While Pacific Gas & Electric Co. hopes to pay millions of dollars in bonuses to retain its current managers, dozens of retired high-ranking PG&E; executives have lined up as creditors in the utility’s bankruptcy case, saying part of their pensions have stopped coming.
The retirees--ranging from chief executive officers to vice presidents--are upset to find themselves among those owed money by the company they once ran, their attorney said.
“Some are more so than others, depending on how it has affected them financially,” John T. Hansen said. “They think the company . . . should have done something to avoid this situation. Most were career employees . . . and represent close to 1,000 years’ service to a company they felt owed them better treatment than this.”
A company spokesman said a portion of the executives’ pensions was not guaranteed and “unfortunately” had to be suspended once the company filed for bankruptcy protection.
PG&E; filed for Chapter 11 protection from creditors April 6, declaring $9 billion in debts related to the energy crisis. The company identified thousands of creditors, including vendors, banks and energy companies that supplied power to the utility’s customers.
But because of their longtime service to PG&E;, the 33 former executives are perhaps the most unlikely group to band together and hire an attorney to ensure they receive their due as the company’s financial affairs are reorganized.
Among them are onetime CEOs Frederick Mielke, Richard A. Clarke and Stanley T. Skinner. Former PG&E; presidents George Maneatis and Barton W. Shackelford also are claimants, along with former vice presidents who oversaw such areas as natural gas and electricity supplies, engineering, customer service and human resources.
Court records list them as the Committee of PG&E; Retirees and Survivors, which was formed to seek their benefits under what is known as the Supplemental Executive Retirement Plan. The plan was designed to provide additional retirement benefits to PG&E;'s highest-paid employees.
Unlike the pensions of rank-and-file workers, the supplemental plan was not secured, or guaranteed, under federal retirement rules.
“Part of their pensions are protected, but in many cases that is a small part of their pensions,” lawyer Hansen said. “The more you make, the greater part of your pension is not qualified, or protected.”
Shackelford, who put in 39 years before retiring as president in 1985, said, “We knew part of [the pension] was at risk. But, of course, I don’t think many people thought that PG&E; was likely to go into bankruptcy.”
The former executives, Shackelford said, only seek to be treated like other unsecured creditors, meaning they want PG&E; to make good on its vow to make creditors whole.
“I don’t know how long it will take,” he said.
The executives’ claims are expected to amount to millions of dollars. Hansen said the total covers not only missed monthly pension payments in May and June but also lifetime payments for the retirees and, in some cases, for spouses.
Some claimants left the company almost a quarter of a century ago and are in their 80s. Others took early retirement and are in their 50s. Two are widows, and two are ex-spouses.
Most remain well-situated financially, Hansen said, but one recently put his house on the market out of concern for his finances.
“Many of them made pretty good salaries while there, and if they were at all prudent, they have assets,” the attorney said. “For many of them their main assets are stock in PG&E;, so they have lots of depressed stock which is not paying a dividend now.”
The retiree committee did not intervene recently when PG&E; asked for and received tentative approval from the federal bankruptcy judge to spend $17.5 million on bonuses to help retain its present management team. But the committee’s bylaws state that it would use litigation, if necessary, to ensure “the continuation of all pension payments, deferred compensation, insurance annuity payments and other similar benefits.”
PG&E; spokesman Ron Low said 50 retired executives and about 35 other senior employees have a portion of their retirement benefits in unsecured plans and are considered creditors.
The company declined as a matter of policy to discuss the pensions of individual employees. But Low noted that under federal law, the maximum benefit that can be paid through secured plans is $140,000 a year, so anything above that is not guaranteed.
“Unfortunately, individuals who have a portion of their retirement in non-qualified programs are unsecured creditors,” Low said. “It means [unsecured] benefits would be suspended until the company emerges from Chapter 11.”
That means their claims will be handled in U.S. Bankruptcy Court with those of other unsecured creditors, whose debts are not backed by utility assets. The company has identified more than 100,000 potential claimants. On July 7, PG&E; will mail “proof of claim” forms to potential creditors, and nongovernmental claimants must return them by Sept. 5.
Times researcher Vicki Gallay contributed to this story.