$38 million doled out to almost 1/3 of PGE employees, primarily the management and top executives of course. That comes to an average of almost $14,000 bonus per person, just hours before filing bankruptcy.

********

PG&E Showers Bonuses, Raises on 6,000 Managers rewarded for 'staying the course'

David Lazarus, Chronicle Staff Writer Saturday, April 7, 2001

Just hours before filing for bankruptcy protection, PG&E Corp. awarded bonuses and raises to about 6,000 senior managers and other employees, The Chronicle has learned.

PG&E Chairman Robert Glynn said in an internal memorandum to employees late Thursday that the company was reversing an earlier decision not to pay bonuses or raises. A copy of the memo was obtained by The Chronicle.

PG&E had said earlier that it could not pay bonuses or raises to senior officials because of the utility's shaky financial status.

In overturning that decision, Glynn cited PG&E employees' "efforts, teamwork and dedication during the past year, and particularly throughout the ongoing energy crisis."

"Thank you for staying the course," he wrote.

PG&E's utility subsidiary, Pacific Gas and Electric Co., filed for bankruptcy protection yesterday morning, after many of the bonuses had been deposited in workers' bank accounts.

The U.S. bankruptcy court in San Francisco subsequently granted PG&E approval to make outstanding compensation payments to employees and maintain related bank accounts.

Russ Jackson, PG&E's vice president of human resources, said in an internal memo yesterday that the payments were being made to recognize "efforts to stay focused on our critical day-to-day operations."

"Retention is a big issue," said PG&E spokesman Shawn Cooper. "This is a way to keep talent."

Glynn, he added, "gained a lot of points with employees."

But Medea Benjamin, head of the San Francisco grassroots organization Global Exchange, called the decision "the ultimate slap in the face for the people of California."

"Not only should these people not be getting raises, there should be criminal proceedings against them," she said.

Nettie Hoge, executive director of The Utility Reform Network in San Francisco, called PG&E's move "outrageous, irresponsible and galling."

"The notion that they are giving bonuses to the people who got us into this is like rewarding rats as the ship goes down," she said.

However, David Huard, a partner at the Los Angeles law firm of Manatt, Phelps & Phillips, said it is common for companies to fill the pockets of top executives before declaring bankruptcy.

"It's not unusual for corporations anticipating bankruptcy to sweeten the pot and encourage management to stay," he said.

Huard added that a federal court probably would go along with any such moves before the bankruptcy filing but that it would have been much more difficult to hand out bonuses after petitioning for Chapter 11 protection.

"Everyone would have gone thermonuclear," he said.

Most rank-and-file PG&E workers were unaffected by the bonus decision. As union members, they received regular pay increases in January per established labor accords.

PG&E spokesman John Nelson said the bonuses were awarded to corporate managers and various "support staff." The performance-based bonuses can be as much as four weeks of an employee's regular salary, he said.

Annual raises are intended to reflect increases in cost-of-living expenses, Nelson said, and average 3 percent of an employee's annual salary.

PG&E Co.

Nature of business: Provides electricity and natural gas distribution and transmission services throughout Northern and Central California. In addition, its National Energy Group provides energy products and services throughout North America.

Scope of operations: Based in San Francisco, the utility serves 13 million customers throughout a 70,000-square-mile service area. The area stretches from Eureka in the north to Bakersfield in the south and from the Pacific Ocean in the west to the Sierra Nevada in the east.

Chairman, President, CE0: Robert Glynn

Employees: 20,000

Revenue for first three quarters of fiscal 2000: $18.15 billion

Net income for first three quarters of fiscal 2000: $772 million

Yesterday's stock price: $7.20

52-week high: $31.64

-- total ripoff (corporate execs live high on the hog @ customers. get fucked up the ass), April 08, 2001

Answers

Correction: The total amount of bonuses is $83,000,000 not 38!

-- (disgusting greedy pigs @ makes me. want to puke), April 08, 2001.

If I was a PG&E exec I wouldn't take the cash. No way. I'd rather see me and my family fucked over by a bunch of legislative and regulatory screwups. Yep. Doin some serious sword falling here is what I think is fair. Parden me while I die because you elected belivers in magic.

-- Carlos (riffraff@cybertime.net), April 08, 2001.

"I'd rather see me and my family fucked over by a bunch of legislative and regulatory screwups."

You mean the same screwups that you engineered? Yeah, that's convenient. Borrow billions of dollars, fill your pockets, and then file bankruptcy so you don't have to pay it back because the business plan you implemented didn't work. Nice racket!

