SAN FRANCISCO (CN) – Refusing to accept that Pacific Gas and Electric’s corporate leaders need seven-figure incentives to achieve safety goals, a federal bankruptcy judge rejected the company’s request for a $16 million bonus plan Friday.
“There is simply no justification for diverting additional estate funds to incentivize them to do what they should already be doing,” U.S. Bankruptcy Judge Dennis Montali wrote in a 7-page ruling.
PG&E lawyers first sought approval of bonuses for 12 senior executives in June, arguing it was critical for the “safe and reliable operation” of the utility and to maximize the company’s value for economic stakeholders.
Montali voiced skepticism toward the plan at an Aug. 9 hearing, telling PG&E lawyers that “dealing with one of the most pervasive tragedies in the history of Northern California” should be “incentive enough.”
During that hearing, Montali also scolded the company for not seeking approval in advance for a $3 million bonus awarded to incoming CEO Bill Johnson, who took over May 1.
Despite rejecting PG&E’s bonus request, Montali said the company could try filing a new request that offers more concrete evidence on how those executives performances relate to PG&E’s safety goals.
“Debtors may file another, similar motion, if it focuses only on safety and premises payout solely on some form of equity participation,” Montali wrote.
Earlier this year, Montali granted PG&E’s request for a $235 million bonus plan for about 10,000 employees, finding the workers should not be denied the compensation they traditionally received for over three decades “because of a tragedy of such magnitude.”
PG&E declared bankruptcy this past January as it faced a potential $30 billion in liability for wildfires allegedly caused by its equipment and failure to maintain vegetation around power lines.
A spokesperson for Pacific Gas and Electric said the utility is “focused on compensating wildfire victims, delivering safe gas and electric service and further reducing wildfire risk.”
“We are reviewing the court’s order, and will work to determine any next steps related to compensation plans for key senior leaders at the company.”