PG&E Considers Boosting New Director Pay to $400,000
(Bloomberg) -- PG&E Corp. is considering offering new board members significantly higher compensation than existing directors as the bankrupt utility giant seeks to recruit directors, according to people familiar with the matter.
The parent of California’s largest utility -- which filed for bankruptcy in January -- may offer incoming directors as much as $400,000 annually, said the people, who asked not to be identified because the matter isn’t public. The median PG&E director compensation was $271,000 in 2017, according to data compiled by Bloomberg.
No decision has been made, and PG&E could opt to not offer more pay to new directors, the people said. Any increase in board compensation would also have to be disclosed to regulators, one of the people said.
PG&E would like to raise new director pay to reflect how the role would require a greater time commitment than the typical utility board seat, the people said. PG&E is working with executive recruiter Spencer Stuart to find board candidates, they said.
PG&E’s search requirements for directors include evidence of ties to California, regulatory experience and a grasp of energy markets, the people said.
Representatives for PG&E and Spencer Stuart declined to comment.
It’s common for companies going through bankruptcy to ask a judge to pass new bonus programs for executives, or boost director pay, because figuring out how to salvage a company is hard.
Employee compensation already has come under the microscope in PG&E’s bankruptcy. Attorneys for wildfire victims asked the bankruptcy judge to reject PG&E’s request to pay $130 million in bonuses to hundreds of workers. PG&E’s board then reversed course and decided not to award the payouts due to the bankruptcy, drawing the ire of its labor unions.
PG&E has been negotiating with investors seeking to overhaul management of the San Francisco-based utility, which filed bankruptcy protection in January in the face of $30 billion of liabilities tied to wildfires.
An ad hoc committee of shareholders being represented by the law firm Jones Day has discussed nominating at least nine board members, people familiar with the situation said this week.
Separately, activist investors BlueMountain Capital Management and ValueAct Capital Management have already banded together to press for their own long-term overhaul of PG&E’s leadership. BlueMountain submitted nominations for the company’s board last week.
PG&E, which has been engaged in talks with BlueMountain and other shareholders, plans to overhaul its board so that a majority of the directors are “new, independent directors” by the time it holds its annual meeting, according to a statement this month.
The company is also looking for a new chief executive officer, following the departure of Geisha Williams in January. PG&E is seeking a CEO candidate willing to take a low starting salary with the possibility of large back-end incentives, the people said.
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