-- (carlos is proof @ there's. plenty of suckers out there), April 08, 2001.

It's not their fault california is filled with pond scum, maggot infested, tree hugging liberals who've castrated businesses their for decades....... You fucked yourself asshole, get over it!!!! NOBODY in America feels sorry for california

-- California Dipshits (rot_in@HELL.com), April 08, 2001.

I'm not in California, ASSHOLE!! This is Dumbya's CORPORATE NEW WORLD ORDER, and it doesn't matter where you live, they're gonna fuck you!

-- (KISS MY @ ASS. DIPSHIT!), April 08, 2001.

FROM 3 YEARS AGO:

In Depth: Flipping the switch: California's new power game

From the March 27, 1998 print edition

Glynn whipping behemoth PG&E into fighting shape

Kristen Bole Business Times Staff Writer

At 10 a.m. on the first day in his new office, Robert Glynn Jr. is not concerned with the mess. There is none: no boxes of files, no paintings leaning against the wall, no stacks of random pens waiting to find a drawer.

Even the globe is in its place by the window overlooking the Bay, the box of Chinese harmony balls neatly placed on his visitor's table.

Bob Glynn is a mechanical engineer: There is order here. There's also the staff to keep it that way.

If only the company's future were so free of chaos.

At 55, Glynn is steering the $30 billion PG&E Corp. from an era of plodding monopoly to a frenetic world of competition, fast change and massive stakes. Or, as Glynn put it, going from "the biggest" to "the best."

"Our objective is to become the premier energy company from three viewpoints: our shareholders, our customers and our employees," Glynn said.

"The speed with which it is moving for both our customers and our employees is something that definitely keeps us on our toes," he said. "Every day."

And they are major changes, said Stephen Lechner, director of financial advisory services at Coopers & Lybrand.

"The whole industry has been turned upside down on its head," Lechner said. "They're all going to have to figure out a whole new way of doing things."

Nimbler giant

The goliath hasn't sat still. Over the past year, the company has rebuilt itself from the bottom up -- partly directed by law.

It started by creating a holding company, PG&E Corp. The utility, Pacific Gas & Electric Co., then became a subsidiary alongside four open-market sisters: retail company PG&E Energy Services, PG&E Gas Transmission, electric commodity trader PG&E Energy Trading Co. and independent power producer U.S. Generating Co.

Glynn, who had been COO of Pacific Gas & Electric Co. since 1995, rose to chief executive of the corporation last May, and replaced 33-year PG&E veteran Stan Skinner as chairman upon Skinner's retirement in January.

Each of the sisters has grown from nothing over the past few years, with rapid change in the last 12 months as PG&E focused on the $250 billion U.S. electric market -- the size of the U.S. long-distance, phone, airline and software markets combined. In that time, while continuing to provide electricity for 13 million Californians, the corporation has made some massive moves:

Invested $100 million to start PG&E Energy Services, to compete in newly opened electric sales.

Bought out Bechtel Group in the joint venture that formed U.S. Generating Co. and sold Bechtel its share in their joint international business.

Bought $1.6 billion in power plants in New England, doubling USGen's capacity and making it the nation's second-largest independent power producer.

Sold three Pacific Gas & Electric plants to Duke Energy for $501 million, with plans to sell off the rest of its fossil fuel plants this year.

Bought a major gas pipeline business in Texas, adding more than 8,500 miles of natural gas pipelines to its transmission business.

Invested $1.3 billion in utility infrastructure and $250 million in computer and information systems.

Money to grow

At the same time, the utility negotiated a sweetheart deal to ease its transition into deregulation. Not only could it issue 10-year bonds to cover the so-called "stranded costs" of its old power plants in just four years, but the high electric prices enabled the utility to tag on a transition surcharge while still cutting prices 10 percent. That strong financial shape for the utility has freed PG&E to devote energy to its free-market kids.

In other states, the utilities aren't faring so well, said Joe Fichera, an investment banker at Prudential Securities.

"They had a financial chemistry there that allowed them to get a savings that other places won't," Fichera, citing up to 30-year paybacks in other states, with lower initial electric prices. "You can't expect what happened in California to happen elsewhere."

While fiercely independent from the utility, PG&E Energy Services has benefited from the corporate stability. In just a year, it has grown to 20 offices nationwide, boosting staff from 25 to more than 300 now, and breaching the $3.5 billion mark in electricity deals since last fall to stay neck-on-neck with competitor Enron Energy Services.

"I don't think anyone in our business would have dreamt that we would have had $3 billion in bookings and be on our way to our fourth before this quarter was over," Glynn said. "That's only two quarters -- if you extend that growth curve, it's a huge, huge market."

