PG&E shareholders, not customers, to pay ex-CEO’s $35M severance 

Score one for the outraged.

After several days of widespread indignation from customers, regulators, and even the governor, Pacific Gas & Electric Corp. announced Monday that it would not make ratepayers cough up $35 million for its fallen CEO’s retirement package.

Last week, the company announced that CEO Peter Darbee was retiring after “a challenging year.” That year included the death of eight people and injury of dozens more when one fo PG&E’s natural-gas pipeline, in San Bruno exploded, and the subsequent downward trajectory of its stock price.

Because Darbee retired, rather than resigning or being fired, he was entitled to an estimated $35 million retirement package — a package that was to be paid by ratepayers.

PG&E spokesman Brian Hertzog said the company immediately began hearing from customers and regulators who felt the money should come from PG&E’s profits rather than from ratepayers. Saturday, the San Jose Mercury News quoted Gov. Jerry Brown as joining the chorus, arguing that it was “time for corporations to rein in executive compensation.”

Brown has appointed three of the five members of the California Public Utilities Commission, which regulates PG&E.

PG&E’s board of directors met Monday morning and decided it was time to respond to the public pressure and voted to pay for Darbee’s retirement from shareholder funds, rather than ratepayer funds, said Hertzog.

“The board had an opportunity to demonstrate that we’re listening,” he said.

Consumer advocate the Utility Reform Network immediately sent out a statement declaring victory. Executive Director Mark Toney said he hopes it’s the start of a trend.

“Customers have been paying for PG&E’s executive perks for too long,” Toney said.

Praise also came from CPUC President Michael Peevey, who issued a statement calling PG&E’s move “the right thing to do.”

Governor’s spokesman Gil Duran said the decision was “certainly a positive development.”

“Thirty-five million dollars is an amount of money most people would consider astonishing,” Duran said.

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Katie Worth

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