UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
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PG&E Corporation
Pacific Gas and Electric Company
Tuesday, May 30, 2017
10:00 a.m. Pacific Time
PG&E Corporation and Pacific Gas and Electric Company Headquarters77 Beale Street, San Francisco, California
PG&E Corporation
Pacific Gas and Electric Company
April 18, 2017
To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:
You are cordially invited to attend the 2017 annual meetings of PG&E Corporation and Pacific Gas and Electric Company. The meetings will be held concurrently on Tuesday, May 30, 2017, at 10:00 a.m., at the PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California. Entry to the meetings will be through the atrium on Beale Street, between Market Street and Mission Street.
The following Joint Proxy Statement contains information about matters to be considered at both the PG&E Corporation and Pacific Gas and Electric Company annual meetings.
PG&E Corporation and Pacific Gas and Electric Company shareholders will be asked to vote on the following matters:
The Boards of Directors and management of PG&E Corporation and Pacific Gas and Electric Company recommend that you vote “FOR” each of these items.
PG&E Corporation shareholders will also be asked to vote on a proposal submitted by an individual PG&E Corporation shareholder. The PG&E Corporation Board of Directors and management recommend that PG&E Corporation shareholders vote “AGAINST” this proposal.
Your vote on these items at the annual meetings is important. Whether or not you plan to attend the annual meetings, please vote soon so that your shares can be represented.
Sincerely,
Anthony F. Earley, Jr.
Executive Chair of the BoardPG&E Corporation
Geisha J. Williams
Chief Executive Officer and PresidentPG&E Corporation
Nickolas Stavropoulos
President and Chief Operating OfficerPacific Gas and Electric Company
Tuesday, May 30, 2017
10:00 a.m. Pacific Time
PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street,San Francisco, California
To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:
The annual meetings of shareholders of PG&E Corporation and Pacific Gas and Electric Company will be held concurrently on Tuesday, May 30, 2017, at 10:00 a.m., at the PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California, for the purpose of considering the following matters:
For PG&E Corporation and Pacific Gas and Electric Company shareholders:
* Nominee for director of Pacific Gas and Electric Company only.
For PG&E Corporation shareholders:
This notice serves as the notice of annual meetings for those shareholders of PG&E Corporation or Pacific Gas and Electric Company who previously elected to receive their proxy materials in paper format. All other shareholders were sent an “Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 30, 2017 and Notice of Annual Meeting of Shareholders” for PG&E Corporation or Pacific Gas and Electric Company, as applicable.
The Boards of Directors have set the close of business on March 31, 2017 as the record date for determining which shareholders are entitled to receive notice of and to vote at the annual meetings.
Dated: April 18, 2017
By Order of the Boards of Directors ofPG&E Corporation and Pacific Gas and Electric Company,
Linda Y.H. Cheng
Vice President, Corporate Governance and Corporate Secretary ofPG&E Corporation and Pacific Gas and Electric Company
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company are soliciting Proxies for use at the companies’ 2017 annual meetings of shareholders, including any adjournments or postponements. The 2017 Annual Meetings are scheduled to be held concurrently on Tuesday, May 30, 2017, at 10:00 a.m., at the PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California.
In connection with this Proxy solicitation, beginning on or about April 18, 2017, PG&E Corporation and the Utility each mailed or caused to be mailed to its respective shareholders (1) a Notice of Internet Availability, or (2) a copy of the Joint Notice, this Proxy Statement, a Proxy Card or Voting Instruction Card, and the 2016 Annual Report. The materials were sent to anyone who owned shares of common stock of PG&E Corporation and/or shares of preferred stock of the Utility at the close of business on March 31, 2017. This date is the record date set by the Boards to determine which shareholders may vote at and attend the annual meetings.
Defined Terms Used in this Proxy Statement
“2006 LTIP”refers to the PG&E Corporation 2006 Long-Term Incentive Plan.
“2014 LTIP”refers to the PG&E Corporation 2014 Long-Term Incentive Plan.
“2016 Annual Report”refers to the PG&E Corporation and Pacific Gas and Electric Company 2016 Joint Annual Report to Shareholders.
“2017 Annual Meetings”refers to the 2017 annual meetings of shareholders of PG&E Corporation and the Utility, which will be held concurrently on May 30, 2017.
“401(k) Plan”refers to the PG&E Corporation Retirement Savings Plan or the PG&E Corporation Retirement Savings Plan for Union-Represented Employees.
“Board”refers to the Board of Directors of either PG&E Corporation or Pacific Gas and Electric, as applicable.
“CD&A”refers to the section of the Proxy Statement entitled “Compensation and Discussion Analysis.”
“CEO”refers to the position of Chief Executive Officer.
“COO”refers to the position of Chief Operating Officer.
“Corporation”refers to PG&E Corporation.
“CPUC”refers to the California Public Utilities Commission.
“Guidelines”refers to the Corporate Governance Guidelines adopted by the Boards of PG&E Corporation and the Utility.
“Independent Auditor”refers to the independent registered public accounting firm.
“Joint Notice”refers to the Joint Notice of Annual Meetings of Shareholders of PG&E Corporation and Pacific Gas and Electric Company.
“LTIP”refers to the 2006 LTIP and/or the 2014 LTIP.
“NEO”or“Named Executive Officer”refers to an officer who is listed in the Summary Compensation Table of this Proxy Statement.
“Notice of Internet Availability”refers to the “Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 30, 2017 and Notice of Annual Meetings of Shareholders” for PG&E Corporation or the Utility, as applicable, which was mailed to certain shareholders starting on or about April 18, 2017.
“NYSE”refers to the New York Stock Exchange.
“NYSE MKT”refers to the NYSE MKT LLC stock exchange (formerly known as the American Stock Exchange).
“Proxy”refers to your authorization for another person or persons to vote your shares at the 2017 Annual Meetings, in the manner indicated on the Proxy. Also may refer to the person or persons so authorized (also called proxy holders).
“Proxy Card”refers to your proxy card, on which you may indicate how you would like the named proxy holders to vote your shares at the 2017 Annual Meetings.
“Proxy Statement”refers to this 2017 Joint Proxy Statement for PG&E Corporation and the Utility.
“RSU”refers to a restricted stock unit.
“SEC”refers to the United States Securities and Exchange Commission.
“Section 16 Officer”refers to any “officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934.
“STIP”refers to the Short-Term Incentive Plan.
“TSR”refers to Total Shareholder Return, measured by stock price appreciation and dividends paid, relative to companies in the Performance Comparator Group.
“Utility”refers to Pacific Gas and Electric Company.
“Voting Instruction Card”refers to the form used by beneficial shareholders or participants in a 401(k) Plan to transmit instructions to the nominee or plan trustee, respectively, on how to vote any shares for which that shareholder or plan participant has voting rights.
This proxy statement summary highlights information to assist you in your review of this Proxy Statement. The summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
PG&E Corporation and the Utility are committed to operating with integrity, accountability, and transparency. Establishing and adhering to strong corporate governance practices goes hand in hand with this commitment. Our governance policies and practices are detailed in the companies’ Guidelines, which are adopted by the Boards. These Guidelines are regularly reviewed against industry best practices by the Nominating and Governance Committee and by the full Boards. Since the 2016 Joint Proxy Statement was issued, the Boards took action on the following governance matters:
2017 Annual Meetings of Shareholders
Meeting Agenda and Voting Recommendations
The following items are expected to be voted on at the 2017 Annual Meetings.
PG&E Corporation
Pacific Gas and Electric Company
Director Nominees
We are asking shareholders of each company to vote “FOR” each of the director nominees listed below. All nominees are current directors who were elected by shareholders at the 2016 annual meetings, with the exception of (1) Jeh C. Johnson, who is nominated for election as a director of PG&E Corporation and the Utility for the first time at the 2017 Annual Meetings, (2) Eric D. Mullins, who was elected as a director of the companies effective September 20, 2016, and (3) Geisha J. Williams, who was elected as a director of the Utility at the 2016 annual meetings and is nominated for election as a director of PG&E Corporation for the first time at the 2017 Annual Meetings. In 2016, each incumbent PG&E Corporation director attended at least 92 percent of the total number of applicable PG&E Corporation Board and Board committee meetings, and each incumbent Utility director attended at least 85 percent of the total number of applicable Utility Board and Board committee meetings. Each director is elected annually by a majority of the votes represented and voting.
Below is summary information about each director nominee.
* Nickolas Stavropoulos is a nominee for the Utility Board only.
2016 Corporate Governance Highlights
Auditors
As a matter of good corporate governance, we are asking shareholders of each company to ratify the selection of Deloitte & Touche LLP (“Deloitte & Touche”) as each company’s Independent Auditor for 2017. We provide information on fees paid to Deloitte & Touche beginning on page 34.
Advisory Vote to Approve Executive Compensation
We are asking shareholders of each company to approve on an advisory basis the compensation paid to that company’s executive officers named in the Summary Compensation Table of this Proxy Statement (“say-on-pay” vote). Each Board recommends a “FOR” vote because it believes that the applicable company’s compensation policies and practices are effective in achieving the companies’ goals of rewarding sustained financial and operating performance and excellence, aligning the executives’ long-term interests with those of our shareholders, and motivating executives to remain with the companies for long and productive careers.
Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
PG&E Corporation and the Utility are required to provide shareholders at least once every six calendar years the opportunity to cast a non-binding advisory vote on whether the periodic say-on-pay vote (Item No. 3 in this Proxy Statement) will occur every one, two, or three years. The Boards recommend that the companies continue to provide shareholders with an annual “say-on-pay” and, therefore, recommend that the frequency of the say-on-pay vote be one year.
Shareholder Proposal
The proxy materials contain a proposal submitted by an individual PG&E Corporation shareholder pertaining to customer approval of the charitable giving program. The PG&E Corporation Board recommends that shareholders vote “AGAINST” this proposal for the reasons indicated beginning on page 75.
2018 Annual Meetings
General Information About the 2017 Annual Meetings and Voting
Answers to many frequently asked questions about the 2017 Annual Meetings and voting can be found in the Q&A section beginning on page 83.
Item No. 1: Election of Directors of PG&E Corporation and Pacific Gas and Electric Company
Shareholders are being asked to elect 13 directors to serve on the Board of PG&E Corporation and 14 directors to serve on the Board of the Utility. The 13 nominees for director of the Corporation also are nominees for director of the Utility. Nickolas Stavropoulos is a nominee for director of the Utility only.
All nominees are current directors who were elected by shareholders at the 2016 annual meetings, with the exception of Jeh C. Johnson, Eric D. Mullins, and Geisha J. Williams. Secretary Johnson is being nominated for election as a director of PG&E Corporation and the Utility for the first time this year at the 2017 Annual Meetings. Mr. Mullins was elected to each company’s Board effective September 20, 2016; he is nominated for re-election at the 2017 Annual Meetings. Secretary Johnson and Mr. Mullins were identified with assistance from a third-party executive search firm and were recommended by members of the Nominating and Governance Committee. Ms. Williams was elected to the Utility Board by shareholders at the 2016 annual meetings; she is nominated for election to the PG&E Corporation Board for the first time this year at the 2017 Annual Meetings, and also is nominated for re-election to the Utility Board.
If elected as director, all of the nominees have agreed to serve and will hold office until the 2018 annual meetings or until their successors shall be elected and qualified, except in the case of death, resignation, or removal of a director.
If any of the nominees become unavailable at the time of the 2017 Annual Meetings to accept nomination or election as a director, the named proxy holders will vote for substitute nominees at their discretion. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement for the applicable company.
Two individuals who served as directors of PG&E Corporation and the Utility during 2016 are not nominated for re-election at the 2017 Annual Meetings: Maryellen C. Herringer and Barry Lawson Williams. Both are retiring from the Boards effective as of the adjournment of the 2017 Annual Meetings because they have reached the age specified in each Board’s retirement policy (which is described on page 24 of this Proxy Statement).
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend a VoteFOR Each of the Nominees for Director Presented in This Joint Proxy Statement.
NOMINEES FOR DIRECTORS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY
The Boards select nominees for director based on recommendations received from the Nominating and Governance Committee.
The Boards believe that each nominee for director is a qualified, dedicated, ethical, and highly regarded individual. The information provided below includes a chart and a description of each nominee’s specific experience, qualifications, attributes, and skills that indicate why that person should serve as a director of the applicable company, in light of the company’s business and structure. The Boards do not believe that each nominee must possess all of the characteristics shown in the chart below in order for each Board, as a whole, to function effectively.
Collectively, the distribution of the nominees’ experience, skills, and expertise, among other characteristics, reflects a balanced and multi-disciplinary Board at each company, and appropriately meets the needs of the companies.
Lewis Chew
Age:54
Director Since:September 2009
Current Board Committees:Audit (Chair, effective May 30, 2017); Compliance and Public Policy (chair until May 30, 2017); Executive
Current Position:Executive Vice President and Chief Financial Officer of Dolby Laboratories, Inc. (audio, video, and voice technologies) since June 2012
Prior Positions:
Mr. Chew previously was Senior Vice President, Finance and Chief Financial Officer of National Semiconductor Corporation (design, manufacturing, and sale of semiconductor products) (2001 to 2011). Before that, he was a Partner and certified public accountant at KPMG, LLP (accounting firm), where he served mainly technology and financial institution clients.
Experience, Skills, and Expertise:
As an executive of a large business customer in the Utility’s service area, Mr. Chew brings insights from a customer’s perspective to the Board. He has specific financial expertise and executive management and leadership skills gained from serving as a chief financial officer of other large public companies and as an audit partner at KPMG, LLP. He also has experience managing and overseeing all financial functions at a large public company, as well as information technology, manufacturing and supply chain, global facilities, investor relations, business planning, corporate controllership, strategic planning, business development, worldwide operations finance, and global internal audit functions.
Anthony F. Earley, Jr.
Age:67
Director Since:September 2011 (PG&E Corporation); June 2012 (Utility)
Current Board Committees:Executive (Chair)
Current Position:Executive Chair of the Board of PG&E Corporation
Other Current Public Company Boards:Ford Motor Company since 2009 (serves on compensation committee (chair), nominating and governance committee, and sustainability and innovation committee)
Prior Positions:
Mr. Earley previously served as Chairman, CEO, and President of PG&E Corporation (September 2011 to February 2017). Prior to joining PG&E Corporation, he was Executive Chairman of DTE Energy Company (integrated energy company) (October 2010 to September 2011), and served as that company’s Chairman of the Board and CEO (1998 to 2010) and President and CEO. Before joining DTE Energy Company, Mr. Earley served as President and COO of Long Island Lighting Company (electric and gas utility in New York).
Prior Public Board Service During the Past Five Years:
Masco Corporation (home improvement and building products and services) (2001 to 2012)
Other Board Experience:
Mr. Earley serves on the executive and compensation committees of the Edison Electric Institute and is former Chairman of that association. In addition, he serves on the executive committee and compensation committees and as a director of the Electric Power Research Institute and also as a director of the Nuclear Energy Institute. Mr. Earley has served on the boards of numerous charitable and civic organizations, and currently serves on the boards of the Bay Area Council, United Way of the Bay Area, and the Exploratorium.
Experience, Skills, and Expertise:
Mr. Earley has extensive knowledge and experience across all aspects of the energy industry, including electric and gas utility operations, nuclear energy, and energy policy and regulation. He brings executive management, business, and civic leadership skills gained from a significant number of years as a CEO and a director of other large public companies.
Fred J. Fowler
Age:71
Director Since:March 2012
Current Board Committees:Finance; Nuclear, Operations, and Safety
Current Position:Retired Chairman of the Board, Spectra Energy Partners, LP (master limited partnership that owns natural gas transmission and storage assets)
Other Current Public Company Boards:Encana Corporation (natural gas producer) since 2010 (serves on corporate responsibility, environment, health and safety committee, and human resources and compensation committee); DCP Midstream Partners, LP (master limited partnership that owns, operates, acquires, and develops midstream energy assets) since 2015 (serves on audit committee)
Prior Positions:
In addition to serving as Chairman of the Board of Spectra Energy Partners, LP (2008 to 2013), Mr. Fowler was President and CEO of Spectra Energy Corp (natural gas gathering and processing, transmission and storage, and distribution company) (2006 to 2008) and served as a director of that company. Before that, he held various executive positions with Duke Energy Corporation (gas and electric energy company) and its subsidiaries and predecessor companies, including President and COO of Duke Energy.
Prior Public Board Service During the Past Five Years:
Spectra Energy Partners, LP (2008 to 2017)
Other Board Experience:
Mr. Fowler is the former Chairman of the Board of the Interstate Natural Gas Association of America and a former director of the Gas Research Institute, the Gas Technology Institute, and the Institute of Nuclear Power Operations.
Experience, Skills, and Expertise:
Mr. Fowler brings extensive knowledge and over 45 years of experience in natural gas and gas liquids production, transportation, and marketing, and electricity generation, transmission, and distribution. He brings leadership, management, and business skills developed as an executive and a director of numerous public and privately held companies.
Jeh C. Johnson
Age:59
Current Position:Partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul, Weiss) (international law firm) since January 2017
Prior Positions:
Secretary Johnson has served in three Senate-confirmed presidential appointments. Before rejoining Paul, Weiss, he served as U.S. Secretary of Homeland Security (December 2013 to January 2017). Secretary Johnson previously served as General Counsel of the U.S. Department of Defense (2009 to 2012), as General Counsel of the U.S. Department of the Air Force (1998 to 2001), and as an Assistant U.S. Attorney in the Southern District of New York (1989 to 1991). Prior to and between his periods of public service, Secretary Johnson was in private practice at Paul, Weiss (2013, 2001 to 2009, 1992 to 1998, and 1984 to 1988).
Other Board Experience:
Secretary Johnson has served as a trustee, director, and governor of Adelphi University, the New York Hall of Science, the Legal Aid Society, the Film Society of Lincoln Center, the New York Community Trust, the City Bar Fund, the Roosevelt Institute, the National Institute of Military Justice, the Federal Bar Council, the Fund for Modern Courts, Vera Institute of Justice, and the Lawyers’ Committee for Civil Rights Under Law. He previously chaired the Judiciary Committee of the New York City Bar Association, and served as a member of the Executive Committee of New York City Bar. He is currently a member of the Council on Foreign Relations.
Experience, Skills, and Expertise:
Secretary Johnson brings extensive leadership, legal, and management skills developed while serving in the public sector and as legal counsel to large public companies and their boards of directors. His specific experience includes crisis and risk management, cybersecurity and other security matters, disaster response, critical infrastructure protection, federal and state policy issues, and regulatory matters. He has a proven track record of navigating through complex and challenging issues in both his public service career and his private law practice.
Richard C. Kelly
Age:70
Director Since:June 2013
Current Board Committees:Nominating and Governance (Chair, effective May 30, 2017); Audit; Nuclear, Operations, and Safety; Executive (effective May 30, 2017)
Current Position:Retired Chairman and CEO of Xcel Energy Inc. (utility supplier of electric power and natural gas service operating in eight Western and Midwestern states)
Prior Positions:
Prior to serving as Chairman and CEO of Xcel Energy Inc. (2005 to 2011), Mr. Kelly held various executive positions at that company, including President, COO, and Chief Financial Officer. Before the merger forming Xcel Energy Inc. in 2000, he held a variety of finance-related positions at predecessor companies New Century Energies and Public Service of Colorado.
Prior Public Board Service During the Past Five Years:
Canadian Pacific Railway (transcontinental railway in Canada and the United States) (2006 to 2014)
Other Board Experience:
Mr. Kelly is former Chairman of the Edison Electric Institute, a former board member of the Electric Power Research Institute and the Nuclear Energy Institute, and a former member of the National Petroleum Council and the National Advisory Council of the National Renewable Energy Laboratory. Mr. Kelly also was a director of BrightSource Energy, Inc. (solar thermal technology company) from 2011 to 2012. He currently serves on the Board of Trustees of Regis University.
Experience, Skills, and Expertise:
Mr. Kelly brings over 40 years of diverse energy experience and leadership as a utility industry executive. His specific expertise includes finance, mergers and acquisitions, utility operations, clean energy, and nuclear and renewable power.
Roger H. Kimmel
Age:70
Director Since:January 2009
Current Board Committees:Compliance and Public Policy (Chair, effective May 30, 2017); Finance; Nominating and Governance; Executive (effective May 30, 2017)
Current Position:Vice Chairman of Rothschild Inc. (international investment banking firm) since January 2001
Other Current Public Company Boards:Endo International plc (global specialty healthcare company) since May 2007 (non-executive Chairman of the Board; serves on nominating and governance committee (chair), and transactions committee; alternate member of audit committee and operations committee)
Prior Positions:
Mr. Kimmel previously was a partner in the international law firm of Latham & Watkins LLP, where his practice focused on mergers and acquisitions, capital markets, and corporate governance matters.
Prior Public Board Service During the Past Five Years:
Schiff Nutrition International, Inc. (vitamins and nutritional supplements company) (1996 to 2012)
Other Board Experience:
Mr. Kimmel has also served on the boards of a variety of privately held companies. He was Chairman of the Board of Trustees of the University of Virginia Law School Foundation from 2009 to June 2015, and was a member of the Board of Trustees of the Riverdale Country School from 2010 to 2016.
Experience, Skills, and Expertise:
Mr. Kimmel’s investment banking work includes cross-border and domestic public company mergers and acquisitions, capital market transactions, corporate governance, and advising special committees of boards of directors. He brings business, finance, and legal skills, as well as leadership and problem-solving skills developed as an executive and a director of, and legal counsel to, other large public companies. His specific expertise includes corporate transactions, finance, investment banking, international business, corporate governance, and legal matters.
Richard A. Meserve
Age:72
Director Since:December 2006
Current Board Committees:Nuclear, Operations and Safety (Chair); Compliance and Public Policy; Nominating and Governance; Executive
Current Position:President Emeritus, Carnegie Institution of Washington (not- for-profit scientific research institution); Senior Of Counsel to the international law firm of Covington & Burling LLP since April 2004; consultant on nuclear matters
Prior Positions:
Prior to serving as President of the Carnegie Institution of Washington (2003 to 2014), Dr. Meserve was Chairman of the U.S. Nuclear Regulatory Commission. He previously was a partner of Covington & Burling LLP. He also served as a member of the Blue Ribbon Commission on America’s Nuclear Future (chartered by the U.S. Secretary of Energy) (2010 to 2012), as legal counsel to President Carter’s science and technology advisor, and as a law clerk to Justice Harry A. Blackmun of the U.S. Supreme Court.
Prior Public Board Service During the Past Five Years:
Duke Energy Corporation (gas and electric energy company) (2015 to 2016)
Other Board Experience:
Dr. Meserve has been a director of Tri Alpha Energy, Inc. (development of clean fusion energy technology) since 2012. He also serves on the Council and Trust of the American Academy of Arts and Sciences and on the Council of the National Academy of Engineering.
Experience, Skills, and Expertise:
Dr. Meserve brings technical, legal, regulatory, and public policy expertise in numerous areas, including nuclear power, energy policy, and climate change, as well as leadership and business skills developed as an executive and a director of, and an advisor to, national and international scientific, research, and legal organizations. He currently is co-chairman of the U.S. Department of Energy’s Nuclear Energy Advisory Committee and a member of the Secretary of Energy Advisory Board.
Forrest E. Miller
Age:64
Director Since:February 2009; lead director of PG&E Corporation and Independent non-Executive Chair of the Board of the Utility (effective May 30, 2017).
Current Board Committees:Compensation (Chair, effective May 30, 2017); Audit (Chair, until May 30, 2017); Executive
Current Position:Retired Group President-Corporate Strategy and Development of AT&T Inc. (communications holding company)
Prior Positions:
Prior to serving as Group President-Corporate Strategy and Development of AT&T Inc. (2007 to 2012), Mr. Miller served as Group President of AT&T Corp., the Global Enterprise division of AT&T Inc., and held a variety of executive positions at SBC Communications (communications holding company) and its predecessor Pacific Telesis Group.
Other Board Experience:
Mr. Miller currently serves as a member of the board of the Baylor Health Care System Foundation in Dallas, Texas.
Experience, Skills, and Expertise:
Mr. Miller brings strategic management, leadership, and business skills developed as an executive of other large public companies in both regulated and competitive markets, as well as specific expertise in a number of areas, including strategic planning, business development, corporate finance, audit, mergers and acquisitions, government and regulatory affairs, and human resources.
Eric D. Mullins
Age:54
Director Since:September 2016
Current Board Committees:Audit
Current Position:Managing Director and Co-CEO of Lime Rock Resources, L. P. (private equity and infrastructure investment firm that acquires, operates, and improves oil and natural gas properties in the U.S.) since 2005
Other Current Public Company Boards:Anadarko Petroleum Company (independent oil and natural gas exploration and production company) since May 2012 (serves on audit committee (chair) and executive committee)
Prior Positions:
Prior to co-founding Lime Rock Resources, L.P. in 2005, Mr. Mullins served as a managing director in the investment banking division of Goldman Sachs & Co., where he led numerous financing, structuring, and strategic advisory transactions for public and private oil and gas exploration and production companies in the division’s Natural Resources Group.
Other Board Experience:
Mr. Mullins currently serves as a member of the Baylor College of Medicine Board of Trustees.
Experience, Skills, and Expertise:
Mr. Mullins brings operational, business development, and mergers and acquisition experience in the energy sector, as well as director and audit committee experience from his other public company board service. He also brings strategic management, leadership, and corporate financial expertise developed as an executive in the investment banking industry working with both public and private companies in the natural resources and utilities sector.
Rosendo G. Parra
Age:57
Director Since:September 2009
Current Board Committees:Compensation; Nominating and Governance; Nuclear, Operations and Safety
Current Position:Retired executive of Dell Inc. (international information technology company); co-founder and Partner of Daylight Partners (technology-focused venture capital firm) since December 2007
Prior Positions:
Mr. Parra previously held various executive and senior management positions at Dell Inc., including Senior Vice President for the Home and Small Business Group and Senior Vice President and General Manager, Dell Americas. In those roles, he led Dell Inc.’s activities in the Americas, including marketing, sales, manufacturing, logistics/distribution, call center operations, and services to all customer segments in the Americas.
Prior Public Board Service During the Past Five Years:
Brinker International (casual restaurant dining company) (2004 to 2015); NII Holdings, Inc. (mobile communications services in Latin America) (2008 to 2015)
Experience, Skills, and Expertise:
Mr. Parra brings business management, leadership, and problem-solving skills developed as an executive and a director of other large public companies, and specific experience in various areas, including technology, product development, manufacturing, sales, marketing, and customer service.
Barbara L. Rambo
Age:64
Director Since:January 2005
Current Board Committees:Finance (Chair); Compensation; Nominating and Governance; Executive
Current Position:CEO of Taconic Management Services (management consulting and services company) since October 2009
Other Current Public Company Boards:West Marine, Inc. (boating specialty retailer) since November 2009 (independent board chair)
Prior Positions:
Ms. Rambo has held various executive positions with companies in the financial services and technology sectors. Prior to joining Taconic Management Services, she was CEO, Vice Chair, and a director of Nietech Corporation (consumer payments technology company) (2002 to 2009). She previously was CEO of Open Close Technologies (financial services technology company) (2000 to 2002). Ms. Rambo assumed that position after holding a number of executive positions at Bank of America, including head of National Commercial Banking.
Prior Public Board Service During the Past Five Years:
International Rectifier Corporation (power management technologies) (2009 to 2015)
Other Board Experience:
Ms. Rambo currently serves as a director of MUFG Union Bank, N.A. and MUFG Americas Holdings Corporation (Mitsubishi UFJ Financial Group - corporate, commercial, and retail banking, wealth management, investment banking).
Experience, Skills, and Expertise:
Ms. Rambo brings leadership and business skills developed as an executive and a director of other large public companies, with a focus on the financial services and technology sectors, and specific experience in corporate finance, capital markets, sales and marketing, operations, and executive management.
Anne Shen Smith
Age:63
Director Since:February 2015
Current Board Committees:Compliance and Public Policy; Finance; Nuclear, Operations, and Safety
Current Position:Retired Chairman and CEO of Southern California Gas Company (natural gas utility subsidiary of Sempra Energy serving southern California and portions of central California)
Prior Positions:
Prior to serving as Chairman and CEO of Southern California Gas Company (SoCalGas) (2012 to 2014) and President of SoCalGas (2012), Ms. Smith held various executive positions at that company, including COO (2010 to 2012), Senior Vice President – Customer Services (2004 to 2010), and Vice President of Environment and Safety. She also served as Senior Vice President – Customer Services of San Diego Gas & Electric Company (natural gas and electric utility subsidiary of Sempra Energy serving San Diego County, California and a portion of Orange County, California) during her tenure in that position for SoCalGas (2004 to 2010).
Prior Public Board Service During the Past Five Years:
Southern California Gas Company (2012 to 2014)
Other Board Experience:
Ms. Smith served as a board member of the American Gas Association, the Southern California Leadership Council, the UC Davis Energy Efficiency Center, Asian Americans Advancing Justice – Los Angeles, and the California League of Conservation Voters Education Fund.
Experience, Skills, and Expertise:
Ms. Smith brings over 38 years of diverse energy experience and leadership as a utility industry executive. Her specific expertise includes utility operations, environmental policy, strategic planning, customer service, regulatory affairs, information technology, and public affairs.
Nickolas Stavropoulos
Age:59
Director Since:August 2015 (Utility)
Current Board Committees:Executive (Utility)
Current Position:President and COO, Pacific Gas and Electric Company
Prior Positions:
Mr. Stavropoulos was elected as President and COO of the Utility effective March 1, 2017. He previously was the Utility’s President, Gas (August 2015 to February 2017) and Executive Vice President, Gas Operations (June 2011 to August 2015). In his role as President, Gas, Mr. Stavropoulos led all aspects of the Utility’s gas transmission and distribution operations, including planning, engineering, maintenance and construction, and emergency response, as well as enterprise-wide IT, physical and cyber security, safety, health and environmental, supply chain, and transportation/fleet/real estate organizations. Before joining the Utility, Mr. Stavropoulos served as Executive Vice President and COO of National Grid (2007 to 2011) (multinational electricity and gas utility), where he was responsible for all aspects of its U.S. gas distribution business. Prior to that role, Mr. Stavropoulos was President of KeySpan Energy Delivery, where he led the company’s gas distribution group, field operations, and sales and marketing teams. He has also held several senior leadership roles at Colonial Gas Company and Boston Gas.
Prior Public Board Service During the Past Five Years:
Dynamics Research Corporation (US. government services, information technology, and management consulting firm) (2005 to 2014)
Other Board Experience:
Mr. Stavropoulos is a member of the Board of Directors of the American Gas Association (2015 to present) and the Gas Technology Institute (2016 to present), as well as a member of the Advisory Board for Underwriters Laboratories Integrated Health and Safety Institute. He has served on the Board of Trustees of Bentley University since 2009.
Experience, Skills, and Expertise:
Mr. Stavropoulos brings over 35 years of energy industry operations leadership, as well as detailed knowledge of the U.S. natural gas sector. He has extensive executive management, business, and leadership experience in areas such as safety, utility operations, information technology, regulatory affairs, strategic planning, supply chain, finance, sales, business development, and marketing.
Geisha J. Williams
Age:55
Director Since:August 2015 (Utility)
Current Board Committees:Executive (Utility); Executive (PG&E Corporation, effective May 30, 2017)
Current Position:CEO and President, PG&E Corporation
Prior Positions:
Ms. Williams was elected as President and CEO of PG&E Corporation, effective March 1, 2017. She previously was the Utility’s President, Electric (August 2015 to February 2017) and Executive Vice President, Electric Operations (June 2011 to August 2015). In her role as President, Electric, Ms. Williams led all aspects of the Utility’s electric business, including power generation, nuclear operations, transmission, distribution, and substation operations, asset management and strategy, and energy procurement, as well as the enterprise-wide customer care organization. Ms. Williams previously served as the Utility’s Senior Vice President, Energy Delivery (December 2007 to May 2011). Before joining the Utility, Ms. Williams held officer-level positions leading electric distribution at Florida Power and Light Company (electric utility serving customers in Florida), as well as a variety of positions of increasing responsibility in customer service, marketing, external affairs, and electric operations at that company.
Other Board Experience:
Ms. Williams currently serves as a director of the Edison Electric Institute and the Institute of Nuclear Power Operations, as director and chair of the Center for Energy Workforce Development, and as a trustee of the California Academy of Sciences.
Experience, Skills, and Expertise:
Ms. Williams brings over 30 years of utility experience, as well as deep knowledge of the Utility’s electric operations business. She has executive management, business, and leadership skills gained from her numerous leadership roles at both the Utility and at another large utility. She has experience in a wide variety of utility functions including electric distribution and transmission, gas field operations, power generation, energy procurement, marketing, customer service, and external affairs.
PG&E Corporation and the Utility are committed to good corporate governance practices that provide a framework within which the Boards and management of the Corporation and the Utility can pursue the companies’ business objectives. The foundation for these practices is the independent nature of each Board and its fiduciary responsibility to the company’s shareholders. These practices are reviewed against industry trends and input from the companies’ top institutional investors.
CORPORATE GOVERNANCE GUIDELINES
Corporate governance practices are documented in Guidelines that are adopted by the Boards of PG&E Corporation and the Utility. The Guidelines are reviewed and updated from time to time as recommended by the Nominating and Governance Committee, and were last updated in December 2016. Other corporate governance practices also are set forth in the charters of the various committees of the Corporation and Utility Boards.
Chair of the Board - Duties
At both PG&E Corporation and the Utility, the Chair of the Board is a member of the Board. The Chair’s primary duty is to preside over meetings of the Board, including special meetings. The Chair also is consulted regarding Board nominees and the composition and chairmanship of Board committees. If the Chair is not independent, then following each executive session meeting of the independent directors, the independent lead director (see below), or his or her designee, has a discussion with the Chair regarding the executive session meeting.
Independent Lead Director; Executive Session Meetings
At each company, if the Chair is not independent, then the independent directors must elect an independent lead director from among the independent chairs of the standing PG&E Corporation and Utility Board committees. This lead director must have at least one year of experience as a director of the respective company, serves a term of three years as lead director (unless elected on an interim basis), and may be re-elected to consecutive terms. Specific duties for the lead director are substantially similar at both companies and include:
Barry Lawson Williams has served since May 12, 2014 as the independent lead director of PG&E Corporation and as the independent non-executive Chair of the Board of the Utility. Forrest E. Miller has been appointed to serve in those capacities following Mr. Williams’ retirement at the adjournment of the 2017 Annual Meetings.
Chair of the Board and CEO
Each company’s Board maintains a flexible policy regarding board leadership structure, including whether the offices of Chair and CEO should be separate and, if the roles are separate, whether the Chair should be elected from management or from among the non-management directors. The Board regularly assesses the appropriateness of the Board’s leadership structure, given the specific facts at the time of assessment.
At PG&E Corporation’s 2015 annual meeting, a shareholder proposal requesting adoption of an independent board chair policy received support from approximately 46 percent of the shares voted. Management reached out to the top institutional investors that had voted in favor of this shareholder proposal, in order to explore the reasons for their vote and discuss any concerns they had regarding PG&E Corporation’s governance practices. PG&E Corporation learned that, while some institutional investors always supported independent board chair proposals as a matter of policy, other investors voted on a case-by-case basis and considered the role and duties of the Corporation’s lead director in their decision to support the shareholder proposal. Some of the investors that voted on a case-by-case basis conveyed the view that we could clarify or strengthen the description of the lead director’s role and duties in the Guidelines. In response to this feedback, the Corporation and the Utility amended their respective Guidelines relating to the lead director’s role and duties, to clarify the nature of this position and the interface between the lead director and the chairman and CEO.
PG&E Corporation
At PG&E Corporation, the positions of chair and CEO have been separate since March 1, 2017, when Anthony F. Earley, Jr. became Executive Chair of the Board and Geisha J. Williams became CEO and President. Prior to that time, Mr. Earley had served as the Chairman, CEO, and President of PG&E Corporation since September 13, 2011, and the positions of chairman and CEO were combined. Separating these roles at this time ensures a smooth officer transition as Ms. Williams assumes a broader leadership role at PG&E Corporation. Among other things, Mr. Earley’s extensive utility and leadership experience, including his executive experience at PG&E Corporation, will allow him to support Ms. Williams’ transition into her new role as CEO and President and to serve as an effective link between the Board and the CEO, especially during this transition period. The structure also will allow Mr. Earley to raise key issues (including those related to various business risks overseen by the Board) and stakeholder interests to the Board’s attention. Because of Mr. Earley’s executive experience at PG&E Corporation and his continuing executive duties, he will be well positioned to chair regular Board meetings and help ensure that key business issues at the Corporation and its subsidiaries and stakeholder interests are addressed by the Board.
