Editor's note: You are reading an archived story. On Aug. 30, U.S. Bankruptcy Court Judge Dennis Montali denied PG&E's plan to pay executive bonuses.

PG&E Corp. plans to pay a group of top executives nearly $11 million in performance-based bonuses this year, the bankrupt utility owner said Thursday.

The payouts would probably be a mix of cash and stock, and based on factors weighted heavily toward safety, the company said in a filing with the Securities and Exchange Commission. Twelve executives, excluding CEO Bill Johnson, are eligible for the bonuses, court papers show.

PG&E cannot award the bonuses without approval from the U.S. Bankruptcy Court for the Northern District of California. The company and its utility subsidiary, Pacific Gas and Electric Co., entered bankruptcy protection in January largely because of their liability in recent devastating wildfires, including the historically deadly 2018 Camp Fire that state officials say was started by PG&E power lines.

The bonus plan is expected to provoke opposition in Bankruptcy Court and from consumer advocates, as the company found when it sought permission for similar payments to employees who were not the most senior executives.

PG&E does not describe the performance-based payments as bonuses, and has stressed that they are a standard part of the compensation for employees who receive them. The payments PG&E wants to pay executives now, through what the company calls its “key employee incentive program,” will allow executives to earn “market rates of pay,” it said in court papers.

Officials backed off one plan to award 2018 performance bonuses, but it later won Bankruptcy Court permission for $235 million in incentive payments to 10,000 employees this year, despite objections from a legal team representing wildfire victims. Senior executives were not included in either program.

While Johnson, who started at PG&E in May, is not eligible for any of the planned $10.9 million in bonus payments, his compensation package does include a performance-based component. His payment plan also requires approval from Bankruptcy Judge Dennis Montali.

After Johnson was hired, PG&E said he could earn $6 million in cash and equity annually, plus a “one-time transition payment” of $3 million. His compensation package also offers him three levels of stock options that he can take advantage of when the shares reach specified prices and he meets certain performance goals.

PG&E said in its SEC filing that Johnson’s bonus could be reduced by as much as 50% if the company does not meet certain performance targets that emphasize wildfire safety.

The company said its proposed compensation plans “align incentive compensation for PG&E’s new CEO and other senior leaders with the company’s progress toward achieving our goals, including, most significantly, those relating to safe operations.”

“Notably, if the company’s performance on key wildfire safety-related metrics are not met, these senior leaders will see their overall incentive awards reduced substantially,” spokesman Andy Castagnola said in an email. “These plans are in line with those of other companies in similar situations, and the incentives paid cannot by law be funded by customer rates.”

Jared Ellias, a UC Hastings associate law professor, said PG&E’s request was a “very normal” part of the bankruptcy process, when companies often think about how to compensate executives in a way that motivates them “to do the things that the company wants.”

“You want smart people working for the company, and you want them to have incentives to do the things that the board thinks are right for the company to exit bankruptcy,” Ellias said. “This is sure to provoke controversy, but it also is something that the bankruptcy judge is almost certain to approve.”

PG&E’s $10.9 million plan does not appear unreasonable at first glance, Ellias said, though the company will need to demonstrate that the payments are reasonable.

Mark Toney, executive director of The Utility Reform Network consumer group, said he views the plan as “bribing executives to comply with the law.”

“I have a big problem with the sense of entitlement,” Toney said. “They are the worst-performing utility in the country when it comes to safety. It’s hard to understand how they could even imagine that they’re even entitled to a bonus.”

The size of PG&E’s incentive payment plan for senior executives does not shock Dario de Ghetaldi, an attorney for wildfire victims suing the company. But he said he thinks the performance bonuses should not be awarded until PG&E officials “pay the people whose lives they destroyed.”

“Let the executives wait,” he said.

Montali, the bankruptcy judge, is scheduled to consider PG&E’s payment plans at a hearing July 24.

J.D. Morris is a San Francisco Chronicle staff writer. Email: jd.morris@sfchronicle.com Twitter: @thejdmorris