SAN FRANCISCO — After Pacific Gas And Electric went bankrupt last year, the utility’s parent company rewarded 11 top executives with a total of $5.75 million in cash bonuses and stock grants now worth $24.8 million, according to documents filed Wednesday.
PG&E Corp. paid $2.38 million to CEO Robert D. Glynn Jr., supplementing his $900,000 salary with $1.48 million in cash bonuses.
The San Francisco-based company also gave Glynn the rights to 307,693 shares of company stock worth $6.4 million, based on the shares’ closing price of $20.91 Wednesday on the New York Stock Exchange.
Glynn’s salary and bonuses in 2001 more than doubled his 2000 paycheck of $900,000.
Gordon R. Smith, who runs the company’s bankrupt utility, also more than doubled his 2000 paycheck of $630,000. PG&E paid Smith $1.5 million last year, including $874,808 in cash bonuses. The company also gave Smith 179,488 shares of stock currently worth $3.75 million as of Wednesday.
All told, PG&E distributed 1.18 million shares of free stock to the 11 top executives listed in the company’s shareholder proxy statement. The executives won’t gain full ownership of the stock until 2003 or 2004, the company said.
The lucrative awards paid to PG&E’s executives outraged critics who believe the company pushed California’s largest utility into bankruptcy by siphoning billions of dollars from the business over several years. California Attorney General Bill Lockyer is suing PG&E in a complaint that accuses the company of fraud.
PG&E’s executive paychecks are “just off the charts. It’s astonishing,” said Mike Florio, a senior attorney for The Utility Reform Network, a consumer group fighting to overhaul California’s power market.
“I think you could just walk down the street and find a lot of people capable of driving a company into bankruptcy and alienating an entire state in the process.”
PG&E believes its executives deserved the rich rewards for guiding the business through a tumultuous year that began with rolling blackouts in Northern California and ended with the scandalous collapse of Enron Corp., once the nation’s largest energy trader.
In between, PG&E suspended its quarterly shareholder dividend for the first time in 85 years as its credit rating deteriorated to junk status.
Management blamed the utility’s woes mostly on state regulators for not allowing the company to charge its customers more for electricity during a long stretch when prices on the wholesale market soared.
“It was an extraordinary year and we performed well under the circumstances,” said PG&E spokeswoman Renee Parnell.
Despite its utility’s bankruptcy, PG&E earned $1.1 billion on revenue of $22.9 billion last year, reversing a loss of $3.4 billion on revenue of $26.2 billion in 2000. The company’s stock fell by 4 percent during 2001.
PG&E’s rewards covered more than just its executives. The company said it gave $64 million in bonuses to 6,200 administrative employees for last year’s work, a 28 percent increase from 2000. Money collected from Pacific Gas and Electric’s customers paid for about 25 percent of the 2001 bonuses.
“Ratepayers and shareholders ought to be steaming mad about this,” said Doug Heller, senior consumer advocate for the Foundation for Taxpayer and Consumer Rights. “This is not a successful management team. They failed.”
Most of the cash bonuses paid PG&E’s executives were tied to the company’s financial performance. The company also paid $1.07 million in retention bonuses to seven executives, including Glynn and Smith. PG&E won bankruptcy court approval to pay retention bonuses to discourage top executives from abandoning the company.
Last year’s stock awards represented another piece of the company’s retention plan.
The executives will gain full control of the stock at the end of 2003 if PG&E’s shareholder return ranks among the top 25 percent of its peer group in the power industry, according to Securities and Exchange Commission documents. If PG&E’s shareholder returns don’t measure up, then the executives will have to wait until the end of 2004 to become fully vested in the stock awards.
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