The existence of an Executive Chair will be balanced by Barry Lawson Williams’ and, effective May 30, 2017, Forrest E. Miller’s strong presence as the independent lead director. Mr. Williams and Mr. Miller each bring a wealth of experience as a director of PG&E Corporation and the Utility, and each individual’s extensive knowledge of PG&E Corporation complements Mr. Earley’s and Ms. Williams’ deep operational and executive experience at the companies and in the utility industry. Further, the presence of an independent lead director at PG&E Corporation enhances the Board’s authority to act independently from management, notwithstanding the fact that the Executive Chair also has been an executive officer of the company.
Pacific Gas and Electric Company
Joint Notice of2019Annual Meetings Joint Proxy Statement |
Friday, June 21, 2019
10:00 a.m., Pacific Time
PG&E Corporation and Pacific Gas and Electric Company Headquarters
77 Beale Street, San Francisco, California
PG&E Corporation
Pacific Gas and Electric Company
May 17, 2019
Dear Fellow Shareholders:
For PG&E Corporation and Pacific Gas and Electric Company, the past two years have been extraordinarily challenging, more so than any other time in our history. The devastating Northern California wildfires will stand as watershed moments for fire victims, our customers, our employees, our owners, and California.
California’s energy providers, including us, are contending with a host of environmental, demographic, regulatory, legal, and financial factors that are shaping our business. Against this backdrop, and faced with a complex legal and financial situation as a result of the 2018 Camp fire and 2017 Northern California wildfires, the companies earlier this year filed to reorganize under Chapter 11. The primary goal of this court-supervised process is to fairly address our liabilities so that we can continue to provide safe and reliable service to our customers, while improving our overall operations.
We believe that the reorganization process is in the best interests of all the stakeholders, including wildfire claimants. In addition to the expeditious resolution of wildfire liability claims, the Chapter 11 filings allow for:
The tragic events of the past few years have made clear that the energy system status quo is no longer working for California. We have heard the calls for change and are committed to answering them with strong actions that will help us re-earn the trust of all our stakeholders. This starts at the top. We replaced PG&E Corporation’s CEO and the vast majority of our Boards of Directors with experienced people with the commitment and expertise necessary to redirect our safety culture and navigate one of the most complex corporate reorganizations ever.
William “Bill” Johnson joined us as Chief Executive Officer and President of PG&E Corporation. Bill brings substantial safety and operational expertise from his extensive career in the energy industry. With decades of experience at two major utility companies, Mr. Johnson has a deep understanding of managing risk and the responsibility of keeping customers safe.
Most recently, as President and CEO of the Tennessee Valley Authority (TVA), he was responsible for leading the nation’s largest publicly owned utility in its mission of providing energy, environmental stewardship, and economic development across a seven-state region. During his time at TVA, the organization achieved the best safety records in its 85-year history and has been a perennial top decile safety performer in the utility industry.
Bill also led the retirement of more than half of TVA’s coal generation, resulting in a reduction of TVA’s carbon emissions by 50 percent over the last decade. He also oversaw TVA’s expansion into utility scale solar in recent years, and pursued the modernization of its hydro assets to increase the amount of energy from that renewable resource.
We believe Mr. Johnson is the right leader at the right time for us. We also significantly revamped our Boards of Directors, as eight of ten incumbent independent directors resigned, and eleven new independent directors were appointed in their stead.
As detailed in the attached joint proxy statement, the new Boards include people who have expertise and experience in all areas necessary for us to navigate the complex challenges before us, and who come to the job committed to work tirelessly to help Pacific Gas and Electric Company be the safest, most reliable operator in the industry.
The management team and the Boards are also committed to working constructively with regulators, policymakers, and other stakeholders in an open and transparent fashion in support of California’s policy goals. We are determined to emerge from Chapter 11 as an enterprise that is positioned to deliver safe and reliable service for customers, create value for shareholders, and help meet the challenges of climate change for California.
As always, we value your input and welcome the opportunity to engage with you to listen to your views and address your concerns.
We cordially invite you to attend the companies’ 2019 annual meetings, which will be held concurrently on Friday, June 21, 2019, at 10:00 a.m., Pacific Time at the PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California. Following this letter are a notice of the meetings and our 2019 Joint Proxy Statement containing information about the matters to be considered at the meetings.
Sincerely,
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company
Joint Notice of Annual Meetings of Shareholders of PG&E Corporation and Pacific Gas and Electric Company |
Friday, June 21, 2019
10:00 a.m., Pacific Time
PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street
San Francisco, California
To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:
The annual meetings of shareholders of PG&E Corporation and Pacific Gas and Electric Company will be held concurrently on Friday, June 21, 2019, at 10:00 a.m., Pacific Time, at the PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California, for the purpose of considering the following matters:
For PG&E Corporation and Pacific Gas and Electric Company shareholders:
Richard R. Barrera | Cheryl F. Campbell | Kenneth Liang | Kristine M. Schmidt | |
Jeffrey L. Bleich | Fred J. Fowler | Dominique Mielle | Alejandro D. Wolff | |
Nora Mead Brownell | William D. Johnson* | Meridee A. Moore | ||
Frederick W. Buckman | Michael J. Leffell | Eric D. Mullins |
* | In the event the PG&E Corporation shareholders vote against approving the Charter Amendment Proposal (as described below), any votes to elect Mr. Johnson to the PG&E Corporation Board will be disregarded. |
For PG&E Corporation shareholders:
Shareholders can go on-line at www.pgecorp.com/investors/financial_reports/ to access electronic copies of this 2019 Joint Proxy Statement and the 2018 Annual Report to Shareholders. Shareholders also may vote their proxies on-line as noted on page 11 of the Joint Proxy Statement. Specific Internet voting instructions also are included on the shareholder’s proxy card.
The Boards of Directors have set the close of business on May 15, 2019 as the record date for determining which shareholders are entitled to receive notice of and to vote at the annual meetings.
You are urged to read the Joint Proxy Statement carefully and, whether or not you plan to attend the meeting, to promptly submit a proxy: (a) by telephone or over the Internet following the easy instructions on the enclosed proxy card or (b) by signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided.
2019 Joint Proxy Statement | 1 |
YOUR VOTE IS EXTREMELY IMPORTANT.
Even if you plan to attend the annual meetings, please act promptly to vote your shares by completing, signing and dating the proxy card and returning it in the postage-paid envelope provided. You may also vote your shares over the Internet or by telephone by following the instructions on the enclosed proxy card.
Please vote soon so that your shares can be represented. Your vote is extremely important no matter how many shares you own. If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders may call toll-free: 1 (877) 750-0502
Banks and Brokers may call collect: 1 (212) 750-5833
Dated: May 17, 2019
By Order of the Boards of Directors of
PG&E Corporation and Pacific Gas and Electric Company,
Linda Y.H. Cheng
Vice President, Corporate Governance and Corporate Secretary of
PG&E Corporation and Pacific Gas and Electric Company
2019 Joint Proxy Statement | 2 |
2019 Joint Proxy Statement | 3 |
2019 Joint Proxy Statement | 4 |
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company are soliciting Proxies for use at the companies’ 2019 annual meetings of shareholders, including any adjournments or postponements. The 2019 Annual Meetings are scheduled to be held concurrently on Friday, June 21, 2019, at 10:00 a.m., Pacific Time, at the PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California.
In connection with this Proxy solicitation, beginning on or about May 24, 2019, PG&E Corporation and the Utility each mailed or caused to be mailed to its respective shareholders a copy of the Joint Notice, this Proxy Statement, a Proxy Card or Voting Instruction Card, and the 2018 Annual Report. Certain shareholders who hold their shares of PG&E Corporation or Utility stock of record may have already received their copy of the 2018 Annual Report. The materials were sent to anyone who owned shares of common stock of PG&E Corporation and/or shares of preferred stock of the Utility at the close of business on May 15, 2019. This date is the record date set by the Boards to determine which shareholders may vote at and attend the 2019 Annual Meetings.
Your vote is extremely important. Even if you plan to attend the 2019 Annual Meetings, we request that you act promptly to vote your shares by completing, signing and dating the enclosed Proxy Card and returning it in the enclosed postage-paid envelope, or by voting over the Internet or by telephone by following the instructions provided on the enclosed Proxy Card or Voting Instruction Card.
Please see pages 11-16 for additional information regarding admission to the meeting and how to vote your shares.
Defined Terms Used in this Proxy Statement
“2006 LTIP”refers to the PG&E Corporation 2006 Long-Term Incentive Plan.
“2014 LTIP”refers to the PG&E Corporation 2014 Long-Term Incentive Plan.
“2018 Annual Report”refers to the PG&E Corporation and Pacific Gas and Electric Company 2018 Joint Annual Report to Shareholders.
“2019 Annual Meetings”refers to the 2019 annual meetings of shareholders of PG&E Corporation and the Utility, which will be held concurrently on June 21, 2019.
“2019 Proxy Materials” refers to the Joint Notice, this Proxy Statement, the Proxy Card or Voting Instruction Card, and the 2018 Annual Report.
“401(k) Plan”refers to the PG&E Corporation Retirement Savings Plan or the PG&E Corporation Retirement Savings Plan for Union-Represented Employees.
“Bankruptcy Code” refers to the United States Bankruptcy Code.
“Bankruptcy Court” refers to the U.S. Bankruptcy Court for the Northern District of California.
“BlueMountain”refers to Blue Mountain Credit Alternatives Master Fund L.P., together with certain of its affiliates.
“Board”refers to the Board of Directors of either PG&E Corporation or the Utility, as applicable.
“CD&A”refers to the section of the Proxy Statement entitled “Compensation Discussion and Analysis.”
“CEO”refers to the position of Chief Executive Officer.
“Chapter 11”refers to chapter 11 of title 11 of the U.S. Code.
“Chapter 11 Cases”refers to voluntary petitions for relief under Chapter 11, which were filed by each of PG&E Corporation and the Utility on January 29, 2019, in the Bankruptcy Court.
“Charter Amendment Proposal”refers to the proposal for shareholders to approve an amendment to the Corporation Charter to increase the maximum number of directors on the Corporation Board to 15 directors and to increase the minimum number of directors on the Corporation Board to 8 directors (which the Corporation Board unanimously recommends the shareholders of PG&E Corporation vote FOR).
“COO”refers to the position of Chief Operating Officer.
“Corporation”refers to PG&E Corporation.
“Corporation Board”refers to the Board of Directors of PG&E Corporation.
“Corporation Charter”refers to the PG&E Corporation Restated Articles of Incorporation.
“CPUC”refers to the California Public Utilities Commission.
“Guidelines”refers to the Corporate Governance Guidelines adopted by the Boards of PG&E Corporation and the Utility.
“Independent Auditor”refers to the independent registered public accounting firm.
“Joint Notice”refers to the Joint Notice of Annual Meetings of Shareholders of PG&E Corporation and Pacific Gas and Electric Company.
“LTIP”refers to the 2006 Long-Term Incentive Plan and/or the 2014 Long-Term Incentive Plan.
“NEO”or“Named Executive Officer”refers to an officer who is listed in the Summary Compensation Table of this Proxy Statement.
“NYSE”refers to the New York Stock Exchange.
“NYSE American”refers to the NYSE American stock exchange (formerly known as NYSE MKT, LLC and as the American Stock Exchange).
2019 Joint Proxy Statement | 5 |
“PEO”refers to an officer or officers who serve as “principal executive officer” of PG&E Corporation or Pacific Gas and Electric Company, as appropriate.
“Proxy”refers to your authorization for another person or persons to vote your shares at the 2019 Annual Meetings, in the manner indicated on the Proxy. Also may refer to the person or persons so authorized (also called proxy holders).
“Proxy Card”refers to your proxy card, on which you may indicate how you would like the named proxy holders to vote your shares at the 2019 Annual Meetings.
“Proxy Statement”refers to this 2019 Joint Proxy Statement for PG&E Corporation and the Utility.
“RSU”refers to a restricted stock unit.
“SEC”refers to the United States Securities and Exchange Commission.
“Section 16 Officer”refers to any “officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934.
“STIP”refers to the Short-Term Incentive Plan.
“TSR”refers to Total Shareholder Return, measured by stock price appreciation and dividends paid, relative to companies in the Performance Comparator Group.
“Utility”refers to Pacific Gas and Electric Company.
“Voting Instruction Card”refers to the form used by beneficial shareholders or participants in a 401(k) Plan to transmit instructions to the nominee or the plan trustee, respectively, on how to vote any shares for which that shareholder or plan participant has voting rights.
This proxy statement summary highlights information to assist you in your review of this Proxy Statement. The summary does not contain all of the information that you should consider, and we encourage you to read the entire Proxy Statement carefully before voting.
Your vote is extremely important. Even if you plan to attend the 2019 Annual Meetings, we request that you act promptly to vote your shares by signing and dating the enclosed Proxy Card and returning it in the enclosed postage-paid envelope, or by voting your shares over the Internet or by telephone by following the instructions provided on the enclosed Proxy Card or Voting Instruction Card.
2019 Annual Meetings of Shareholders
• | Time and Date | 10:00 a.m., Pacific Time on Friday, June 21, 2019 |
• | Place | PG&E Corporation and Pacific Gas and Electric Company headquarters, 77 Beale Street, San Francisco, California |
• | Record Date | May 15, 2019 |
• | Voting | Shareholders as of the record date are entitled to vote. |
Each share of PG&E Corporation common stock, Pacific Gas and Electric Company common stock, and Pacific Gas and Electric Company preferred stock is entitled to cast one vote on each of the respective company’s director nominees and one vote on each of that company’s other proposals. | ||
• | Admission | All shareholders as of the record date are invited to attend the 2019 Annual Meetings. Shareholders must have acceptable proof of share ownership as of the record date and valid photo identification in order to enter the meeting. Please see the instructions on pages 15-16. |
2019 Joint Proxy Statement | 6 |
Meeting Agenda and Voting Recommendations
The following items are expected to be voted on at the 2019 Annual Meetings.The Boards unanimously recommend that you vote as follows:
PG&E Corporation
Item | Board’s Voting Recommendation | Voting Standard | Page Reference (for more detail) |
Election of 14 directors* | FOR all nominees | Majority of votes cast | 17 |
Charter Amendment Proposal | FOR | Majority of outstanding common stock | 49 |
Ratification of Deloitte & Touche LLP as Independent Auditor for 2019 | FOR | Majority of votes cast | 50 |
Advisory vote to approve executive compensation | FOR | Majority of votes cast | 55 |
Shareholder proposal: Corporation structure reform | AGAINST | Majority of votes cast | 95 |
Shareholder proposal: Improve shareholder proxy access | AGAINST | Majority of votes cast | 96 |
* | In the event that the PG&E Corporation shareholders vote against approving the Charter Amendment Proposal (Item No. 2), any votes to elect Mr. Johnson to the Corporation Board will be disregarded. |
Pacific Gas and Electric Company
Item | Board’s Voting Recommendation | Voting Standard | Page Reference (for more detail) |
Election of 14 directors | FOR all nominees | Majority of votes cast | 17 |
Ratification of Deloitte & Touche LLP as Independent Auditor for 2019 | FOR | Majority of votes cast | 50 |
Advisory vote to approve executive compensation | FOR | Majority of votes cast | 55 |
Director Nominees
We are asking shareholders of each company to vote “FOR” each of the director nominees listed below (it being understood that if the Charter Amendment Proposal is not approved, shareholders that vote on the Corporation’s Proxy Card will be deemed to vote for each of the director nominees to the Corporation Board other than Mr. Johnson and any votes to elect Mr. Johnson will be disregarded). As a result of the PG&E Corporation Board’s previously announced board refreshment process, in April 2019, eleven new directors (Richard R. Barrera, Jeffrey L. Bleich, Nora Mead Brownell, Frederick W. Buckman, Cheryl F. Campbell, Michael J. Leffell, Kenneth Liang, Dominique Mielle, Meridee A. Moore, Kristine M. Schmidt, and Alejandro D. Wolff) joined two continuing directors (Fred J. Fowler and Eric D. Mullins) on the Boards of PG&E Corporation and the Utility, with eight of ten then-incumbent directors stepping down. The then-incumbent directors of each Board, including the continuing directors, approved the appointments of the new directors. Mr. Johnson joined the Board of Pacific Gas and Electric Company on May 2, 2019 concurrently with stepping into his role as CEO and President of PG&E Corporation.
In addition, the Boards of PG&E Corporation and Pacific Gas and Electric Company have nominated, and recommend that shareholders vote in favor of, the following candidates for election to the Boards at the 2019 Annual Meetings:
Richard R. Barrera | Cheryl F. Campbell | Kenneth Liang | Kristine M. Schmidt |
Jeffrey L. Bleich | Fred J. Fowler | Dominique Mielle | Alejandro D. Wolff |
Nora Mead Brownell | William D. Johnson | Meridee A. Moore | |
Frederick W. Buckman | Michael J. Leffell | Eric D. Mullins |
As noted above, there are currently 13 directors on the Board of PG&E Corporation, which is the maximum number of directors currently permitted under the Corporation Charter. In order to allow for the addition of more diverse perspectives and to enhance the collective effectiveness of the PG&E Corporation Board, shareholders are being asked to vote on a proposal to amend the Corporation Charter to increase the maximum size of the PG&E Corporation Board to 15 members (and to concurrently increase the minimum size of the PG&E Corporation Board to 8 members, as required by state law).The Board of PG&E Corporation unanimously recommends that shareholders vote FOR each of PG&E Corporation’s director nominees and FOR the proposal to amend the Corporation Charter to increase the maximum size of the PG&E Corporation Board to 15 members.Under each company’s Corporate Governance Guidelines, each member of each Board is elected annually and serves a one-year term.
We are confident these slates of nominees, including PG&E Corporation’s new CEO and President, Bill Johnson, will guide the companies through the Chapter 11 process while balancing the interests of all stakeholders.
2019 Joint Proxy Statement | 7 |
In 2019, the elections of directors for the Corporation and for Pacific Gas and Electric Company are not contested, and therefore, directors of the Corporation and of Pacific Gas and Electric Company will be elected by a majority of the votes represented and voting at the 2019 Annual Meetings.
Below is summary information about each director nominee recommended by the Corporation and Utility Boards. See pages 21 to 29 for complete biographical information for each of the nominees. The Boards recommend that you vote FOR each of the nominees.
Nominee | Age | Director Since | Principal Occupation | Current Committee Memberships | Other Current Public Company Boards | |||||
Richard R. Barrera | 47 | April 2019 | Founder, CEO and Portfolio Manager, Roystone Capital Management LP | • Audit • Executive • Finance (Chair) | ||||||
Jeffrey L. Bleich | 58 | April 2019 | Attorney, former Special Counsel to the President, U.S. Ambassador, and California State Bar President | • Compliance and Public Policy • Safety and Nuclear Oversight | ||||||
Nora Mead Brownell | 71 | April 2019 | Founder, Espy Energy Solutions LLC | • Safety and Nuclear Oversight | ||||||
Frederick W. Buckman | 73 | April 2019 | Retired President and CEO of Powerlink Transmission Company | • Audit • Safety and Nuclear Oversight | ||||||
Cheryl F. Campbell | 59 | April 2019 | Former Senior Vice President, Gas, Xcel Energy, Inc. | • Compliance and Public Policy • Executive • Finance • Safety and Nuclear Oversight (Chair) | ||||||
Fred J. Fowler | 73 | March 2012 | Retired Chairman of the Board, Spectra Energy Partners, LP | • Finance • Safety and Nuclear Oversight | • DCP Midstream Partners, LP • Encana Corporation | |||||
William D. Johnson | 65 | May 2019* | CEO and President of PG&E Corporation | • Executive | ||||||
Michael J. Leffell | 60 | April 2019 | Founder, Portage Partners | • Compliance and Public Policy • Executive • Nominating and Governance (Chair) | ||||||
Kenneth Liang | 57 | April 2019 | Former senior Managing Director and Head of Restructurings, Oaktree Capital Management | • Compensation • Finance | ||||||
Dominique Mielle | 50 | April 2019 | Former Partner and Senior Portfolio Manager, Canyon Partners LLC | • Audit (Chair) • Executive | • Anworth Mortgage Asset Corporation • Studio City International | |||||
Meridee A. Moore | 61 | April 2019 | Senior Managing Member, Watershed Asset Management LLC | • Compensation (Chair) • Executive • Finance • Nominating and Governance | • BlackRock Capital Investment Corporation | |||||
Eric D. Mullins | 56 | September 2016 | Managing Director and Co-CEO, Lime Rock Resources, L.P. | • Audit • Safety and Nuclear Oversight | • Anadarko Petroleum Company | |||||
Kristine M. Schmidt | 55 | April 2019 | Retired Owner and Consultant of Swan Consulting Services, LLC; former President of ITC Great Plains; former Chair of the Western Energy Imbalance Market Governing Body | • Compliance and Public Policy (Chair) • Executive • Nominating and Governance • Safety and Nuclear Oversight | ||||||
Alejandro D. Wolff | 62 | April 2019 | Former U.S. Ambassador to the Republic of Chile; former U.S. Ambassador to the United Nations | • Compensation • Compliance and Public Policy | • Albemarle Corporation • Versum Materials |
* | indicates that the applicable nominee is a member of the Board of the Utility only. |
2019 Joint Proxy Statement | 8 |
Corporate Governance Highlights
• | Significant board refreshment process to provide fresh perspectives and additional expertise to help address the changing nature of the companies’ business and the serious challenges they face now and in the future | • | Director overboarding policy requiring Board approval for service on more than three other public company boards; directors who are principal executive officers of public companies must receive Board approval for service on more than two other public company boards | |
• | Board refreshment process resulted in new PG&E Corporation CEO and eleven new directors who were appointed to the Corporation and Utility Boards in April 2019 to join two continuing directors, with eight of ten incumbent directors resigning | • | Policy to consider diversity in the director nomination process | |
• | All non-executive directors are currently independent | • | Succession planning for the Boards of Directors, the CEO, and senior management | |
• | Independent key Board committees (excluding the Executive Committees) | • | Executive and director stock ownership guidelines | |
• | Independent non-executive Chair at both companies since December 2017 (independent lead director if the Chair is not independent) | • | Board oversight of risk management, and proxy statement disclosure on the Boards’ roles and responsibilities with respect to risk management | |
• | Executive sessions of independent directors at regular Board meetings | • | Board oversight of corporate sustainability, and disclosure on sustainability programs and performance | |
• | Annual evaluation of CEO and President performance by independent directors | • | Board oversight and transparent public disclosure of political activities | |
• | Annual Board and committee self-evaluations | • | Board oversight of compliance and ethics; the Chief Ethics and Compliance Officer has direct access to the Chair of the Compliance and Public Policy Committee of the PG&E Corporation Board | |
• | Annual election of directors | • | Board oversight of enterprise-wide safety matters; the Chief Safety Officer reports to the Safety and Nuclear Oversight Committees of the Boards | |
• | Majority vote for directors, with mandatory resignation policy and plurality carve-out for contested elections | • | Policy limiting obtaining certain types of services from the Independent Auditor | |
• | One share one vote | • | No poison pill; shareholder approval required for adoption | |
• | No supermajority vote requirements | • | Proxy access bylaw provisions that are consistent with prevailing market standards | |
• | Confidential voting policy for uncontested elections | • | Regular investor outreach, including opportunities for dialogue with the Board’s independent leadership when applicable |
Vote to Approve Charter Amendment Proposal
We are asking shareholders of the Corporation to approve a resolution to amend the Corporation Charter to increase the maximum size of the Corporation Board to 15 members (and to concurrently increase the minimum size of the Corporation Board to 8 members), effective at the 2019 annual meeting. The Corporation Board recommends a “FOR” vote because it believes that increasing the size of the Corporation Board is in the best interest of the Corporation and its shareholders, will allow for more diverse perspectives on the Board, and will enhance the overall effectiveness of the Corporation Board. The increase of the size of the Corporation Board will allow all 14 individuals nominated by the Corporation Board to serve as directors on the Corporation Board following the 2019 annual meeting with one additional vacant seat to be filled in the future as appropriate. In the event that the PG&E Corporation shareholders do not approve the Charter Amendment Proposal (Item No. 2), any votes to elect Mr. Johnson to the Corporation Board will be disregarded.
Auditors
As a matter of good corporate governance, we are asking shareholders of each company to ratify the selection of Deloitte & Touche LLP (“Deloitte & Touche”) as that company’s Independent Auditor for 2019. We provide information on fees paid to Deloitte & Touche beginning on page 51. Each Board recommends a vote “FOR” the proposal to ratify the appointment of Deloitte & Touche.
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Advisory Vote to Approve Executive Compensation
We are asking shareholders of each company to approve on an advisory basis the compensation paid for 2018 to that company’s executive officers named in the Summary Compensation Table of this Proxy Statement (“say-on-pay” vote). Each Board recommends a “FOR” vote because it believes that the applicable company’s compensation policies and practices were effective in achieving the companies’ goals of rewarding sustained financial and operating performance and excellence, aligning the executives’ long-term interests with those of our shareholders, and motivating executives to remain with the companies for long and productive careers.
Shareholder Proposals
The proxy materials contain two proposals submitted pursuant to SEC Rule 14a-8 by individual PG&E Corporation shareholders pertaining to (1) Corporation structure reform and (2) improvement of shareholder proxy access. These proposals are being submitted to PG&E Corporation shareholders only. The PG&E Corporation Board recommends that the Corporation’s shareholders vote “AGAINST” these proposals for the reasons indicated beginning on page 95.
General Information About the 2019 Annual Meetings and Voting
Answers to many frequently asked questions about the 2019 Annual Meetings and voting can be found in the Q&A section beginning on page 11.
2020 Annual Meetings
• Deadline for submission of shareholder proposals for inclusion in the proxy statement: | January 25, 2020 | |
• Period for submission of proxy access director nominees for inclusion in the proxy statement (PG&E Corporation only): | December 26, 2019 – January 25, 2020 | |
• Period for submission of advance written notice of other business and nominations for director: | February 22, 2020 – March 23, 2020 |
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General Information About the 2019 Annual Meetings and Voting
How do I vote?
If your shares are registered to you directly, there are three ways to submit your Proxy:
Over the Internet. You may submit your Proxy and vote your shares over the Internet by following the instructions on the Proxy Card. | |||
By telephone. You may submit your Proxy and vote your shares by calling the toll-free number on the Proxy Card. | |||
By mail. You may submit your Proxy and vote your shares by completing, signing, and dating the Proxy Card and mailing it in the postage-paid envelope provided. |
You can also attend and vote at the 2019 Annual Meetings, however we encourage you to vote your proxy over the Internet, telephone, or mail prior to the meeting, even if you plan to attend in person. (See meeting location information on the back cover of this Proxy Statement).
If your shares are not registered to you directly but are held indirectly through a broker, bank, trustee, nominee, or other third party (“broker”), follow the instructions provided by your broker to vote your shares.If you do not submit voting instructions to your broker, the broker will not be permitted to vote your shares on any proposal, unless it constitutes a “routine” item and your broker is a member of the NYSE and permitted by NYSE rules to vote on “routine” items. The election of directors, the say-on-pay vote, the Charter Amendment Proposal, and shareholder proposals, for example, are “non-routine” items.
If you are a 401(k) Plan participant, specific instructions for voting are noted on the Voting Instruction Card.
Can I change my vote?
If your shares are registered to you directly, you can change your vote or revoke your Proxy any time before it is exercised by doing one of the following before the applicable deadline: (1) returning a signed Proxy Card with a later date, (2) entering a new vote over the Internet or by telephone, (3) notifying the Corporate Secretary of PG&E Corporation or the Utility, as appropriate, in writing, at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177 or (4) submitting a written ballot at the 2019 Annual Meetings. Your attendance at the 2019 Annual Meetings will not automatically revoke your Proxy unless you vote again at the 2019 Annual Meetings.
If you are a participant in a 401(k) Plan, you may change your vote at any time prior to 6:00 a.m., Eastern time, on Wednesday, June 19, 2019. The last vote that the 401(k) Plan trustee receives from you within this timeframe will be the vote that is counted. Participants in a 401(k) Plan are not eligible to vote in person at the 2019 Annual Meetings.
If your shares otherwise are not registered to you directly but are registered in the name of your nominee (such as a broker, bank, trustee, or other third party), follow the instructions provided by your nominee to change your vote or revoke your voting instructions.
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What is the voting deadline?
If you hold your shares directly and submit your Proxy over the Internet or by telephone, your vote must be received by 6:00 a.m., Eastern time, on Friday, June 21, 2019. These Internet and telephone voting procedures comply with California law. If you submit your Proxy by mail, your vote must be received by 10:00 a.m., Pacific time, on Friday, June 21, 2019.
If you are a participant in a 401(k) Plan, your voting instructions must be received by 6:00 a.m., Eastern time, on Wednesday, June 19, 2019, for the 401(k) Plan trustee to vote your shares.
If your shares otherwise are not registered to you directly but are registered in the name of your nominee (such as a broker, bank, trustee, or other third party), please consult information provided by the nominee.
Have other candidates been nominated for election at the 2019 Annual Meetings in opposition to PG&E Corporation Board’s nominees?
As of the date of this Proxy Statement, no other candidates have been nominated for election at the 2019 Annual Meetings in opposition to the Corporation Board nominees. Previously, BlueMountain had provided notice of its intent to nominate a slate of 13 nominees for election to the Corporation Board at the 2019 annual meeting in opposition to the Corporation Board’s recommended nominees. In connection with a settlement agreement between the Corporation and BlueMountain, BlueMountain has withdrawn all of its nominees. For more information regarding the settlement agreement with BlueMountain please refer to page 18.
What am I voting on, and what are each Board’s voting recommendations?
PG&E Corporation shareholders will be voting on the following items andthe Board of the Corporation unanimously recommends that you vote as follows:
Item No. | Description | Board’s Voting Recommendation |
1 | Election of 14 directors* | FOR all nominees |
2 | Charter Amendment Proposal* | FOR this proposal |
3 | Ratification of Deloitte & Touche LLP as Independent Auditor for 2019 | FOR this proposal |
4 | Advisory vote to approve executive compensation | FOR this proposal |
5 | Shareholder proposal: Corporation Structure Reform | AGAINST this proposal |
6 | Shareholder proposal: Amendment of proxy access bylaw provisions | AGAINST this proposal |
* | In the event that the PG&E Corporation shareholders vote against approving Item No. 2 (Charter Amendment Proposal), any votes to elect Mr. Johnson to the Corporation Board will be disregarded. |
The Utility’s shareholders will be voting on the following items andthe Board of the Utility unanimously recommends that you vote as follows:
Item No.* | Description | Board’s Voting Recommendation |
1 | Election of 14 directors | FOR all nominees |
3 | Ratification of Deloitte & Touche LLP as Independent Auditor for 2019 | FOR this proposal |
4 | Advisory vote to approve executive compensation | FOR this proposal |
* | There is no Item No. 2 proposal for the Utility. |
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What vote is required to approve each item?
A majority voting standard applies to the election of each director nominee and to the approval of Item Nos. 3, 4, 5, and 6. Under a majority voting standard, approval occurs if the shares voted “for” a director nominee or other item exceed the number of shares voted “against” that nominee or item. In addition, the shares voting affirmatively must equal at least a majority of the quorum that is required to conduct business at each meeting. This means that the shares voting affirmatively must be greater than 25 percent of the outstanding shares entitled to vote.
The approval of Item No. 2 (Charter Amendment Proposal) with respect to the Corporation requires the vote of a majority of the Corporation’s outstanding shares of common stock as of the record date. In the event that the shareholders of the Corporation do not approve the Charter Amendment Proposal, then any votes to elect Mr. Johnson will be disregarded.
In determining whether a majority of the shares represented and voting have elected a director nominee or approved a proposal, abstentions and any broker non-votes (see the definition below under “What is a broker non-vote?”) will not be considered.
For all matters subject to a majority voting standard (i.e., all matters other than the Charter Amendment Proposal), abstentions and broker non-votes that occur with respect to the election of a director nominee or a proposal could prevent the election of a nominee or the approval of a proposal if the number of shares voting affirmatively does not constitute a majority of the required quorum. For the Charter Amendment Proposal, abstentions and any broker non-votes will have the same effect as a vote against this proposal and could prevent the approval of this proposal if the number of shares voting affirmatively does not constitute a majority of the Corporation’s outstanding shares of common stock as of the record date.
Abstentions and broker non-votes will be treated as present for the purpose of determining whether a quorum is present at each meeting.
Where shareholders are being asked for an advisory vote or for ratification (Item Nos. 3, 4, 5, and 6), any voting results with respect to these items will be non-binding on the affected company but will be considered by that company’s Board.
What is a broker non-vote?
If you hold your shares indirectly through your broker, then your broker is the registered holder of your shares and submits the Proxy to vote your shares. You are the beneficial owner of the shares, and typically you will be asked to provide your broker with instructions as to how you want your shares to be voted. Under the rules of the NYSE, if you fail to provide your broker with voting instructions, your broker can use its discretion to vote your shares on “routine” matters, like the ratification of the appointment of the Independent Auditor. However, your broker may not use its discretion to vote your shares on “non-routine” matters, like director elections, advisory votes on executive compensation, the Charter Amendment Proposal, and the shareholder proposals. When a broker votes your shares on routine matters but is unable to vote your shares on other non-routine matters because you have failed to provide instructions on how to vote any non-routine matters, a “broker non-vote” occurs with respect to these other non-routine matters.
What shares am I entitled to vote?
If you are a PG&E Corporation registered shareholder, you are entitled to vote all the shares of PG&E Corporation common stock that you own (or for which you have been given the right to provide instructions as to how such shares should be voted) as of the close of business on May 15, 2019 (the “record date”). If you are a Utility registered shareholder, you are entitled to vote all the shares of Utility preferred stock that you own (or for which you have been given the right to provide instructions as to how such shares should be voted) as of the record date.
If you are a registered holder of both PG&E Corporation common stock and Utility preferred stock, you are entitled to vote separately on each company’s proposals.
We encourage shareholders to submit proxies in advance of the 2019 Annual Meetings over the Internet, by telephone, or by mail. You can ensure that your shares are voted at the 2019 Annual Meetings by following the instructions on the enclosed Proxy Card and submitting your votes over the Internet or by telephone, or by completing, signing, dating and returning the enclosed Proxy Card.
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How many copies of the 2019 Proxy Materials will I receive?
Registered Holders and 401(k) Plan Participants
You will receive one copy of the 2019 Proxy Materials for each account.
Beneficial Owners
If you receive your proxy materials through Broadridge Investor Communication Solutions (“Broadridge”), and there are multiple beneficial owners at the same address, you may receive fewer copies of the 2019 Proxy Materials than the number of beneficial owners at that address. SEC rules permit Broadridge to deliver only one copy of the 2019 Proxy Materials to multiple beneficial owners sharing an address, unless the applicable company receives contrary instructions from any beneficial owner at that address.
If you receive your proxy materials through Broadridge and (1) you currently receive only one copy of the 2019 Proxy Materials at a shared address but you wish to receive an additional copy of the 2019 Proxy Materials or of any future notices or proxy materials, or (2) you share an address with other beneficial owners who also receive their separate proxy materials through Broadridge and you wish to request delivery of a single copy of the proxy materials to the shared address in the future, please contact the office of the Corporate Secretary of PG&E Corporation or Pacific Gas and Electric Company, as appropriate, at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, or call 1-415-973-8200. We will promptly honor your request.
What does it mean if I receive more than one Proxy Card on or about the same time?
It means that your PG&E Corporation common shares or Utility preferred shares are registered differently or are in more than one account. In order to vote all of your shares, please sign and return each Proxy Card or, if you vote over the Internet or by telephone, vote once for each Proxy Card you receive.
Are proxy materials for the 2019 Annual Meetings available online?
Yes. You can go online atinvestor.pgecorp.com/financials/annual-reports-and-proxy-statementsto access the 2019 Proxy Materials.
What if I submit my Proxy but I do not specify how I want my shares voted?
For PG&E Corporation’s registered shareholders, the Corporation’s proxy holders will vote your shares in accordance with the Corporation Board’s recommendations, which are as follows: “For” each of the Corporation Board’s nominees for director, “For” Item Nos. 2, 3, and 4 and “Against” Item Nos. 5 and 6. If the Charter Amendment Proposal (Item No. 2) is not approved, shareholders that vote on the Corporation’s Proxy Card will be deemed to vote for each of the nominees other than Mr. Johnson and any votes to elect Mr. Johnson will be disregarded. For the Utility’s registered shareholders, the Utility’s proxy holders will vote your shares in accordance with the Utility Board’s recommendations, which are as follows: “For” each of the nominees for director and “For” Item Nos. 3 and 4 (there is no Item No. 2 proposal for the Utility).
