Documents show safety more of a priority for utility

Filing details basis for $22.7 million in compensation planned for top executives

SAN FRANCISCO — PG&E faced accusations during its criminal trial over the fatal pipeline explosion in San Bruno that it had put profits ahead of safety, but a new regulatory filing Friday indicated safety is becoming a more important priority for the company.

The documents, filed with the Securities and Exchange Commission, detail the basis for $22.7 million in compensation planned for top executives.

Although PG&E became a felon at its sentencing this year for crimes linked to the 2010 San Bruno blast, its new incentive packages for several executives — including its current and future chief executives — peg more of their compensation to certain safety objectives.

San Francisco-based PG&E lists three major company-performance objectives to determine bonuses for the executives: safety, customer satisfaction and financial performance. Of those objectives, safety had 50 percent of the weight, finan-

cial performance had 25 percent and customer satisfaction had 25 percent, the SEC filing showed.

“We know of no other company that has as much of its compensation tied to safety as does PG&E,” said Brian Hertzog, a spokesman for the utility.

The seven executives listed in the filing are slated to receive a combined total of $17.85 million in longterm incentive packages, the SEC documents show. They also are in line for bonuses totaling $4.85 million, under a short-term incentive program.

A review of the SEC filing shows that PG&E subdivided the safety category into 10 components, including multiple safety benchmarks for its gas and electricity operations and the Diablo Canyon nuclear plant.

“We are being completely transparent about what specific safety measures that we are tying compensation to,” Hertzog said. “This way, our employees know what safety goals we are trying to achieve.”

The three major company-performance objectives are divided into a total of 13 components. When those are broken out separately, as shown in the filing, financial performance — specifically, earnings from operations — becomes the top individual component, with 25 percent of the overall weight.

The No. 2 component, ranked by importance, was customer satisfaction scores, which had 15 percent of the weight. No. 3 was “system average service interruption,” which had 10 percent of the weight.

Three safety components were tied at No. 4: gas in-line pipeline inspections and upgrades, a “serious injuries and fatalities corrective action index,” and serious preventable motor vehicle accidents.

Geisha Williams, who will become the CEO on March 1, will receive $6.5 million under the long-term incentive program. Williams at present is head of the utility’s electricity operations.

Nick Stavropoulos, who will become the utility’s president and chief operating officer on March 1, will receive $4.25 million through his share of the long-term incentives, the SEC documents show.

Anthony Earley, who will step down as CEO on March 1 and become executive chairman, will land a $3 million long-term incentive package.

Jason Wells, the chief financial officer, will be awarded $2 million.

Hyun Park, who is the company’s general counsel but will become a senior vice president on March 1, will be granted $1 million.

One critic of PG&E said none of the pay packages should be connected to operating profits.

“Putting profits ahead of customers and safety is what led to the San Bruno disaster and PG&E’s criminal conviction,” said Thomas Long, a staff attorney for The Utility Reform Network, a consumer group. “With that track record, it’s time for PG&E to pull the plug on linking incentive compensation to profits.”

State Sen. Jerry Hill, a Democrat whose San Mateo County district includes San Bruno, said safety benchmarks will work — but only if the state Public Utilities Commission properly supervises PG&E. Federal investigators have determined that the San Bruno explosion resulted from a lethal combination of PG&E’s flawed recordkeeping and shoddy maintenance, and the PUC’s lax oversight of the negligent utility giant.