Two executives of the California Power Exchange improperly paid themselves bonuses designed to keep employees on the job, a U.S. Bankruptcy Court judge has ruled.
The now-defunct Power Exchange, established to broker electricity deals under deregulation, had offered the bonuses to Chief Executive George Sladoje and Chief Financial Officer Lynn Miller to keep them on the job as the agency struggled through bankruptcy proceedings.
The bonuses were supposed to be paid only after termination, to ensure that the officers stayed until they were no longer needed. Instead, both continued to work for the electricity market, even though they collected $320,000 between them, violating terms of a court order, Bankruptcy Judge Erithe A. Smith ruled Monday.
Smith cited Sladoje and Miller for civil contempt and ordered a hearing May 9 to determine damages. Also cited for contempt were Joseph A. Eisenberg, the attorney who advised Sladoje and Miller, and the law firm Jeffer, Mangels, Butler & Marmaro, where Eisenberg is a partner.
Sladoje and Miller “are being unduely penalized” for decisions made to keep the operation going during a chaotic time, said Dana Perlman, a lawyer representing the two. “We are reviewing our options.”
Eisenberg could not be reached for comment.
Creditors have protested more than $5 million in salary and other compensation paid to several top officers of the exchange in the weeks before its March 2001 bankruptcy filing. But most of those funds are outside the authority of the Bankruptcy Court because they were paid before the filing.
Sladoje left in November and Miller is now chief operating officer of the nonprofit corporation, which was the state’s primary electricity market until late 2000. The exchange shut down in January 2001 when debt-laden Southern California Edison and Pacific Gas & Electric no longer could buy electricity for their customers.