What if I do not submit my Proxy or Voting Instruction Card?
If you are a registered shareholder, your shares will not be voted if you do not submit your Proxy or vote in person at the 2019 Annual Meetings. If you are a participant in a 401(k) Plan, your shares will not be voted if you do not submit your Voting Instruction Card. If you hold your shares through a broker (or other intermediary), your broker may vote your shares in the broker’s discretion on “routine” matters, as discussed above under “What is a broker non-vote?”.
Your vote is extremely important. Even if you plan to attend the 2019 Annual Meetings, we request that you act promptly to vote your shares by completing, signing and dating the enclosed Proxy Card and returning it in the enclosed postage-paid envelope, or by voting over the Internet or by telephone by following the instructions provided on the enclosed Proxy Card or Voting Instruction Card.
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Is my vote confidential?
PG&E Corporation and the Utility each have adopted a confidential voting policy under which shareholder votes are revealed only to a non-employee proxy tabulator or an independent inspector of election, except (1) as necessary to meet legal requirements, (2) in a dispute regarding authenticity of proxies and ballots, (3) in the event of a proxy contest if the other party does not agree to comply with the confidential voting policy, and (4) where disclosure may be necessary for either company to assert or defend claims. The policy allows the companies to engage shareholders, and to directly or indirectly (1) accept voting information that is voluntarily provided by shareholders, or (2) request and obtain final shareholder voting information that is or will be publicly disclosed pursuant to law, regulation, or similar requirements.
Who will count the votes?
First Coast Results, Inc. will act as the proxy tabulators and the inspectors of election for the 2019 Annual Meetings. First Coast Results, Inc. is independent of PG&E Corporation and the Utility and their respective directors, officers, and employees. Corporate Election Services will be the voting instruction tabulator for the 401(k) Plan.
How many shares are entitled to vote at the 2019 Annual Meetings?
As of the record date, there were 529,212,562 shares of PG&E Corporation common stock, without par value, outstanding and entitled to vote. Each share is entitled to one vote.
As of the record date, there were 10,319,782 shares of Utility first preferred stock, $25 par value, and 264,374,809 shares of Utility common stock, $5 par value, outstanding and entitled to vote. Each share is entitled to one vote.
May I attend the 2019 Annual Meetings?
Only PG&E Corporation and Utility shareholders who held shares as of the record date (May 15, 2019), or their duly appointed legal proxies, may attend the 2019 Annual Meetings. If you plan to attend the meeting, you must:
Registered Shareholders | Any oneof the following: • Registered Shareholder List: Your name will be verified against our list of registered shareholders as of the record date; or • Proxy Card: You may present the Proxy Card at Shareholder Registration that you received in the mail (in case you voted over the Internet or by telephone, or intend to vote your shares at the 2019 Annual Meetings) | |
BeneficialOwnersthrough a401(k) Plan | Any oneof the following: • Shareholder List: Your name will be verified against PG&E Corporation’s list of shareholders provided by the 401(k) Plan trustee (Fidelity) as of the record date; or • Voting Instruction Card: You may present the top portion of the Voting Instruction Card that you received in the mail showing your name, address, and valid control number at Shareholder Registration. | |
Other Beneficial Owners | Any oneof the following: • Account Statement: You may present a copy of your May 2019 brokerage or bank account statement showing that you owned PG&E Corporation or Utility stock as of the record date; • Voting Instruction Card: You may present the Voting Instruction Card that you received in the mail showing your name, address, and valid control number; • Legal Proxy: You may present a valid legal proxy from your broker, bank, trustee, or nominee holding your shares, containing your name, address, and valid control number; or • Letter from Intermediary: You may present a letter from the broker, bank, trustee, or nominee holding your shares, confirming that you owned PG&E Corporation or Utility stock as of the record date. |
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If you do not have a valid photo identification or proof of your stock ownership, you will not be admitted to the 2019 Annual Meetings. Please note that the following items will not be allowed in the meeting: cameras, video or tape recorders, and other electronic recording devices, or any other items that might be disruptive or pose a safety or security risk. For your protection, all purses, briefcases, backpacks, and packages will be subject to inspection, and you may be required to check these items. Photography and video/audio recording are not permitted at the 2019 Annual Meetings. Please arrive early enough to allow yourself adequate time to clear security.
Even if you plan to attend the 2019 Annual Meetings, we request that you act promptly to vote your shares by voting over the Internet or by telephone by following the instructions provided on the enclosed Proxy Card or Voting Instruction Card or by completing, signing and dating the enclosed Proxy Card and returning it in the enclosed postage-paid envelope.
May I bring a guest to the 2019 Annual Meetings?
Each registered shareholder or beneficial owner may bring either a spouse or a domestic partner as his or her guest to the 2019 Annual Meetings.
Whom can I contact if I have questions or need assistance in voting my shares, or if I need additional copies of the 2019 Proxy Materials?
Please contact Innisfree, the firm assisting us in the solicitation of proxies, toll-free at 877-750-0502. Banks and brokers may call collect at 212-750-5833.
How will the 2019 Annual Meetings be conducted?
The independent non-executive Chair of the Board of PG&E Corporation, or her designee, will preside over the 2019 Annual Meetings and will make any and all determinations regarding the conduct of the meetings.
All items of business described in Item Nos. 1-6 in this Proxy Statement will be deemed presented at the 2019 Annual Meetings.
How much will this Proxy solicitation cost?
All costs of soliciting proxies on behalf of PG&E Corporation and the Utility will be borne by PG&E Corporation and the Utility.
PG&E Corporation and the Utility hired Innisfree M&A Incorporated (“Innisfree”) to assist in the distribution of proxy materials and solicitation of votes for a fee not to exceed $1,200,000 plus reasonable out-of-pocket expenses. PG&E Corporation and the Utility have agreed to indemnify Innisfree against certain liabilities relating to, or arising out of, its engagement. In addition, the Corporation and the Utility will reimburse brokerage houses and other custodians, nominees, and fiduciaries for reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders. The companies’ solicitation of Proxies also may be made in person, by telephone, or by electronic communications by the companies’ respective directors, officers, and employees, who will not receive additional compensation for those solicitation activities.
The total amount to be spent for the companies’ solicitation of Proxies from the companies’ respective shareholders for the 2019 Annual Meetings, including expenses for vote tabulation and inspection but excluding salaries and wages of regular employees and officers of the companies, is estimated to be approximately $1.73 million, approximately $280,000 of which has been accrued to date.
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Item No. 1: Election of Directors of PG&E Corporation and Pacific Gas and Electric Company
Shareholders are being asked to elect 14 directors to serve on the Board of PG&E Corporation and on the Board of the Utility. All of the nominees for director of the Corporation also are nominees for director of the Utility. In the event that the Charter Amendment Proposal (Item No. 2) is not approved, shareholders that vote on the Corporation’s Proxy Card will be deemed to vote for each of the nominees other than Mr. Johnson and the votes for Mr. Johnson will be disregarded, and only 13 directors will be elected to the PG&E Corporation Board.
If elected as director, all of the nominees have agreed to serve and will hold office until the 2020 annual meetings or until their successors shall be elected and qualified, except in the case of death, resignation, or removal of a director.
If any of the nominees become unavailable at the time of the 2019 Annual Meetings to accept nomination or election as a director, the proxy holders named on the PG&E Corporation or Utility Proxy Card (as applicable) will vote for substitute nominees at their discretion.
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend Using the Proxy Card to VoteFOR Each of the Nominees for Director Presented in This Joint Proxy Statement.
If you have any questions, please contact Innisfree, our proxy solicitor assisting us in connection with the 2019 Annual Meetings, by calling toll free 877-750-0502.
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CERTAIN AGREEMENTS WITH BLUEMOUNTAIN
In connection with BlueMountain’s proposal to nominate director candidates that has since been withdrawn,Mr. Buckman entered into a nomination agreement (the “Nomination Agreement”) with BlueMountain, pursuant to which Mr. Buckman agreed, among other things, to be nominated by BlueMountain for election to the Corporation Board at the 2019 annual meeting, and, if elected, to serve as a director of the Corporation. Pursuant to the Nomination Agreement, BlueMountain agreed to pay to Mr. Buckman $100,000 in connection with the nomination. The Nomination Agreement includes customary reimbursement and indemnification provisions in favor of Mr. Buckman.
On April 22, 2019, Richard C. Kelly resigned from the Boards of the Corporation and the Utility. Also, PG&E Corporation entered into a Settlement Agreement (the “Settlement Agreement”) with BlueMountain. In connection with the execution and delivery of the Settlement Agreement, and effective upon Mr. Kelly’s resignation, Frederick W. Buckman was appointed to fill the resulting vacancies on the Boards.
Pursuant to the terms of the Settlement Agreement with BlueMountain, the Corporation has agreed to propose an amendment, and recommend that the Corporation’s shareholders vote in favor of such amendment at the 2019 annual meeting of the shareholders of the Corporation, to the Corporation’s Restated Articles of Incorporation to increase the maximum size of the Board to fifteen members. Under the Settlement Agreement, subject to the approval of such amendment by the shareholders of the Corporation, the Boards will endeavor to select a person to be appointed to each of the Boards, taking into account such person’s clean energy / clean energy technology expertise, ties to the state of California, and expertise relating to the achievement of California’s clean energy goals. In addition, the Corporation has agreed to engage Christopher A. Hart to provide consulting services to the CEO of the Corporation regarding matters of safety.
The full text of the Settlement Agreement is attached as an exhibit to the Corporation’s Current Report on Form 8-K filed with the SEC on April 23, 2019.
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NOMINEES FOR DIRECTORS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY
As summarized in the below director biographies, the Boards were significantly changed in April 2019. The new Boards’ members’ skills and experiences cover areas we believe are most important to our sustainable success going forward. Mr. Johnson joined the Board of the Utility on May 2, 2019 and is nominated to both Boards at the 2019 Annual Meetings, subject to approval of the Charter Amendment Proposal. Mr. Johnson brings substantial safety and operational expertise from his extensive career in the energy industry. The two continuing directors provide diverse expertise, years of leadership and experience, and the institutional knowledge believed to be necessary to ensure stability and continuity on the Boards. The eleven new directors for the PG&E Corporation and Utility Boards provide fresh perspectives, leadership experience, and specific expertise to lead the companies through their current challenges and drive necessary cultural and operational changes. The new directors include:
The Boards believe that each nominee for director is a qualified, dedicated, ethical, and highly regarded individual. The Corporation and the Utility also each believe that a diverse Board with a mix of operational, safety, risk management, governance, regulatory, compliance, legal, restructuring, strategic planning, financial, audit, and business experience will be critical to continue improvements to safety, drive operational excellence, and navigate the restructuring process. The refreshed Boards, as a whole, include individuals who are committed to further enhancing the safety culture, understanding and properly responding to customer concerns, and fairly treating wildfire victims, employees, retirees, and other stakeholders. There are no agreements, arrangements, or understandings between the eleven new directors and any third party relating to their respective nominations for election to the Boards at the 2019 Annual Meetings.
The information provided below includes a chart and a description of each nominee’s specific experience, qualifications, attributes, and skills that indicate why that person should serve as a director of the applicable company, in light of the Corporation’s and the Utility’s business and structure. The Boards do not believe that each nominee must possess all of the characteristics shown in the chart below in order for each Board, as a whole, to function effectively.
The Corporation and the Utility believe that, collectively, the distribution of the nominees’ experience, skills, and expertise, among other characteristics, reflects a balanced and multi-disciplinary Board at each company, and appropriately meets the needs of the companies.
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Each director is elected for a one-year term, and in general, the Nominating and Governance Committee will recommend, and each Board will re-nominate, an existing director for re-election if the Committee and the Board each believe that the individual would continue to be a productive and effective contributor to the Board, unless that individual no longer is eligible for re-nomination under the applicable company’s Board of Directors retirement policy or he or she declines to stand for re-election.
With respect to diversity, the Nominating and Governance Committee’s policy, as reflected in the companies’ respective Corporate Governance Guidelines, is to seek a range of different backgrounds, perspectives, skills, and experiences. Nine of the 14 director nominees for each company’s Board are diverse with respect to gender or ethnicity.
The Nominating and Governance Committee and the Boards annually review whether the diversity represented by the members of the Boards serves the needs of the companies, given the current operating environment. If a diversity gap is identified, the Committee will consider and prioritize the need to close that gap, along with other factors, in its director recruitment process. The diversity represented by the director nominees is shown below.
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Richard R. Barrera Age:47 Director Since:April 2019 Current Board Committees:Finance (Chair); Audit; Executive Current Position:Founder, CEO and Portfolio Manager, Roystone Capital Management LP (an asset management firm that invests across the capital structure in both debt and equity) Prior Positions: Mr. Barrera previously was a Partner and Co-Portfolio Manager at Redwood Capital Management and Glenview Capital Management (both private investment management firms). Other Board Experience: Mr. Barrera is a member of the board of Mount Sinai Children’s Center Foundation and a member of the board of Success Academy Charter Schools. Experience, Skills, and Expertise: Mr. Barrera has over 20 years of asset management and financial expertise investing in businesses undergoing transformations across a wide range of sectors. Throughout his career, Mr. Barrera has invested across the electric utility and independent power industries and has directly participated in numerous restructurings both in and out of Chapter 11. Mr. Barrera’s restructuring experience includes several bankruptcies involving complex litigation and a number of telecommunication restructurings in which he actively helped companies recapitalize balance sheets to enable successful operational turnarounds. |
Jeffrey L. Bleich Age:57 Director Since:April 2019; independent non-executive Chair of the Board of the Utility since April 2019 Current Board Committees:Compliance and Public Policy; Safety and Nuclear Oversight Current Position:Attorney Prior Positions: Mr. Bleich was a partner in the San Francisco, CA office of Dentons US LLP (a multinational law firm) from 2016 to April 2019. Mr. Bleich served as a member of the Senior Advisory Group to the Director of National Intelligence from 2014 to 2016. Mr. Bleich served as U.S. Ambassador to Australia from 2009 to 2013 and also as Special Counsel to President Obama in the White House from 2008 to 2009. Mr. Bleich previously was a long-time partner at the California law firm Munger, Tolles & Olson LLP, where he was recognized as one of California’s leading litigators, litigated a variety of complex civil cases and handled landmark state and U.S. Supreme Court pro bono cases. Other Board Experience: Mr. Bleich is a member of the board of Nuix Pty. Ltd (from 2017 to present) and the advisory board of Amber Kinetics, Inc. (from 2017 to present). Mr. Bleich serves on several boards, including as Chair of the Fulbright Foreign Scholarship Board (appointed by President Obama). Experience, Skills, and Expertise: Mr. Bleich has over three decades of experience resolving complex domestic and international disputes and specializing in cybersecurity. In addition to his legal and public sector experience, Mr. Bleich has served on the boards of numerous private organizations, including as the Chair of the California State University Board of Trustees, President of the California State Bar, a member of the Governor’s International Trade and Investment Council, and President of the Bar Association of San Francisco. Mr. Bleich is a long-time California resident. |
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Nora Mead Brownell Age:71 Director Since:April 2019; independent non-executive Chair of the Board of PG&E Corporation since April 2019 Current Board Committees:Executive; Safety and Nuclear Oversight Current Position:Co-Founder of Espy Energy Solutions LLC (an energy consulting group that provides strategic planning, marketing, business planning, and other consulting services to energy utilities, equipment manufacturers, service providers and financial institutions evaluating energy investments) Prior Positions: Ms. Brownell is a former Commissioner of the Federal Energy Regulatory Commission (“FERC”), a former member of the Pennsylvania Public Utility Commission and a former President of the National Association of Regulatory Utility Commissioners. Prior Public Board Service During the Past Five Years: National Grid (2012 to April 2019); Spectra Energy Partners (2007 to 2018); Oncor, Inc. (2007 to 2014) Other Board Experience: Ms. Brownell previously served on the boards of Tangent (2000 to April 2019) and Comverge Inc. (2007 to 2014). Ms. Brownell is also currently a director of Morgan Stanley Infrastructure Advisory Board and of Mead Family Investments (previously Times Publishing Co.) (1996 to present), and she previously served as a director of Direct Energy Advisory Board (2014 to 2017) and of New World Capital Advisory Board (2009 to 2016). Experience, Skills, and Expertise: Ms. Brownell is a former Commissioner of the FERC, a former member of the Pennsylvania Public Utility Commission and a former President of the National Association of Regulatory Utility Commissioners. During her time at FERC, Ms. Brownell oversaw the transition of the North American Electric Reliability Corporation to FERC oversight after Congress passed the Energy Policy Act of 2005, which provided for mandatory electric reliability standards. Ms. Brownell has been an advocate for consumer protection, competitive markets and national energy infrastructure development. She has worked extensively with California stakeholders to resolve market and infrastructure issues. |
Frederick W. Buckman Age:73 Director Since:April 2019 Current Board Committees:Audit; Safety and Nuclear Oversight Most Recent Position:Retired President and Chief Executive Officer of Powerlink Transmission Company (transmission investment for private equity) Prior Positions: Mr. Buckman was President and CEO of Shaw Group’s Power Group (engineering firm) (2009 to 2010), a managing partner for utilities at Brookfield Asset Management (alternative asset management company focusing on real estate, renewable power, infrastructure and private equity) (2007 to 2009), President and CEO of Trans-Elect (electric and gas transmission system development) (1999 to 2006), and has held various leadership positions in the utility and energy industry, including President and CEO of Pacificorp (electric energy company) (1994 to 1998) and CMS Energy (natural gas and electric energy company) (1986 to 1994). He also served on the Board of Directors of SmartWires, Inc. (transmission technology company) (2011 to 2019). Other Board Experience: Mr. Buckman currently serves as a board member of StanCorp Financial Group Incorporated (insurance and financial services company) and Solomon Corporation (sales and service of transformers and related equipment). Experience, Skills, and Expertise: Mr. Buckman brings over 30 years of experience in the utility, energy, and asset management sectors. In addition to serving as the CEO of two U.S. utilities, Mr. Buckman has extensive experience in utility operation and management, safety assessment, engineering and construction management, project development and nuclear plant design. |
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Cheryl F. Campbell Age:59 Director Since:April 2019 Current Board Committees:Safety and Nuclear Oversight (Chair); Compliance and Public Policy; Executive; Finance Current Position:Consultant, Executive Director, Gold Shovel Standard Association (non-profit organization working to reduce damage to underground infrastructure) Prior Positions: Ms. Campbell spent 13 years at Xcel Energy, Inc. (utility supplier of electric power and natural gas service operating in eight Western and Midwestern states), most recently serving as the Senior Vice President, Gas and President and CEO of West Gas Interstate (a FERC-regulated pipeline owned by Xcel Energy) from 2011 to 2018. Prior to Xcel Energy Inc., Ms. Campbell worked for approximately 20 years at Coastal Corporation (El Paso Corporation) (provider of natural gas and related energy products) where she held various roles, including director. Other Board Experience: Ms. Campbell currently serves as a board member of Hoffman Southwest (a private equity-owned provider of water flow inspection, repair and cleaning services) (2018 to present). Ms. Campbell previously served as a member of the Engineering Advisory Committee of the University of Colorado College of Engineering, a member of the Gas Pipeline Advisory Committee to the Department of Transportation and a member of the Colorado Oil and Gas Association Board. Experience, Skills, and Expertise: Ms. Campbell has 35 years of energy experience in midstream, interstate pipelines and utilities. During her tenure at Xcel Energy, Ms. Campbell developed Xcel Energy’s risk management, regulatory, environmental and operating plans for its gas assets while improving operating and financial results across the enterprise. Ms. Campbell also developed the same programs for WestGas InterState while she was serving as its President and CEO. Her experience includes strategic planning, operations, regulatory and risk management. Ms. Campbell is a champion of public and employee safety and served on the U.S. Department of Transportation’s Gas Pipeline Advisory Committee from 2013 to 2018, providing guidance to the Secretary of Transportation on the safety of the nation’s gas pipeline infrastructure. Ms. Campbell also served as a member of the independent panel assessing the enterprise risk management and overall safety of the 11 gas utilities in Massachusetts in the aftermath of the September 2018 explosions and fires in Merrimack Valley. |
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Fred J. Fowler Age:73 Director Since:March 2012 Current Board Committees:Finance; Safety and Nuclear Oversight Most Recent Position:Retired Chairman of the Board, Spectra Energy Partners, LP (master limited partnership that owns natural gas transmission and storage assets) Other Current Public Company Boards:Encana Corporation (natural gas producer) since 2010 (serves on corporate responsibility, environment, health and safety committee, and human resources and compensation committee); DCP Midstream Partners, LP (master limited partnership that owns, operates, acquires, and develops midstream energy assets) since 2015 (serves on audit committee) Prior Positions: In addition to serving as Chairman of the Board of Spectra Energy Partners, LP (2008 to 2013), Mr. Fowler was President and CEO of Spectra Energy Corp (natural gas gathering and processing, transmission and storage, and distribution company) (2006 to 2008) and served as a director of that company. Before that, he held various executive positions with Duke Energy Corporation (gas and electric energy company) and its subsidiaries and predecessor companies, including President and COO of Duke Energy. Prior Public Board Service During the Past Five Years: Spectra Energy Partners, LP (2008 to 2017) Other Board Experience: Mr. Fowler is the former Chairman of the Board of the Interstate Natural Gas Association of America and a former director of the Gas Research Institute, the Gas Technology Institute, and the Institute of Nuclear Power Operations. Experience, Skills, and Expertise: Mr. Fowler brings extensive knowledge and over 45 years of experience in utility company operations, including safety, natural gas and gas liquids production, transportation and marketing, and electricity generation, transmission and distribution. He brings leadership, management, and business skills developed as an executive and a director of numerous public and privately held companies. |
William D. Johnson Age:65 Director Since:May 2019 (Utility) Current Position:CEO and President, PG&E Corporation Prior Positions: Mr. Johnson served as President and CEO of the Tennessee Valley Authority (TVA) from 2012 to April 2019. Prior to his tenure at the TVA, Mr. Johnson was the Chairman, President and CEO of Progress Energy. Experience, Skills, and Expertise: Mr. Johnson brings over 20 years of utility experience and leadership as a utility industry executive. During his six-year tenure at TVA, he was responsible for leading the nation’s largest public utility in its mission of providing energy, environmental stewardship and economic development across a seven-state region. During Mr. Johnson’s time at TVA, the organization achieved the best safety records in its 85-year history and has been a perennial top decile safety performer in the utility industry. In that same period, retirement of more than half of TVA’s coal generation, resulting in a reduction of TVA’s carbon omissions by about 50% over the last decade. He was responsible for leading the generation of more than 50% of TVA’s energy from non-greenhouse gas emitting sources. He also oversaw TVA’s expansion into utility scale solar in recent years, with the addition of approximately 1,000 megawatts (mWs), and pursued the modernization of its hydro assets to increase the overall amount of renewable resources. TVA’s renewable portfolio includes almost 2,400 mWs of wind and solar and 5,800 mWs of hydro capacity. Throughout his career in the electric utilities industry, Mr. Johnson has collaborated closely with elected officials and other community leaders to deliver safe and reliable electricity to millions of customers. |
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Michael J. Leffell Age:60 Director Since:April 2019 Current Board Committees:Nominating and Governance (Chair); Compliance and Public Policy; Executive Current Position:Founder, Portage Partners LLC (a privately held company focused on sourcing, analyzing and monitoring non-traditional investment opportunities) and Chairman of Canoe Software (a financial technology company) Prior Positions: Prior to founding Portage Partners in 2010, Mr. Leffell was the Deputy Executive Managing Member of Davidson Kempner Capital Management, a global institutional investment management firm. Prior Public Board Service During the Past Five Years: Genco Shipping and Trading Limited (a publicly traded transportation services company) (2014 to 2016) Experience, Skills, and Expertise: Mr. Leffell has over 20 years of experience participating in the restructuring of multiple businesses under Chapter 11. In addition to serving as the Deputy Executive Managing Member of Davidson Kempner Capital Management, Mr. Leffell also co-managed the Distressed Investment strategy, including multiple positions in a broad range of large complex corporate restructuring and domestic and international bankruptcies that often implicated complex litigation. |
Kenneth Liang Age:57 Director Since:April 2019 Current Board Committees: Compensation; Finance Most Recent Position:Former senior Managing Director and Head of Restructurings, Oaktree Capital Management (a global alternative investment management firm with expertise in credit strategies) Prior Positions: From Oaktree’s formation in 1995 until June 2001, Mr. Liang was Oaktree’s General Counsel. Before that, he served as a Senior Vice President at TCW Group. Prior Public Board Service During the Past Five Years: Tribune Media (media/entertainment/real estate company) (2013 to 2015); STORE Capital Corporation (a real estate investment trust) (2012 to 2016) Other Board Experience: Mr. Liang served as chairman of the board of Excel Maritime (dry bulk shipping company) (2014 to 2018). He also served on the boards of Chassix (automotive parts company) (2016 to 2018) and of Pulse Electronics (mobile electronics company) (2015 to 2018). Mr. Liang has also served on the board of Flintridge Preparatory School (2012 to 2018). Experience, Skills, and Expertise: Mr. Liang was a senior Managing Director and Head of Restructurings at Oaktree Capital Management’s Opportunities Funds, Oaktree’s largest investment strategy fund. Mr. Liang retired from Oaktree in April 2018 after being with Oaktree since its inception over 20 years ago. Mr. Liang joined Oaktree at its formation in 1995 as an original equity holder and served as Oaktree’s General Counsel until June 2001. Mr. Liang has extensive U.S. and international experience as a significant stakeholder in prominent and complex restructurings of many troubled businesses inside and outside of Chapter 11 and in court-supervised reorganizations, including Enron, Energy Future Holdings, Tribune and Caesars Entertainment. Mr. Liang holds a J.D. from Georgetown University and a B.S. from the University of Southern California, has been a long-time California resident and has close family relatives who live in PG&E Corporation’s service area. |
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Dominique Mielle Age:50 Director Since:April 2019 Current Board Committees: Audit (Chair); Executive Most Recent Position:Former Partner and Senior Portfolio Manager, Canyon Partners LLC (an investment manager that specializes in value-oriented special situation investments for institutional investors) Other Current Public Company Boards: Anworth Mortgage Asset Corporation (mortgage REIT investment firm) since 2018 (serves on the compensation committee (chair), audit committee and nominating and corporate governance committee); Studio City International since 2018 (serves on the nominating and corporate governance committee (chair), compensation committee and audit and risk committee) Prior Positions: Ms. Mielle was a partner and senior portfolio manager at Canyon Partners, where she worked from 1998 to 2017. Before 1998, she worked at various investment banks, including Libra Investments, Lehman Brothers and Credit Lyonnais. Experience, Skills, and Expertise: Ms. Mielle has played key roles in complicated bankruptcies where public safety and the economic well-being of the public were critical issues requiring extensive engagement with government entities, regulatory agencies and affected communities. Ms. Mielle was a member of the creditors’ committee for the Commonwealth of Puerto Rico, and also served as a restructuring committee member of American Airlines, Continental Airlines, Delta Airlines, Northwest Airlines and United Airlines in the wake of the September 11 attacks. Ms. Mielle earned an MBA from Stanford University. She is a long-time California resident. |
Meridee A. Moore Age:61 Director Since:April 2019 Current Board Committees:Compensation (Chair); Executive; Finance; Nominating and Governance Current Position:Founder, CEO and Chief Investment Officer of Watershed Asset Management (a San Francisco-based alternative asset manager) Other Current Public Company Boards: Blackrock Capital Investment Corporation since 2017 (serves on the audit committee and governance & compensation committee) Prior Positions: Before founding Watershed Asset Management, Ms. Moore was a Partner and Portfolio Manager at Farallon Capital Management (a global institutional investment firm). Other Board Experience: Ms. Moore currently serves as a board member of Nextgen Climate America (NextGen Policy Center) (a California-based climate policy non-profit) (2014 to present) and as a director on the investment advisory board of Fiduciary Counselling Inc. Ms. Moore has served as a trustee of Right to Play International (2003 to 2018), Right to Play US (2004 to 2019), and Grace Cathedral (2011 to 2018). Ms. Moore also served on the boards of Morgans Hotel Group (2005 to 2007) and AMF Bowling Worldwide (2001 to 2003). Experience, Skills, and Expertise: Ms. Moore has over 25 years of investment and restructuring experience over a wide range of industries. She is the Founder, CEO and Chief Investment Officer of Watershed Asset Management, a San Francisco-based alternative asset manager. Watershed managed capital for institutional investors for 15 years. Ms. Moore has invested and participated in numerous restructurings in and out of Chapter 11, including PG&E Corporation’s restructuring in 2001. Ms. Moore is a long-time California resident. |
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Eric D. Mullins Age:56 Director Since:September 2016 Current Board Committees:Audit; Safety and Nuclear Oversight Current Position:Co-CEO of Lime Rock Resources, L.P. (private equity investment firm that acquires, operates, and improves oil and natural gas properties in the U.S.) since 2005 Other Current Public Company Boards:Anadarko Petroleum Company (independent oil and natural gas exploration and production company) since May 2012 (serves on audit committee (chair) and executive committee) Prior Positions: Prior to co-founding Lime Rock Resources, L.P. in 2005, Mr. Mullins worked in the investment banking division of Goldman Sachs & Co. for 15 years, most recently as managing director in the firm’s Energy and Power Group, where he led numerous financing, structuring, and strategic advisory transactions for public and private oil and gas exploration and production companies. Other Board Experience: Mr. Mullins currently serves as a member of the Baylor College of Medicine Board of Trustees. Experience, Skills, and Expertise: Mr. Mullins brings operational, business development, and mergers and acquisition experience in the energy sector, as well as director and audit committee experience from his other public company board service. He also brings strategic management, leadership, and corporate financial expertise developed as an executive in the investment banking industry working with both public and private companies in the natural resources and utilities sector. |
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Kristine M. Schmidt Age:55 Director Since:April 2019 Current Board Committees:Compliance and Public Policy (Chair); Executive; Nominating and Governance; Safety and Nuclear Oversight Most Recent Position:Former Chief Executive Officer of Peak Utility Services Group (utility services contractor) Prior Positions: Ms. Schmidt was the President, founder and owner of Swan Consulting Services (a consulting company that provides strategic, regulatory and advisory services to utilities and equipment and services related businesses in the electricity and natural gas utility industry) from 2015 to 2018. Before that, she was President of ITC Great Plains and Vice President at ITC Holdings (independent electric high voltage transmission owner and operator). Other Board Experience: Ms. Schmidt served as a member of the Western Energy Imbalance Market Governing Board (which has the primary governance responsibility and decisional authority for the interstate wholesale energy imbalance market in the western region). Ms. Schmidt also served on the board of Peak Utility Services Group in 2018. Experience, Skills, and Expertise: Ms. Schmidt has over 35 years of experience in the electricity industry, having worked for and consulted with some of the largest public utilities throughout the United States. Over the last 25 years, Ms. Schmidt’s experience was primarily in the regional wholesale market arena and high voltage transmission development and regulatory policies. The regional wholesale markets are critical across the United States to efficiently and cost-effectively integrate large scale renewables. Ms. Schmidt has served as a FERC Commissioner Advisor, addressing national policies and reforms resulting from the California Energy Crisis and FERC’s expanded authority from the Energy Policy Act, among other key policy issues. Ms. Schmidt was the Chair of the inaugural Western Energy Imbalance Market (WEIM) Governing Body, which promotes the integration of surplus renewables energy into the grid, and was a member of the board with governance responsibility over the wholesale energy imbalance market in the western region, including California. Ms. Schmidt was previously CEO of Peak Utility Services Group, a leading utility construction service provider. She was also a corporate officer with the nation’s largest independent high voltage transmission company, ITC Holdings Corporation, and the President of ITC Great Plains, which has the highest percentage of utility scale wind power in the nation. Ms. Schmidt has also held various senior management responsibilities for public utilities, including Xcel Energy, and served on the board of Peak Utility Services Group. |
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Alejandro D. Wolff Age:62 Director Since:April 2019 Current Board Committees:Compensation; Compliance and Public Policy Previous Position:Former Managing Director, Gryphon Partners (global advisory firm focused on emerging and frontier markets) Other Current Public Company Boards:Albemarle Corporation (public specialty chemicals company) since 2015 (serves on the Health, Safety and Environment committee and as chair of the executive compensation committee); Versum Materials (public specialty chemicals company) since 2016 (serves as the lead independent director and chair of the governance and nominating committee) Prior Positions: Mr. Wolff served in the U.S. State Department for 34 years, including serving as the U.S. Ambassador to the Republic of Chile from 2010 to 2013 and the U.S. Ambassador to the United Nations from 2005 to 2010. Other Board Experience: Mr. Wolff currently serves as a board member of JetSMART Holdings Limited (private airline operating in South America) (2017 to present). Mr. Wolff is also an advisory board member of the Counter Extremism Project. Experience, Skills, and Expertise: Alejandro D. Wolff brings decades of experience in high-level political, economic, and security issues from his 34-year career in the U.S. State Department. His has experience managing natural disaster, conflict, and terrorist-response situations, and a successful negotiating record of bridging differences among numerous constituencies with competing interests. As Ambassador to the Republic of Chile, Mr. Wolff promoted U.S.-origin renewable energy alternatives for Chile, including solar power. Mr. Wolff currently serves as a director of Albemarle Corporation (“Albemarle”), a global specialty chemicals company. As a member of Albemarle’s Health, Safety & Environment Committee, Mr. Wolff brings considerable knowledge of clean energy, sustainability, renewable energy and electricity storage. Mr. Wolff also serves as the Lead Independent Director and Chair of the Corporate Governance and Nominating Committee of Versum Materials, an electronic materials company with operations in California, and as a director of JetSMART Holdings, an airline in South America. Mr. Wolff was a long-term resident of California, graduated from the University of California, Los Angeles, and continues to have close ties to California. |
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PG&E Corporation’s and the Utility’s corporate governance practices provide a framework within which the Boards and management can pursue strategies that will drive long-term value for the companies and their respective shareholders. The foundation for these practices is the independent nature of each Board and its fiduciary responsibility to the company’s shareholders. These practices are reviewed against industry trends and input from the companies’ institutional investors and other shareholders.
CORPORATE GOVERNANCE GUIDELINES
Corporate governance practices are documented in Guidelines that are adopted by the Boards of PG&E Corporation and the Utility. The Guidelines are reviewed and updated from time to time as recommended by the Nominating and Governance Committee, and were last updated in April 2019. Other corporate governance practices also are set forth in the charters of the various committees of the Corporation and Utility Boards (see “Website Availability of Governance Documents” on page 105).
Chair of the Board – Duties; Executive Session Meetings
At both PG&E Corporation and the Utility, the Chair of the Board is a member of the Board. The Chair’s primary duty is to preside over meetings of the Board, including special meetings. The Chair also is responsible for setting meeting agendas and representing the Board in any meeting with major shareholders. Additionally, the Chair is consulted regarding Board nominees and the composition and chairmanship of Board committees.
At both companies, the independent directors meet at each regularly scheduled Board meeting in executive session. These executive session meetings generally are chaired by the independent Chair of the Board (or if the Chair is not independent, by the independent lead director). Nora Mead Brownell is PG&E Corporation’s independent non-executive Chair of the Board, and Jeffrey L. Bleich is the Utility’s independent non-executive Chair of the Board. Ms. Brownell chairs executive session meetings of the Corporation’s independent directors as well as concurrent executive session meetings of the Corporation’s and the Utility’s independent directors; Mr. Bleich chairs executive session meetings of the Utility’s independent directors only. The independent Chair establishes the agenda for each executive session meeting, and also determines which, if any, other individuals (including members of management) attend each meeting.
Chair of the Board and CEO Positions
Each company’s Board maintains a flexible policy regarding board leadership structure, including whether the offices of Chair and CEO (or President, if the office of CEO is not filled) should be separate and, if the roles are separate, whether the Chair should be elected from management or from among the non-management directors. The Board regularly assesses the appropriateness of the Board’s leadership structure, given the specific facts at the time of assessment.
PG&E Corporation
At PG&E Corporation, the positions of Chair and CEO have been separate since March 1, 2017. In April 2019, Nora Mead Brownell became PG&E Corporation’s independent non-executive Chair of the Board. Separating the roles of Chair and CEO allows the CEO (Bill Johnson) to continue to focus on the business of PG&E Corporation and its strategic priorities during this time of transition, while the Chair leads the Board of Directors. Among other things, Ms. Brownell’s extensive utility, regulatory, and leadership experience will allow her to support the CEO during this time of transition, while serving as an effective link between the Board and the CEO.
