The judge in the PG&E bankruptcy case rejected the company’s plan to hand out up to $16 million in executive bonuses this year, saying he saw no basis to give up to a dozen executives more money to “do what they should already be doing” in bolstering safety and preventing wildfires.
Judge Dennis Montali found the company failed to show the bonuses, as proposed, would add anything to improve safety, noting that the company routinely handed out bonuses for the last decade – even in the last two years of devasting wildfires.
PG&E had argued that its plan properly factored in both safety and financial performance and was necessary to retain leaders during the turmoil and keep their salaries in line with other utilities. It said it would not guarantee bonuses, that they would range from a low of $5 million to a high of $16 million, depending on whether the executives met set goals.
But Montali said, in a ruling issued late Friday, that he could not see any direct link in the plan and safety.
“It appears that the metrics are at least partially what some would call a ‘lay-up’,’’ the judge said, noting even PG&E acknowledged it awarded bonuses for meeting goals every year during the last decade – even during the two years of devastating wildfires.
“It is simply unclear at this stage” whether PG&E’s bonus plan can be justified, given the “formidable challenges” the company faces and the already strong pressure to “drastically” improve its safety record, the judge said.
The top leaders, the judge said, “should be satisfactorily motivated by this laundry list of pressures to reform” the company and “should not require the promise of more cash to bring debtors up to the task.”
Judge Montali did, however, hold out a chance he would approve a more focused, stock-only bonus plan that is “solely motivated by safety metrics.”