Bankruptcy Judge Rips PG&E Over Executive Bonuses

(CN) – A federal bankruptcy judge slammed Pacific Gas & Electric at a hearing Friday for failing to properly disclose the full compensation package for its newly hired CEO, and questioned whether bonuses for other senior executives were appropriate given the utility’s financial state.

PG&E General Office Building in San Francisco. (Photo by v via Wikipedia Commons)

U.S. Bankruptcy Judge Dennis Montali told PG&E attorneys he was “very, very troubled” by a proposed compensation package that could distribute as much as $16.3 million to 12 executives if the utility meets certain thresholds are met.

“I’m not sure I’m comfortable giving them seven-figure checks at the end of the year when there hasn’t been a single dollar given to the victims’ fund,” Montali said during the lengthy hearing.

Cecily Dumas, an attorney representing wildfire victims in the bankruptcy proceedings, said giving money to senior executives who presided over a corporate culture that led to the most destructive wildfire in the modern history of California is outrageous.

“They should not be receiving bonuses, they should be losing their jobs,” Dumas said, adding that withholding financial compensation is the only way to “let PG&E know this can’t continue.”

Stephen Karotkin, attorney for PG&E, said the bonuses are necessary to motivate the executives to achieve the company’s safety targets.

“They should have the opportunity to receive market-based compensation,” he said.

Montali did not seem receptive.

“They have an opportunity to serve on a corporation that is dealing with one of the most pervasive tragedies in the history of Northern California,” Montali said. “If that isn’t incentive enough, they should get another job, honestly.”

The judge also took PG&E to task for failing to disclose a signing bonus paid to new CEO William Johnson. He was paid $3 million by the board, but U.S. Trustee Greg Zipes protested and said Johnson received the bonus before the judge approved it.

“It was paid and then the motion was filed,” Zipes said.

Montali said he was not happy.

“It should’ve been filed as part of the request,” he said.

Ultimately, Montali punted decisions on both issues, saying he would take the matter under advisement with the goal to rule either orally or in writing “fairly soon.”

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