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Pacific Gas and Electric Company
At the Utility, the positions of chairChair and principal executive officer have been separated since January 2008. Barry Lawson Williams has beenIn April 2019, Jeffrey L. Bleich became the independent non-executive ChairmanChair of the Board since May 2014, and Forrest E. Miller has been appointed to serve in that capacity following Mr. Williams’ retirement at the adjournmentBoard. Nickolas Stavropoulos retired as President of the 2017 Annual Meetings. Nickolas Stavropoulos serves asUtility on August 30, 2018. The office of President has not been filled since that time, and since April 12, 2019, the functions of the office of Utility President have been allocated among the following three individuals: Michael Lewis (Senior Vice President, Electric Operations), Jesus Soto, Jr. (Senior Vice President, Gas Operations), and Jim Welsch (Senior Vice President and COO, and has been the soleChief Nuclear Officer). Under this interim structure, all three individuals are principal executive officer since March 1, 2017. Previously, Mr. Stavropoulos had sharedofficers of the principal executive officer role with Geisha J. Williams starting in August 2015. SeparatingUtility. Continuing to separate the roles of chair and principal executive officer continues to be appropriate given, among other things, the need for continuity during a transition in the Utility’s principal executive officer position. By separating the chairChair and principal executive officer roles preserves continuity during this period of transition at the Utility. In addition, the Utility will beis able to benefit from the complementary skill sets and business experiences of the independent non-executive chairmanChair (Mr. Williams currently and then Mr. Miller)Bleich) and the President (Mr. Stavropoulos)principal executive officers (Messrs. Lewis, Soto, and Welsch).
As a subsidiary of PG&E Corporation, the Utility also benefits from the fact that Anthony F. Earley, Jr. and Geisha J. Williams will continue to be membersMs. Brownell is a member of the Utility Board, as well as the fact that Mr. Earley servesfrom her perspective as Executive Chair of the Board of PG&E Corporation and Ms. Williams serves as CEO and President of the Corporation.Chair. Pursuant to the CPUC’s affiliate rules, Mr. Earley and Ms. Williamsno individual may not serve as Chair of the Board, CEO, or President, or in a functionally equivalent position, of both PG&E Corporation and the Utility.
Independent Lead Director
At each company, if the Chair is not independent, then the independent directors must elect an independent lead director from among the independent chairs of the standing PG&E Corporation and Utility Board committees. Currently, each company has an independent Chair, and neither company has an independent lead director.
For more information on the criteria and specific duties of a lead director, please see each company’s Corporate Governance Guidelines (see “Website Availability of Governance Documents” on page 105).
BOARD AND DIRECTOR GENERAL INDEPENDENCE AND QUALIFICATIONS
On both PG&E Corporation’s Board and the Utility’s Board, at least 75 percent of the directors are independent, as required by each company’s Guidelines. The definitions of “independence” are identical for each company, are set forth in each company’s Guidelines, and reflect the applicable NYSE and NYSE MKT definitions. Each company’s Guidelines are available on the company’s website (see “Website Availability of Governance Documents” on page 82)105).
A majority of PG&E Corporation’s directors also are independent as defined by the NYSE. The Utility Board is exempt from NYSE MKTAmerican rules requiring that at least a majority of the directors meet the stock exchange’s definition of “independent director” because PG&E Corporation holds approximately 96 percent of the voting power of the Utility and the Utility is a “controlled” subsidiary.
The Boards of PG&Ethe Corporation and the Utility have affirmatively determined that each of the following directors and director nominees is independent according to the applicable company’s Guidelines: Lewis Chew,Richard R. Barrera, Jeffrey L. Bleich, Nora Mead Brownell, Frederick W. Buckman, Cheryl F. Campbell, Fred J. Fowler, Maryellen C. Herringer,Michael J. Leffell, Kenneth Liang, Dominique Mielle, Meridee A. Moore, Eric D. Mullins, Kristine M. Schmidt, and Alejandro D. Wolff. PG&E Corporation and the Utility also have determined that from January 1, 2018 to the date of this Proxy Statement, each of the following past directors was independent while serving on the Boards, according to the applicable company’s Guidelines: Lewis Chew, Jeh C. Johnson, Richard C. Kelly, Roger H. Kimmel, Richard A. Meserve, Forrest E. Miller, Eric D. Mullins,Benito Minicucci, Rosendo G. Parra, Barbara L. Rambo, and Anne Shen Smith,Smith. (Jeh C. Johnson, who resigned as a director of the Utility on December 7, 2017, served on the Board of the Corporation as of January 1, 2018 but did not stand for reelection at the Corporation’s 2018 annual meeting of shareholders and Barry Lawson Williams.served through the last day of his term, May 22, 2018. Roger H. Kimmel served on the Boards of the Corporation and the Utility but resigned from both Boards on January 14, 2019. The remaining past directors left the Boards in April 2019.)
In determiningassessing each director’s orand director nominee’s independence, the Boardscompanies considered transactions between PG&E Corporation or the Utility and their respective directors/directors and director nominees, and their immediate family members, and certain entities with which the directors/directors, director nominees, or their immediate family members were affiliated. These transactions primarily involved (a) the Utility’s provision of utility services at rates or charges fixed in conformity with law or governmental authority and (b) membership fees paid to a non-profit entity affiliated with one of the companies’ directors (in amounts below the $10,000 threshold for Audit Committee review pursuant to the companies’ Related Party Transaction Policy), which the Boards determined were not material and did not affect the director’s/director’s or director nominee’s independence.
There are no family relationships between any director of the Corporation or the Utility, executive officer of the Corporation or the Utility, or person nominated or chosen to become a director or executive officer of the Corporation or the Utility.
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The Boards of PG&E Corporation and the Utility have numerous permanent standing committees, which support each Board’s basic responsibilities. Each Board also may establish temporaryad hoccommittees, subcommittees, or other informal governing bodies from time to time.
Each Board’s permanent standing committees are described below. For each of these committees, the applicable company’s Board has adopted a formal charter that sets forth the committee’s duties and responsibilities; current copies of the charters are available on the companies’ websites (see “Website Availability of Governance Documents” on page 82)105).
Where a committee exists at PG&E Corporation only, that committee’s responsibilities include assisting and advising the Utility Board on matters within the committee’s scope of responsibility.
Committee Name(1) | Company | Primary Duties/Scope of Responsibility | |
Executive | PG&E Corporation and Utility | Exercises powers and performs duties of the applicable Board, subject to limits imposed by state law. | |
Audit | PG&E Corporation and Utility | Oversees and monitors: | |
• | Integrity of the company financial statements, and financial and accounting practices | ||
• | Internal controls over financial reporting, and external and internal auditing programs | ||
• | Selection and oversight of the companies’ Independent Auditor | ||
• | Compliance with legal and regulatory requirements, in concert with other Board committees | ||
• | Related party transactions | ||
• | With the assistance of other Board committees, risk management and assessment | ||
Compensation | PG&E Corporation | Oversees matters relating to compensation and benefits, including: | |
• | Compensation for non-employee directors | ||
• | Development, selection, and compensation of policy-making officers | ||
• | Annual approval of the corporate goals and objectives of the PG&E Corporation CEO and the Utility CEO (or if the Utility CEO office is not filled, any Utility | ||
• | Management evaluation and officer succession | ||
• | Employment, compensation, and benefits policies and practices | ||
• | Potential risks arising from compensation policies and practices | ||
• | Retention and oversight of the Committee’s independent compensation consultants, legal counsel, or other advisors |
Compliance andPublic Policy | PG&E Corporation | Coordinates the compliance-related oversight of the various committees of the Boards, including: | |
• | The companies’ compliance and ethics program | ||
• | Compliance with laws, regulations, and internal policies and standards | ||
• | Internal or external compliance reviews, investigations, or audits | ||
Oversees public policy, sustainability, and corporate responsibility issues that could affect customers, shareholders, or employees, including: | |||
• | Energy and utility policy positions | ||
• | Environmental protection, quality, and compliance | ||
• | Community relations programs, activities, and contributions | ||
• | Political contributions and political activities | ||
• | Workforce development and diversity and inclusion | ||
• | Supplier diversity | ||
Finance | PG&E Corporation | Oversees matters relating to financial and investment planning, policies, and risks, including: | |
• | Strategic plans and initiatives | ||
• | Financial and investment plans and strategies | ||
• | Dividend policy | ||
• | Proposed capital projects and divestitures | ||
• | Financing plans | ||
• | Use of derivative instruments | ||
• | Major commercial banking, investment banking, financial consulting, insurance, and other financial relationships | ||
• | Major financial risk exposures |
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Committee Name(1) | Company | Primary Duties/Scope of Responsibility | |
Nominating andGovernance | PG&E Corporation | Oversees matters relating to selection of directors and corporate governance, including: | |
• | Recommending Board candidates, including reviewing skills and characteristics required of Board members | ||
• | Selection of the chairmanship and membership of Board committees, and the nomination of a lead director of each company’s Board, if necessary | ||
• | Corporate governance matters, including the companies’ governance principles and practices, and the review of shareholder proposals | ||
• | Evaluation of the Boards’ performance and effectiveness | ||
Safety and Nuclear | PG&E Corporation and Utility | Oversees matters relating to safety, operational performance, and compliance issues related to the Utility’s nuclear, generation, gas and electric transmission, and gas and electric distribution operations and facilities (“Operations and Facilities”), including: | |
• | Principal risks arising out of the Operations and Facilities, the process used by management to analyze and identify these risks, and the effectiveness of programs to manage or mitigate these risks | ||
• | The Corporation’s and the Utility’s goals, programs, policies, and practices with respect to promoting a strong safety culture | ||
• | Periodically visiting the Utility’s nuclear and other operating facilities |
(1) | This chart provides information regarding duties for the Boards’ permanent standing committees. Each of the Corporation and Utility Boards also has established an ad hoc committee to assist the Board and its committees in a review of issues related to the Chapter 11 Cases. | |
(2) | Established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. | |
(3) | Each year, the Finance Committee presents for the PG&E Corporation and the Utility Boards’ review and/or concurrence (1) a multi-year financial outlook for the Corporation and the Utility that, among other things, summarizes projected financial performance and establishes the basis for the annual |
COMMITTEE MEMBERSHIP, INDEPENDENCE, AND QUALIFICATIONS
The current membership of PG&E Corporation’s and the Utility’s standing Board committees as of the date of this Proxy Statement is shown in the table below.
Compliance | Nominating | Nuclear, | |||||
and Public | and | Operations, | |||||
Executive | Audit | Compensation | Policy | Finance | Governance | and Safety | |
Committees | Committees | Committee | Committee | Committee | Committee | Committee | |
Independent Directors: | |||||||
L. Chew(1)(2) | X | X | |||||
F. J. Fowler | X | X | |||||
M. C. Herringer(3) | X | X | X | ||||
R. C. Kelly(1)(4) | X | X | X | ||||
R. H. Kimmel(5) | X | X | X | ||||
R. A. Meserve | X | X | X | ||||
F. E. Miller(1)(6) | X | X | |||||
E. D. Mullins(1) | X | ||||||
R. G. Parra | X | X | X | ||||
B. L. Rambo | X | X | X | ||||
A. S. Smith | X | X | X | ||||
B. L. Williams(1)(7) | X | X | |||||
Employee Directors: | |||||||
A. F. Earley, Jr. | |||||||
N. Stavropoulos(8) | X | ||||||
G. J. Williams(8)(9) | X | ||||||
Number of Meetings in 2016 (PG&E Corporation/ Utility where applicable) | 0/0 | 5/5 | 5 | 4 | 5 | 8 | 6 |
Executive Committees | Audit Committees | Compensation Committee | Compliance and Public Policy Committee | Finance Committee | Nominating and Governance Committee | Safety and Nuclear Oversight Committees | |
Independent Directors: | |||||||
Richard R. Barrera | X | X | |||||
Jeffrey L. Bleich(1) | X | X | X | ||||
Nora Mead Brownell(2) | X | X | |||||
Frederick W. Buckman | X | X | |||||
Cheryl F. Campbell | X | X | X | ||||
Fred J. Fowler | X | X | |||||
Michael J. Leffell | X | X | |||||
Kenneth Liang | X | X | |||||
Dominique Mielle(3) | X | ||||||
Meridee A. Moore | X | X | X | ||||
Eric D. Mullins(3) | X | X | |||||
Kristine M. Schmidt | X | X | X | ||||
Alejandro D. Wolff | X | X | |||||
Employee Directors: | |||||||
William D. Johnson(4) | X | ||||||
Number of Meetings in 2018 (PG&E Corporation/Utility where applicable) | 0/0 | 8/8 | 3 | 6 | 6 | 3 | 6/6 |
Committee Chair
(1) | Chair of the Utility Executive Committee only. Independent non-executive Chair of the Utility Board. | |
(2) | Chair of the Corporation Executive Committee only. Independent non-executive Chair of the PG&E Corporation Board. | |
(3) | Independent audit committee financial expert, as defined by the SEC and applicable stock exchanges, and as determined by the Boards. Background information on each audit committee financial expert can be found in the director biographies beginning on page | |
(4) | ||
Member of | ||
Committee Membership Requirements
Each of the permanent standing committees (other than the Executive Committees) is composed entirely of independent directors, as defined in the applicable company’s Guidelines and the Committee’s charters.committee’s charter. In addition, the Audit Committees, the Compensation Committee, and the Nominating and Governance Committee are composed entirely of independent directors, as required and defined by the NYSE. Because the Utility is a “controlled” subsidiary of PG&E Corporation for purposes of the NYSE MKTAmerican standards, the Utility is not subject to NYSE MKTAmerican rules that otherwise would require that the Utility’s Board committees responsible for executive compensation and governance be comprised of “independent” directors, as defined by NYSE MKT,American, and would impose requirements on the Utility’s director nomination and compensation-setting processes.
Each member of the Audit Committees and each member of the Compensation Committee also satisfysatisfies heightened independence rulesstandards established by SEC rules and applicable stock exchange requirements regarding independence of audit committee members and compensation committee members. Each member of the Audit Committees also is financially literate, and four members of each Audit Committee are identified asliterate. Each “audit committee financial experts”expert” is identified in the above table, and havehas accounting and related financial management expertiseexpertise.
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Compensation Committee Interlocks and financial sophistication.Insider Participation
During fiscal year 2018, the members of the Compensation Committee were Forrest E. Miller (Chair), Richard C. Kelly, Rosendo G. Parra and Barbara L. Rambo. There were no impermissible interlocks or inside directors on the Compensation Committee.
DIRECTOR SERVICE ON OTHER PUBLIC COMPANY BOARDS
If a director is considering serving on the board of another public company (in addition to PG&E Corporation, the Utility, and their respective subsidiaries), that director must inform the Chair of the Nominating and Governance Committee and the Chair of the Board of the Corporation and/or the Utility, as applicable, before accepting membership on any such board. Unless otherwise approved by the applicable Board, (1) a director may not serve on more than three public company boards (in addition to the Corporation and Utility Boards), and (2) a director who is the principal executive officer of a public company (including the Corporation and the Utility) may not serve on more than two public company boards in addition to the board of his or her employer. For these purposes, the Boards of the Corporation and the Utility would count as one board.
If an Audit Committee member simultaneously serves on the audit committees of three or more public companies other than PG&E Corporation, the Utility, and their respective subsidiaries, that Committee member must inform the applicable company’s Board. In order for that member to continue serving on the Audit Committees, each Board must affirmatively determine that the simultaneous service does not impair that committee member’s ability to serve effectively on the applicable Audit Committee.
All members of the Boards are in compliance with the above policies regarding service on other public company boards, as well as on audit committees of other public company boards.
DIRECTOR MEETING ATTENDANCE DURING 20162018
During 2016,2018, there were 1423 meetings of the PG&E Corporation Board. Each of the incumbent Corporation directordirectors attended 92%95% or more of the aggregate of all meetings of the Corporation Board and of the Corporation Board committees on which that director served during 2016.2018.
During 2016,2018, there were 1323 meetings of the Utility Board. Each of the incumbent Utility directordirectors attended 85%95% or more of the aggregate of all meetings of the Utility Board and of the Utility Board committees on which that director served during 2016.2018.
Each member of the Board of PG&E Corporation or the Utility is expected to attend that company’s annual meetings of shareholders. AllWith the exception of one director, all 12 then-current directors attended the Corporation’s 20162018 annual meeting, and all 1312 then-current directors attended the Utility’s 20162018 annual meeting. Jeh Johnson was a member of the PG&E Corporation Board at the time of the 2018 annual meeting (which was the last day of his term), but was not renominated for election at, and did not attend, that meeting.
As part of the companies’ commitment to change, the Boards of PG&E Corporation and the Utility conducted a board refreshment process to add fresh perspectives to the Boards to help address the serious challenges the companies face now and in the future. Although the Boards of the Corporation and the Utility historically sought to balance board refreshment with established board experience, the Corporation and the Utility are facing extraordinary challenges resulting from the 2017 and 2018 Northern California wildfires. In light of these extraordinary challenges, the Corporation and the Utility determined to make substantial changes to their respective Boards.
On January 4, 2019, the Corporation Board issued a press release announcing that, as part of a series of changes to reinforce the companies’ commitment to safety and improvement, the Corporation Board was conducting a board refreshment process that included searching for new directors at both the Corporation and the Utility. The Nominating and Governance Committee engaged Spencer Stuart, a leading national search firm, to assist the Nominating and Governance Committee in identifying and evaluating potential new director nominees.
As a result of the board refreshment process, in April 2019, eleven new directors joined two continuing directors on the Boards of PG&E Corporation and the Utility, with eight of ten then-incumbent directors stepping down. Mr. Johnson joined the Utility Board in May 2019.
DIRECTOR NOMINATION PROCESSThe following sections of this Proxy Statement describe PG&E Corporation’s and the Utility’s ordinary course director nomination process, which differs in some respects from the substantial board refreshment process culminating in April 2019.
ManagementCompany Nominees – Characteristics and Qualifications
TheIn general, the Boards of PG&E Corporation and the Utility each select nominees for director based on recommendations received from the Nominating and Governance Committee. The Committee’s recommendations are based upon a review of the qualifications of Board candidates and consultation with the Chair of the Board of the Corporation or the Utility, as applicable, and with the Corporation CEO.
The Nominating and Governance Committee’s goal is to create for each company a balanced and multi-disciplinary Board composed of qualified, dedicated, ethical, and highly regarded individuals who have experience relevant to the company’s operations, understand the complexities of the company’s business environment, and possess capabilities to provide valuable insight, judgment, and oversight. The Committee also considers overall independence of the Boards, as defined in each company’s Guidelines.
In conducting this review, theThe Committee considers factors such as diversity, age, skills, and any other factors that it deems appropriate, and annually reviews and recommends to the Boards the appropriate skills and characteristics required of Board members, given the current composition and needs of each company’s Board. In addition to the skills and characteristics noted above, for the 2017 nominees,Since 2018, the Committee alsohas considered specific safety experience as an assessment factor in its director nomination process, and the extent to which the nominees (both individually and as a group) possessedpossess the experience, skills, and expertise shown in the chart on page 10.19. In its consideration of diversity, the Nominating and Governance Committee and the Boards seek to include a diversity of backgrounds, perspectives and skills among the Boards’ members, as well as applicable legal requirements. The Nominating and Governance Committee reviews the composition of the companies’ Boards and Board committees, including with respect to the companies’ commitment to the diversity of the Boards.
Under each company’s Board of Directors retirement policy, the Boards may not designate any person as a candidate for election or re-election as a director after such person has reached the age of 72,75, unless the applicable company’s Board determines that it is in the best interests of the company to re-nominate that director. Under this policy, the Boards also consider tenure, and generally target an average tenure for all directors of 10 years or less. In general, the Nominating and Governance Committee will recommend, and the Boards will re-nominate, an existing director for re-election if the Committee and the BoardBoards each believe that the individual would continue to be a productive and effective contributor to the Board.Boards.
Ms. Herringer, Dr. Meserve, and Mr. Williams each are at least 72 years old. Ms. Herringer and Mr. Williams are retiring from the PG&E Corporation and Utility Boards effective upon the adjournment of the 2017 Annual Meetings. However, Dr. Meserve is nominated for re-election to the Boards at the 2017 Annual Meetings. Given the potential challenges associated with the Utility’s planned retirement of its nuclear facilities at the expiration of their current operating licenses, as well as the increasing focus by governmental entities on the Utility’s programs and practices with respect to safety, risk, compliance, and other related areas, the PG&E Corporation and Utility Boards have determined that it would be in the best interests of each company to nominate Dr. Meserve for re-election at the 2017 Annual Meetings, so that he can continue to provide leadership to the Nuclear, Operations, and Safety Committee in his role as Chair of that committee and the companies can continue to benefit from his unique experience and expertise in the fields of nuclear power, energy policy, and safety.Director Nominee Selection Process
If elected as directors at the 2017 Annual Meetings, Jeh C. Johnson and Geisha J. Williams will fill the vacancies on the PG&E Corporation Board resulting from Ms. Herringer’s and Mr. Williams’ retirement, and Secretary Johnson will fill one of the two resulting vacancies on the Utility Board (Ms. Williams already is a member of the Utility Board).
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Company Nominees – Sources
As ofshown in the date of this Proxy Statement, if elected,diagram above, the average tenure of the director nominees would be 5.5 years for PG&E Corporation and 5.4 years for the Utility, and the average age of the director nominees would be 63.1 years for PG&E Corporation directors and 62.8 years for Utility directors.
Although there is no set policy regarding diversity of nominees for director, the Nominating and Governance Committee seeks a range of different backgrounds, perspectives, skills, and experiences. The Committee and the Boards annually review the extent to which diverse backgrounds, perspectives, skills, and experiences are represented by the members of the Boards. The director nominees for each company reflect this diversity. Of the 13 PG&E Corporation director nominees, approximately 54 percent are diverse (3 are female, 2 are African-American, 2 are Asian or Asian-American, and 2 are Hispanic). Of the 14 Utility director nominees, approximately 50 percent are diverse (3 are female, 2 are African-American, 2 are Asian or Asian-American, and 2 are Hispanic).
Management Nominees - Sources
The Nominating and Governance Committee accepts recommendations for director nominees from a variety of sources, including independent executive search firms, shareholders, management, and Board members. The Committee uses the same review criteria to review all candidates recommended for nomination at the annual meetings. In 2016, the Committee retained Diversified Search and Kroll Inc. to assist the Committee’s evaluation of certain potential director nominees,meetings, including candidates recommended by performing appropriate due diligence on such candidates.shareholders.
Shareholders may recommend a person for the Committee to consider as a nominee for director of PG&E Corporation or the Utility, as applicable, by writing to that company’s Corporate Secretary. Each such recommendation must include:
1. | A brief description of the candidate, |
2. | The candidate’s name, age, business address, and residence address, |
3. | The candidate’s principal occupation and the class and number of shares of the company’s stock owned by the shareholder and the candidate, |
4. | Any other information that would be required under the rules of the SEC in a proxy statement listing the candidate as a nominee for director, and |
5. | Any material interest that the shareholder has in the candidate’s nomination. |
Recommended candidates may be required to provide additional information. The companies also may request additional information regarding the candidate or the shareholder, consistent with the information requirements applicable to shareholder nominations.
The following nominees for election at the 2019 Annual Meetings who have not previously stood for election were recommended by the Corporation shareholders: Barrera, Campbell, Brownell, Buckman, Leffell, Liang, Mielle, Moore, Schmidt, and Wolff. The following nominees for election at the 2019 Annual Meetings who have not previously stood for election were initially identified by the Nominating and Governance Committee’s independent executive search firms: Bleich and Johnson.
Shareholder Nominations
On February 17, 2016, the PG&E Corporation Board adopted proxy access bylaw provisions that permit shareholders owning 3 percent or more of the Corporation’s outstanding common stock for at least three years to nominate the greater of two directors or 20 percent of the Board, and to include these nominees in the Corporation’s proxy materials. The number of shareholders who may aggregate their shares to meet the ownership threshold is limited to 20. Nominations are subject to the eligibility, procedural, and disclosure requirements set forth in the Corporation’s Bylaws.bylaws.
Shareholders of either company who wish to nominate directors directly at an annual meeting in accordance with the procedures in the applicable company’s bylaws should follow the instructions under “2018“2020 Annual Meetings - Can shareholders introduce proposals (other than proxy access proposals, but including director nominations) during the 20182020 annual meetings?” on page 89.106.
RISK MANAGEMENTBOARD AND COMMITTEE SELF-EVALUATIONS
The Nominating and Governance Committee oversees the process for evaluating and assessing the performance of the PG&E Corporation and Utility Boards, as applicable, including Board committees. At least annually, each Board or the Nominating and Governance Committee conducts an evaluation to determine whether the applicable Board as a whole and its committees are functioning effectively.
If the evaluation is conducted by the Nominating and Governance Committee, that Committee presents its conclusions to the applicable full Board for review and concurrence.
For each of the Corporation and the Utility, continuethe Board evaluation includes an assessment of the Board’s contribution as a whole and of specific areas in which the Board and/or management believes that a better contribution could be made. The evaluation also considers any feedback that might be received from individual directors regarding the performance of the chair. The Audit Committees, the Compensation Committee, the Compliance and Public Policy Committee, the Finance Committee, the Nominating and Governance Committee, and the Safety and Nuclear Oversight Committees conduct annual self-evaluations. The Nominating and Governance Committee may request the results of any Board committee evaluation for consideration in the Board evaluation.
2019 Joint Proxy Statement | 38 |
The Nominating and Governance Committee annually considers the format of the evaluations, including whether a third-party facilitator should be used. Since 2015, the evaluation process has included:
1. | One-on-one interviews with each director to solicit each director’s input regarding Board and committee performance. Interview topics also address the annual performance of the PG&E Corporation CEO and the Utility Principal Executive Officer(s). The Chair of the Nominating and Governance Committee and the Chairs of the Boards conduct the one-on-one interviews with each director. |
2. | The Chair of the Nominating and Governance Committee and the Chairs of the Boards provide Board Committee feedback to each Committee Chair. |
3. | The Chair of the Nominating and Governance Committee, the Chairs of the Boards, and the PG&E Corporation CEO discuss the results of the one-on-one interviews. |
4. | Each Committee and the full Board conduct separate self-evaluations that include actionable follow-up items for the coming year. |
Since the San Bruno tragedy in 2010, the Boards have continuously sought to reviewenhance the quality of oversight for risk management, compliance, and refinesafety. In addition to receiving regular deep dive reviews of enterprise-level risks, risk management at the companies has transitioned from a largely qualitative approach to a quantitative one. This approach continues to evolve with the companies’development and use of operational risk management programs. modeling to support data-driven decision making – a direction supported by the CPUC.
In 2011,recent years, that rigorous strategic process has begun to explicitly recognize risks from a changing climate, including heat waves, more frequent and extreme storms and wildfires, drought, subsidence, and rising sea levels. In 2017, we launched an array of foundational work to help the companies expanded their Enterprise Risk Management programUtility anticipate and plan for changing weather and climate-change related events.
In 2018, the Utility engaged independent experts to examine all enterpriseadvise on best practices in wildfire safety. Recommendations will inform the prioritization and operational company risks,resourcing of critical risk mitigation work and to increase Board review of risk management. The program was renamed as the Enterprise and Operational Risk Management (“EORM”) program in 2013 to reflect its expanded scope. At that time, risk management was integratedwill feed into the companies’ planning and budgeting process,next Wildfire Mitigation Plan to be filed with the CPUC, which leads to the identification of specific enterprise risks for review and oversight by the Corporation and Utility Boards.now is an annual requirement.
As described below, the companies’ risk management governance structures allow risks to be investigatedassessed both under a Board-directed review process and also from a “bottoms-up” approach that allows operational experts to add their knowledge and identify emerging issues for the companies.
Further, and as described more fully on pages 39–41, the companies have also strengthened board and management-level duties with regards to related aspects of risk oversight and management, including board oversight for compliance and ethics, and safety.
Board-Level Duties
As part of their oversight functions, theThe Boards generally oversee the companies’ risk management policies and programs; however,programs and management has day-to-day responsibility for assessing and managing exposure to various risks.
Enterprise risks are reviewed annually by the Boards’ Audit Committees, and oversight for specific risk categories is allocated to various Board committees (and this allocation is reviewed once every 12 months), consistent with the substantive scope of each committee’s charter. Each such committee provides a report of its activities to the applicable Board.
The Boardsspecific allocation of Board-level risk oversight was last reviewed by the Audit Committees in 2018, resulting in (1) reassignment of oversight for Climate Resilience risk to the Safety and their respective committees have specificNuclear Oversight (SNO) Committees from the Finance Committee, (2) the addition of the following risks to the list of top enterprise risks explicitly assigned to the oversight of Board committees: distribution overhead conductor, motor vehicle safety, and transmission overhead conductor, and (3) renaming of various risk categories. Generally the SNO Committees are allocated oversight responsibility for risk management inoperational risks, and the Finance Committee is allocated oversight responsibility for business and financial risks. Most recently, the committees have been allocated oversight responsibility for the following areas:types of enterprise risks:
• |
• | Finance Committee |
The Boards and their respective committees also have specific oversight responsibility for risk management in the following additional areas:
Other risk oversight responsibilities also have been allocated, consistent with the overall substantive scope and duties of each Board and their respective committees.
This allocation of Board-level risk oversight was last reviewed by the Audit Committees the Compliancein April 2018, and Public Policy Committee, and the Nuclear, Operations, and Safety Committeeis scheduled for review again in October 2016.2019.
The Boards’ role in risk oversight has had no significant effect on either Board’s leadership structure.
Management-Level Duties
Management has the day-to-day responsibility for identifying, assessing, and managing PG&E Corporation’s and the Utility’s exposure to various risks. Currently, risk is managed in three broad categories: enterprise and operational risk (e.g., public and employee safety, customer service, and other operational risks), compliance risk (e.g., legal and regulatory requirements), andrisks. These risks range from asset-related risks to market and credit risks to public, employee, and contractor safety risks. The Chief Risk Officer’s organization provides the framework to assess risks and to facilitate management decision making.
For enterprise and operational risks, the EORM program specifies the use of a risk (e.g.assessment methodology called the Bowtie Analysis to facilitate the calculation of a risk score, which reflects the probability of the risk event occurrence given the historical frequency of key risk drivers and the potential consequences of the risk event. Risk consequences are measured in terms of potential impacts to safety (public, employee, or contractor), energy commodity risk).gas or electric reliability, the environment, and the company’s financials. The risk scoring methodology assigns a 50 percent weighting to potential safety consequences to ensure that top safety risks receive senior management’s attention.
The risk score then serves as a baseline from which to assess the need for further risk reducing actions and to assess the effectiveness of those actions over time. The goal of the EORM program is to demonstrate measurable risk reduction across the portfolio of enterprise and operational risks.
With respect to supporting the Boards’ oversight activities:
Compensation Risk Analysis
As discussed in more detail in the CD&A, the Compensation Committee’s independent compensation consultant assists PG&E Corporation and the Utility with a review of the design of the companies’ incentive plans relative to general compensation plan risk factors (or the potential for unintended consequences).
Compliance and Ethics
During 2015, as part of PG&E Corporation’s and the Utility’s commitment to strengthen their compliance and ethics program and performance, the companies restructured the governance for managing compliance and ethics to highlight and delineate more clearly the responsibilities for the implementation, coordination, and monitoring of their compliance and ethics program.
Board-level oversight is shared by the Boards and their committees. The Compliance and Public Policy Committee coordinates the compliance-related oversight of the Boards, including, but not limited to: overseeing and evaluating the effectiveness of the companies’ compliance and ethics program; reviewing periodic reports from management about the companies’ compliance with laws, regulations, and internal policies and standards; and monitoring that management consistently communicates its commitment to an effective compliance and ethics program. The Audit Committees generallyalso assist the Boards with monitoring and overseeing compliance with legal and regulatory requirements, including discussing with management the companies’ programs to monitor compliance with laws, regulations, and internal policies and standards. The Compliance and Public Policy Committee provides further assistance for these Board-level oversight duties, including overseeing and evaluating the effectiveness of the companies’ compliance programs, reviewing periodic reports from management regarding compliance status and potential issues, and monitoring that a consistent commitment to effective compliance programs is conveyed to employees, contractors, and other relevant stakeholders. The Audit Committees also specifically review legal and regulatory matters that may impact the companies’ financial statements. The Safety and Nuclear Operations, and Safety Committee reviewsOversight Committees review the companies’ significant compliance risks, including those risks and issues related to the Utility’scompanies’ nuclear, generation, gas and electric transmission, and gas and electric distribution operations and facilities.
This compliance governance structure helps promote a consistent approach to compliance and ethics across Board committees and the companies. The Compliance and Public Policy Committee works with management to make sure that the appropriate reportsregularly view and materials regardingdiscuss compliance and ethics issues, are reviewedincluding but not limited to reviews or reported compliance violations and discussed on a regular basis.employee misconduct. The Audit Committees, the Compliance and Public Policy Committee, and the Safety and Nuclear Operations, and Safety CommitteeOversight Committees meet jointly at least annuallytwice a year to, among other things, coordinate and discuss the companies’ compliance and ethics program and monitor that all significant compliance and ethics issues are addressedreviewed and considered by the appropriate Board committees.
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At the management level, the companies’ Chief Ethics and Compliance Officer (CECO), in partnership with the lines of business, has day-to-day responsibility for overseeing and monitoring the company-wide compliance and ethics program. The lines of business are responsible for program implementation within their respective subject matter areas, and regularly report to the CECO on compliance matters.and ethics matters, including through cross-functional officer committees that review, discuss, and make decisions regarding the companies’ compliance and ethics related work. Management also has established a senior officer compliance and ethics committeecommittees at the level of the functional business units that providesprovide strategic guidance on, and oversight of, thetheir respective compliance and ethics program, includingprograms, which may include the programs and systems designed to prevent, detect, mitigate, and mitigateremediate non-compliance. The CECO has direct access to the Chair of the Compliance and Public Policy Committee and may be required to report to the Committee on requested matters. The CECO also leadsreports to the companies’Safety and Nuclear Oversight Committees regarding activities relating to establishment of and performance on compliance and ethics metrics related to operations and compliance training and culture-building efforts.facilities.
The CECO also oversees matters arising from the Utility’s 2016 criminal convictions, stemming from the 2010 San Bruno gas pipeline explosion. These include the Utility’s federal probation and independent third-party Monitorship. The Compliance and Ethics group communicates regularly with the Boards on these topics and provides the Boards updates following the Monitor’s semi-annual reports on the Utility’s progress towards satisfying its obligations under the terms of its sentencing. The monitor also provides its periodic report to the Boards and regularly attends Board meetings.
Political Contributions
The Compliance and Public Policy Committee reviews PG&E Corporation’s and the Utility’s political contributions and recommends Board approval limits for political contributions from the companies to candidates, measures, initiatives, political action committees, and certain other organizations that may engage in activities involving elections. The BoardsAll political contributions from the companies are apprised of significant advocacy efforts undertaken by the companies.made in full compliance with applicable federal, state, and local laws and regulations. The Compliance and Public Policy Committee also directs preparation of an annual report summarizing political contributions and certain other expenditures made by the companies during the preceding year. Additional information regarding each company’s political engagement policies and political expenditurescontributions is available on PG&E Corporation’s website atwww.pgecorp.com/aboutus/corp_gov/political_engagement/political_engagement.shtml..
Corporate Sustainability
The Compliance and Public Policy Committee has primary oversight of corporate sustainability issues, such as environmental compliance and leadership, climate change resilience, community investments, workforce development, and workforce development.diversity and inclusion. This includes an annual review of PG&E Corporation’s and the Utility’s sustainability practices and performance. Other committees of the Corporation Board and the full Corporation and Utility Boards address other components of the companies’ sustainability commitment, such as public and employee safety, operational excellence and investments made to modernize the electric grid, and the pathways to further integrating the Utility’s deliveries of renewable electricity. For example,enable a low-carbon future. In addition, the Compensation Committee approves the structure of theany STIP or LTIP, which reinforcescan help reinforce the companies’ sustainability commitment by rewarding eligible employees for achievement of goals that benefit customers, shareholders, and employees.business goals.
Within management, the Chief Sustainability Officer of PG&E Corporationthe Utility is responsible for developing and coordinating the companies’ corporate sustainability initiatives and overseeing the companies’ corporate sustainability reporting and performance measurement. This is done in coordination with other members of senior management who are responsible for functions such as supply chain management, environmental compliance, and customer energy solutions.
AdditionalIn 2017, the companies introduced a new framework defining our mission, vision, and culture, developed through extensive outreach and interactions with our employees, customers, and other stakeholders. Our vision of a sustainable energy future is focused on meeting the challenge of climate change while providing affordable energy for all customers.
