The state law that protected the Southern California Edison and other utilities against liability for forest fires that were fueled by their equipment came up with a catch: CEO would be forced to do a wage reduction if the safety record of their company would fall.
Edison’s safety record fell last year. The number of fires that was fueled by its equipment rose to 178, from 90 the year before and 39% above the five -year average.
Serious injuries suffered by employees rose by 56% on the average. Five contractors who worked on the electrical system died.
As a result of that performance, the parent company of the utility, Edison International, has cut bonuses for the 2024 year, the California Regulators told in a report of 1 April.
For Edison International employees, planned executive cash bonuses were reduced by 5%and managers in South California Edison saw their bonuses shrinking by 3%, said Sergey Trakhtenberg, a compensation specialist for the company.
But Kasbonusen for four of Edison’s top five managers actually rose last year, with no less than 17%, according to a separate report from March by Edison to federal supervisors. Their long -term bonuses of shares and options, which are much more valuable and are not connected to safety, also rose.
From the top five managers, only Pedro Pizarro, Chief Executive of Edison International, saw his cash bonus backwards. He received a cash bonus of 128% of his salary instead of the planned 135% because of the safety errors, the company said, for the total reimbursement including salary of $ 13.8 million.
The cash bonuses increased for the other top four managers despite the safety -related subtituations because of how they performed on other responsibilities, said Trakhtenberg, director of Edison of Total Rewards. He said that bonuses would have been higher if it was not for safety -related reductions.
“Compensation is structured to promote safety,” said Trakhtenberg and called it “the most important focus of the company.”
Proponents of the consumer say that the fact that the bonuses have increased despite the deterioration of safety, an error in AB 1054, the law of 2019 that reduced liability of utilities with profit motive such as the damage of forest fires that were created by their equipment, reduced by their equipment.
AB 1054 created a Wildfire Fund to pay fire damage in an attempt to ensure that utilities would not be made insolvent by having to wear billions of dollars in damage costs.
In exchange, the legislation said that executive bonus plans for utility companies “should be structured to promote safety as a priority and to guarantee the financial stability of public safety and usefulness.”
“All these supposed accountability measures that have been put in the account appear to be toothless,” said Mark Toney, executive director of the Utility Reform Network, a consumer interest group in San Francisco.
“If managers do not reduce a significant salary when there is a significant increase in natural fire safety incidents,” Toney said, “then the stimulus has disappeared.”
One of the managers who received an increased cash bonus was Adam Umanoff, Edison’s general counselor.
Umanoff is expected to get 85% of his salary of $ 706,000, or $ 600,000, as a cash bonus as his target at the start of the year. The deduction for safety errors reduced that bonus, said Trakhtenberg. But Umanoff’s performance on other goals “were considerably above goal” and thus increased his cash bonus to 101% of his salary,
So despite the safety errors, Umanoff received a kas bonus of $ 717,000, or 19% higher than it was expected.
“If you can just make up for it somewhere else,” Toney said, “the stimulus has disappeared.”
The utility recently told its investors that AB 1054 will protect against potential obligations of billions of dollars if its equipment fueled the Eaton fire on January 7, resulting in 18 deaths and the destruction of thousands of houses and commercial buildings.
The cause of the fire, which record videos that are inflamed under one of the transmissite towers of Edison, is still being investigated. Pizarro has said that the re -energy of an inactive transmission line is now A leading theory of what caused the deadly fire.
The legislation of 2019 was adopted within a few weeks to strengthen the financial health of the electric companies with profit motive of the state after the camp fire in Butte County, which was caused by a Pacific Gas & Electric Transmission line.
The nature fire destroyed the city of Paradise and killed 85 people, and the damage helped to push PG&E bankrupt.
During the ceremony for signing the account, Gavin Newsom government advertised The language that said utilities had no access to the money in a new state fire fund and their obligations of a fire caused by their equipment, unless they tied the executive compensation to their safety performance.
In April, Edison submitted his mandatory annual Safety performance Report With the Public Utilities Commission, because it is looking for approval to increase the customer’s electrical rates this year by more than 10%.
In the report, Edison said that because the safety record deteriorated in 2024 on certain important statistics, the managers “a total deduction of 18 points” names on a 100-point scale used in determining bonuses.
