against Merger

San Diego Gas & Electric’s board of directors did not adopt a recently modified employee severance plan in order to provide the utility with a “credible deterrent” to SCEcorp’s unsolicited merger offer, SDG&E; spokesman Maurice Luque said Friday.

Luque disputed media reports suggesting that SDG&E;’s board had modified the plan to make the company less attractive as a takeover or merger target. The plan would, under certain circumstances, double the severance payments made to some SDG&E; employees who lose their jobs within two years of an unsolicited merger.

The modified plan adopted Monday will help SDG&E; retain employees during “what could be many months of regulatory discussions and approvals” should SDG&E; agree to be merged into SCEcorp’s Southern California Edison subsidiary, Luque said.

SDG&E;’s board adopted the plan to help “maintain quality service to SDG&E; customers by retaining employees” if the proposed merger takes place, Luque said. SDG&E;’s board was not trying to “deter SCEcorp’s unsolicited proposal or any other offer to acquire SDG&E;,” Luque said.

The non-management severance plan covers 2,560 of SDG&E;’s 4,522 employees, Luque said. “It is incorrect to construe that this amended plan--as it applies to these employees--would be a credible deterrent to any multibillion-dollar transaction,” he said.

SDG&E; has about 60,000 business and residential customers in southern Orange County.