During 2018, the companies demonstrated continued progress toward the sustainability goals. For example, during the year, 38.9 percent of the Utility’s electricity came from renewable energy sources including solar, wind, geothermal, biomass, and small hydroelectric sources, exceeding California’s annual renewable energy target of 28 percent. In addition, the Utility spent $2.98 billion with suppliers, service providers or contractors meeting the criteria for the Utility’s Supplier Diversity Program in 2018, accounting for 41.43 percent of its total procurement. The Utility also brought the total number of interconnected private solar customers to nearly 400,000—about 20 percent of the nation’s private rooftop solar.
For additional information regarding PG&E Corporation’s sustainability efforts and progress, can be found in theplease see our comprehensive online Corporate Responsibility and Sustainability Report 2016,2018, which can be accessed at the sustainability portion of PG&E Corporation’s website at www.pgecorp.com/sustainability.sustainability.
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Safety
The PG&E Corporation and Utility Boards are responsible for oversight of safety. Specifically, the Safety and Nuclear Oversight Committees of the Boards are responsible for overseeing and reviewing policies, practices, goals, issues, risks, and compliance relating to safety, including public, employee, and contractor safety. This responsibility includes, among other things, overseeing goals, programs, policies and practices with respect to promoting a strong safety culture, and monitoring the impact of changes in laws and regulations affecting safety, including, for example, the Community Wildfire Safety Program. The Safety and Nuclear Oversight Committees also monitor and review the adequacy and direction of the corporate safety function.
In addition, the Compensation Committee, with advice from the Safety and Nuclear Oversight Committees, selects appropriate safety metrics for inclusion in executive compensation program and plans, and may adjust individual award amounts to reflect, among other reasons, safety performance. The Compliance and Public Policy Committee reviews compliance with safety requirements as part of its general oversight for compliance. The Finance Committee, as part of its responsibility for reviewing proposed major capital projects, reviews capital projects and programs with safety implications, such as projects and programs to enhance public or employee safety.
Within management, all officers, including the PG&E Corporation CEO and the Utility President (or the Utility officers fulfilling the President’s functions), are responsible for safety and the instillation of safety culture. More specifically, the Chief Safety Officer (“CSO”) is responsible for the occupational health and safety of employees and contractors and partners with the lines of business to develop and monitor the enterprise-wide safety program at PG&E Corporation and the Utility. Currently, the CSO reports directly to the Corporation CEO, and also reports regularly to the Safety and Nuclear Oversight Committees, which in turn serve as a direct channel of communication between the CSO and the full Boards. The CSO also may be requested to provide reports to the full Boards regarding safety matters.
The Safety and Health organization partners with the lines of business to develop and monitor the enterprise-wide safety program at PG&E Corporation and the Utility, by helping guide safety process improvements; developing and deploying new initiatives, training, technology, incident investigation protocols, compliance programs, and metrics; and conducting industry benchmarking to identify best safety practices.
The following management-level committees and teams are also involved in safety governance:
Management Succession
At least annually, and often more frequently, the PG&E Corporation and Utility Boards each review the applicable company’s plan for CEO succession, both in the ordinary course of business and in response to emergency situations. Each company’s Board also develops a profile of appropriate responsibilities, attributes, and requirements for the position of CEO, which reflects the Corporation’s and the Utility’s business functions, vision, and strategy. Potential candidates for CEO may be identified internally within the companies in consultation with the Compensation Committee (which oversees the evaluation of management) and the CEO, as well as externally through various sources, including independent third-party consultants.
The succession planning process also addresses the continuing development of appropriate leadership skills for internal candidates for CEO, as well as candidates for other leadership positions within the companies. The Compensation Committee is responsible for reviewing the CEO’s long-range plans for officer development and succession for PG&E Corporation and the Utility.
2019 Joint Proxy Statement | 43 |
Throughout 2016,2018, the Compensation Committee addressed management succession and executive development in connection with its review of officer elections, promotions, and compensation matters during the year. The Boards and the Compensation Committee last reviewed and discussed CEO and management succession planning and executive development at their respective meetings in February 2017.
BOARD AND COMMITTEE SELF-EVALUATIONS
The NominatingAs announced on April 3, 2019, William “Bill” Johnson has been named Chief Executive Officer and Governance Committee overseesPresident of PG&E Corporation and began his new role on May 2, 2019. With the process for evaluating and assessing the performanceassistance of a leading search firm, Spencer Stuart, the PG&E Corporation and Utility Boards, including Board committees. At least annually, each Board or the Nominatingof Directors conducted a national search for a new CEO, and Governance Committee conducts an evaluation to determine whether the Board is confident that Bill Johnson is the right person to lead the company during this critical time. Mr. Johnson brings substantial safety and operational expertise from his extensive career in the energy industry. With more than a decade of combined chief executive experience at two large utility companies, Mr. Johnson has a deep understanding of managing risk and the responsibility of keeping customers safe. Most recently, he served as President and CEO of the Tennessee Valley Authority (TVA), where he was responsible for leading the nation’s largest public utility in its mission of providing energy, environmental stewardship and economic development across a wholeseven-state region. During Mr. Johnson’s time at TVA, the organization achieved the best safety records in its 85-year history and has been a perennial top decile safety performer in the utility industry. In that same period, Mr. Johnson led the retirement of more than half of TVA’s coal generation, resulting in a reduction of TVA’s carbon omissions by about 50% over the last decade. He was responsible for leading the generation of more than 50% of TVA’s energy from non-greenhouse gas emitting sources. He also oversaw TVA’s expansion into utility scale solar in recent years, with the addition of approximately 1,000 megawatts (mWs), and pursued the modernization of its committees are functioning effectively.hydro assets to increase the overall amount of renewable resources. TVA’s renewable portfolio includes almost 2,400 mWs of wind and solar and 5,800 mWs of hydro capacity. Throughout his career in the electric utilities industry, Mr. Johnson has collaborated closely with elected officials and other community leaders to deliver safe and reliable electricity to millions of customers.
If the evaluation is conducted by the Nominating and Governance Committee, that Committee presents its conclusions to the applicable full Board for review and concurrence.
The Board evaluation includes an assessment of the Board’s contribution as a whole and of specific areas in which the Board and/or management believes that a better contribution could be made. The evaluation also considers any feedback that might be received from individual directors regarding the performance of the lead director. The Audit Committees, the Compensation Committee, the Compliance and Public Policy Committee, the Finance Committee, the Nominating and Governance Committee, and the Nuclear, Operations, and Safety Committee conduct annual self-evaluations. The Nominating and Governance Committee may request the results of any Board committee evaluation for consideration in the Board evaluation. The Boards and Board committees consider the results of the evaluations when planning for the upcoming year.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
New directors receive information on subjects that would assist them in discharging their duties. All
On April 9 and 10, 2019, as part of the Board refreshment process, the PG&E Corporation and Utility Boards had a two-day on-site onboarding session and Board meeting during which the new directors and the continuing directors met together and with company officers to, among other things, discuss the overall context for the companies’ current situation, share key information, establish the Boards’ governance framework, and discuss areas of focus for the next 90 days. As part of the Boards’ continuing onboarding process, the new directors are being provided with materials and presentations regarding, among other things, business operations for each of the Utility’s lines of business; safety, risk management, and cybersecurity; corporate governance matters; legal proceedings (including the Utility’s probation); the wildfire liabilities, risks, and response; the Chapter 11 Cases; the regulatory and legal landscape; California carbon reduction goals and other policy matters; financial performance and corporate finance matters; and other key stakeholder issues.
Directors also periodically receive briefing sessions or materials at regularly scheduled Board and Committee meetings on such subjects.subjects and developments relevant to exercise of their Board and committee duties. Each director also receives information regarding opportunities for continuing education, and is encouragedexpected to stay current on important developments pertaining to such director’s function and duties to the companies by attending such programs as appropriate or otherwise.
COMMUNICATING WITH DIRECTORS AND OFFICERS
Shareholder Engagement
PG&E Corporation and the Utility value our shareholders’ views and are committed to ongoing constructive dialogue with shareholders to advance the long-term viability and interests of the companies.
We regularly provide opportunities for dialogue with shareholders to further promote the exchange of ideas regarding corporate governance and other issues. In addition, our outreach efforts with the Corporation’s largest shareholders, who collectively hold a majority of the outstanding common stock, include discussions with members of senior management and the Boards, as applicable, ongoing meetings with our investor relations team, and other institutional shareholder forums.
PG&E Corporation has had a record of Board responsiveness to shareholders, demonstrated by the Board’s voluntary adoption of proxy access bylaw provisions in 2016, as well as the refreshment of the entire Boards of Directors since 2010. Since the beginning of 2018, the Boards and management have engaged in the following shareholder engagement activities:
Correspondence with Directors and Officers
Under the companies’ Corporate Governance Guidelines, the independent Chairs of the Boards are responsible for responding to written communications that are directed to the Boards from shareholders and other parties. Section 32 of each company’s Guidelines provides more details on these communications. (See “Website Availability of Governance Documents” on page 105).
Correspondence to directors and executive officers should be sent to the applicable company’s principal executive office, in care of the Corporate Secretary. Consistent with procedures adopted and approved by the Boards, the Corporate Secretary will forward to the independent lead director or the independent non-executive Chair any communications addressed to the Board of Directors as a body or to all of the independent or non-management directors in their entirety, and such other communications as the Corporate Secretary, in his or her discretion, determines is appropriate. The Corporate Secretary also will receive communications directed to individual directors or officers, including the independent non-executive Chair or the independent lead director, and will forward those as appropriate.
The address of the principal executive office for each company is:
PG&E Corporation
Pacific Gas and Electric Company
77 Beale Street, P.O. Box 770000
San Francisco, California 94177
PG&E Corporation and the Utility believe that it is important to provide shareholders with the means to provide input on the Corporation’s corporate governance policies and practices. The companies are committed to investor engagement and listening to investor views on corporate governance matters and executive compensation policies and programs. Prior to the SEC ruling that required large public companies to provide advisory say-on-pay votes, in 2010 PG&E Corporation and the Utility each began providing its shareholders with the right to cast an annual advisory vote on the compensation paid to their NEOs.
Management has made it a practice to contact PG&E Corporation’s top institutional investors on a regular basis to discuss corporate governance trends and issues that are of interest to them. If requested by major shareholders, the lead director or the independent Chair of each company are available for consultation and direct communication with such major shareholders of the applicable company.
Compensation of Non-Employee Directors
The Boards of PG&E Corporation and the Utility each establish the level of compensation for that company’s non-employee directors, based on the recommendation of the Compensation Committee and considering the impact of compensation on director independence.Committee. Directors who also are current employees of either company receive no additional compensation for service as directors.
The Compensation Committee periodically reviews the amount and form of compensation paid to non-employee directors of PG&E Corporation and the Utility. As part of this review, the Committee reviews the compensation provided to the companies’ non-employee directors as compared to other comparable U.S. peer companies (including both other utilities and companies within the S&P 250), with the objective of ensuring that non-employee director compensation is:
Compensation paid to non-employee directors for 20162018 for service on the Boards and their committees is based upon periodic compensation reviews conducted in consultation with the Committee’s executive compensation consultants.consultant, Pay Governance LLC. The Compensation Committee’s most recent reviews of non-employee director compensation were conducted in SeptemberDecember 2017, December 2018, and December 2015.February 2019. See “2019 Non-employee Director Compensation Program” beginning on page 48. The Compensation Committee used Pay Governance’s benchmark analyses of director compensation at utility and Fortune 500 companies and Willis Towers Watson analysis of director compensation at companies undergoing Chapter 11 restructuring.
20162018 Director Compensation
The following table summarizes the principal components of compensation paid or granted to individuals for their service as non-employee directors of PG&E Corporation and the Utility during 2016.2018.
Fees | |||||||||||||||
Earned | Stock | Option | All Other | ||||||||||||
Or Paid in | Awards | Compensation | Total | ||||||||||||
Name | Cash ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($) | Fees Earned Or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||
L. Chew | 130,000 | 139,982 | 1,096 | 271,078 | 170,000 | 139,965 | 96 | 310,061 | |||||||
F. Fowler | 185,750 | 139,982 | 96 | 325,828 | 120,000 | 139,965 | 96 | 260,061 | |||||||
M. C. Herringer | 135,000 | 139,982 | 1,096 | 276,078 | |||||||||||
J. C. Johnson(5) | 47,143 | 0 | 96 | 47,239 | |||||||||||
R. C. Kelly | 162,500 | 139,982 | 96 | 302,578 | 235,000 | 259,972 | 96 | 495,068 | |||||||
R. H. Kimmel | 120,000 | 139,982 | 96 | 260,078 | 135,000 | 139,965 | 96 | 275,061 | |||||||
R. A. Meserve | 135,000 | 139,982 | 1,096 | 276,078 | 135,000 | 139,965 | 96 | 275,061 | |||||||
F. E. Miller | 170,000 | 139,982 | 96 | 310,078 | 170,000 | 139,965 | 96 | 310,061 | |||||||
E. D. Mullins(5) | 33,587 | 0 | 24 | 33,611 | |||||||||||
B. Minicucci(6) | 60,000 | 0 | 40 | 60,040 | |||||||||||
E. D. Mullins | 120,000 | 139,965 | 96 | 260,061 | |||||||||||
R. G. Parra | 120,000 | 139,982 | 96 | 260,078 | 120,000 | 139,965 | 1,096 | 261,061 | |||||||
B. L. Rambo | 130,000 | 139,982 | 96 | 270,078 | 135,000 | 139,965 | 96 | 275,061 | |||||||
A. S. Smith | 162,500 | 139,982 | 1,096 | 303,578 | 120,000 | 139,965 | 1,096 | 261,061 | |||||||
B. L. Williams | 185,000 | 139,982 | 96 | 325,078 |
(1) | Represents receipt of retainers | |
(2) | Represents the grant date fair value of RSUs granted in | |
(3) | No stock options were granted in |
2019 Joint Proxy Statement | 46 |
(4) | Represents (i) premiums paid for accidental death and dismemberment insurance, and (ii) matching gifts, paid or payable for | |
(5) | Secretary Johnson retired from the Corporation Board effective May 21, 2018. | |
(6) | Mr. |
Non-Employee Director Total 2018 Compensation Summary
Per Quarter | Annual | |
Annual Retainer | ||
Non-Employee Directors(1) | $30,000 | $120,000 |
Corporation Chair of the Board | $25,000 additional | $100,000 additional |
Utility Chair of the Board(1) | $7,500 additional | $30,000 additional |
Committee Chair Additional Retainers | ||
Audit Committees(1) | $12,500 | $50,000 |
Compensation Committee | $5,000 | $20,000 |
Other Permanent Standing Committees(1) | $3,750 | $15,000 |
Special Committee Additional Retainer | ||
As determined by the applicable Board (none paid during 2018) | ||
Annual Equity Award | ||
Non-Employee Directors | n/a | $140,000 |
Corporation Chair of the Board(1) | n/a | $80,000 additional |
Per-Meeting Fees | ||
No meeting fees for attendance at Board, Board committee, or shareholder meetings | ||
Special Committee Per-Meeting Fees(1) | ||
As determined by the applicable Board (none paid during 2018) |
No additional retainer will be paid by the Utility for any quarter during which the director is paid a retainer from the Corporation for the same role. |
Retainers and Fees
The following retainers were provided during 2016 to each director who was not an employee of PG&E Corporation orRetainers and fees are paid as described in the Utility for service on the Boards and their permanent standing committees.
above summary table. Any director who serves on the PG&E Corporation Board, Audit Committee, Executive Committee, or ExecutiveSafety and Nuclear Oversight Committee does not receive additional retainers for concurrent service on the Utility Board, Audit Committee, Executive Committee, or ExecutiveSafety and Nuclear Oversight Committee, as applicable.
Directors who during 2016 served onad hocEffective January 1, 2018, (1) a quarterly retainer of $7,500 was approved for the non-executive Chair of the Board committees in connection with matters relatingof the Utility and (2) the quarterly retainer for the Chair of the Compensation Committee increased to $5,000 (from $3,750), and the derivative lawsuits also received quarterly retainers for the Chairs of $12,500 (for the chair)Finance Committee and $6,250 (for other members)the Compliance and per-meeting fees of $1,750 in connection with such service.Public Policy Committee increased to $3,750 (from $2,500).
Non-Employee Director Stock-Based Compensation
Under the 2014 LTIP, each non-employee director of PG&E Corporation is entitled to receive annual awards of stock-based compensation. Pursuant to the terms of the 2014 LTIP, as approved by PG&E Corporation’s shareholders, the annual value of equity awards provided to any one non-employee director is limited to $400,000 in any calendar year.
Awards for 20162018 were granted on May 26, 2016.22, 2018. Each non-employee director’s award award—other than that for the Chair of PG&E Corporation—had a total aggregate value of $140,000 (rounded down to reflect awards equivalent to whole units with values equivalent to whole shares of PG&E Corporation common stock) and consisted of RSUs that were granted to each non-employee director after his or her election to the Board. The award for the Chair of PG&E Corporation had a total aggregate value of $220,000 (rounded down to reflect awards equivalent to whole units with values equivalent to whole shares of PG&E Corporation common stock) and consisted of RSUs that were granted
2019 Joint Proxy Statement | 47 |
after his election to the Board. These RSUs vest at the earlier of the end of the director’s annual elected term or one year after the date of grant and are then settled as shares of PG&E Corporation common stock. RSUs also will vest and be settled upon the director’s death or disability, or if there is both a Change in Control (as defined on page 55)74) and the director is terminated. Otherwise, RSUs are forfeited if the director ceases to be a member of the Board prior to vesting. Non-employee directors also may elect to defer settlement of vested RSUs.
Effective January 1, 2018, the total aggregate value of the annual award of stock-based compensation granted to the non-executive Chair of the Board of PG&E Corporation was increased to $220,000 (from $140,000). In addition, in December 2017, a $40,000 supplemental RSU award was approved for the non-executive Chair of the Board of PG&E Corporation. Under the PG&E Corporation Equity Grant Date Policy, the supplemental RSU award was granted on February 12, 2018. The award vested on February 12, 2019.
Stock Ownership Guidelines
Non-employee directors of PG&E Corporation are expected to own shares of PG&E Corporation common stock having a dollar value of at least five times the value of the then-applicable annual Board retainer. Ownership is measured annually as of December 31 of each calendar year. If any non-employee director is on the Utility Board only, then that director also may satisfy his or her stock ownership obligation with Utility preferred stock. Directors generally have five years to meet the guidelines. Ownership includes beneficial ownership of common stock, as well as RSUs and common stock equivalents. These guidelines were adopted in order to more closely align the interests of directors and each company’s shareholders.
Deferral of Retainers and Fees
Under the PG&E Corporation 2005 Deferred Compensation Plan for Non-Employee Directors, directors of PG&E Corporation and the Utility may elect to defer all of their retainers, all of their meeting fees, or both. Directors who participate in the Deferred Compensation Plan may elect either to (1) convert their deferred compensation into common stock equivalents, the value of which is tied to the market value of PG&E Corporation common stock, or (2) have their deferred compensation deemed to be invested in the Utility Bond Fund (which is described in the narrative following the “Non-Qualified Deferred Compensation—2016”2018” table beginning on page 65)84).
Reimbursement for Travel and Other Expenses
Directors of PG&E Corporation and the Utility are reimbursed for reasonable expenses incurred in connection with attending Board, Board committee, or shareholder meetings, or participating in other activities undertaken on behalf of the Corporation or the Utility.
Retirement Benefits from PG&E Corporation or the Utility
The non-employee directors of the Boards of PG&E Corporation Retirement Planand the Utility are not provided retirement benefits.
2019 Non-employee Director Compensation Program
In connection with the companies’ financial situation, in late 2018 the companies retained Willis Towers Watson (“WTW”) as an independent consultant for Non-Employee Directors was terminated effectivethe discrete, targeted purpose of advising the Compensation Committee, the Boards, and management with respect to incentive plans, retention plans, and non-employee director compensation for companies undergoing financial restructurings.
On January 1, 1998. Directors who had accrued benefits29, 2019, PG&E Corporation and the Utility each filed a voluntary petition for relief under Chapter 11 in the Bankruptcy Court. Post-petition, the companies can continue to pay regular cash directors’ fees under the Plan were given a one-time option of either (1) receiving the benefit accrued through 1997, upon their retirement, or (2) converting the present value of their accrued benefit into a PG&E Corporation common stock equivalent investment heldnon-employee director compensation program in the Deferred Compensation Plan for Non-Employee Directors. Accrued retirement benefits, or distributions fromordinary course of business but may be limited in the Deferred Compensation Plan relatingability to the conversion of retirement benefits, will be paid at the later of age 65 or retirement from the Board.issue additional equity compensation to non-employee directors.
Item No. 2: Amendment to Increase the Maximum Size of the Corporation’s Board to 15 Directors
The Corporation Charter as currently in effect provides that the Corporation Board shall consist of a maximum of thirteen (13) directors and a minimum of seven (7) directors, as prescribed by the Corporation bylaws. Pursuant to Section 902 of the California Corporations Code, an amendment to the Corporation Charter may be adopted if approved by the Board and approved by the affirmative vote of a majority of the outstanding shares entitled to vote, either before or after the approval by the Board.
The Corporation Board asks its shareholders to approve the following (the “Charter Amendment Proposal”):
RESOLVED that part I of the third paragraph of the Corporation Charter be amended and restated as follows:
“The Board of Directors of the Corporation shall consist of such number of directors, not less than eight (8) nor more than fifteen (15), as shall be prescribed in the Bylaws.”
The Charter Amendment Proposal will increase the maximum number of directors on the Corporation Board to 15 and increase the minimum number of directors on the Corporation Board to 8. The Charter Amendment Proposal will not affect the Corporation Board’s existing power to amend the bylaws to increase or reduce the size of the Corporation Board within the limits set by the Corporation Charter.
The Corporation Board believes that increasing the size of the Corporation Board is in the best interest of the Corporation and its shareholders. The Corporation Board also believes that the Charter Amendment Proposal will allow for more diverse perspectives on the Board and will enhance the overall collective effectiveness of the Corporation Board. This increase will allow all 14 individuals nominated by the Corporation Board to serve as directors on the Corporation Board with one additional vacant seat to be filled in the future as appropriate.
The Board of Directors of PG&E Corporation Unanimously Recommends a VoteFOR the Charter Amendment Proposal.
2019 Joint Proxy Statement | 49 |
Item No. 3: Ratification of the Appointment of the Independent Registered Public Accounting Firm for PG&E Corporation and Pacific Gas and Electric Company
The Audit Committees of PG&E Corporation and the Utility each have selected and appointed Deloitte & Touche LLP (“Deloitte & Touche”) as the independent auditor for that company to audit the consolidated financial statements as of and for the year ended December 31, 2017,2019, and to audit the effectiveness of internal control over financial reporting as of December 31, 2017.2019. Deloitte & Touche is a major national accounting firm with substantial expertise in the energy and utility businesses. Deloitte & Touche has served as the independent auditors for PG&E Corporation and the Utility since 1999.
One or more representatives of Deloitte & Touche are expected to be present at the 2017 Annual Meetings.annual meetings. They will have the opportunity to make a statement if they wish and are expected to be available to respond to questions from shareholders.
Each company’s Board believes that this appointment of Deloitte & Touche is in the best interests of that company and its shareholders.
PG&E Corporation and the Utility are not required to submit these appointments to a vote of their shareholders. However, the Boards of Directors believe that requesting shareholder ratification of this selection is a good corporate governance practice. If the shareholders of either PG&E Corporation or the Utility do not ratify the appointment, the applicable Audit Committee will investigate the reasons for rejection by the shareholders and will reconsider the appointment. Even if a company’s shareholders ratify the selection, the applicable Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of that company and its shareholders.
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend a VoteFOR the Proposal to Ratify the Appointment of Deloitte & Touche.
Information Regarding the Independent Auditor for PG&E Corporation and Pacific Gas and Electric Company
Selection and Oversight of the Independent Auditor
Each Audit Committee is responsible for the appointment, replacement, compensation, and oversight of the work of the independent auditor. The Audit Committees review the scope of the audit, including the terms of the engagement. The independent auditor reports directly to the Audit Committees; at each Audit Committee meeting, the independent auditor meets separately with the Audit Committees, without management present.
Annually, each Audit Committee also evaluates the independence, qualifications, and performance of the independent auditor.auditor, taking into account the opinions of management and the internal auditors. To ensure continuing independence of the independent auditor, the Audit Committees also consider whether there should be rotation of the independent auditor. In accordance with SEC rules, the lead audit partner may provide a maximum number of five consecutive years of service to the companies. Consistent with that requirement, Deloitte & Touche has assigned a new lead auditor to lead the integrated audit of PG&E Corporation’s and the Utility’s 2017 financial statements.statements, starting in 2017. The Audit Committees reviewed and evaluated the new lead auditor as part of itstheir annual process for reviewing the independent auditor. Although the Audit Committees are directly responsible for evaluating the independent auditor, the Committees take into account the opinions of management and the internal auditors.
For 2017,2019, the Audit Committees selected Deloitte & Touche as the companies’ independent auditor, afterfollowing consideration of the following factors and criteria: (1) status as a registered public accounting firm whichand is subject to oversight by the Public Company Accounting Oversight Board,Board; (2) status as a “Big Four” public accounting firm, nationally and internationally recognized as an expert in accounting and auditing,auditing; (3) having one of the largest utility practices of the “Big Four” public accounting firms,firms; (4) having made a strong commitment to supporting supplier diversity,diversity; (5) having significant experience with the companies,companies; and (6) having an experienced team, including the lead partner, familiar with the industry, assigned to the companies’ engagements. The Audit Committees also considered (1) Deloitte & Touche’s quality control report, (2) Deloitte & Touche’s discussion of its independence, and (3) a review of Deloitte & Touche’s proposed audit plan (including draft engagement letter) for 2017.2019.
Although Deloitte & Touche has been the companies’ independent auditor since 1999, in 2015 and at the Audit Committees’ direction, the companies solicited bids from accounting firms to conduct the external audits of the companies’ financial statements for the year ending December 31, 2016. The bids were evaluated by the Auditor Selection Committee, which was comprised of members from the companies’ accounting, internal auditing, regulatory, operational, sourcing, and legal functions. The bids were evaluated with respect to four key factors: firm capabilities and background, firm resources and audit plan, supplier diversity plans, and pricing. Upon consideration of the information provided by the Auditor Selection Committee, each Audit Committee appointed Deloitte & Touche as the independent auditor for the year ending December 31, 2016.
Fees Paid to the Independent Auditor During 20162018 and 20152017
The Audit Committees have reviewed the audit and non-audit fees that PG&E Corporation, the Utility, and their respective controlled subsidiaries have paid to the independent auditor (including subsidiaries and affiliates), in order to consider whether the nature and relative value of those fees are compatible with maintaining the firm’s independence.
Table 1: Fees Billed to PG&E Corporation
(Amounts include Fees Billed to the Utility and its Subsidiaries shown in Table 2 below)
2016 | 2015 | 2018 | 2017 | |||||
Audit Fees | $4.35 million | $4.81 million | $5.505 million | $4.67 million | ||||
Audit-Related Fees | $0.20 million | $0.16 million | $0.245 million | $0.15 million | ||||
Tax Fees | $0 | $0 | $0 | $0 | ||||
All Other Fees | $0 | $0 | $0 | $0 |
Table 2: Fees Billed to the Utility and its Subsidiaries
(Amounts are included in Fees Billed to PG&E Corporation shown in Table 1 above)
2016 | 2015 | 2018 | 2017 | |||||
Audit Fees | $3.58 million | $4.01 million | $4.896 million | $3.94 million | ||||
Audit-Related Fees | $0.19 million | $0.16 million | $0.245 million | $0.15 million | ||||
Tax Fees | $0 | $0 | $0 | $0 | ||||
All Other Fees | $0 | $0 | $0 | $0 |
Audit Fees
Audit fees billed for 20162018 and 20152017 relate to services rendered by Deloitte & Touche and its affiliates in connection with reviews of Quarterly Reports on Form 10-Q, certain limited procedures on registration statements, the audits of the annual financial statements of PG&E Corporation and its subsidiaries and the Utility and its subsidiaries, the audits of both PG&E Corporation’s and the Utility’s internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, and support for statutory or regulatory filings or engagements and regulators’ reviews of auditor workpapers.
Audit-Related Fees
Audit-related fees billed in 20162018 and 20152017 relate to services rendered by Deloitte & Touche and its affiliates for nuclear decommissioning trust audits, consultations on financial accounting and reporting standards, required agreed-upon procedure reports related to contractual obligations of the Utility and its subsidiaries, advice regarding proposed transactions, advice regarding adoption of new accounting pronouncements, training, and advice concerning internal controls surrounding new applications, systems, or activities.
Tax Fees
Deloitte & Touche and its affiliates provided no services in this category during 20162018 and 2015.2017.
All Other Fees
Deloitte & Touche and its affiliates provided no services in this category during 20162018 and 2015.2017.
2019 Joint Proxy Statement | 52 |
Obtaining Services from the Independent Auditor
Annual Review and Pre-Approval of Services
For each fiscal year, each Audit Committee approves a list of services that will be obtained during that year by the companiesapplicable company and theirits controlled subsidiaries and affiliates from the independent auditor (including its affiliates). The Audit Committees also approve maximum fee amounts for each approved service. Three types of services may be obtained fromgenerally are consistent with the independent auditor.descriptions below:
Category | Description | |
Audit services | Audit and review of annual and quarterly financial statements, expressing opinions on the conformity of the audited financial statements with generally accepted accounting principles, auditing management’s assessment of the effectiveness of internal control over financial reporting, and services that only the independent auditor reasonably can provide (e.g., comfort letters, statutory and regulatory audits, attest services, consents, | |
Audit-related services | Assurance and related services that traditionally are performed by the independent auditor (e.g., agreed-upon procedure reports related to contractual obligations and financing activities, consulting regarding accounting pronouncements, nuclear decommissioning trust audits, and attest services). | |
Tax services | Advice relating to compliance, tax strategy, tax appeals, and specialized tax issues, all of which also must be permitted under the Sarbanes-Oxley Act. | |
Non-audit services | None. |
The Audit Committees also approve maximum fee amounts for each approved service.
As part of the review process, the Audit Committees assess, among other things, the impact of that service on the independent auditor’s independence.
During 2018, management adopted a policy of retaining Deloitte & Touche, Deloitte Consulting, or their subsidiaries or affiliates (together, “Deloitte”) for non-audit services only if the services (1) do not impair Deloitte & Touche’s independence, in fact or appearance, and are permitted by any rules regarding auditor independence, and (2) when aggregated, total amounts paid per year by the companies to Deloitte for “tax service” and “other services” (non-audit services) will be no more than 20 percent of the expected amounts that the companies will pay to Deloitte for “audit services” and “audit-related services.”
Mid-Year Monitoring and Approval of Additional Services
During the year, management periodically updates each Audit Committee as to the extent to which the approved services have already been provided. The Audit Committees also must approve (1) any proposed new services that were not approved during the annual review and (2) any increase in authorized fee amounts for previously approved services.
Management also has adopted a policy under which PG&E Corporation, the Utility, and their controlled subsidiaries may not enter into new engagements with Deloitte & Touche and its affiliate, Deloitte Consulting, for services other than audit services, audit-related services, and tax services that Deloitte & Touche and its affiliates are allowed to provide to Deloitte & Touche’s audit clients under the Sarbanes-Oxley Act.
Delegation of Pre-Approval Authority
Each Audit Committee has delegated to its Committee Chair, or to any other independent Committee member if the Chair is not available, the authority to pre-approve services provided by the applicable company’s independent auditor. These pre-approvals must be presented to the full Audit Committee at the next regularly scheduled Committee meeting.
Services Provided During 20162018 and 20152017
During 20162018 and 2015,2017, all services provided by Deloitte & Touche to PG&E Corporation, the Utility, and their consolidated affiliates were approved consistent with the applicable pre-approval procedures.
Report of the Audit Committees
The Audit Committees (“Committees”) of PG&E Corporation and Pacific Gas and Electric Company (“Utility”) are comprised of independent directors and operate under written charters adopted by their respective Boards. The members of the Audit Committees of PG&E Corporation and the Utility are identical. At both PG&E Corporation and the Utility, management is responsible for internal controls and the integrity of the financial reporting process.
The Committees reviewed and discussed the audited consolidated financial statements of PG&E Corporation and the Utility with management and the independent auditor. The Committees also discussed with the independent auditorauditors the matters that are required to be discussed by the Public Company Accounting Oversight Board (PCAOB)(“PCAOB”) Auditing Standard No. 1301—Communications with Audit Committees.
Deloitte & Touche LLP was the independent auditor for PG&E Corporation and the Utility in 2016.2018. Deloitte & Touche LLP provided to the Committees the written disclosures and letter required by applicable requirements of the PCAOB regarding an independent auditor’s communications with an audit committee concerning independence and non-audit services, and the Committees discussed with Deloitte & Touche LLP that firm’s independence.
Based on the Committees’ review and discussions described above, the Committees recommended to the respective Boards that the audited consolidated financial statements for PG&E Corporation and the Utility be included in the PG&E Corporation and Pacific Gas and Electric Company Annual Report on Form 10-K for the year ended December 31, 2016,2018, filed with the Securities and Exchange Commission.
April 18, 2017
Audit Committees of the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company
February 19, 2019
Lewis Chew, Chair
Richard C. Kelly
Forrest E. Miller Chair
Lewis Chew
Maryellen C. Herringer
Richard C. Kelly
Eric D. Mullins(1)
The four names listed above reflect the composition of the Audit Committees as of February 19, 2019, the date of this report of the Audit Committees. |
2019 Joint Proxy Statement |
Item No. 3:4: Advisory Vote on Executive Compensation for PG&E Corporation and Pacific Gas and Electric Company
PG&E Corporation and the Utility each ask their respective shareholders to approve the following:
RESOLVED that the compensation paid for 2018 to the company’s executive officers named in the Summary Compensation Table of this Joint Proxy Statement, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative discussion, is hereby APPROVED.
PG&E Corporation and the Utility each believe that its executive compensation policies and practices arefor 2018 were effective in tying a significant portion of pay to performance, while providing competitive compensation that attracts, retains,to attract, retain, and motivatesmotivate talented executives, and alignsalign the interests of our executive officers with those of our shareholders.
In establishing PG&E Corporation’s officer compensation programs for 20162018 (which also cover officers of the Utility), the Compensation Committee established three objectives. These objectives, and how these objectives were met for 2016,2018, are discussed in the CD&A, which can be found immediately following this Item No. 3.4. These objectives are summarized below.
With the exception of base salary and perquisites, all elements of 2018 annual officer compensation were tied to corporate operational and/or financial performance and, therefore, provided a direct connection between compensation and performance in the achievement of both key operating results and long-term shareholder value. For Geisha J. Williams, who served as the PG&E Corporation CEO and President during 2018, approximately 89 percent of 2018 target compensation was tied to corporate performance. For the other NEOs, approximately 75 percent of average 2018 target compensation was tied to corporate performance.
The Compensation Committee’s independent general compensation consultant, Pay Governance LLC, advised that for 2018 there were no material issues regarding PG&E Corporation’s and the Utility’s executive compensation programs, and that the design of the companies’ incentive pay plans posed a low risk. As such, incentive plan design posed a low likelihood of incenting employees to engage in behaviors that are likely to have an adverse material impact on the companies.
The annual long-term incentive awards for 2018 were comprised of 20 percent performance shares using a relative TSR measure, 10 percent performance shares using a safety measure, 5 percent performance shares using a financial measure, 45 percent RSUs, and 20 percent stock options. Performance shares granted in 2018 vest, if at all, at the end of a three-year period, and their value is also tied to the price of PG&E Corporation common stock. In addition, the value of performance shares using a TSR measure is tied to the relative three-year performance of PG&E Corporation common stock price appreciation and dividends paid, as compared to the TSR of companies in the 2018 Performance Comparator Group. RSUs vest over a three-year period, and their value is tied directly to the price of PG&E Corporation common stock. Stock options vest over three years and only have cash value if the price of PG&E Corporation common stock upon exercise exceeds the stock option exercise price.
Target cash compensation for 2018 generally was within a range of 15 percent above to 15 percent below the corresponding market median for companies in the 2018 Pay Comparator Group.
This vote is non-binding and is required by Section 14A of the Securities Exchange Act of 1934. PG&E Corporation and the Utility each currently plan to submit this vote to shareholders annually and expect to next submit this matter to shareholders in connection with next year’s annual shareholder meeting, pending consideration of results from each company’s shareholder vote on Item No. 4 in this Proxy Statement.meeting. If the shareholders of either company do not approve this proposal, the Compensation Committee and members of management will investigate the reasons for disapproval and will consider those reasons when developing future executive compensation programs, practices, and policies.
