PG&E awards bonuses hours before filing Chapter 11
SAN FRANCISCO – As a reward for ”staying the course” the parent company of Pacific Gas and Electric Co. awarded about 6,000 bonuses and raises to midlevel managers and other employees hours before the utility filed for bankruptcy, a newspaper reported.
PG&E Corp. Chairman Robert Glynn issued an internal memo late Thursday that incentive payments denied in January would be awarded to eligible employees at the subsidiary utility.
The payments were made in time for many of the bonuses to be deposited into workers’ bank accounts before the utility filed for Chapter 11 Friday morning, the San Francisco Chronicle reported Saturday after obtaining a copy of the memo.
Gov. Gray Davis issued a brief statement Saturday in response saying ”PG&E’s management is suffering from two afflictions: denial and greed.”
Glynn applauded the employees’ ”efforts, teamwork and dedication during the past year, and particularly throughout the ongoing energy crisis,” he wrote.
”Thank you for staying the course.”
The bonuses and raises were earned as part of the company’s incentive program. In January, the amount owed to employees who met their department objectives was estimated at $83 million, Pacific Gas & Electric Co. spokesman Ron Low said Saturday.
The amount paid out was less than the earlier estimate because top-level company executives were exempt from payment. Low did not have a dollar figure for the amount paid out but said it was based only on department objectives met by employees.
Low said the money came from a combination of a $1.1 billion tax refund, paying power generators only what the company receives in rates and cash conservation within the company such as halting the installation of underground distribution lines.
The raises and bonuses were given to secretarial staff, midlevel managers and other support staff. No money was distributed to rank-and-file union members who already received a wage increase earlier this year as part of their contract, Low said.
The performance-based bonuses can equal up to four weeks of an employee’s regular salary, said company spokesman John Nelson.
Annual raises average 3 percent of an employee’s salary and are meant to balance cost-of-living expenses, he said.
Los Angeles lawyer David Huard of Manatt, Phelps & Phillips said the practice of compensating employees prior to filing Chapter 11 is not uncommon. In addition, the U.S. bankruptcy court in San Francisco granted approval for Pacific Gas & Electric Co. to make outstanding compensation payments to employees and to maintain related bank accounts.
”It’s not unusual for corporations anticipating bankruptcy to sweeten the pot and encourage management to stay,” Huard said.
But Assembly Republican Leader Dave Cox, R-Fair Oaks, said it’s disgraceful to the state’s ratepayers.
”On the surface it’s outrageous,” he said. ”Declaring bankruptcy and at the same time providing increases and bonuses for employees would just be in your face to the consumers of the state of California.”
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