A good chunk of those bookings came from a $2 billion deal the corporation signed in early March with the San Antonio-based Ultramar Diamond Shamrock Corp., a deal that Glynn said redefined the size and shape of the retail market.

"It's a brand-new and defining example of what customers want in the new competitive energy market," he said. "It's the diversity of their needs, the size of their framework and the clarity of them saying, `You do this for us.'"

That, said Glynn, is the way of the future, as big customers hand off those decisions to an energy company, so they can get back to their core business. And he's not just looking at California: He wants the nation.

In a move to spark name recognition nationwide, the subsidiaries have added voltage to their efforts to build a national customer base in open sectors like natural gas or consolidated energy billing. That way, PG&E won't be a stranger when those states open up their electric markets.

Building a team

It will take a lot of those deals to gain the U.S. market share, though. To do that will take the right people -- from the executive level in each subsidiary to Glynn's personal staff who switch his coffee to decaf when the stress gets too high.

But just as the high-tech industry has seen, it needs seasoned staff from a wide range of backgrounds, from energy to marketing, sales and customer service. And, just as high-tech has seen, they don't exist yet within the industry. That means hiring from the utility, hiring from the enemy, hiring from telecom, hiring fast.

Said Glynn: "The market is hot for people with those skills."

That may create a great composite, but it also leaves him herding cats -- jaguars, maybe. His response: a hands-off management style that one staffer said was unsettling at first, even among the top brass at the subsidiaries. "Some of them expected to be able to go to the CEO with problems and have him fix them," he said. "He would listen to them and say, `How are you going to solve that?'"

As Glynn sees it, his job is to have the vision of how to become the best, and help top staff pass it on.

Bottom-line deals

Meanwhile, the balance sheet is also topsy-turvy. Last year, the utility still made up two-thirds of PG&E Corp.'s $15.4 billion in operating revenues, and nearly all of its profits. Five years from now, Glynn predicted, the open-market side is likely to make up nearly a third of the profits alone.

"The revenues have started to flow from the nonregulated business," Glynn said. "And I'm eagerly awaiting the day when the profits start to flow with the same vigor with which the revenues have."

Then he laughed: "That's an understatement."

The future isn't all peaches and plums though.

Among the big issues looming on PG&E's horizon are the shut-down of the Diablo Canyon nuclear plant, which is already beating down dividends. Also possible, analysts say, is some turmoil in top management as the scenarios change, and the ever-present issue of takeovers, which the federal energy commission is still mulling over.

Then there's the third leg of the stool: shareholders. Long considered good dividend-payers, and thus the equities of "widows and orphans," the safe and reliable utility stock has become the teenager next door, full of hope -- and risk.

As a result, the institutional investor base has risen 50 percent in the past year and a half, to represent 45 percent of the shareholders now. The company's stock also rose 44 percent last year, closing the year at $30.31 per share. It closed March 20 at $33.18

That sense of market optimism has carried over to the staff, most of whom are also shareholders. That, said Glynn, goes back to clarity.

"The reason is that the view we have of the company and the marketplace is rational," Glynn said. "We're the only competitor of our type that's focused on the domestic market exclusively. We have a very focused vision and a huge market that's just opening up."

And like most engineering tasks, this one feels both immense and possible.

"It's like something on the runway taking off," Glynn said. "Five years from now, we'll have a huge number of customers buying commodities and services from us. We'll have without a doubt the best local distributing company and utility in the country.

"And the really neat thing about it," he said, "is that we can do it."

-- (GET A CLUE @ DIPSHIT. SUCKERS), April 08, 2001.

Hey mr kiss my ass, you sound just a little paranoid there.... and you're still full of shit, it's been a california problem long before dubya came along.... sorry to ruin your delusion.

-- california dipshits (kiss_my_white@ass.com), April 08, 2001.

"And the really neat thing about it," he said, "is now that Dubya's in office, we can get away with it."

-- (greedy@back.stabbers), April 08, 2001.

I say blame Dubya all you like (for what I do not know as this has been a problem in the works for years), but don't expect Federal price-fixing, which will screw the rest of the country for California's own mismanagement.

-- libs are idiots (moreinterpretation@ugly.com), April 09, 2001.

The first line of the post, "primarily the management and top executives of course".

The article, "senior managers and other employees". Tell me, total ripoff, do you know the difference?

These liberal wackos who continue to blame Bush for this are totally demented.

-- Maria (anon@ymous.com), April 09, 2001.