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend a VoteFOR This Proposal to Approve the Compensation of Each Company’s Executive Officers Named in the Summary Compensation Table, as Described in This Joint Proxy Statement.
The Compensation Committee of PG&E Corporation is comprised of independent directors and operates under a written charter adopted by the PG&E Corporation Board. The Compensation Committee is responsible for overseeing and establishing officer compensation policies for PG&E Corporation, the Utility, and their subsidiaries.
The Compensation Committee has reviewed and discussed the section of this Joint Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on its review and discussion with management, the Compensation Committee has recommended to the Boards of PG&E Corporation and the Utility that the “Compensation Discussion and Analysis” section be included in this Joint Proxy Statement.
February 19, 2019
Forrest E. Miller, Chair
Richard C. Kelly
Rosendo G. Parra
Barbara L. Rambo(1)
(1) | The four names listed above reflect the composition of the Compensation Committee as of February 19, 2019, the date of this Compensation Committee report. |
2019 Joint Proxy Statement | 56 |
Compensation Discussion and Analysis
This CD&A describes the companies’ compensation philosophy, executive compensation program, and how the NEOs were compensated in 2016.2018. The CD&A discusses:
1. | Performance and Pay Highlights |
2. | ||
Compensation Program Objectives and Competitive Market Review |
3. | ||
Risk and Governance Approach |
4. | ||
2018 NEO Compensation Structure |
5. | 2019 NEO Compensation Structure |
Committee Conclusion |
Detailed information regarding 20162018 NEO compensation can be found in the Executive Officer Compensation Information section following this CD&A.
1. | PERFORMANCE AND PAY HIGHLIGHTS |
Corporate Performance Overview
We believeMuch like 2017, 2018 was an extremely difficult year for PG&E Corporation, the Utility, and our stakeholders with respect to recent wildfires in California. The devastating 2017 and 2018 wildfires impacted our customers and communities on an unprecedented level. PG&E Corporation’s stock price declined in the wake of the October 2017 Northern California wildfires and dropped precipitously after the November 2018 Camp fire. This resulted in steeply negative total shareholder return on a one-, three-, and five-year basis. Although 2018 earnings from operations were above target,(1) we have reported a combined $14.0 billion in pre-tax charges related to both the 2018 Camp fire and the 2017 Northern California wildfires for fiscal 2018, with full year GAAP net losses of $6.9 billion. On January 29, 2019, PG&E Corporation and the Utility each voluntarily filed for reorganization under Chapter 11.
The magnitude of our financial challenges are reflected in our executive compensation outcomes for the year. Performance awards tied to 2016-2018 TSR resulted in no payout, outstanding stock options are currently entirely underwater, and unvested restricted stock unit (RSU) grants are worth 38 percent of value as of April 1, 2019. Our Compensation Committee (“Committee”) exercised discretion to reduce 2018 Short-Term Incentive Plan (STIP) payouts to zero, although we performed above target with respect to certain operational and compliance, safety, customer service, and financial goals. Our executives’ realized pay for the year is substantially lower than the value at grant, representing the strong alignment of their interests with those of our shareholders.
As a result of the Chapter 11 Cases, the 2019 executive compensation program may differ significantly from that in prior years. In addition, certain compensation provided to executive officers during the pendency of the Chapter 11 Cases may be subject in certain instances to approval by the Bankruptcy Court. The Committee has been working with its advisors, including WTW, to review the 2019 executive compensation program in an effort to balance the financial situation facing the companies with the need to continue to recruit and retain qualified executives to guide the companies through a period of uncertainty, including the unpredictability of the stock price and the resulting effect on the incentive and retentive value of equity-based awards. In February 2019, the Committee determined that the NEOs will not participate in the 2019 STIP and expects that the companies will continue to evaluate all aspects of the 2019 executive team’s 2016 performance delivered bothcompensation program, including base salary, short- and long-term value for shareholdersincentives, and customers. The companies furthered our progress on safety, continued to improve system reliability, and won recognition from our industry for the speed and quality of our emergency response efforts.
Safety Successother benefits.
PG&E Corporation discloses historical financial results and bases guidance on “earnings from operations” in order to provide a measure that allows investors to compare the underlying financial performance | ||
Customer and Reliability Achievements
Financial ResultsWe remain committed to providing safe and reliable gas and electric services to our customers. The safety of our employees, our customers, and our communities are of utmost importance to us and we are taking active steps to reduce wildfire risk and assist in rebuilding efforts. As a part of those efforts, we are conducting enhanced inspections of our electric transmission and distribution systems in high fire-threat areas. We recognize the importance of recruiting and retaining talented leaders as we enter this next phase as a company, and have appointed Mr. Johnson as our new Chief Executive Officer and President. As a result of the Board’s previously announced Board refreshment process, in April 2019 eleven new directors joined two continuing directors on the Board of PG&E Corporation and the Utility, with eight of ten then-incumbent directors stepping down. Mr. Johnson joined the Board of Pacific Gas and Electric Company on May 2, 2019 concurrently with stepping into his role as Chief Executive Officer and President of PG&E Corporation. We believe that these steps position us to continue to improve our safety and operational effectiveness.
Short-Term Performance and Pay
20162018 SHORT-TERM INCENTIVE PLAN RESULTS
The STIP is the annual cash incentive plan for executives. Performance is measured against targets previously approved by the Compensation Committee.
Overall safety performance, was belowmeasured with respect to certain pre-set compliance, employee, and operational safety goals exceeded target. More specifically, performance for the Diablo Canyon Power Plant Reliability and Safety Indicator met the stretch goal for both units. Performance for the Public Safety Index exceeded target through focused effort from the Vegetation Management group and contractors to maintain continuous compliance through numerous quality control and quality assurance audits across the system. Performance for the Asset Records Duration Index exceeded target through increased accountability, work visibility, and focus by the clerical, construction, estimating, and mapping teams. Specifically, increased utilization of real-time reports allowed immediate visibility to orders with issues, so actions could be taken to reduce cycle times. Performance for the Gas Operations safety performanceIn-Line Inspection and Upgrade Index exceeded targets; however, Electric Operations safety performance lagged, primarilytarget through successful completion of medium- and high-risk projects. Performance for the Gas Dig-Ins Reduction measure exceeded stretch goal due to weather-related wires-down results.a 3.5 percent decrease in dig-ins with a 13.5 percent increase in volume of Underground Service Alert tickets compared to the same period in 2017. Performance for the Serious Injuries and Fatalities (SIF) Corrective Action Index exceeded target through good performance on timely completion of corrective actions and completed SIF investigation reports.
Customer performance was at target. Satisfaction increased for both residentialabove stretch goal. Record reliability satisfaction perception and business customers. While 2016 was our second-best year ever for electric reliability, we did not meet our aggressive STIP targetsignificantly improved pricing satisfaction boosted 2018 performance. Customer focus and customer service satisfaction also significantly improved in 2018 along with several other key survey drivers. Additionally, the Utility met estimating and construction cycle time targets approximately 91 percent of the time due primarily to inclement weather.a focus by the Restoration & Construction teams to prioritize schedules based on customers’ needs.
Financial performance was slightlyas measured by earnings from operations exceeded the year-end target, primarily driven by the expected cost recovery of insurance premiums above amounts included in authorized revenues as a result of the 2016CPUC authorizing a Wildfire Expense Memorandum Account, and tax favorability associated with the 2017 tax return, partially offset by higher emergency and restoration costs.
Overall company STIP target.results resulted in a final company performance score of 1.601.
After reviewing overall company performance againstin light of the 2016 STIP targets,devastating 2018 Camp fire, the hardships incurred by communities and others, and the companies’ financial circumstances including the need to seek relief under Chapter 11, management recommended that the Committee approved a final 2016 STIPexercise its discretion and reduce the company performance score of 0.936 percent.
to zero. The Committee and Boards accepted the Boards reduced the 2016recommendation andno 2018 STIP score to 0.900 for senior officers due to the deaths of an employee and a contractor during 2016. The reduction applied to all NEOs except Mr. Thomason.awards were paid.
2019 Joint Proxy Statement | 58 |
Long-Term Performance and Pay
Our equity-based incentive plan is designed to link executive performance to long-term shareholder returns. Awards consist of (1) performance shares which cliff-vest following a three-year performance period, and (2) RSUs with time-based vesting, and (3) stock options with time-based vesting.
2016 Performance sharesShare Result - TSR
Fifty percent of long-term incentive plan (“LTIP”) awards granted in 2014 vested and2016 were paid in 2017,allocated to performance shares with the payout determined by comparing PG&E Corporation’s TSR to that of the companies in its 20142016 Performance Comparator Group.
PG&E Corporation’s TSR ranked 4thbelow all companies in comparison to the 20142016 Performance Comparator Group for the three-year period from 20142016 to 2016,2018, resulting in a 160 percentno payout of thein 2019 with respect to these performance shares granted in 2014.
RSUs settle in equivalent shares of PG&E common stock, directly tying long-term compensation to stock performance over time.shares.
TOTAL SHAREHOLDER RETURN (TSR) PERFORMANCE
AS OF DECEMBER 31, 20162018
2016 Performance Share Result – Safety and Affordability
Ten percent of LTIP awards granted in 2016 were allocated to performance shares with the payout determined by measuring performance against equally-weighted safety and affordability goals. Safety performance, as measured by the 2016 through 2018 Lost Workday Case Rate, was below the threshold target. Affordability, as measured by three-year efficiency gains versus a $100 million target, achieved a 2.0 score. The overall result was a 100 percent payout in 2019 for these performance shares, which represented 10 percent of the total target LTIP grant value for 2016.
2016-2018 SAFETY AND AFFORDABILITY RESULTS
CEO Realizable Compensation
The Compensation Committee believes that analyzing realizable pay is important in understanding the relationship between the targeted compensation that was approved for the CEO of PG&E Corporation and the compensation that hewas actually earned, or may still earn,be earned, based on company performance.
For the past three years in aggregate, Mr. Earley’sCEO realizable pay was 10848 percent of target.
Target compensation for each year includes salary, non-equity incentives at target, the value of stock awards granted (at grant date fair market value), change in pension value, and all other compensation.
Realizable compensation for each year includes salary, non-equity incentives earned, the value of stock awards (using the December 31, 20162018 stock price for vested awards or, for outstanding unvested awards, the expected value at vesting based on the December 31, 20162018 stock price), change in pension value, and all other compensation. Based on the significant reduction in TSR following 2017 and 2018 catastrophic wildfire events, no payouts are assumed for performance shares granted in 2017 and 2018 using a TSR measure. Target payouts are assumed for performance shares granted in 2017 and 2018 using safety and affordability or financial goals.
Effective March 1, 2017, Ms. Williams replaced Anthony F. Earley, Jr. as CEO of PG&E Corporation. The following chart presents Mr. Earley’s compensation for 2016 and Ms. Williams’ compensation for 2017 and 2018.
CEO TARGET AND REALIZABLE COMPENSATION
(20142016 - 2016)2018) IN $ MILLIONS
2. | COMPENSATION PROGRAM OBJECTIVES, PROCESS, AND COMPETITIVE MARKET REVIEW |
20162018 Officer Compensation Program Objectives
The Compensation Committee established PG&E Corporation’s officer compensation program for 20162018 to meet three primary objectives:
• | Performance-Based Pay—A significant portion of total compensation is at risk based on PG&E Corporation and individual performance. Short- and long-term incentives reflect safety, customer, operational, and financial goals, and long-term shareholder returns, without promoting excessive risk-taking. |
• | Shareholder Alignment—A significant component of every officer’s compensation is tied directly to PG&E Corporation’s performance for shareholders. Performance is defined as TSR, measured by stock price appreciation and dividends paid, relative to companies in the Performance Comparator Group. |
• | Market-Competitive Compensation Levels—Target cash compensation (base salary and short-term incentive) should be competitive with the median target cash compensation for comparable officers in the Pay Comparator Group. |
PG&E Corporation’s and the Utility’s 20162018 compensation policies and practices described below and elsewhere in this Proxy Statement are designed to meet these objectives. These objectives arefor 2018 were largely unchanged from 2015.2017.
The Committee also considers shareholder advisory votes as part of its review of executive compensation programs and practices. In May 2016,2018, PG&E Corporation’s and the Utility’s shareholders approved the companies’ NEO compensation for 20152017 with votes of 80.194.9 percent and 99.899.9 percent, respectively. The Committee considered these results and, given the level of shareholder support, made no material changes to compensation policies in 2016.2018.
2019 Joint Proxy Statement | 60 |
Executive Officer Compensation-Setting Process
The executive officer compensation setting process for 2018 was consistent with that in prior years. Each year, the independent members of the applicable Board, based on the Compensation Committee’s advice and recommendation, approve the amounts of total target compensation for the CEO of PG&E Corporation and the CEO of the Utility (or, if the Utility CEO office is not filled, anythe Utility President)President or equivalent). Such approvals are made following a review of comparative data, advice from the Committee’s independent compensation consultant, and an assessment of individual performance, objectives, and scope of responsibilities. The Committee also approves the amounts of total target compensation for all other executive officers based upon a review of comparative data, advice from its independent compensation consultant, and recommendations from the Corporation CEO and the Utility CEO (or, if the Utility CEO office is not filled, anythe Utility President)President or equivalent), as applicable. The Committee uses comparative data throughout the year to set the total target compensation of new executive officers. The Committee also reviews other benefits provided to executive officers.
The PG&E Corporation Board has delegated to the Compensation Committee the authority to administer the 2014 LTIP, under which equity-based awards have been made. In addition, the Corporation Board has delegated to the Corporation CEO the authority to grant LTIP awards to certain eligible participants within the guidelines adopted by the Committee.
The PG&E Corporation CEO and the Utility CEO (or, if the Utility CEO office is not filled, anythe Utility President)President or equivalent) generally attend a portion of each Compensation Committee meeting but excuse themselves from the Committee’s deliberations or decisions with respect to their own pay. At the Committee’s request, the Corporation CEO and the Utility CEO (or, if the Utility CEO office is not filled, anythe Utility President)President or equivalent) review with the Committee the performance of the other NEOs. The Corporation CEO and the Utility CEO (or, if the Utility CEO office is not filled, anythe Utility President)President or equivalent), as applicable, also recommend adjustments, if any, in base pay, annual incentive awards, and LTIP awards for the other NEOs.
These recommendations are given appropriate weight by the Committee in the compensation-setting process, given each CEO’s and any applicable President’s direct knowledge of the performance and contributions of each NEO. The Committee may exercise its discretion to accept, reject, or modify their recommendations based on the Committee members’ collective assessment of the NEOs’ performance and pay position relative to the peer group, as well as PG&E Corporation’s overall financial and operating performance and other factors that the Committee deems appropriate.
The Compensation Committee may delegate its authority with respect to ministerial matters under the 2014 LTIP to the PG&E Corporation CEO or the PG&E Corporation Senior Vice President, Human Resources.
The PG&E Corporation Board has delegated to the Corporation CEO the authority to approve compensation, within guidelines approved by the Compensation Committee, to lower-level officers officers—excluding without limitation, Section 16 officers Officers—and to non-officer employees. With respect to annual equity awards, such Committee-approved guidelines include the LTIP annual award value ranges for different categories of employees, an aggregate cap on the value of awards for any given year, and the terms and conditions of all LTIP awards to be made during the year. The guidelines also specify the grant date for annual LTIP awards. Actual awards are generally made within the range of target LTIP values previously approved by the Committee.
Consultants and Advisers
The Compensation Committee retains an independent compensation consultantconsultants to advise the Committee on compensation programs and practices, including pay levels for non-employee directors and officers. Under a policy adopted by the Committee, this consultant must be “independent,” i.e., (1) the consultant must be retained by, and report solely to, the Compensation Committee, and (2) the consultant and its affiliates may not perform any work for PG&E Corporation or its affiliates, except at the request of the Committee or its Chair, and in the capacity of the Committee’s agent.officers.
For establishing 20162018 compensation, the Compensation Committee retained Pay Governance LLC (“Pay Governance”) as its independent consultant.consultant for general compensation issues. Neither Pay Governance did not providenor any of its affiliates provided any services to management of PG&E Corporation, the Utility, or their affiliates, although Pay Governance has maintained a working relationship with management in order to fulfill Pay Governance’s primary role as adviser to the Compensation Committee. Pay Governance is a nationally recognized independent firm providing consulting assistance to corporations in order to develop compensation programs for senior executives, key employees, and boards of directors. Pay Governance was first selected as the Compensation Committee’s independent consultant in September 2014, following the Committee’s review of numerous candidate firms.
During 2016,2018, Pay Governance advised the Compensation Committee on the following matters:
In late 2018, the companies retained Willis Towers Watson (“WTW”) as an independent consultant for the discrete, targeted purpose of advising the Compensation Committee, the Boards of Directors, and management with respect to incentive plans, retention plans, and non-employee director compensation for companies undergoing financial restructurings. WTW received $150,000 in fees during 2018 for such services. WTW also has historically provided the companies with customary actuarial and consulting services with respect to employee compensation and benefit plan administration. WTW received $2.3 million for such services during 2018. The WTW representatives who work on the targeted executive and director compensation issues for the companies have no relationships with PG&E Corporation’s and the Utility’s Board members and executive management (other than through the provisions of such targeted consulting services) and are independent of the WTW team working on ordinary course matters for the companies. Compensation that would be received by the WTW executive and director compensation team is not directly tied to the other fees paid to WTW by PG&E Corporation and the Utility.
The Compensation Committee determined that no conflicts of interest were raised by the work of Pay Governance or WTW during 2016.2018.
The Compensation Committee also has discretion to engage other compensation consultants, as well as legal counsel and other advisers, although it did not do so during 2016.2018. The Committee will take into accountconsider any such advisers’ and consultants’ independence, and whether the work of any compensation consultants will raise any conflict of interest. PG&E Corporation pays the reasonable compensation costs for any such advisers.advisers and consultants.
Management also may retain compensation consultants to assist management and the Compensation Committee in connection with compensation matters.
20162018 NEO Compensation Competitive Market Review
For 2016,2018, the Compensation Committee used a Pay Comparator Group of publicly traded gas and electric utilities to evaluate market practice and assess PG&E Corporation’s and the Utility’s competitive pay position, supplemented by data for the broader energy services sector or general industry, as appropriate. All elements of NEO total direct pay (base pay and short- and long-term incentive targets) were compared individually and in aggregate to the applicable benchmark data.
The Committee does not adhere strictly to formulas or survey data to determine the actual mix and amounts of compensation. The Committee considers various additional factors, including each NEO’s scope of responsibility and organizational impact, experience, and performance, as well as PG&E Corporation’s and the Utility’s overall safety, operating, and financial results. This flexibility is important in supporting the overall pay-for-performance philosophy and in meeting the Committee’s objectives of attracting, retaining, and motivating a talented executive leadership team.
In setting 20162018 compensation levels, base pay and short-term incentive targets were aligned with the market median.
Target annual LTIP award values for 20162018 reflect long-term incentive award trends of the market. Specifically, performance share valuesawards using a TSR metric are designed to (1) provide payouts commensurate with PG&E Corporation’s TSR performance as compared to the 20162018 Performance Comparator Group, and (2) deliver long-term incentive compensation at approximately the 60thpercentile level of the 20162018 Pay Comparator Group, upon achievement of 60thpercentile TSR performance as compared to the 20162018 Performance Comparator Group. If the Corporation’s TSR performance is at the median level of the 20162018 Performance Comparator Group, participants will realize a payout below target award values. Actual amounts realized by NEOs depend on the Corporation’s performance, as measured by stock price and relative TSR performance as compared to the 20162018 Performance Comparator Group and by actual safety and affordabilityfinancial performance as compared to established targets. Stock options only have value if the price of PG&E Corporation common stock upon exercise exceeds the stock option strike price.
2019 Joint Proxy Statement | 62 |
Pay Comparator Group
For 2016,2018, the Pay Comparator Group used to benchmark compensation elements consisted of all companies listed in the Philadelphia Utility Index, with two replacements. Sempra Energy and WEC Energy Group, Inc. were used as comparators in place of CovantaAmerican Water Works, due to its dissimilar business model, and El Paso Electric because, with annual revenues under $2$1 billion, Covanta and El Paso Electric areit is too small to be a reasonable comparators.comparator. The Philadelphia Utility Index, which is administered by NASDAQ, consists of a group of 20 companies (including PG&E Corporation) that are selected by NASDAQ based on the basis of having a primary business in the electric utility sector and meeting minimum market capitalization criteria.
A total of 19 companies were included in the 20162018 Pay Comparator Group.
AES Corporation Ameren Corporation American Electric Power Company, Inc. CenterPoint Energy, Inc. Consolidated Edison, Inc. Dominion Resources, Inc. DTE Energy Company | Duke Energy Corporation Edison International Entergy Corporation Eversource Energy Exelon Corporation FirstEnergy Corp. NextEra Energy, Inc. | Public Service Enterprise Group |
Sempra Energy | ||
Southern Company | ||
WEC Energy Group, Inc. | ||
Xcel Energy Inc. | ||
In addition, supplemental data for the broader energy services segment, adjusted for PG&E Corporation’s revenues, was provided by Willis Towers WatsonWTW from its proprietary Energy Services executive compensation survey, which includes information from over 100 energy services companies. For Mr. Simon and Mr. Mistry, comparisons were made to data from Willis Towers Watson’s General Industry executive compensation survey, as their job scope and skills are easily transferable to other industries. Due to the proprietary nature of theirthe data, Willis Towers WatsonWTW did not disclose the companies matching individual benchmark positions.
Performance Comparator Group
Each year, PG&E Corporation and the Utility also identify a Performance Comparator Group that is used only for evaluating PG&E Corporation’s relative TSR performance to determine payouts for LTIP performance shares. In determining the composition of the Performance Comparator Group for 2016,2018, the Compensation Committee decided that the Performance Comparator Group will include companies (1) that are categorized consistently by the investment community as “regulated,” as opposed to “less regulated,” based on analysis of revenue sources (i.e., the companies have business models similar to the Corporation and the Utility), and (2) that have a market capitalization of at least $4 billion. The Committee first selected companies listed on the Philadelphia Utility Index that meet these criteria and then selected additional companies that also meet these criteria. A total of 1415 companies were included in the Performance Comparator Group for performance shares granted in 2016.2018.
Alliant Energy Corporation | DTE Energy Company | Pinnacle West Capital Corporation |
Ameren Corporation | Duke Energy Corporation | SCANA Corporation |
American Electric Power Company, Inc. | Edison International | Southern Company |
CMS Energy Corporation | Eversource Energy | WEC Energy Group, Inc. |
Consolidated Edison, Inc. | NiSource Inc. | Xcel Energy Inc. |
3. RISK AND GOVERNANCE APPROACH
3. | RISK AND GOVERNANCE APPROACH |
The companies’ compensation programs emphasize sound governance practices. Our executive compensation practices, as aligned with best practices, include:
Our Compensation Practices | NOT Our Compensation Practices | |||||
Pay for Performance.A majority of compensation is “at risk” and linked to shareholder interests. | ||||||
No Unearned Dividends Paid.No dividends or dividend equivalents are paid on unvested equity awards. | ||||||
Shareholder Outreach.Discussions with key institutional investors on a regular basis. | No Repricing of Options and Stock AppreciationRights.Repricing requires shareholder approval. | |||||
Clawback Policy.Clawback policy with a three-year | ||||||
No Tax Gross-Ups.No tax gross-ups are provided, except for limited programs generally available to all management employees. | ||||||
No Hedging or Pledging.Policy restricts hedging and pledging of either company’s stock. | ||||||
Realizable Pay.The Compensation Committee reviews tally sheets and considers realizable pay. | No Additional Service Credit.Policy against granting additional credited service under the Supplemental Executive Retirement Plan. | |||||
Limited Severance Benefits.Benefits are limited to one times base salary plus target STIP bonus, pro-rata vesting of performance shares, and one-year continued vesting of | ||||||
Compensation Consultant.The Compensation Committee engages an independent consultant and has a policy concerning independence. | ||||||
Ownership Guidelines.Share ownership and retention requirements (6X base salary for the |
Shareholder Outreach
PG&E Corporation and the Utility believe that it is important to provide shareholders with the means to provide input on the Corporation’s corporate governance policies and practices, including its executive compensation programs and the clarity of the company’s disclosures regarding such programs.
PG&E Corporation is committed to investor engagement and listening to investor views on corporate governance matters and executive compensation policies and programs. Prior to the SEC ruling that required large public companies to provide advisory say-on-pay votes, in 2010 PG&E Corporation and the Utility each began providing its shareholders with the right to cast an annual advisory vote on the compensation paid to their NEOs.
Management has made it a practice to contact PG&E Corporation’s top institutional investors on a regular basis to discuss corporate governance trends and issues that are of interest to them.
Executive Stock Ownership Guidelines
The 2010 Executive Stock Ownership Guidelines are designed to encourage senior executive officers to achieve and maintain a minimum investment in PG&E Corporation common stock at levels set by the Compensation Committee, and to further align executive interests with those of PG&E Corporation’s shareholders. Executive stock ownership guidelines are increasingly viewed as an important element of a company’s governance policies.
TheFor NEOs in 2018, the stock ownership target for Mr. Earley and Ms. Williams iswas six times base salary, the target for Messrs. Stavropoulos,Malnight, Wells, and Simon iswas three times base salary, and the target for Messrs. HalpinSoto and Mistry isHogan was one and one-half times base salary. Mr. Thomason is not subject to stock ownership guidelines. Prior to his retirement, the stock ownership target for Mr. Stavropoulos was three times base salary.
Until an executive meets the applicable stock ownership guideline, he or she must retain 50 percent of the net shares realized from the vesting of RSUs or stock units (including performance shares), after accounting for tax withholding. For the purpose of calculating compliance with the guidelines, unvested RSUs and unvested stock units are not taken into account,considered, except in the case of RSUs after a participant is retirement-eligible (defined as age 55 with five consecutive years of service)(as defined in the applicable award agreement).
Clawback Policy
In February 2018, and again in February 2019, the Compensation Committee approved changes to the Clawback Policy, broadening the scope of events to which recoupment applies, including events not predicated on a restatement. The policy now provides the Committee and Boards with the discretion to seek recoupment of payments made to a Section 16 Officer under the following circumstances:
2019 Joint Proxy Statement | 64 |
Compensation Risk Analysis
Pay Governance assists PG&E Corporation and the Utility with a review of the design of the companies’ incentive plans relative to general compensation plan risk factors (or the potential for unintended consequences).factors. The companies reviewed the overall compensation pay structure, the overall mix of compensation vehicles, the structure of the incentive plans, in particular, other company pay plans, and governance for oversight of program design and administration. With respect to incentive plan structure, the companies specifically examined target and maximum compensation inpayable from each plan, the nature and mix of performance measures, the governance structure, the risk of earnings manipulation posed by the incentive structure, and the extent to which the NEO pay program rewards short-term decisions at the risk of long-term performance. The companies also generally considered other compensation policies (such as clawback and anti-hedging policies), other compensation plans relating to severance and change-in-control benefits, and compensation governance.
For 2016,2018, Pay Governance concluded that there were no material issues regarding the companies’ executive pay programs, and that the design of the companies’ incentive pay plans have,has, overall, a low risklow-risk profile.
To further ensure appropriate incentive metrics, the Compensation Committee also receives advice from the Safety and Nuclear Operations, and Safety CommitteeOversight Committees regarding appropriate safety and operational incentive measures.
Based on the foregoing, PG&E Corporation and the Utility concluded that the risks arising from the companies’ overall compensation policies and practices are not reasonably likely to have a material adverse effect on either the Corporation or the Utility.
Tax Deductibility
The Committee appropriately weighsWith the tax-deductibility limitations imposed by Sectionpassage of the Tax Cuts and Jobs Act of 2017, section 162(m) of the Internal Revenue Code. TheCode no longer permits companies to deduct certain qualified performance-based executive compensation. As a result, in establishing compensation for 2018, the Committee in its discretion may award formsno longer considered the tax deductibility limitations imposed by section 162(m).
Despite the new limits on the deductibility of performance-based compensation, the Committee continues to believe that are not deductible under Section 162(m) when it determines that such awards best carry out the goals and objectivesa significant portion of the companies’ officerNEO compensation programs.should be tied to company performance.
4. NEO COMPENSATION STRUCTURE
Named Executive Officers
Named Executive Officers of PG&E Corporation for 20162018 (positions as of December 31, 2018)
Named Executive Officers of Pacific Gas and Electric Company for 20162018 (positions as of December 31, 2018)
Messrs. Earley, Stavropoulos, and Wells and Ms. Williams and Messrs. Wells, Simon, Soto, Malnight, and Stavropoulos are considered NEOs of the Utility. The other NEOs of the Utility for 20162018 are:
As of December 31, 2018, three individuals concurrently served as PEOs of the Utility: Patrick Hogan, Steven Malnight, and Jesus Soto.
20162018 Officer Compensation Program
NEOs received the following types of compensation during 2016.2018.
Type | Component | Key Elements | ||
Cash | Base Salary | • | Determined annually, though merit increase adjustments, or lump sum in lieu of an adjustment, may be made mid-year. | |
Short-Term Incentive | • | Based on corporate performance against pre-established operational and performance goals that are set annually. | ||
• | The Boards and the Compensation Committee have discretion to adjust payments (e.g., for external factors or individual performance) and to reduce awards to zero. | |||
Equity | • | Generally have a three-year vesting period (one-third at the end of each year) while employed or after retirement. | ||
• | Generally vest after a three-year performance | |||
• | Payout is based on TSR relative to | |||
Stock Options | • | Generally have a three-year vesting period (one-third at the end of each year) while employed or after retirement. | ||
• | Exercise price based on closing price of PG&E Corporation common stock on grant date. | |||
Post-Employment | Pension | • | NEOs receive benefits based on their | |
• | Vested benefits are payable at the later of age 55 or separation from service. | |||
• | Benefits may be reduced unless at least 35 years of service or age 65. |
Supplemental Pension | • | Eligible NEOs receive benefits based on their | |
• | Benefits may be reduced unless at least 35 years of service or age 65, at time of separation, and are reduced by amounts payable from the tax-qualified pension plan. | ||
• | Vested benefits are payable at the later of age 55 or separation from service. | ||
• | Officers elected after December 31, 2012 | ||
• | For eligible NEOs, each time salary or STIP is paid, the company credits the participant’s non-qualified deferred compensation account with an amount equal to 7 percent of the payment. | ||
• | DC-ESRP account balances, including earnings, are distributed to the participant in up to 10 annual installments following the end of employment. | ||
Other | Perquisites | • | Limited perquisites include safety- and security-based car transportation services for |
• | Lump-sum annual cash stipend paid in lieu of providing broader perquisite benefits. | ||
• | Also may include the following items that are available to other management employees: health club fee reimbursement and relocation services. |
The following charts illustrate the percentage of target 20162018 compensation allocated to base salary plus cash perquisite allowance, short-term incentives, and long-term incentives for the PG&E Corporation CEO and for the other NEOs on average. (Short-term incentives are shown at target payout levels, and long-term equity incentives are shown at 100 percent payout.)
2019 Joint Proxy Statement | 66 |
TheFor 2018, the Compensation Committee believes that these proportions of base salary relative to target short-term and long-term incentives provideprovided the right mix to attract, retain, and motivate officers with the necessary skills and experience for the development and successful operation of PG&E Corporation’s and the Utility’s businesses. They also provideprovided a direct connection between compensation and performance in both the achievement of key operating results and long-term shareholder value, as more fully described below.
A greater portion of the PG&E Corporation CEO’s 20162018 target compensation is tied to the long-term performance of PG&E Corporation, which the Committee believes is appropriate given the CEO’s role.
Compensation paid to the NEOs was consistent with the types and forms of compensation provided during 20162018 to all executive officers of the companies.
Components of 20162018 Officer Compensation – Cash
Base Salary
For NEO compensation, the base salary component falls within a range of 1310 percent to 40 percent of target total compensation, depending on officer level.
This is consistent with the Compensation Committee’s objective of tying a significant portion of every NEO’s compensation directly to PG&E Corporation’s performance for shareholders through short-term and long-term incentives.
For 2016,2018, the Committee approved a base salary increase budget of 33.25 percent. The comparative data indicated that the companies in the Pay Comparator Group expected to provide officers a 33.20 percent average salary increase in 2016.2018.
In the case of NEOs, the base salary at PG&E Corporation and the Utility is generallyare targeted to be within a range of between 15 percent above and 15 percent below (the “15 percent band”) the median base salary of the appropriate benchmark position. The Committee believes that this level of comparability to the market is appropriate and consistent with its pay philosophy of taking into consideration factors other than market data in establishing individual pay levels, while delivering cash compensation that is competitive with the market.
Short-Term Incentives
The STIP is an at-risk component of pay. NEOs and other eligible employees may earn annual performance-based cash incentive compensation under the STIP based on achievement of financial and operational goals approved by the Committee and an individual executive’s achievements for the year. The Committee retains complete discretion to determine and pay all STIP awards to NEOs and other eligible employees. This includes discretion to reduce the final score on any and all measures downward to zero.
20162018 STIP Structure and Results
For 2016,2018, the Committee adopted a STIP structure that continued PG&E Corporation’s and the Utility’s focus on improving public and employee and contractor safety and customer satisfaction. The weights of the components -– Safety, Customer Satisfaction, and Financial -– were unchanged from 20152017 at 50 percent, 25 percent, and 25 percent, respectively.
2019 Joint Proxy Statement | 67 |
The Safety component was structured to provide a strong focus on the safety of employees, customers, and communities. It was made up of fourfive subcomponents: (1) Nuclear Operations Safety, (2) Electric Operations Safety, (3) Electric and Gas Operations Safety, (4) Gas Operations Safety, and (4)(5) Employee Safety. For 2016, Timely Reporting of Injuries wasThree new safety measures were added as a safety measurefor 2018 – Public Safety Index with a 4weight of 10 percent, weight. The measure was designed to support early intervention, avoid exacerbationAsset Mapping Duration Index with a weight of medical problems,10 percent, and reinforce the companies’ “Speak Up” culture. To accommodate the added measure, the weightsSafe Driving Rate with a weight of the Lost Workday Case Rate and Serious Preventable Motor Vehicle Incident Rate measures were each reduced from 8 percent in the 2015 STIP to 6 percent in the 2016 STIP.5 percent.
The Customer Satisfaction measures were designed to incent employees to be more responsive to customers’ needs. One new customer satisfaction measure was added for 2018 – Customer Connection Cycle Time with a weight of 10 percent.
As in prior years, corporate Financialfinancial performance was measured by PG&E Corporation’s actual earnings from operations compared to budget.
Each STIP measure has a threshold, target, and maximum level of performance used to arrive at a score ranging from zero to 2.0 for that measure. Performance below the minimum performance level, or threshold, results in a zero score. Performance at the threshold results in a STIP score of 0.5. Target performance results in a STIP score of 1.0, and performance at or above the maximum established level results in a score of 2.0. A score of 1.0 provides 100 percent of an executive’s target payout. Performance at the threshold and maximum levels delivers 50 percent and 200 percent of targeted payout, respectively. Linear interpolation is used to determine scores for performance between threshold and target, and between target and maximum.
The STIP overall performance score is the sum of the weighted cumulative average scores for performance on each of the STIP measures.
An NEO’s final STIP score also may be increased or decreased by an individual performance modifier, which can range from 0 percent to 150 percent. The individual performance modifier is determined by the Committee based upon the PG&E Corporation CEO’s assessment of an executive’s performance, or the applicable Board’s assessment in the case of the CEO’s or anythe Utility President’s (or equivalent officer’s) performance, for the year.