“Safety and compliance are fundamentally for SCE, and events such as fatalities of employees or serious injury can lead to the public to a meaningful deduction or full elimination” of the remuneration of executive stimulus, the company wrote.
In the report, Edison did not explain what an 18-point deduction meant for managers in actual dollars, another point of frustration in which consumer lawyers try to determine whether manager compensation plans really comply with AB 1054.
“Without seeing dollar figures, it is impossible to determine whether the stimulation plan for a utility is reasonable,” the Public Advocates Office wrote to the state committee of the State of Public Utilities in a letter of 2022 to the safety regulations of the natural fires.
To try to determine how much the missed safety goals actually influenced Edison’s reimbursement last year, the times looked at a Separately federal securities report Edison submitted for investors who are known as the proxy statement.
In that March report, Edison has detailed how the majority of his compensation to managers is based on the profit and share price rating and not safety.
Safety helps to determine approximately 50% of cash bonuses that are paid to managers every year, according to the report. But the long -term stimulus bonuses, which are paid in shares of shares and share options and are based on income, are more valuable.
The Reforming Network, which is also known as a turn, pointed out those stock bonuses in a letter of 2021 to supervisors where Edison and the other two large utilities of the State actually compensate for the executive power to the safety.
“Good financial performance does not necessarily mean that the utility gives priority to safety,” the staff wrote in the letter.
Trekhtenberg did not agree and said that the “long -term stimuli of the company are aimed at promoting financial stability.” An important part of this is the capacity of the company “in the long term to deliver reliable, affordable electricity,” he said.
Trakhtenberg noted that the State Office of Energy Infrastructure Safety had approved the Executive Compensation Plan of the company in October and said it met the requirements of AB 1054, as well as every year since the office in July 2021 was founded.
The Times asked the Energy Safety Office if it had checked the compensation reports of the utilities or tried to determine how much money Edison executives lost due to the safety errors.
Sandy Cooney, a spokesperson for the agency, said that the office “had no statutory authority … to check the structures of executive compensation.” He referred the reporter to Edison for information about how much executive compensation had actually fallen in dollar amounts due to the missed safety goals.
A committee of the board members of Edison determines which goals will be linked to safety, said Trakhtenberg, and whether these goals have been achieved.
Although five contractors died last year while they were working on Edison’s electrical system, the committee does not include the safety of contractors according to the documents of the company.
And the committee said that the company achieved its goal to protect the public, although three people died in his equipment and there was an increase of 27% in killing and serious injury to the public compared to the five -year average.
Trakhtenberg said that most serious injuries have happened to people who commit theft or vandalism, and that is why the committee said that the goal had been achieved.
Edison has told regulators that if the equipment starts a catastrophic natural fire, the committee could decide to eliminate the cash bonuses of managers.
But the documents of the company show that it did not eliminate or even reduce the bonuses for the FairView Fire in Riverside County, which killed two people, and even killed 28,000 hectares.
In 2023, the researchers blamed Edison’s equipment for igniting the fire and said that one of his conductors came into contact with a telecommunication cable, creating sparks that fell into vegetation.
Trakhtenberg said that the Council’s compensation committee that year assessed the circumstances of the fire brigade and discovered that the company had acted “carefully” to maintain its equipment. The committee decided not to reduce the manager bonuses for the fire, he said.
In March, the Public Utilities Commission Edison put a fine of $ 2.2 million before the fire and said that it had violated four safety regulations, including by not working with researchers.
Trakhtenberg said that the compensation committee would reconsider its decision not to punish managers for the fatal fire during the next meeting.
Turn has repeatedly asked supervisors not to approve Edison’s compensation plans, which describes how its committee has “unnecessary discretion” when setting goals and then determining whether they have been reached.
But the Energy Safety Office has approved the plans. Toney said that he believes that the responsibility for revising the compensation plans and the natural fire safety of utilities should be reduced to the Public Utilities Commission, which had done the work until 2021.
The Energy Safety Office has rules that make the assessment process less transparent than at the committee, he said.
“In our opinion, the whole process is strongly decorated for utility companies,” he said.
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