SAN FRANCISCO — A federal bankruptcy judge has rejected PG&E's request to approve an incentive program for its top executives.

The utility wanted to pay 12 top leaders a combined total of up to $16 million in bonuses if the company successfully executed its state-approved wildfire safety plan this year. PG&E has argued in court documents that its executives are paid considerably less than other top-tier execs at comparable companies and that these bonuses would simply be bringing them up to pay that is standard in the industry. The bonuses would be paid half in cash and half in shares of the company. Rate-payers would not be footing this.

PG&E has said these potential bonuses would incentivize the execs to strictly follow the safety plan because tiers are built into the plan; if the company doesn't perform well on its safety plan, as gauged by an established public safety index metric, executives would not get the full bonus. They would still, however, get at least half of the bonus regardless of how well the company follows the plan.

Because PG&E filed for bankruptcy in January, the company couldn't go ahead and move forward with the plan unless the federal judge overseeing their case - Dennis Montali - gave his approval.

He said no.

In a decision filed Friday afternoon, the judge rejected PG&E's plan, saying that there's no justification to pay extra money to encourage company leaders "to do what they should already be doing."

RELATED: PG&E asks bankruptcy judge for executive bonus plan

He did say that PG&E made a strong case "showing that the scope of the plan is reasonable, that it is consistent with industry standards, and that they conducted some due diligence and received independent professional advice" in crafting the plan. However, he continued, "the other factors weigh heavily against that result."

The plan, he said, fails to explain specifically how these 12 executives are tied to meeting safety goals, adding that "whether the cost is reasonable remains to be seen."

Moreover, he pointed out PG&E filed for bankruptcy "to deal with their enormous liability from the Northern California wildfires...and it is simply unclear at this stage whether the cost of the [plan] is reasonable in light of these formidable challenges."

"Finally, the most vital of these incentives remains the pressure to avoid additional loss of life and property and accompanying civil and criminal liability," Montali wrote, "which can only be achieved by drastically improving Debtors’ safety record."

That should be motivation enough for the executives to do their jobs and follow the wildfire safety plan, he said.

RELATED: PG&E seeks bankruptcy judge's approval to give top executives bonuses if the company fulfills safety goals

However, he left the door open for PG&E to file a similar motion "if it focuses only on safety and premises payout solely on some form of equity participation."

In other words, Judge Montali will consider an executive incentive plan if the bonuses are paid in company shares and the focus is on meeting safety targets. Montali stressed that PG&E must also demonstrate specifically how these 12 executives are tied to meeting safety goals, something he said PG&E failed to explain in the plan he rejected.

In response to ABC10's request for comment on Judge Montali's decision, a spokesperson said, "We are reviewing the court’s order, and will work to determine any next steps related to compensation plans for key senior leaders at the company."

PG&E's statement also says, "the commitment of our leaders and all of our employees is steadfast and unwavering. PG&E is focused on compensating wildfire victims, delivering safe gas and electric service and further reducing wildfire risk."

RELATED: How much does PG&E owe wildfire victims?

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