For 2016,2018, the measures and related weightings, thresholds, targets, maximums, and results for calculating the STIP performance score were as follows:
Weighted | ||||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||
2016 STIP Measures | Weight | Threshold | Target | Maximum | Result | Score | Score | |||||||||||||||||||||
2018 STIP Measures | Weight | Threshold | Target | Maximum | Result | Score | Weighted Average Score | |||||||||||||||||||||
SAFETY COMPONENT (50%) | ||||||||||||||||||||||||||||
Nuclear Operations Safety | ||||||||||||||||||||||||||||
Diablo Canyon Power Plant Reliability and Safety Indicator | ||||||||||||||||||||||||||||
Unit 1 Reliability and Safety Indicator | 4% | 94.2 | 98.7 | 100.0 | 100.0 | 2.000 | 0.080 | 2.5% | 85.3 | 96.4 | 100.0 | 100.0 | 2.000 | 0.050 | ||||||||||||||
Unit 2 Reliability and Safety Indicator | 4% | 94.2 | 98.7 | 100.0 | 90.0 | 0.000 | 0.000 | 2.5% | 85.3 | 87.6 | 90.0 | 90.0 | 2.000 | 0.050 | ||||||||||||||
Electric Operations Safety | ||||||||||||||||||||||||||||
Transmission and Distribution (T&D) Wires Down | 5% | 3,000 | 2,572 | 2,400 | 3,299 | 0.000 | 0.000 | |||||||||||||||||||||
911 Emergency Response | 5% | 95.0% | 97.5% | 98.5% | 98.3% | 1.800 | 0.090 | |||||||||||||||||||||
Public Safety Index | 10% | 0.5 | 1.0 | 2.0 | 1.9 | 1.888 | 0.189 | |||||||||||||||||||||
Gas and Electric Operations Safety | ||||||||||||||||||||||||||||
Asset Records Duration Index | 10% | 0.5 | 1.0 | 2.0 | 1.3 | 1.268 | 0.127 | |||||||||||||||||||||
Gas Operations Safety | ||||||||||||||||||||||||||||
In-Line Inspection and Upgrade Index | 6% | 0.50 | 1.00 | 2.00 | 0.88 | 0.880 | 0.053 | |||||||||||||||||||||
Gas In-Line Inspection and Upgrade Index | 5% | 0.5 | 1.0 | 2.0 | 1.5 | 1.483 | 0.074 | |||||||||||||||||||||
Gas Dig-ins Reduction | 5% | 2.18 | 2.03 | 1.96 | 2.02 | 1.143 | 0.057 | 5% | 2.0 | 1.91 | 1.8 | 1.6 | 2.000 | 0.100 | ||||||||||||||
Gas Emergency Response | 5% | 21.5 | 21.0 | 20.0 | 20.0 | 2.000 | 0.100 | |||||||||||||||||||||
Employee Safety | ||||||||||||||||||||||||||||
Lost Workday Case Rate | 6% | 0.353 | 0.320 | 0.275 | 0.402 | 0.000 | 0.000 | |||||||||||||||||||||
Serious Preventable Motor Vehicle Incident (SPMVI) Rate | 6% | 0.252 | 0.239 | 0.226 | 0.280 | 0.000 | 0.000 | |||||||||||||||||||||
Timely Reporting of Injuries | 4% | 64.0% | 67.1% | 70.2% | 67.3% | 1.065 | 0.043 | |||||||||||||||||||||
Serious Injuries and Fatalities (SIF) Corrective Action Index | 10% | 0.5 | 1.0 | 2.0 | 1.6 | 1.600 | 0.160 | |||||||||||||||||||||
Safe Driving Rate | 5% | 6.7 | 6.5 | 6.1 | no results | 0.000 | 0.000 | |||||||||||||||||||||
CUSTOMER SATISFACTION COMPONENT (25%) | ||||||||||||||||||||||||||||
Customer Satisfaction Score | 15% | 75.5 | 75.7 | 76.3 | 76.1 | 1.667 | 0.250 | 15% | 74.0 | 75.0 | 76.5 | 77.3 | 2.000 | 0.300 | ||||||||||||||
System Average Interruption Duration Index (SAIDI) | 10% | 101.1 | 96.3 | 93.9 | 109.0 | 0.000 | 0.000 | |||||||||||||||||||||
Customer Connection Cycle Time | 10% | 15 | 10 | 8 | 6 | 2.000 | 0.200 | |||||||||||||||||||||
FINANCIAL COMPONENT (25%) | ||||||||||||||||||||||||||||
Earnings from Operations (EFO) (in millions) | 25% | 95% of Budget | Budget | 105% of Budget | $1,884.0 | 1.053 | 0.263 | 25% | 95% of Budget | $1,976 (Budget) | 105% of Budget | $2,016 | 1.404 | 0.351 | ||||||||||||||
100% | 0.936 | 100% | 1.601 |
2019 Joint Proxy Statement | 68 |
The measures in the foregoing table are defined below.
Diablo Canyon Power Plant Reliability and Safety Indicator—Year-end score of 12 performance indicators reported to the Institute of Nuclear Power Operations for the Utility’s Diablo Canyon Power Plant Units 1 and 2.2 based on 11 performance indicators developed by the nuclear industry for nuclear power generation.
Transmission and Distribution (T&D) Wires DownPublic Safety Index—NumberA weighted index of unplanned sustained outage events involving at least one downed overhead electric transmission or primary distribution conductor.three programs that evaluate compliance in the CPUC High Fire-Threat District (HFTD).
911 Emergency ResponseAsset Records Duration Index—PercentageAn equally-weighted index comprised of time that Utility personnel are on site within 60 minutes after receiving a 911 callGas and Electric Asset Record Duration Indices tracking the average number of a potential Utility electric hazard.days to complete the as-built process of capital and expense jobs.
Gas In-Line Inspection and Upgrade Index—Index measuring the Utility’s ability to complete planned in-line inspections and pipeline retrofit projects.
Gas Dig-ins Reduction—Number of third-party dig-ins to the Utility’s gas assets per 1,000 Underground Service Alert tickets.
Gas Emergency ResponseSerious Injuries and Fatalities (SIF) Corrective Action Index—AverageIndex measuring two equally-weighted measures of response time in minutes to an immediate response gas emergency order.SIF events: (1) Quality of Corrective Actions, and (2) Timely Completion of Corrective Actions.
Lost Workday CaseSafe Driving Rate—NumberThe total number of lost workday cases incurredVehicle Safety Technology (VST) in-vehicle performance monitor alerts for hard braking and hard acceleration per 200,000 hours worked (or for approximately every 100 employees).
Serious Preventable Motor Vehicle Incident (SPMVI) Rate—Number of SPMVIs occurring that the driver could have reasonably avoided, per 1 millionthousand miles driven.
Timely Reporting of Injuries—Percentage of work-related injuries reported to the 24/7 Nurse Report Line within one day of the incident.
Customer Satisfaction Score—Overall satisfaction of customers with the products and services offered by the Utility, as measured through a quarterlyan ongoing survey.
System Average Interruption Duration Index (SAIDI)Customer Connection Cycle Time—TotalThe 12-month average Service Planning and Construction cycle time that the average customer is withoutfor electric power during a given time period (measured in number of minutes).residential Express Connections New Business Work requested by Utility customers.
Earnings from Operations (EFO)—PG&E Corporation’s actual earnings from operations, excluding items impacting comparability compared to budget. The measurement is non-GAAP. Please see Exhibit A for a reconciliation of PG&E Corporation’s earnings from operations to income available for common shareholders in accordance with GAAP.
Individual Awards Determination
STIP cash awards to NEOs are calculated as follows:
1. | Determine the executive’s individual |
2. | Calculate the overall enterprise-wide STIP performance score, which can range from 0 to 2.0 and is calculated based on final results compared to the threshold, target, and maximum of each weighted measure. |
Multiply the |
4. | Multiply the |
5. | The Committee (and the independent members of the PG&E Corporation and Utility Boards of Directors in the case of the CEO and any President (or equivalent) of the respective companies) approves all final awards and has discretion to adjust all STIP awards. |
For 2016,2018, the Committee approved NEO participation rates that ranged from 4045 percent to 125130 percent of base salary (the 125130 percent participation rate applies only to the PG&E Corporation CEO). This range is within the 15 percent band of the Pay Comparator Group’s median annual incentive participation rates.
For 2016, STIP awards for the NEOs ranged from 100 percent to 140 percent of the 2016 calculated company award when adjusted for individual performance. The final awards for 2016 were paid to each of the NEOs in March 2017 and are reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 58.
Although the overall final company 2016 STIP score was 0.936, in order to reflect the importance of employee safety,2018, the Committee and the independent members of each of the PG&E Corporation and Utility Boards reducedof Directors exercised their discretion to adjust awards for NEOs and the PG&E Corporation CEO and Pacific Gas and Electric Company principal executive officers, setting the company score to 0.900zero. No STIP awards were paid to NEOs for senior officers due to the deaths of an employee and a contractor during 2016. The reduction applied to all NEOs except Mr. Thomason.
2017 STIP Structure
The Committee approved a STIP structure for 2017 that remains focused on improving public and employee safety and customer satisfaction. Weightings remain unchanged from 2016, with achievement of safety goals at a 50 percent weighting, achievement of customer satisfaction goals at a 25 percent weighting, and achievement of the corporate financial target at a 25 percent weighting. Two safety measures have been replaced for 2017. Transmission and Distribution Wires Down, with a weight of 5 percent, was replaced by the Electric Overhead Conductor Index. Lost Workday Case rate, with a weight of 6 percent, was replaced by the Serious Injuries and Fatalities Corrective Action Index. The measures and related weighting are as follows:2018.
Long-Term Incentives
Long-Term Incentive Awards Granted in 20162018
LTIP awards (both annual and mid-year) are granted consistent with the PG&E Corporation Equity Grant Date Policy (see discussion below under “Equity Grant Dates”).
Award Type/Measure | Weight | |||
Performance Shares | 35 | % | ||
Total Shareholder Return (20%) | ||||
Safety: | ||||
Financial: Earnings from Operations (5%) | ||||
Nonqualified Stock Options – Time Based Vesting | 20 | % | ||
Restricted Stock Units – Time Based Vesting | 45 | % |
In February 2016,2018, the Compensation Committee (and the independent members of the PG&E Corporation Board in the case of Ms. Williams, and the independent members of the Utility BoardsBoard in the case of Mr. Earley, and Ms. Williams and Mr. Stavropoulos, respectively)Stavropoulos) approved annual LTIP awards for 2016,2018, which were granted in March 2016.May 2018.
Target annual LTIP award values for 20162018 for the NEOs were determined based on competitive market data, internal equity considerations, and advice from Pay Governance. The annual LTIP awards for 20162018 granted to the NEOs were comprised of 5035 percent performance shares using a relative TSR, measure, 10 percent performance shares using safety, and affordabilityfinancial measures, based on grant date fair value,20 percent nonqualified stock options, and 4045 percent RSUs.
TheFor 2018, the Committee believes that this allocation of performance shares, stock options and RSUs for NEOs balances the interests of shareholdersclosely aligned NEO compensation with long-term PG&E Corporation performance and officers by linking the value of all long-term compensation to stock price appreciation, and by linking the value of a significant portion of long-term compensation to relative TSR.shareholder value. Because performance shares, stock options and RSUs each vest over a three-year period and increase or decrease in value depending on the performance of PG&E Corporation common stock, these awards are at risk based on corporate performance, and align the interests of NEOs with performance for shareholders.
In December 2015, the Committee approved a $500,000 RSU award for Mr. Mistry for retention purposes. In accordance with the PG&E Corporation Equity Grant Date Policy, this award was granted on February 23, 2016. In May 2016, the Committee approved a $100,000 award, allocated $60,000 to performance shares and $40,000 to RSUs for Mr. Thomason in connection with his promotion. The award was granted on August 8, 2016. In September 2016, the Committee approved a $1,000,000 RSU award for Mr. Halpin for retention purposes. The award was granted on November 28, 2016.
Additional details regarding RSUsperformance shares, stock options and performance sharesRSUs are provided below.
Performance Shares – TSR
Performance shares are hypothetical shares of PG&E Corporation common stock tied directly to PG&E Corporation’s performance for shareholders, and generally vest only at the end of a three-year performance period.
The number of performance shares with a TSR measure granted in March 2016May 2018 to each NEO was determined by multiplying 35 percent of the NEO’s actual annual LTIP award value for 20162018 by 5020 percent and dividing the result by the grant date fair value of a performance share as determined by a Monte Carlo simulation.
Performance shares with a TSR measure granted in March 2016May 2018 will vest, if at all, following completion of the three-year performance period starting January 1, 20162018 and ending December 31, 20182020 and upon certification of performance results by the Compensation Committee, which will occur no later than March 14, 2019.2021. The payout value of any vested performance shares will be based on PG&E Corporation’s TSR relative to the 20162018 Performance Comparator Group for the period. The payment for performance shares will be in the form of stock and will be calculated by multiplying (1) the number of vested performance shares by (2) a payout factor based on the Corporation’s relative TSR performance compared to the Performance Comparator Group.
2019 Joint Proxy Statement | 70 |
As shown in the following 20162018 Performance Share Payout Scale, payouts of performance shares are linked to PG&E Corporation’s TSR performance compared to the Performance Comparator Group.60thpercentile performance is required for a 100 percent payout.
2016 PERFORMANCE SHARE PAYOUT SCALE
NUMBER OF COMPARATOR COMPANIES IN TOTAL = 14
2018 PERFORMANCE SHARE PAYOUT SCALE NUMBER OF COMPARATOR COMPANIES IN TOTAL = 15 | 2018 PERFORMANCE SHARE PAYOUT SCALE NUMBER OF COMPARATOR COMPANIES IN TOTAL = 15 | |||||||
Company Performance | Rounded | |||||||
Peer Company Rank | Percentile | Payout | Company Performance Percentile | Rounded Payout | ||||
1 | 100 | 200% | 100 | 200% | ||||
2 | 93 | 200% | 93 | 200% | ||||
Maximum | 90 | 200% | 90 | 200% | ||||
3 | 86 | 186% | 87 | 189% | ||||
4 | 79 | 162% | 80 | 167% | ||||
5 | 71 | 138% | 73 | 144% | ||||
6 | 64 | 114% | 67 | 122% | ||||
Target | 60 | 100% | ||||||
7 | 57 | 94% | ||||||
7 andTarget | 60 | 100% | ||||||
8 | 50 | 79% | 53 | 86% | ||||
9 | 43 | 63% | 47 | 71% | ||||
10 | 36 | 48% | 40 | 57% | ||||
11 | 29 | 33% | 33 | 43% | ||||
12 | 27 | 29% | ||||||
Threshold | 25 | 25% | 25 | 25% | ||||
12 | 21 | 0% | ||||||
13 | 14 | 0% | 20 | 0% | ||||
14 | 7 | 0% | 13 | 0% | ||||
15 | 7 | 0% |
Interpolation shallwill be used in the event thatif PG&E’s&E Corporation’s TSR performance does not fall directly on one of the listed performance percentiles.
Performance Shares – Safety and AffordabilityFinancial
The number of performance shares with safety and affordabilityfinancial measures granted in March 20162018 to each NEO was determined by multiplying 35 percent of the NEO’s actual annual LTIP award value for 20162018 by 1015 percent and dividing the result by the closing price of a share of PG&E Corporation common stock on March 1, 2016.2018.
Performance shares with safety and affordabilityfinancial measures granted in March 20162018 will vest, if at all, following completion of the three-year performance period starting January 1, 20162018 and ending December 31, 20182020 and upon certification of quantifiable performance results by the Compensation Committee, which will occur no later than March 14, 2019.2021. The measures were designed to provide a direct focus on long-term safety and financial goals. The payout value of any vested performance shares will be based on achievement of equally weighted safety and affordabilityfinancial goals. The safety measure will comparemeasures the total number of repeat SIF actual or potential injury or near-hit events per 200,000 hours worked. The financial measure compares Earnings from Operations (EFO) per share in 2018, actual Lost Workday Case Rate against established threshold, target,2019, and maximum goals, with2020 to the mid-point of the guidance range for each year. In the event that guidance is not issued until after February of the target representing a 42 percent improvement over the 2015 result. The affordability measure will compare three-year cumulative efficiency gains to established threshold, target, and maximum goals, withyear, the target representing a $100 million cumulative net reduction of standard rate case expense overwill be set based on the three-year performance period as compared to escalated 2014 costs.Board-approved EFO forecast for the year. Awards pay out at 25 percent for threshold (95 percent of mid-point) performance, 100 percent for target (mid-point) performance, and 200 percent for maximum (105 percent of mid-point) performance. Interpolation shallwill be used if results do not fall directly on the minimum, target, or maximum goal. The payment for performance shares will be in the form of stock and will be calculated by multiplying (1) the number of vested performance shares by (2) a payout factor based on achievement of performance goals.
Restricted Stock Units
RSUs are hypothetical shares of stock that are settled in an equal number of shares of PG&E Corporation common stock, and generally vest only if the officer remains employed over the vesting period. Because the value of RSUs varies with the price of PG&E Corporation common stock, RSUs align officers’ interests with those of shareholders (i.e., stock price appreciation and dividends). The multi-year vesting period also serves a retention purpose. The number of RSUs granted in March 20162018 to each NEO was determined by multiplying the NEO’s actual annual LTIP award value for 20162018 by 4045 percent and dividing the result by the closing price of a share of PG&E Corporation common stock on March 1, 2016.
stock on March 1, 2018. Annual RSU awards granted in 2018 will vest in three tranches, with one-third vesting on the first business day of March of each of the three years following the grant date. The $500,000 retention RSU award granted to Mr. Soto on June 26, 2018 vests one-third on June 26, 2020 and two-thirds on June 26, 2021. The $300,000 promotional RSU award granted to Mr. Malnight on September 4, 2018 vests on September 4, 2020.
Nonqualified Stock Options
A stock option is the right to acquire shares at a fixed exercise price for a fixed time. The exercise price of each option is based on the closing price of the stock on the NYSE on the date of grant. Options vest and become exercisable ratably during each of the three years following the grant date. Options expire at the close of business ten years after the date of grant, after which time the options cease to be exercisable. Because the value of stock options varies with the price of PG&E Corporation common stock and because options have a ten-year expiration period, stock options align officers’ interests with those of shareholders while reflecting a longer-term view of the companies’ business environment. The number of stock options granted in March 2018 to each NEO was determined by multiplying the NEO’s actual annual LTIP award value by 20 percent and dividing the result by the Black-Scholes American Call model value per share on the date of grant.
Performance Shares Vested in 20162018
The three-year performance cycle for annual performance share awards that were granted in 20132015 under the 2006 LTIP ended on December 31, 2015.2017. These awards vested on March 1, 2016,2018, and payouts are reported in this Proxy Statement in the table entitled “Option Exercises and Stock Vested During 2016”2018” on page 63. 82.
For that performance period, PG&E Corporation’s TSR ranked 8fell between 13th and 14th rank when compared to the 1214 companies in the 20132015 Performance Comparator Group. This ranking resulted in a 50 percentno payout with respect to the 20132015 performance share awards.awards using a TSR measure. PG&E Corporation’s TSR performance for the three-year period was 48.74.5 percent, as compared to the median TSR of 49.545.0 percent among the 20132015 Performance Comparator Group companies for the same period.
Performance Shares Vested in 20172019
Fifty percent of awards granted under the LTIP in 2016 were allocated to performance shares using a relative TSR measure. The three-year performance cycle for annual performance share awards that were granted in 2014 under the 2006 LTIP ended on December 31, 2016.2018. These awards vested on March 1, 2017February 19, 2019 and any payouts for these awards arewould be expected to be reflected in the 20182019 proxy statement. For that period, PG&E Corporation’s TSR ranked 4thfell lowest when compared to the 1214 companies in the 20142016 Performance Comparator Group. This ranking resulted in a 160 percentno payout with respect to the 20142016 performance share awards.awards using a TSR measure. PG&E Corporation’s TSR performance for the three-year period was 67.5negative 50.5 percent, as compared to the median TSR of 59.951.2 percent among the 20142016 Performance Comparator Group companies for the same period. A 20-day average is used to determine the beginning and ending values for the calculation.
2017 LTIP Structure
In February 2017, the Committee and the independent members of the PG&E Corporation and Utility Boards approved LTIP awards for 2017. The design and allocation is similar to that of the 2016 awards. 50Ten percent of awards granted under the award value isLTIP in 2016 were allocated to performance shares with a TSR measure, 10 percent tothe payout determined by measuring performance shares with equally weightedagainst equally-weighted safety and financial measures, and 40 percent to RSUs. A metric measuringaffordability goals. Safety performance, as measured by the effectiveness of corrective actions related to serious injuries and fatalities replaces2016 through 2018 Lost Workday Case Rate was below the threshold target. Affordability, as measured by three-year efficiency gains versus a $100 million target, achieved a 2.0 score, with savings of $279 million, which is significantly above the safety measure. A financial metric measuring earnings from operations per share replaces$200 million maximum target. The overall result was a 100 percent payout in 2019 for these performance shares, which represented 10 percent of the affordability measure.total 2016 target LTIP award.
2016 Safety and Affordability Measures | Weight | Threshold | Target | Maximum | Result | Score | Weighted Average Score | |||||||
SAFETY COMPONENT | ||||||||||||||
2016-2018 Lost Workday Case Rate | 50% | 0.247 | 0.215 | 0.201 | 0.392 | 0.000 | 0.000 | |||||||
AFFORDABILITY COMPONENT | ||||||||||||||
3-Year Efficiency Gains (in millions) | 50% | $75 | $100 | $200 | $279 | 2.000 | 1.000 | |||||||
100% | 100% |
2019 Joint Proxy Statement | 72 |
Equity Grant Dates
The PG&E Corporation Equity Grant Date Policy, as last amended in September 2017, generally provides that annual LTIP awards are granted whenonce per year on March 1 (or if that day is not a business day, then on the market price offollowing business day). The PG&E Corporation common stock reflectsBoard or the disclosure of all material information. Annual equity awards for 2016 were granted on March 1, 2016, which was consistent with this policy. Under the policy, theCompensation Committee may determine a different grant date if appropriate or necessary. The grant date for non-annual equity awards to employees (such as for newly hired or newly promoted officers)officers or awards made for retention, recognition, or other purposes) is the later of (1) the date that the non-annual award is approved by the independent members of the PG&E Corporation or Utility Board, the Compensation Committee, or the PG&E Corporation CEO, as applicable, (2) the effective date thatof the LTIP award recipient becomes an employee, if applicable,recipient’s employment, promotion, or recognition, or (3) the date otherwise specified by the applicable Board, the Committee, or the Corporation CEO. If the grant date of any non-annual LTIP award would occur during a trading blackout period, as defined under the PG&E Corporation Insider Trading Policy, then the actual grant date will be the first business day after the trading blackout period ends.
Other Elements of Executive Compensation in 2018
Perquisites and Related Compensation
NEOs generally receive a limited range of perquisite benefits, typically encompassing a partial subsidy for financial planning services from a third-party financial advisory firm, partial reimbursement of certain health club fees, on-site parking, and executive health services. Eachservices, andde minimis perquisites under a pre-approved perquisite policy. The PG&E Corporation CEO and the Utility President also may receive safety-and security-based car transportation services. The magnitude of these perquisites, including the lump-sum payment described in the following paragraph, is comparable to that provided to executive officers of companies in the Pay Comparator Group, and the value of these services is taxable to the recipient.
The Compensation Committee (and the independent members of the PG&E Corporation Board in the case of Ms. Williams, and the independent members of the Utility BoardsBoard in the case of Mr. Earley, and Ms. Williams and Mr. Stavropoulos, respectively)Stavropoulos) also approved a 20162018 lump-sum annual stipend amount for each executive officer consistent with 2015,2017, which ranged from $15,000 to $35,000 (the upper end applicable only to Mr. Earley)Ms. Williams). This stipend is provided in lieu of providing the NEOs with additional perquisite benefits. The NEOs have discretion to use this stipend as they see fit. This stipend is consistent with amounts paid historically.
The PG&E Corporation CEO is authorized to use private aircraft for business travel under appropriate circumstances. The Utility’s Corporate Aircraft Use policy prohibits use of Utility aircraft for personal travel.
Post-Retirement Benefits
NEOs are eligible to receive retirement benefits under the Utility’s tax-qualified defined benefit plan (Retirement Plan)(“Retirement Plan”), which also provides benefits to other eligible employees of PG&E Corporation and the Utility. Retirement Plan benefits are in the form of either a final average pay pension benefit or a cash balance benefit. All NEOs except Mr.Messrs. Hogan and Thomason also are eligible to receive benefits under the PG&E Corporation Supplemental Executive Retirement Plan (“SERP”), which is a non-tax-qualified defined benefit pension plan that provides officers and key employees of the Corporation and its subsidiaries, including the Utility, with an additional pension benefit. These plans are described in the section entitled “Pension Benefits—2016”2018” beginning on page 63.82.
In February 2010, the Committee adopted a policy against crediting additional years of service for participants in the SERP.
Effective January 1, 2013, SERP participation was closed to new participants. Individuals who did not participate in the SERP but who were newly hired or promoted to officer after January 1, 2013 are eligible for non-tax-qualified defined contribution pension payments under the 2013 PG&E Corporation Defined Contribution Executive Supplemental Retirement Plan (“DC-ESRP”). Mr.Messrs. Hogan and Thomason iswere the only NEONEOs who participatesparticipate in the DC-ESRP. The DC-ESRP is described in more detail in the section entitled “Non-qualified Deferred Compensation – 2016”2018” beginning on page 65.84.
2019 Joint Proxy Statement | 73 |
NEOs and other officers and employees also are eligible to participate in the PG&E Corporation Retirement Savings Plan (“RSP”), a tax-qualified 401(k) plan. PG&E Corporation provides a maximum matching contribution of 75 cents for each dollar contributed, up to 6 percent of base salary for individuals eligible for the final average pay pension benefit and up to 8 percent of base salary for individuals eligible for a cash balance pension benefit. To the extent that the Internal Revenue Code limits prevent an NEO from making contributions to his or her RSP account and, as a result, company matching funds are not contributed to that NEO’s RSP account, the matching funds will instead be contributed to the NEO’s account in the PG&E Corporation 2005 Supplemental Retirement Savings Plan (SRSP)(“SRSP”), a non-qualified deferred compensation plan.
Upon retirement, NEOs also may be eligible for post-retirement health, welfare, insurance, and similar benefits, pursuant to plans that generally provide benefits to all employees. Additional details regarding the retirement programs and post-retirement benefits, and the value of pension benefits accumulated as of December 31, 20162018 for the NEOs, can be found in the table entitled “Pension Benefits—2016”2018” beginning on page 63,82, the table entitled “Non-qualified Deferred Compensation – 2016”Compensation—2018” beginning on page 65,84, and in the section entitled “Potential Payments—Resignation/Retirement” on page 68.88.
The majority ofMost companies in the 20162018 Pay Comparator Group provide tax-qualified pensions or similar plans, other tax-qualified defined contribution plans (i.e.(e.g., 401(k) plans), and non-tax-qualified retirement plans for NEOs. The Committee believes that these defined benefit and defined contribution plans offer significant recruiting and retention incentives.
Officer Severance Program
General severance benefits are provided to NEOs through the 2012 PG&E Corporation Officer Severance Policy (“Officer Severance Policy”) and specific LTIP award agreements and guidelines. Upon termination by either company (other than for cause), NEOs may be eligible for cash severance payments, continued or accelerated vesting for LTIP awards, and other post-employment benefits. If an NEO is terminated for cause (i.e.(e.g., for dishonesty, a criminal offense, or violation of a work rule) or resigns before becoming retirement-eligible, the NEO forfeits any unvested performance shares, stock options, and RSUs, and would not receive any associated dividends.
Officer Severance Policy
The purpose of the Officer Severance Policy is to (1) attract and retain senior management by providing severance benefits that are part of a competitive total compensation package, (2) provide consistent treatment for all terminated officers, and (3) minimize potential litigation costs in connection with terminations of employment by conditioning payments upon a general release of claims.
In February 2012, the PG&E Corporation Board of Directors (upon the recommendation of the Compensation Committee) amended the officer severance program and adopted the Officer Severance Policy, to better align the officer severance program with industry best practices. The Officer Severance Policy, in combination with LTIP award agreements generally provides the following benefits upon termination without cause:
Additional details regarding severance benefits can be found in the section entitled “Potential Payments—Termination Without Cause” beginning on page 70.90.
Change in Control
Providing change-in-control severance benefits is a key part of the companies’ officer compensation program. In a hostile takeover or other change-in-control situation, it is important for management to remain focused on maximizing shareholder value and aligning management’s interests with shareholders’ interests, and not to be distracted by concerns about job security.
Change-in-control benefits require a “double trigger” and are not payable based on a change-in-control event alone, as described below. The Compensation Committee believes that the “double trigger” requirement aligns our change-in-control benefits with shareholder interests and reflects current market practices.
2019 Joint Proxy Statement | 74 |
The Officer Severance Policy provides enhanced cash severance benefits if the officerofficer’s employment is terminated (including constructive termination by the officer for good reason) in connection with a Change in Control (as defined in the Policy). These enhanced benefits replace general severance benefits and are available only to officers in bands 1 or 2, which, as of December 31, 2016, includes all NEOs except2018, included Ms. Williams and Messrs. Halpin, Mistry,Malnight, Wells, Simon, and Thomason. These coveredStavropoulos. Covered officers are eligible to receive (1) change-in-control cash severance benefits equal to two times the sum of base salary and target annual STIP bonus, and (2) prorated STIP bonus for the year of termination. Mr. Earley waived his rights under the Officer Severance Policy in return for reasonable costs for relocation to Detroit, Michigan upon separation from employment. Other NEOs receive general severance benefits only.
All LTIP award agreements contain the same change-in-control provisions whichthat accelerate vesting of all awards if there is a Change in Control,andeither the award is not continued, assumed, or substituted, or the recipientrecipient’s employment is terminated in connection with a Change in Control. This practice aligns PG&E Corporation and the Utility with market practices and (1) better balances the interests of award recipients and shareholders, (2) provides security for award recipients in a time of uncertainty, and (3) preserves the incentive for award recipients to stay with the Corporation or the Utility even following a transaction.
The Golden Parachute Restriction Policy requires shareholder approval of certain executive severance payments (as defined in the Golden Parachute Restriction Policy) provided in connection with a change in control of PG&E Corporation, to the extent that those payments exceed 2.99 times the sum of a covered officer’s base salary and target STIP award.
Additional details regarding Change-in-Control benefits can be found in the section entitled “Potential Payments—Severance in Connection with Change in Control” beginning on page 71.90.
5. 2019 NEO COMPENSATION PROGRAM
On January 29, 2019, PG&E Corporation and the Utility each filed a voluntary petition for relief under Chapter 11 in the Bankruptcy Court.
As a result of the Chapter 11 Cases, the 2019 executive compensation program may differ significantly from that in prior years. In addition, certain compensation provided to executive officers during the pendency of the Chapter 11 Cases may be subject in certain instances to approval by the Bankruptcy Court. The Committee has been working with its advisors, including WTW, to review the 2019 executive compensation program in an effort to balance the financial situation facing the companies, the need to continue to recruit and retain qualified executives to guide the companies through a period of uncertainty, including the unpredictability of the stock price, and the resulting effect on the incentive and retentive value of equity-based awards. In February 2019, the Committee determined that the NEOs will not participate in the 2019 STIP and expects that the companies will continue to evaluate all aspects of the 2019 executive compensation program, including base salary, short- and long-term incentives, and other benefits.
6. COMMITTEE CONCLUSION
The Compensation Committee believes that the amount and design of executive compensation provided for 20162018 to the NEOs of PG&E Corporation and the Utility are consistent with the Committee’s compensation objectives and policies to (1) provide long-term incentives to align shareholders’ and officers’ interests and enhance total return for shareholders, (2) attract, retain, and motivate officers with the necessary mix of skills and experience for the development and successful operation of the Corporation’s and the Utility’s businesses, and (3) compensate NEOs in a competitive, cost-efficient, and transparent manner.
EXHIBIT A
Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Income Available for Common Shareholders in Accordance with Generally Accepted Accounting Principles (“GAAP”) to Earnings from Operations.
For the year ended December 31, 20162018
Per Share | ||||||||
Amounts | ||||||||
(in millions, except per share amounts) | Earnings | (Diluted) | ||||||
PG&E Corporation Earnings from Operations(1) | $1,884 | $3.76 | ||||||
Items Impacting Comparability:(2) | ||||||||
Butte fire related costs, net of insurance(3) | (137) | (0.27) | ||||||
Fines and penalties(4) | (307) | (0.61) | ||||||
Pipeline related expenses(5) | (67) | (0.13) | ||||||
Legal and regulatory related expenses(6) | (43) | (0.09) | ||||||
GT&S capital disallowance(7) | (130) | (0.26) | ||||||
GT&S revenue timing impact(8) | 193 | 0.38 | ||||||
PG&E Corporation Earnings on a GAAP basis | $1,393 | $2.78 |
(in millions, except per share amounts) | Earnings | Per Share Amounts (Diluted) | ||||||
PG&E Corporation Earnings on a GAAP basis | $(6,851) | $(13.35) | ||||||
Items Impacting Comparability:(1) | ||||||||
2018 Camp fire-related costs, net of insurance(2) | 6,823 | 13.20 | ||||||
2017 Northern California wildfire-related costs, net of insurance(3) | 2,090 | 4.04 | ||||||
Pipeline related expenses(4) | 33 | 0.06 | ||||||
2015 Butte fire-related costs, net of insurance(5) | 24 | 0.05 | ||||||
Reduction in gas-related capital disallowance(6) | (27) | (0.05) | ||||||
2017 insurance premium cost recoveries(7) | (23) | (0.05) | ||||||
PG&E Corporation Earnings from Operations(8) | $2,069 | $4.00 |
(1) | “ | |
Items impacting |
The Utility incurred costs, net of insurance, of $9.5 billion (before the | ||
December 31, | ||||
(3) | The Utility incurred costs, net of insurance, of $629 million (before the tax impact of $176 million) and $2.9 billion (before the tax impact of $813 million) during the three and twelve months ended December 31, 2018, respectively, associated with |
December 31, | ||||
Future fines or penalties may be imposed in connection with other enforcement, regulatory, and litigation activities regarding natural gas matters and regulatory communications.
(4) | The Utility incurred costs of $11 million (before the tax impact of $3 million) and $46 million (before the tax impact of $13 million) during the three and twelve months ended December 31, 2018, respectively, for pipeline-related expenses incurred in connection with the multi-year effort to identify and remove encroachments from transmission pipeline |
The Utility incurred costs, net of | ||
(6) | The Utility reduced the estimated disallowance for gas-related capital |
(7) | As a result of the |
(8) | “Earnings from operations” is a non-GAAP financial measure and is calculated as income available for common shareholders less items impacting comparability as described in Note (1) above. PG&E Corporation uses earnings from operations to understand and compare operating results across reporting periods for various purposes, including internal budgeting and forecasting, short- and long-term operating plans, and employee incentive compensation. PG&E Corporation believes that non-GAAP earnings from operations provide additional insight into the underlying trends of the |
The Compensation Committee of PG&E Corporation is comprised of independent directors and operates under a written charter adopted by the PG&E Corporation Board. The Compensation Committee is responsible for overseeing and establishing officer compensation policies for PG&E Corporation, the Utility, and their subsidiaries.
The Compensation Committee has reviewed and discussed the section of this Joint Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on its review and discussion with management, the Compensation Committee has recommended to the Boards of PG&E Corporation and the Utility that the “Compensation Discussion and Analysis” section be included in this Joint Proxy Statement.
April 18, 2017
Barry Lawson Williams, Chair
Maryellen C. Herringer
Forrest E. Miller
Rosendo G. Parra
Barbara L. Rambo
Executive Officer Compensation Information
SUMMARY COMPENSATION TABLE – 20162018
This table summarizes the principal components of compensation paid or granted during 20162018 (including cash incentives earned for corporate performance in 2016,2018 but paid in 2017)2019). This table also includes information disclosed in the 20162018 and 20152017 Joint Proxy Statements for compensation paid or granted to certain officers during 20152017 and 2014,2016, respectively.
