LDN - Business

U.S. judge defers ruling on PG&E $350 million bonus plan

[April 10, 2019] By Jim Christie

SAN FRANCISCO (Reuters) - A U.S. bankruptcy judge on Tuesday deferred a ruling on whether to approve a PG&E Corp plan to pay up to $350 million in bonuses to 10,000 employees, saying he wants more details from the California power producer that is facing bankruptcy following last year's wildfires.

Judge Dennis Montali of the U.S. Bankruptcy Court in San Francisco set April 23 as the next date for a hearing on the plan, saying he wants PG&E to give him a "tutorial" on it.

"It doesn't quite feel right yet," Montali said of the plan, noting he wanted a better understanding of how some of its performance measures will affect payouts.

The plan covers 2019 and takes the place of a previously proposed 2018 bonus program that the California power provider scuttled after criticism from wildfire victims and their lawyers.

San Francisco-based PG&E sought Chapter 11 bankruptcy protection in January, facing the prospect of potentially billions of dollars in liabilities stemming from wildfires in California in recent years linked or suspected to be linked to its equipment.

The investor-owned power provider has said it expects its equipment will be found to have caused November's Camp Fire, California's deadliest and most destructive wildfire of modern times. The blaze killed 86 people and destroyed the town of Paradise.

The U.S. Trustee, the government's bankruptcy watchdog, had objected to the new plan, saying it was not clear if top company executives were excluded and expressing concern about its cost.

Montali said he found no evidence top executives were included. He hoped to rule on the plan after the next hearing, he said.

"I'm not going to make the 10,000 employees dangle in the wind," the judge said.

PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

More than half of the plan's formula for calculating bonuses is pegged to how well employees help PG&E meet safety goals like clearing trees and branches around power lines to avert contact that triggers wildfires, a lawyer for the company said at Tuesday's hearing.

Stephen Karotkin of Weil Gotshal & Manges added that committees for PG&E's unsecured creditors, equity holders and some bond holders support the plan because they see it helping the company's reorganization effort.

"I can't emphasize enough the importance of bringing stability to this workforce," Karotkin said.

But those who had been affected by wildfires found the size of the proposed bonus plan difficult to stomach, said Robert Julian of the BakerHostetler law firm, who represents wildfire victims.

"The dollars are just too large," Julian said, adding his clients were also concerned about whether the plan will advance wildfire safety measures.

While the maximum cost of the plan is $350 million, PG&E has said it expects the likely cost will be around $235 million. PG&E has said it aims to remove 375,000 trees around power lines this year to avert the potential for its equipment sparking blazes during California's next wildfire season.

PG&E shares rose 0.4% to $18.90 in after-hours trading.

(Reporting by Jim Christie; Editing by Phil Berlowitz and Rosalba O'Brien)

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