PG&E Corp. CEO Bill Johnson will step down from his job just 14 months after the nation’s largest utility hired him to rescue it from a financial mess caused by a history of negligence and to change a corporate culture that emphasized profits over safety.
Johnson’s June 30 retirement was not expected, but the announcement made Wednesday didn’t come as a surprise either as PG&E tries to emerge from a bankruptcy triggered by deadly 2017 and 2018 wildfires ignited by its decaying electrical grid.
California Gov. Gavin Newsom and the head of the chief agency that regulates PG&E have pressured the company to oust its entire 14-member board of directors, including Johnson.
The California Public Utilities Commission, which oversees PG&E’s operations, said it will “closely monitor” who the company picks as its next long-term CEO. Newsom’s office didn’t respond to a request for comment.
PG&E gave Johnson a $3 million bonus when it signed him to a three-year contract last April. Under terms of that agreement, he will be able to keep that bonus on top of a pro-rated portion of his annual $2.5 million salary, even though he is leaving before his contract expires.
PG&E valued Johnson’s entire compensation package last year at $18.5 million, but most of that consisted of stock options and other awards that he won’t be able to keep upon his retirement. The company told The Associated Press Johnson isn’t eligible for a severance payment.
Johnson’s retirement is timed to coincide with the deadline for PG&E to wrap up its bankruptcy case with a deal that includes $25.5 billion to pay for losses suffered in Northern California wildfires that killed nearly 130 people and destroyed more than 25,000 buildings.
As part of its bankruptcy plan, PG&E had agreed only to replace some board members and gave no sign it planned to ask Johnson to step aside so soon after bringing him in from Tennessee, where he ran another large utility.
PG&E recruited Johnson to replace Geisha Williams, who stepped down as the company’s CEO shortly before it filed for bankruptcy in January 2019. Williams had become a target of scorn and derision after PG&E’s equipment started a 2018 wildfire that wiped out Paradise, California. PG&E plans to plead guilty to 84 counts of involuntary manslaughter for that inferno next month and will pay a $4 million fine for those felony.
Johnson’s departure clears the way for PG&E to work with the state to bring in a new leader who government officials believe is better qualified to oversee the utility. Priorities for the next CEO include installing about $40 billion in badly needed equipment upgrades and managing deliberate blackouts during wildfire season to reduce the the chances its equipment ignites more fires.
“As we look to PG&E’s next chapter, this great company should be led by someone who has the time and career trajectory ahead of them to ensure that it fulfills its promise to re-imagine itself as a new utility and deliver the safe and reliable service that its customers and communities expect and deserve,” Johnson, 66, said in a statement.
PG&E declined an AP request to interview Johnson.
Once Johnson steps down, he will be temporarily replaced by a former AT&T executive, Bill Smith, who joined PG&E’s board four months ago. PG&E gave no timeline for how long Smith will serve as interim CEO.
This marks the fifth full-time CEO to part ways with PG&E since the San Francisco company got out of a prior stint in bankruptcy in 2004. The utility has been a frequent lightning rod for criticism since then, partly because of high electricity prices but mostly for its shoddy safety record.
Besides its role in deadly wildfires, PG&E’s natural gas lines blew up a neighborhood in 2010, killing eight people in the process. The company is in the midst of a five-year criminal probation for that tragedy.
“PG&E has a pattern of bringing in new CEOs with great fanfare and then having them leave in disgrace,” said Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer group that has long been critical of the company’s practices. “We keep hearing promises they are going to make things better, but they only seem to make things worse.”