PG&E Corp. CEO Bill Johnson earned $18.5 million last year, but only on paper. Most of his total 2019 compensation is effectively worthless for now, a new regulatory filing shows.
Johnson, who became PG&E’s chief executive in May, earned a base salary of nearly $1.7 million and a one-time $3 million signing bonus after he joined the bankrupt San Francisco energy company. He was previously the CEO of the Tennessee Valley Authority.
The majority of Johnson’s total reported compensation at the parent company of Pacific Gas and Electric Co. came through $11.1 million in stock options, according to a filing the company made this week with the Securities and Exchange Commission.
“I think it’s unlikely, in that time frame, that PG&E stock will get to those levels,” said Travis Miller, a utilities analyst at Morningstar Research Services.
The company is in Chapter 11 bankruptcy protection because of devastating wildfires its power lines caused in 2015, 2017 and 2018, and it’s trying to wrap up the case in the next few months. Just last week, PG&E revealed that it has agreed to plead guilty to 85 felony counts, all but one for involuntary manslaughter, over the 2018 Camp Fire.
PG&E’s SEC filing illuminates the reality of the compensation that Johnson has received as he tries to steer the embattled company through bankruptcy and the enduring threat of more wildfires.
The company had previously said his base salary and annual equity awards could total $6 million or more. He ended up being granted a reported $2.3 million in stock awards, 75% of which vested in February, according to PG&E. But shares have declined from their value incorporated in PG&E’s amended annual report to the SEC.
The total compensation for each of the top 10 highest-paid CEOs in the Bay Area last year was far higher, with all of them earning more than $30 million and several of them far more, according to a list compiled by the San Francisco Business Times.
Miller, the Morningstar analyst, said Johnson’s compensation package is unusual for the utility sector in how much of it is based on stock options linked to prices so much higher than where the company’s shares are currently trading. But it’s a reasonable package overall, Miller said.
Mark Toney, executive director of the Utility Reform Network consumer group, was deeply skeptical of the stock options.
“We’ll have to see, but it’s not out of the realm of possibility that he’s able to collect most of that in three or four years,” Toney said.
He said he thinks Johnson’s compensation should have been limited only to his base salary and signing bonus.
“We’re not at the point where they should be rewarded for not killing people,” Toney said of PG&E leaders. “There’s no point to rewarding a company for fulfilling its basic function.”
“PG&E aligns incentive compensation with our goals, including, most significantly, those relating to safe operations of our electric and gas systems,” the company said.
PG&E also noted that Johnson’s compensation plan “is in line with those of other companies in similar situations,” and state law bars any of his pay from being funded by customers. Instead, PG&E shareholders bear the burden of his compensation.
“Under the leadership of Bill Johnson, PG&E is taking actions to fairly and expeditiously compensate wildfire victims, safely deliver reliable energy to customers and communities, and help secure California’s energy future,” the company said.
By comparison, the total 2019 compensation for the chief executives of the parent companies of Southern California Edison and San Diego Gas & Electric was about $11.8 million and $19.8 million, respectively, according to filings with the securities commission.