PGW now says its secret bonus plan was not such a secret

Philadelphia Gas Works, under fire after the disclosure of its secret $333,000 executive-retention bonus plan, now maintains that the plan was not so secret, after all.

The city-owned utility, in a filing late Friday to the Philadelphia Gas Commission, said it sketched out the bonus plan to the commission two years ago, in May 2014. PGW said that the names of the eight executives were redacted, but that the plan itself was clearly spelled out.

The Gas Commission, a regulatory body whose responsibilities include reviewing PGW's budget, has maintained that it did not approve spending for the bonuses. Marian Tasco, who retired this year after nearly 24 years as Gas Commission chair, told the Inquirer last month that she knew nothing about them.

Janet Parrish, the Gas Commission's executive director, wrote to PGW's president April 6 after learning that the Inquirer planned to disclose the bonuses.

"Any such expenditures lacked proper budget authorization by the gas commission," Parrish wrote to PGW president and chief executive Craig White.

In its response Friday to Parrish, PGW said the bonuses were incorporated into the budget as a part of overall payroll expense.

"PGW believes that its payment of the retention plan sums is consistent with the historic presentation of onetime, discretionary incentive and special payments and therefore takes exception to the characterization that necessary budget authorization was not obtained," wrote Andre C. Dasent, a utility lawyer.

PGW says the retention payments - it does not use the word bonus - were recommended by investment bankers during the city's ill-fated 2014 effort to sell the utility to private buyers. The bankers suggested that retention bonuses were commonly used in private-sector acquisitions to ensure that key personnel did not depart because of uncertainty over a sale.

The plan awarded bonuses amounting to 20 percent of annual salary to eight executives, the largest of which, $74,939, went to White. The recipients had to remain employed at PGW for 12 months after the sale process ended. They also had to "actively support" the sale.

An additional condition for the payments, according to the plan submitted in 2014 to the Gas Commission, was that "all requisite budgetary approvals shall have been procured."

It is upon this point that the commission and the city's utility appear to disagree.

PGW said its plan was included among documents it submitted to the Gas Commission during the annual budget process, and it is unclear whether it escaped notice or the regulators were awaiting a formal notification from PGW when the expense was actually proposed, 18 months later, in the subsequent fiscal year.

PGW said it was restrained from responding publicly to queries about the bonuses because of nondisclosure agreements, which it included in the filing.

Parrish, in an email Monday, said the commission would not respond to PGW's submission. The staff will make a recommendation to the commission before its next meeting, May 20.

PGW, in its filing, downplays the significance of the bonuses in the overall scheme of its $600 million annual budget. The $330,000 bonus expense is less than 1 percent of PGW's $110 million payroll, it said. The utility's payroll expenditures are also $2.4 million under budget this year, it said.

The issue seems to be less about the bonuses themselves than a deeper jurisdictional squabble between the Gas Commission and PGW's board, a seven-member nonprofit body of mayoral appointees known as the Philadelphia Facilities Management Corp.

The PFMC board, in its response, brushed aside Parrish's demand that the board disclose how its members voted on the bonus issue.

"PFMC respectfully notes that the commission lacks jurisdiction with respect to the internal process of the board and PFMC," it said.

amaykuth@phillynews.com

215-854-2947 @maykuth