PG&E; Managers Offered Millions
Pacific Gas & Electric Co.’s top six officials and 200 other management employees would receive a total of $17.5 million under a proposal submitted Friday to a federal bankruptcy judge.
The company said the payments, amounting to 25% to 100% of annual salary, are necessary to retain high-ranking management as the company undergoes financial reorganization and tries to weather the energy crisis. The average payment would be $77,000.
“Not surprisingly, PG&E;’s Chapter 11 filing has injected a significant sense of uncertainty among its employees,” the company said. “PG&E; depends on the dedication and continued employment of certain essential employees for the provision of safe, reliable and responsive service to its customers.”
There was no indication of when Judge Dennis Montali would rule.
Steve Maviglio, Gov. Gray Davis’ press secretary, said: “This is another example of PG&E;’s damn-the-ratepayer attitude. Lining their pockets while insisting ratepayers foot the bill for their costs shows poor judgment on management’s part.”
In a widely criticized move, the utility paid more than $50 million in annual bonuses and merit raises to more than 6,000 managers and other employees on April 5, one day before it filed for protection from creditors, saying it had fallen $9 billion in debt.
Bankruptcy lawyers say it is common for companies to establish retention programs so they will not lose key employees as they work through bankruptcy.
But Gail Hillebrand, senior attorney at Consumers Union in San Francisco, said: “This is not the time to be dissipating the assets of PG&E.; The court should be very careful about authorizing payments to managers until the overall reorganization plan is in.”
The program would cover about 1% of the company’s 19,500 employees and would provide the payments on condition that the employees stay with the company for the next several years.
The top six officers, including President and Chief Executive Gordon Smith, would be entitled to a third of their retention payment only if the company files a reorganization plan by Jan. 1, and they would get the rest when the plan is approved. The company said it did not have a breakdown of payments.
The six top executives and another 17 officers would receive up to 100% of base pay, another group of 77 department directors and key attorneys would get between 50% and 75% of base pay, and a group of 126 managers and other attorneys would receive 25% to 50%.
Separately, Southern California Edison said it handed out about $19 million in incentive pay this week to about 12,000 workers as part of a long-standing compensation plan that rewards employees for achieving corporate goals.
The payout was sharply lower than the $80 million awarded last year, reflecting Edison’s financial woes, said J. Michael Mendez, Edison vice president of human resources. Edison executives are not part of the compensation plan and will receive no raises or bonuses this year, he said.
The average payment of $1,600, or about 2.3% of base salary, recognized employees for meeting nonfinancial goals such as employee safety and customer satisfaction, Mendez said.
*
Reiterman reported from San Francisco, Rivera Brooks from Los Angeles.
