SAN FRANCISCO (AP) --

As a reward for ``staying the course'' Pacific Gas & Electric Co. awarded about 6,000 bonuses and raises to mid-level managers and other employees hours before filing for bankruptcy, a newspaper reported.

The company's chairman, Robert Glynn, issued an internal memo late Thursday that incentive payments denied in January would be awarded to eligible employees at Pacific Gas and Electric Co.

The payments were made in time for many of the bonuses to be deposited into workers' bank accounts before the subsidiary of PG&E Corp. filed for Chapter 11 Friday morning, the San Francisco Chronicle reported Saturday after obtaining a copy of the memo.

Gov. Gray Davis issued a brief statement Saturday in response saying ``PG&E's management is suffering from two afflictions: denial and greed.''

Glynn applauded the employees' ``efforts, teamwork and dedication during the past year, and particularly throughout the ongoing energy crisis,'' he wrote.

``Thank you for staying the course.''

The bonuses and raises were earned as part of the company's incentive program. In January, the amount owed to employees who met their department objectives was estimated at $83 million, Pacific Gas & Electric Co. spokesman Ron Low said Saturday.

The amount paid out was less than the earlier estimate because top-level company executives were exempt from payment. Low did not have a dollar figure for the amount paid out but said it was based only on department objectives met by employees.

Low said the money came from a combination of a $1.1 billion tax refund, paying power generators only what the company receives in rates and cash conservation within the company such as halting the installation of underground distribution lines.

The raises and bonuses were given to secretarial staff, mid-level managers and other support staff. No money was distributed to rank-and-file union members who already received a wage increase earlier this year as part of their contract, Low said.

The performance-based bonuses can equal up to four weeks of an employee's regular salary, said company spokesman John Nelson.

Annual raises average 3 percent of an employee's salary and are meant to balance cost-of-living expenses, he said.

Los Angeles lawyer David Huard of Manatt, Phelps & Phillips said the practice of compensating employees prior to filing Chapter 11 is not uncommon. In addition, the U.S. bankruptcy court in San Francisco granted approval for Pacific Gas & Electric Co. to make outstanding compensation payments to employees and to maintain related bank accounts.

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

But Assembly Republican Leader Dave Cox, R-Fair Oaks, said it's disgraceful to the state's ratepayers.

``On the surface it's outrageous,'' he said. ``Declaring bankruptcy and at the same time providing increases and bonuses for employees would just be in your face to the consumers of the state of California.''

-- Anonymous, April 08, 2001

Answers

Frankly, I don't have a problem with what PG&E did for their employees just before going into Chapter 11 bankruptcy. I have been in that situation as an employee of a company that filed for Chapter 11, but *did not* even issue the employees their back pay due, before the final filing. We never got it either. Employees are at the very tail end of the claims chain for payments during Chapter 11 filings. I am sure those employees were being asked to please forgo all pay raises, bonuses, vacation packages, and other pay type issues while the company (PG&E) tried to find a way to survive their problems.

From this point on, the attorneys and the courts will eat up the liquid assets of PG&E like vultures, or like a lion on a wounded antelope, etc, etc. For the employees who had forgone all raises and bonuses during the difficult period of attempting to come to some sort of arrangements with the California government, and then watching that government totally botch up the matter and make it infinitely worse, they deserve to get their last monetary claims fulfilled prior to entering the never-never land of bankruptcy.

The final pay claims awarded to the employees will have no impact whatsoever on the outcome of the bankfuptcy, except for the fact that it will reduce the amount of money available for the attorneys and courts to consume as they mess around with the details over the next few years. It will also impact bond holders, perhaps, but I really do think the employees have a better claim on the last of the money than the bondholders due. That is my philosophical view though, and after the filing is begun the courts put the employees behind everyone else.

-- Anonymous, April 08, 2001

PG-E just rose a notch higher on my opinion scale. I,too, have been on the loosing end of a company filing Ch.11, loosing back pay, vacation, and retirement benefits. For them to pay the lower tier folks is just...justice.

Dennis

-- Anonymous, April 09, 2001

I think it was a cool thing that they did. I worked for a comapny years ago that went into Chaper 11, and a few days before, they paid all of us back vacation pay, bonuses, etc. I collected the equivalent of 3 months pay. They knew the employees would be on the bottom of the food chain once the courts took over. With that cushion in my bank, I stayed with them until they brought the company out the other side.

I was grateful, and I'm sure the loyal employees of PG&E are too, and are more likely to stick it out until PG&E can pull the company out of bankruptcy. I think a lot more highly of the company for doing this than just pulling the plug and leaving their employees high and dry....

-- Anonymous, April 09, 2001

Snip:

Edison was to file an update on its financial condition with the Securities and Exchange Commission on Monday. [end snip]

Apr 9, 2001 - 05:54 AM

Governor, Bankrupt Utility Blame Each Other for Power Woes By Gary Gentile The Associated Press

LOS ANGELES (AP) - Gov. Gray Davis and Pacific Gas & Electric executives traded acrimonious barbs - but no solutions - as the state's largest utility headed into bankruptcy court claiming $9 billion in debts. On Sunday, Davis appeared on two nationally televised news programs to berate PG&E for awarding an estimated $50 million in bonuses and raises to about 6,000 midlevel managers and support staff on the eve of its filing for bankruptcy protection Friday.

"Management at PG&E is just focused upon padding their own pockets, not in discharging their duty to serve their many customers in California," Davis said on ABC's "World News Tonight."

Earlier, Davis had issued a statement saying PG&E "management is suffering from two afflictions: Denial and greed."

In response, PG&E defended their employee bonus package and took a swipe at the governor.

"Instead of focusing all his attention on solving the state's yearlong and ever-worsening energy crisis, the governor has launched a campaign-style attack on our company," a PG&E statement read.

The rancor came at the start of a hectic week. A San Francisco bankruptcy judge was to hold PG&E's first bankruptcy hearing Monday or Tuesday to determine, among other priorities, which creditors will be paid and in what order.

Davis, meanwhile, was still locked in faltering negotiations with Southern California Edison, the state's second-largest utility, which also claims the state's flawed 1996 deregulation law is the cause of its financial woes.

Davis is hoping to strike a deal to buy Edison's share of the power transmission system for $2.76 billion, which would provide Edison with a much-needed cash-flow to restructure its debt.

SoCal Edison executives have said they would continue negotiations with Davis, but weekend talks in San Francisco failed to resolve any of the outstanding issues on the table, said Davis' spokesman Steven Maviglio.

Edison was to file an update on its financial condition with the Securities and Exchange Commission on Monday.

---

On the Net:

Pacific Gas and Electric Co.: http://www.pge.com

AP-ES-04-09-01 0553EDT © Copyright 2001 Associated Press. All rights reserved.

-- Anonymous, April 09, 2001

Davis reminds me of all the slime sucking, lying, no good, greedy, self-serving politicians that I totally hate!

-- Anonymous, April 09, 2001

Problem is, those checks had to be processed (cashed or deposited) prior to the filing, or they go into the collective hopper as a relatively privileged creditor. And it sounds like they were checks, not direct deposits. A few hours isn't much time, and if anyone had advanced knowledge that would be a problem as well.

-- Anonymous, April 09, 2001