Change in | ||||||||||||||||||
Pension | ||||||||||||||||||
Value and | ||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||
Incentive | Deferred | All | ||||||||||||||||
Stock | Option | Plan | Compensation | Other | ||||||||||||||
Name and | Salary | Bonus | Awards | Award(s) | Compensation | Earnings | Compensation | Total | ||||||||||
Principal Position | Year | ($)(1) | ($) | ($)(2) | ($) | ($)(3) | ($)(4) | ($)(5) | ($) | |||||||||
Anthony F. Earley, Jr.(a) | 2016 | 1,318,750 | 0 | 7,500,072 | 0 | 1,928,672 | 885,572 | 97,580 | 11,730,646 | |||||||||
Chairman, Chief | 2015 | 1,281,250 | 0 | 7,500,080 | 0 | 2,245,365 | 1,075,345 | 96,354 | 12,198,394 | |||||||||
Executive Officer, and President, PG&E Corporation | 2014 | 1,250,000 | 0 | 7,500,007 | 0 | 1,825,200 | 955,849 | 96,160 | 11,627,216 | |||||||||
Geisha J. Williams(a) | 2016 | 695,833 | 0 | 2,250,072 | 0 | 610,594 | 519,983 | 87,748 | 4,164,230 | |||||||||
President, Electric, | 2015 | 634,183 | 0 | 2,000,115 | 0 | 620,585 | 395,456 | 72,868 | 3,723,207 | |||||||||
Pacific Gas and Electric Company | ||||||||||||||||||
Nickolas Stavropoulos(a) | 2016 | 660,833 | 0 | 2,250,072 | 0 | 579,881 | 375,692 | 67,497 | 3,933,975 | |||||||||
President, Gas, Pacific | 2015 | 613,221 | 0 | 2,000,115 | 0 | 624,713 | 303,098 | 62,695 | 3,603,842 | |||||||||
Gas and Electric Company | 2014 | 575,317 | 0 | 1,375,128 | 0 | 606,706 | 274,513 | 63,309 | 2,894,973 | |||||||||
Jason P. Wells | 2016 | 500,000 | 0 | 2,000,101 | 0 | 371,250 | 205,749 | 52,876 | 3,129,976 | |||||||||
Senior Vice President | ||||||||||||||||||
and Chief Financial Officer, PG&E Corporation | ||||||||||||||||||
David S. Thomason(b) | 2016 | 257,432 | 0 | 300,206 | 0 | 87,302 | 93,339 | 37,898 | 776,177 | |||||||||
Vice President, Chief | ||||||||||||||||||
Financial Officer, and Controller, Pacific Gas and Electric Company | ||||||||||||||||||
John R. Simon(c) | 2016 | 512,500 | 0 | 1,500,102 | 0 | 419,738 | 349,338 | 61,499 | 2,843,177 | |||||||||
Executive Vice President, | 2015 | 453,393 | 0 | 1,250,149 | 0 | 405,240 | 161,109 | 56,381 | 2,326,272 | |||||||||
Corporate Services and Human Resources, PG&E Corporation | 2014 | 424,994 | 0 | 750,104 | 0 | 387,756 | 319,381 | 49,047 | 1,931,282 | |||||||||
Edward D. Halpin | 2016 | 572,000 | 0 | 1,700,119 | 0 | 325,611 | 229,236 | 49,600 | 2,876,566 | |||||||||
Senior Vice President, | ||||||||||||||||||
Generation and Chief Nuclear Officer, Pacific Gas and Electric Company | ||||||||||||||||||
Dinyar B. Mistry(d) | 2016 | 405,700 | 0 | 1,100,120 | 0 | 273,082 | 391,811 | 38,316 | 2,209,029 | |||||||||
Senior Vice President, | 2015 | 381,433 | 0 | 400,131 | 0 | 229,781 | 199,502 | 32,224 | 1,243,071 | |||||||||
Human Resources, Pacific Gas and Electric Company | 2014 | 373,046 | 0 | 350,074 | 0 | 277,988 | 617,051 | 31,509 | 1,649,668 |
Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) |
Geisha J. Williams(a) Chief Executive Officer and President, PG&E Corporation | 2018 | 1,079,167 | 0 | 6,400,078 | 1,600,003 | 0 | 40,341 | 170,253 | 9,289,842 |
2017 | 991,667 | 0 | 6,500,168 | 0 | 0 | 996,810 | 108,575 | 8,597,220 | |
2016 | 695,833 | 0 | 2,250,072 | 0 | 610,594 | 519,983 | 87,748 | 4,164,230 | |
Jesus Soto Jr. Senior Vice President, Gas Operations, Pacific Gas and Electric Company | 2018 | 474,333 | 0 | 1,220,086 | 180,007 | 0 | 88,088 | 52,292 | 2,014,605 |
Steven E. Malnight(b) Senior Vice President, Energy Supply and Policy, Pacific Gas and Electric Company | 2018 | 460,633 | 0 | 1,020,086 | 180,007 | 0 | 22,013 | 53,884 | 1,736,423 |
Patrick M. Hogan(c) Senior Vice President, Electric Operations, Pacific Gas and Electric Company | 2018 | 424,975 | 0 | 640,085 | 160,007 | 0 | 13,537 | 95,587 | 1,334,191 |
Jason P. Wells Senior Vice President and Chief Financial Officer, PG&E Corporation | 2018 | 625,000 | 0 | 2,000,122 | 500,001 | 0 | 0 | 72,151 | 3,197,274 |
2017 | 583,333 | 0 | 2,000,079 | 0 | 0 | 462,213 | 62,509 | 3,108,134 | |
2016 | 500,000 | 0 | 2,000,101 | 0 | 371,250 | 205,749 | 52,876 | 3,129,976 | |
David S. Thomason Vice President, Chief Financial Officer, and Controller, Pacific Gas and Electric Company | 2018 | 323,718 | 0 | 260,039 | 65,001 | 0 | 0 | 59,900 | 708,658 |
2017 | 301,650 | 0 | 300,086 | 0 | 113,482 | 170,516 | 55,741 | 941,475 | |
2016 | 257,432 | 0 | 300,206 | 0 | 87,302 | 93,339 | 37,898 | 776,177 | |
John R. Simon(d) Executive Vice President and General Counsel, PG&E Corporation | 2018 | 599,000 | 0 | 1,800,090 | 450,007 | 0 | 203,765 | 71,766 | 3,124,628 |
2017 | 594,582 | 0 | 2,000,079 | 0 | 558,130 | 549,429 | 58,713 | 3,760,933 | |
2016 | 512,500 | 0 | 1,500,102 | 0 | 419,738 | 349,338 | 61,499 | 2,843,177 | |
Nickolas Stavropoulos(e) Special Advisor, Pacific Gas and Electric Company | 2018 | 628,266 | 0 | 2,400,067 | 600,010 | 0 | 23,021 | 86,235 | 3,729,871 |
2017 | 777,500 | 0 | 4,250,151 | 0 | 768,539 | 538,693 | 78,373 | 6,413,256 | |
2016 | 660,833 | 0 | 2,250,072 | 0 | 579,881 | 375,692 | 67,497 | 3,933,975 |
(a) | Effective March 1, 2017, |
(b) | Mr. Malnight resigned effective April 12, 2019. |
(c) | Mr. Hogan retired effective January 28, 2019. |
(d) | From January 13, 2019 to May 1, 2019 Mr. Simon served as Interim CEO of PG&E Corporation. |
(e) | Mr. Stavropoulos served as President and Chief Operating Officer, Pacific Gas and Electric Company until August 31, 2018. Effective September 1, 2018, Mr. Stavropoulos became | |
SUMMARY COMPENSATION TABLE – 20162018(Continued)
(1) | Includes payments for accrued vacation. |
(2) | Represents the grant date fair value of performance shares and RSUs measured in accordance with FASB ASC Topic 718, without |
(3) | Represents the grant date fair value of stock options based on a Black-Scholes American Call valuation model. Assumptions in valuation of stock options are described in footnote 5 to the table entitled “Grants of Plan-Based Awards in 2018.” |
(4) | Amounts represent payments received or deferred in |
Amounts reported for |
Amounts reported for |
The following chart provides additional information regarding certain perquisites and personal benefits that are included in the Summary Compensation Table and discussed in section (i) of footnote 5. Additionally, NEOs may receive de minimis incidental perquisites under a pre-approved perquisite policy (including company-paid insurance, service awards, and similar benefits).
Transportation | Executive | Financial | AD&D | Transportation Services ($) | Security ($) | Fitness ($) | Executive Health ($) | Financial Services ($) | ||||||||||||||||||||
Services | Fitness | Health | Services | Insurance | Total | |||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||
A. F. Earley, Jr. | 3,176 | 60 | 3,236 | |||||||||||||||||||||||||
G. J. Williams | 19,951 | 3,150 | 8,274 | 60 | 31,435 | 21,560 | 51,638 | 5,453 | 7,980 | |||||||||||||||||||
J. Soto | 5,686 | |||||||||||||||||||||||||||
S. Malnight | 5,394 | |||||||||||||||||||||||||||
J. P. Wells | 5,937 | 8,029 | ||||||||||||||||||||||||||
J. R. Simon | 811 | 5,912 | 8,029 | |||||||||||||||||||||||||
N. Stavropoulos | 1,127 | 3,250 | 8,322 | 60 | 12,759 | 5,460 | 1,049 | 5,552 | 8,560 | |||||||||||||||||||
J. P. Wells | 5,316 | 60 | 5,376 | |||||||||||||||||||||||||
D. S. Thomason | 60 | 60 | ||||||||||||||||||||||||||
J. R. Simon | 5,000 | 8,377 | 60 | 13,437 | ||||||||||||||||||||||||
E. D. Halpin | 3,800 | 60 | 3,860 | |||||||||||||||||||||||||
D. B. Mistry | 60 | 60 |
The above perquisites and personal benefits consist of the following:
• | Transportation services for |
• | Installation and monitoring of a security system for Ms. Williams’ private residence, to help ensure her safety and security while serving in the position of CEO of PG&E Corporation. |
• | The value of reimbursements for health club fees, pursuant to a program available to certain management employees, including non-officers. |
• | The cost of executive health services provided to executive officers. Amounts vary among officers, reflecting (i) the decisions of each individual officer regarding the specific types of tests and consultations provided, and (ii) the exact value of reimbursed expenses. |
• | Fees paid to partially subsidize financial services provided by an independent contractor selected by PG&E Corporation to provide such services. |
In addition to the perquisite benefits described above, NEOs are given a set stipend that each NEO may use as the officer sees fit. The stipend is intended to cover miscellaneous items in each NEO’s discretion (such as membership in professional organizations). The amount of this stipend is included in the Summary Compensation Table in the “All Other Compensation” column and is addressed in section (ii) of footnote 5.6. NEOs also were eligible to receive on-site parking, which was provided at no additional incremental cost to PG&E Corporation and the Utility.
2019 Joint Proxy Statement | 78 |
Please see the CD&A beginning on page 3957 for additional information regarding the elements of compensation discussed above, including information regarding salary, short-term incentives, and long-term incentives. Additional information regarding grants of LTIP awards can be found in the narrative following the “Grants of Plan-Based Awards in 2016”2018” table.
GRANTS OF PLAN-BASED AWARDS IN 20162018
This table provides information regarding incentive awards and other stock-based awards granted during 20162018 to NEOs.
Committee | Estimated Future Payouts Under Non-EquityIncentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and Option | ||||||||||||||||||||||||||||
Name | Grant Date | Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units (#)(3) | Awards (#)(4) | Awards ($/Sh) | Awards ($)(5) | ||||||||||||||||||||||
G. J. Williams | 701,458 | 1,402,917 | 4,208,750 | |||||||||||||||||||||||||||||||
3/1/2018 | 2/21/2018 | 18,958 | 75,828 | 151,656 | 2,800,060 | |||||||||||||||||||||||||||||
3/1/2018 | 2/21/2018 | 87,252 | 3,600,018 | |||||||||||||||||||||||||||||||
3/1/2018 | 2/21/2018 | 156,403 | 41.26 | 1,600,003 | ||||||||||||||||||||||||||||||
J. Soto | 142,300 | 284,600 | 853,800 | |||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: | Grant Date Fair | 3/1/2018 | 2/20/2018 | 2,134 | 8,532 | 17,064 | 315,060 | |||||||||||||||||||||||||
Number of | Value of | 3/1/2018 | 2/20/2018 | 9,816 | 405,008 | |||||||||||||||||||||||||||||
Shares of | Stock and | 6/26/2018 | 11,732 | 500,018 | ||||||||||||||||||||||||||||||
Committee | Stock | Option | 3/1/2018 | 2/20/2018 | 17,596 | 41.26 | 180,007 | |||||||||||||||||||||||||||
Action | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Awards | ||||||||||||||||||||||||||
Name | Grant Date | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | ($)(4) | ||||||||||||||||||||||||
A. F. Earley, Jr. | 824,219 | 1,648,438 | 4,945,313 | |||||||||||||||||||||||||||||||
S. Malnight | 142,565 | 285,130 | 855,390 | |||||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 20,982 | 83,925 | 167,850 | 4,500,032 | 3/1/2018 | 2/20/2018 | 2,134 | 8,532 | 17,064 | 315,060 | |||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 53,372 | 3,000,040 | 3/1/2018 | 2/20/2018 | 9,816 | 405,008 | |||||||||||||||||||||||||||
G. J. Williams | 260,937 | 521,875 | 1,565,625 | |||||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 6,295 | 25,178 | 50,356 | 1,350,037 | 9/4/2018 | 8/20/2018 | 6,382 | 300,018 | |||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 16,012 | 900,035 | 3/1/2018 | 2/20/2018 | 17,596 | 41.26 | 180,007 | ||||||||||||||||||||||||||
N. Stavropoulos | 247,813 | 495,625 | 1,486,875 | |||||||||||||||||||||||||||||||
P. Hogan | 126,750 | 253,500 | 760,500 | |||||||||||||||||||||||||||||||
3/1/2018 | 2/20/2018 | 1,897 | 7,584 | 15,168 | 280,050 | |||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 6,295 | 25,178 | 50,356 | 1,350,037 | 3/1/2018 | 2/20/2018 | 8,726 | 360,035 | |||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 16,012 | 900,035 | 3/1/2018 | 2/20/2018 | 15,641 | 41.26 | 160,007 | ||||||||||||||||||||||||||
J. P. Wells | 187,500 | 375,000 | 1,125,000 | 234,375 | 468,750 | 1,406,250 | ||||||||||||||||||||||||||||
3/1/2018 | 2/20/2018 | 5,925 | 23,698 | 47,396 | 875,086 | |||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 5,596 | 22,381 | 44,762 | 1,200,064 | 3/1/2018 | 2/20/2018 | 27,267 | 1,125,036 | |||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 14,233 | 800,037 | 3/1/2018 | 2/20/2018 | 48,876 | 41.26 | 500,001 | ||||||||||||||||||||||||||
D. S. Thomason | 46,636 | 93,271 | 279,814 | 72,188 | 144,375 | 433,125 | ||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 560 | 2,239 | 4,478 | 120,055 | 3/1/2018 | 2/20/2018 | 771 | 3,081 | 6,162 | 113,772 | |||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 1,424 | 80,043 | 3/1/2018 | 2/20/2018 | 3,545 | 146,267 | |||||||||||||||||||||||||||
8/8/2016 | 5/23/2016 | 234 | 935 | 1,870 | 60,097 | 3/1/2018 | 2/20/2018 | 6,354 | 41.26 | 65,001 | ||||||||||||||||||||||||
8/8/2016 | 5/23/2016 | 630 | 40,011 | |||||||||||||||||||||||||||||||
J. R. Simon | 166,562 | 333,125 | 999,375 | 224,625 | 449,250 | 1,347,750 | ||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 4,196 | 16,786 | 33,572 | 900,060 | 3/1/2018 | 2/20/2018 | 5,333 | 21,328 | 42,656 | 787,570 | |||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 10,675 | 600,042 | 3/1/2018 | 2/20/2018 | 24,540 | 1,012,520 | |||||||||||||||||||||||||||
E. D. Halpin | 157,300 | 314,600 | 943,800 | |||||||||||||||||||||||||||||||
3/1/2018 | 2/20/2018 | 43,989 | 41.26 | 450,007 | ||||||||||||||||||||||||||||||
N. Stavropoulos | 262,933 | 525,867 | 1,577,600 | |||||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 1,959 | 7,834 | 15,668 | 420,058 | 3/1/2018 | 2/21/2018 | 7,109 | 28,436 | 56,872 | 1,050,040 | |||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 4,982 | 280,038 | 3/1/2018 | 2/21/2018 | 32,720 | 1,350,027 | |||||||||||||||||||||||||||
11/28/2016 | 9/20/2016 | 16,464 | 1,000,023 | 3/1/2018 | 2/21/2018 | 58,652 | 41.26 | 600,010 | ||||||||||||||||||||||||||
D. B. Mistry | 108,366 | 216,732 | 650,195 | |||||||||||||||||||||||||||||||
2/23/2016 | 12/15/2015 | 8,739 | 500,046 | |||||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 1,679 | 6,715 | 13,430 | 360,057 | |||||||||||||||||||||||||||||
3/1/2016 | 2/16/2016 | 4,270 | 240,017 |
(1) | Compensation opportunity granted for |
(2) | Represents performance shares granted under the 2014 LTIP. |
Threshold equals 0.25 times target. Maximum equals 2.0 times target. | |
(3) | Represents RSUs granted under the 2014 LTIP. |
(4) | Represents stock options granted under the 2014 LTIP. |
2019 Joint Proxy Statement | 79 |
GRANTS OF PLAN-BASED AWARDS IN 2018(Continued)
(5) | For performance shares with a relative TSR measure, the grant date fair value is based on the probable outcome of the applicable performance conditions, measured using a Monte Carlo simulation valuation model. The assumed per-share value for the |
Detailed information regarding compensation reported in the tables entitled “Summary Compensation Table—2016”2018” and “Grants of Plan-Based Awards in 2016,2018,” including the relative amounts apportioned to different elements of compensation, can be found in the CD&A. Information regarding specific grants and arrangements is provided below.
GRANTS OF PLAN-BASED AWARDS IN 2016(Continued)
STIP Awards
Information regarding the terms and basis of STIP awards can be found in the CD&A.
Performance Shares
Annual performance shares granted in 20162018 will vest, if at all, at the end of a three-year period. Upon vesting, performance shares are settled in shares of PG&E Corporation common stock, net of the number of shares having a value equal to required withholding taxes. For performance shares using a relative TSR measure, the number of shares issued will depend on PG&E Corporation’s TSR relative to the 20162018 Performance Comparator Group for the three-year performance period. For performance shares with safety and affordabilityfinancial measures, the number of shares issued will depend on achievement of equally weighted safety and affordabilityfinancial goals. The specific payout formulas are discussed in the CD&A.
Each time that a cash dividend is paid on PG&E Corporation common stock, an amount equal to the cash dividend per share multiplied by the number of performance shares granted to the recipient will be accrued on behalf of the recipient. At the end of the vesting period, the amount of accrued dividend equivalents will be increased or decreased by the same payout factor used to increase or decrease the number of vested performance shares for the period.
Restricted Stock Units
Annual RSU awards granted in March 2016May 2018 will vest in three tranches, with one-third vesting on the first business day of March of each of the three years following the grant date. The $500,000 RSU awardsretention award granted to Mr. MistrySoto on February 23, 2016June 26, 2018, vests one-third on June 26, 2020 and Mr. Halpintwo-thirds on November 28, 2016 vest in two tranches, with one-half vesting on each of the second and third anniversaries of the grant date.June 26, 2021. The $300,000 promotional RSU award granted to Mr. ThomasonMalnight on August 8, 2016September 4, 2018, vests in three tranches, with one-third vesting on each of the first three anniversaries following the grant date.September 4, 2020. Upon vesting, RSUs are settled in an equivalent number of shares of PG&E Corporation common stock, net of the number of shares having a value equal to required withholding taxes. All RSUs may be subject to earlier vesting or forfeiture upon certain events, in accordance with the terms of the grant.
Each time that a cash dividend is paid on PG&E Corporation common stock, an amount equal to the cash dividend per share multiplied by the number of outstanding RSUs granted to the recipient will be accrued on behalf of the recipient. Accrued dividends are paid in cash at the time that the related RSUs are settled.
Stock Options
Annual stock options granted in 2018 will vest in three tranches, with one-third vesting on the first business day of March of each of the three years following the grant date. Upon vesting, recipients may elect to pay the option exercise price and receive a share of PG&E Corporation stock for each option exercised. Options expire at the close of business ten years after the date of grant, after which time the options cease to be exercisable. The exercise price of each option is based on the closing price of the stock on the NYSE on the date of grant.
No tandem dividend equivalents are granted with stock options.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END – 20162018
This table provides additional information regarding performance shares, stock options, and RSUs that were held as of December 31, 20162018 by the NEOs, including awards granted prior to 2016.2018. Any awards described below that were granted in 20162018 also are reflected in the “Grants of Plan-Based Awards in 2016”2018” table.
Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | |||||||||||||||||||||||||||||||||||
A. F. Earley, Jr. | 265,620 | (4) | 16,141,727 | 132,374 | (5) | 8,044,368 | |||||||||||||||||||||||||||||||||||||||||||||
G. J. Williams | 67,299 | (6) | 4,089,760 | 33,867 | (7) | 2,058,098 | 156,403 | 41.26 | 3/1/2028 | 122,411 | (5) | 2,907,261 | 99,456 | (6) | 2,362,068 | ||||||||||||||||||||||||||||||||||||
N. Stavropoulos | 64,420 | (8) | 3,914,803 | 33,867 | (9) | 2,058,098 | |||||||||||||||||||||||||||||||||||||||||||||
J. Soto | 17,596 | 41.26 | 3/1/2028 | 28,455 | (7) | 675,806 | 11,733 | (8) | 278,665 | ||||||||||||||||||||||||||||||||||||||||||
S. Malnight | 17,596 | 41.26 | 3/1/2028 | 22,491 | (9) | 534,161 | 11,505 | (10) | 273,238 | ||||||||||||||||||||||||||||||||||||||||||
P. Hogan | 15,641 | 41.26 | 3/1/2028 | 13,999 | (11) | 332,476 | 10,175 | (12) | 241,662 | ||||||||||||||||||||||||||||||||||||||||||
J. P. Wells | 25,515 | (10) | 1,550,547 | 22,440 | (11) | 1,363,679 | 48,876 | 41.26 | 3/1/2028 | 43,515 | (13) | 1,033,481 | 30,940 | (14) | 734,813 | ||||||||||||||||||||||||||||||||||||
D. S. Thomason | 7,225 | (12) | 439,063 | 4,191 | (13) | 254,687 | 6,354 | 41.26 | 3/1/2028 | 5,936 | (15) | 140,980 | 4,205 | (16) | 99,875 | ||||||||||||||||||||||||||||||||||||
J. R. Simon | 39,349 | (14) | 2,391,239 | 21,410 | (15) | 1,301,086 | 43,989 | 41.26 | 3/1/2028 | 38,712 | (17) | 919,410 | 28,756 | (18) | 682,961 | ||||||||||||||||||||||||||||||||||||
E. D. Halpin | 37,649 | (16) | 2,287,930 | 11,576 | (17) | 703,474 | |||||||||||||||||||||||||||||||||||||||||||||
D. B. Mistry | 23,412 | (18) | 1,422,747 | 9,032 | (19) | 548,875 | |||||||||||||||||||||||||||||||||||||||||||||
N. Stavropoulos | 58,652 | 41.26 | 10/1/2023 | 50,998 | (19) | 1,211,203 | 36,444 | (20) | 865,533 |
(1) | Consists of unvested stock options from awards granted in 2018, with one-third of each award vesting on March 1, 2019, one-third vesting on March 2, 2020, and one-third vesting on March 1, 2021. |
(2) | Includes (a) performance shares granted in |
Value based on the December 31, | |
Consists of unvested performance shares granted in | |
25,178 performance shares vested on February 19, 2019. 20,712 RSUs vested on March 1, 2019, 15,376 RSUs will vest on March 2, 2020, and 10,907 RSUs will vest on March 1, 2021. | |
(20) | 10,247 and 26,196 performance shares are scheduled to vest in 2020 and 2021, respectively, upon Committee certification of performance results, but no later than March 14 of each year. |
OPTION EXERCISES AND STOCK VESTED DURING 20162018
This table provides additional information regarding the amounts received during 20162018 by NEOs upon vesting or transfer of restricted stock and other stock-based awards.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(1) | ||||||||||||||
A. F. Earley, Jr. | 136,044 | 8,314,891 | ||||||||||||||||||||
G. J. Williams | 25,185 | 1,539,565 | 27,022 | 1,213,615 | ||||||||||||||||||
N. Stavropoulos | 23,879 | 1,459,891 | ||||||||||||||||||||
J. Soto | 6,067 | 272,159 | ||||||||||||||||||||
S. Malnight | 5,313 | 237,912 | ||||||||||||||||||||
P. Hogan | 4,470 | 203,465 | ||||||||||||||||||||
J. P. Wells | 6,818 | 418,848 | 10,373 | 462,565 | ||||||||||||||||||
D. S. Thomason | 3,146 | 192,216 | 1,782 | 79,814 | ||||||||||||||||||
J. R. Simon | 12,545 | 766,161 | 13,579 | 621,873 | ||||||||||||||||||
E. D. Halpin | 12,903 | 800,084 | ||||||||||||||||||||
D. B. Mistry | 6,917 | 423,552 | ||||||||||||||||||||
N. Stavropoulos | 18,582 | 852,299 |
(1) | Reflects performance shares that vested on |
PENSION BENEFITS – 20162018
This table provides information for each NEO relating to accumulated benefits as of December 31, 20162018 under any plan that provides for payments or other benefits at, after, or relating to retirement.
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | ||||||||||||||
A. F. Earley, Jr. | Pacific Gas and Electric Company Retirement Plan | 5.3 | 1,502,977 | 0 | ||||||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 5.3 | 2,419,724 | 0 | |||||||||||||||||||
G. J. Williams | Pacific Gas and Electric Company Retirement Plan | 9.1 | 1,637,669 | 0 | Pacific Gas and Electric Company Retirement Plan | 11.1 | 2,681,061 | |||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 9.1 | 448,664 | 0 | PG&E Corporation Supplemental Executive Retirement Plan | 11.1 | 441,816 | ||||||||||||||||
N. Stavropoulos | Pacific Gas and Electric Company Retirement Plan | 5.5 | 937,739 | 0 | ||||||||||||||||||
J. Soto, Jr. | Pacific Gas and Electric Company Retirement Plan | 6.6 | 704,494 | |||||||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 5.5 | 313,381 | 0 | PG&E Corporation Supplemental Executive Retirement Plan | 6.6 | 174,649 | ||||||||||||||||
S. Malnight | Pacific Gas and Electric Company Retirement Plan | 15.1 | 1,188,912 | |||||||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 15.1 | 208,547 | ||||||||||||||||||||
P. Hogan | Pacific Gas and Electric Company Retirement Plan | 5.1 | 110,633 | |||||||||||||||||||
J. P. Wells | Pacific Gas and Electric Company Retirement Plan | 9.8 | 519,847 | 0 | Pacific Gas and Electric Company Retirement Plan | 11.8 | 944,029 | |||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 9.8 | 153,649 | 0 | PG&E Corporation Supplemental Executive Retirement Plan | 11.8 | 126,368 | ||||||||||||||||
D. S. Thomason | Pacific Gas and Electric Company Retirement Plan | 15.1 | 466,173 | 0 | Pacific Gas and Electric Company Retirement Plan | 17.1 | 613,930 | |||||||||||||||
J. R. Simon | Pacific Gas and Electric Company Retirement Plan | 9.7 | 1,142,550 | 0 | Pacific Gas and Electric Company Retirement Plan | 11.7 | 1,758,206 | |||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 9.7 | 262,085 | 0 | PG&E Corporation Supplemental Executive Retirement Plan | 11.7 | 392,371 | ||||||||||||||||
E. D. Halpin | Pacific Gas and Electric Company Retirement Plan | 4.8 | 550,774 | 0 | ||||||||||||||||||
N. Stavropoulos | Pacific Gas and Electric Company Retirement Plan | 7.3 | 1,130,473 | 21,926 | ||||||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 4.8 | 193,129 | 0 | PG&E Corporation Supplemental Executive Retirement Plan | 7.3 | 565,910 | ||||||||||||||||
D. B. Mistry | Pacific Gas and Electric Company Retirement Plan | 22.3 | 2,432,193 | 0 | ||||||||||||||||||
PG&E Corporation Supplemental Executive Retirement Plan | 22.3 | 324,634 | 0 |
PENSION BENEFITS – 20162018(Continued)
Additional information regarding compensation reported in the “Pension Benefits—2016”2018” table, and any associated policies, can be found in the CD&A. The present value of accumulated benefits as of December 31, 20162018 is determined assuming that the NEOs retire at the earliest unreduced retirement age, using mortality and interest assumptions consistent with those used in preparing PG&E Corporation’s and the Utility’s financial statements. The RP-2014 “Employees” mortality table was used without collar or amount adjustments (adjusted to 2011 using a variation of MP-2014). Rates were projected on a generational basis from 2011 using a variation of MP-2014. Interest discount rates of 4.114.35 percent and 4.084.29 percent were used for the PensionPacific Gas and Electric Company Retirement Plan (“Retirement Plan”) and the SERP,PG&E Corporation Supplemental Executive Retirement Plan (“SERP”), respectively.
TheFor 2018, the pension benefits described in the above table are provided to officers under two plans.
The Utility provides retirement benefits to all of its employees, including its officers, under the Pacific Gas and Electric Company Retirement Plan, (“Retirement Plan”), which is a tax-qualified defined benefit pension plan. The Retirement Plan historically also has coveredprovided benefits to a significant number of PG&E Corporation’s employees and officers. As of April 1, 2007, all PG&E Corporation employees and officers are eligible to participate in the Retirement Plan.
The Retirement Plan has two forms of benefit. With respect to the Retirement Plan’s final pay benefit formula, a participating officer may begin receiving tax-qualified pension benefits at age 55, but benefits will be reduced unless the individual has at least 35 years of service. At age 65, a participant becomes eligible for an unreduced pension, irrespective of the years of service. Between age 55 and age 65, any pension benefit may be reduced based on the number of years of service, and in accordance with the Retirement Plan’s early retirement reduction factors. The normal benefit formula is 1.7 percent of the average annual salary for the last 36 months of service multiplied by years of credited service. The default form of benefit is a single-life annuity for participants who are unmarried at retirement or a 50 percent joint spousal annuity for married participants. However, other types of joint pensions are available, and participants may designate non-spousal joint pensioners (subject to spousal consent).
Effective January 1, 2013, a cash balance benefit has beenwas added to the Retirement Plan. Employees hired or re-hired on or after January 1, 2013 will participate in the cash balance benefit. Employees hired before January 1, 2013 were given a one-time opportunity during 2013 to irrevocably select to switch to the cash balance benefit on a going-forward basis, effective January 1, 2014, or to retain the final pay benefit to which they were otherwise entitled. On the last day of each year (or on the date of benefit commencement, if earlier), an employee’s cash balance account is credited with pay credits based on a point system of age plus service and eligible pay during the year. At the end of each calendar quarter, the account is credited with interest credits, based on an average of the 30-year Treasury rates for the three months before the calendar quarter. Special interest credit rules apply in the quarter in which benefit payment commences. The default forms of payment are similar to those under the final pay benefit formula. Additionally, however, a cash balance participant may elect a lump-sum payout that is eligible for rollover into an Individual Retirement Account or other tax-advantaged employer plan. Cash balance participants may elect to receive their vested benefit when they leave employment with any participating employer, regardless of whether they have attained age 55. No current NEOs elected to switch to the cash balance benefit.
PG&E Corporation’s non-qualified SERP provides benefits to certain officers and key employees. The SERP benefit formula is 1.7 percent of the average of the three highest combined salary and annual STIP payments during the last 10 years of service, multiplied by years of credited service. Payments are in the form of a single lifesingle-life annuity or, at the election of the officer, a joint spousal annuity. Normal retirement age is 65. Benefits may begin earlier, on the later of the NEO’s reaching age 55 or separation from the company, subject to reduction depending on years of credited service, in accordance with the Retirement Plan’s early retirement reduction factors. Payments are reduced by amounts payable from the Retirement Plan.
Effective January 1, 2013, SERP participation was closed to new participants. Individuals who do not participate in the SERP but who are newly hired or promoted to officer after January 1, 2013 may be eligible to participate in the 2013 PG&E Corporation DC-ESRP,Defined Contribution Executive Supplemental Retirement Plan (“DC-ESRP”), a non-tax-qualified deferred compensation plan. Mr.Messrs. Hogan and Thomason is the only NEO who participatesparticipate in the DC-ESRP. See the table entitled “Non-qualified Deferred Compensation—2016”2018” beginning on page 6584 and the accompanying narrative for additional DC-ESRP details.
Mr. Earley is the only NEO currentlyAt December 31, 2018, Ms. Williams was eligible for unreduced benefitsearly retirement under the Retirement Plan and the SERP. At December 31, 2016, Ms. Williams, Mr. Stavropoulos, and Mr. Halpin were eligible for early retirement under both plans. If Ms. Williams Mr. Stavropoulos, and Mr. Halpin had retired on December 31, 2016, their benefits2018, her benefit under both plans would have been subject to an early retirement reductionsreduction of 2822.75 percent. Mr. Stavropoulos’ benefits under both plans were subject to a 13.5 percent 18.75 percent, and 28.75 percent, respectively.reduction when his employment ended.
NON-QUALIFIED DEFERRED COMPENSATION – 20162018
This table provides information for 20162018 for each NEO regarding such individual’s accounts in non-qualified defined contribution plans and other deferred compensation plans as of December 31, 2016.2018.
Name | PLAN | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distribution ($) | Aggregate Balance at Last FYE ($)(4) | PLAN | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distribution ($) | Aggregate Balance at Last FYE ($)(4) | ||||||||||||||||
A. F. Earley, Jr. | SRSP | 364,688 | 52,102 | 191,034 | 0 | 2,380,802 | ||||||||||||||||||||||
G. J. Williams | SRSP | 0 | 18,375 | 43,806 | 0 | 353,883 | SRSP | 0 | 36,188 | -88,326 | 0 | 283,899 | ||||||||||||||||
N. Stavropoulos | SRSP | 0 | 17,869 | 38,436 | 0 | 436,703 | ||||||||||||||||||||||
J. Soto, Jr. | SRSP | 398,535 | 10,745 | -57,329 | 0 | 778,397 | ||||||||||||||||||||||
S. Malnight | SRSP | 0 | 8,354 | -1,864 | 0 | 33,163 | ||||||||||||||||||||||
P. Hogan | SRSP | 133,735 | 11,475 | 22,396 | 0 | 848,902 | ||||||||||||||||||||||
DC-ESRP | 0 | 45,177 | 7,198 | 0 | 202,931 | |||||||||||||||||||||||
J. P. Wells | SRSP | 0 | 14,000 | 2,472 | 0 | 49,254 | SRSP | 0 | 18,900 | -8,951 | 0 | 127,524 | ||||||||||||||||
D. S. Thomason | SRSP | 38,615 | 6,997 | 4,285 | 0 | 83,901 | SRSP | 79,167 | 9,713 | -19,070 | 0 | 242,099 | ||||||||||||||||
DC-ESRP | 0 | 11,229 | 166 | 0 | 11,395 | DC-ESRP | 0 | 30,402 | -5,788 | 0 | 67,916 | |||||||||||||||||
J. R. Simon | SRSP | 430,240 | 11,457 | 77,688 | 0 | 1,150,764 | SRSP | 111,626 | 14,931 | 50,124 | 0 | 1,711,641 | ||||||||||||||||
E. D. Halpin | SRSP | 0 | 13,815 | 3,626 | 0 | 61,186 | ||||||||||||||||||||||
D. B. Mistry | SRSP | 0 | 6,519 | 2,500 | 0 | 47,253 | ||||||||||||||||||||||
N. Stavropoulos | SRSP | 0 | 15,600 | -42,539 | 0 | 417,046 |
(1) | The following amounts |
(2) | The amounts shown were earned and reported for |
(3) | Represents earnings from the supplemental retirement savings plans and the DC-ESRP described below. Includes the following amounts that were reported for |
(4) | Includes the following amounts that were reported as compensation in the Summary Compensation Table for |
The table presents balances from both the PG&E Corporation Supplemental Retirement Savings Plan for deferrals made prior to January 1, 2005 and the PG&E Corporation 2005 Supplemental Retirement Savings Plan (together, the “SRSP Plans”) for deferrals made on and after January 1, 2005 and from the PG&E Corporation Defined Contribution Executive Supplemental Retirement Plan (DC-ESRP)(“DC-ESRP”). The below descriptions pertain to 2018.
Under the SRSP Plans, officers may defer 5 percent to 75 percent of their base salary, and all or part of their perquisite allowance, STIP payment, and performance share award if settled in cash.
PG&E Corporation also will contribute an amount equal to any employer contributions due under the 401(k) plan that were not made due to limitations under Internal Revenue Code Sections 401(m), 401(a)(17), or 415. Under the SRSP Plans, officers may elect deferrals to be distributed in 1 to 10 installments commencing in January of the year following termination of employment. For deferrals made in 2005 and thereafter, distributions may commence seven months after termination of employment or in January of a year specified by the officer. Earlier distributions may be made in the case of an officer’s death. The plan administrator may, in its discretion, permit earlier withdrawals as requested by participants to meet unforeseen emergencies.
Under the DC-ESRP, each time salary or STIP is paid, PG&E Corporation credits the participant’s account with an amount equal to 7 percent of the payment. Benefits vest after three years of cumulative service with the companies, and benefits are paid in a single lump sum upon the officer’s separation from service commencing as soon as reasonably practicable, following a date seven months after the separation from service. Officers may also elect deferrals to be distributed in between 2 to 10 equal annual installments. Earlier distributions may be made in the case of an officer’s death.
2019 Joint Proxy Statement | 84 |
NON-QUALIFIED DEFERRED COMPENSATION – 2018(Continued)
Earnings on amounts in participant accounts under the SRSP Plans and the DC-ESRP are calculated based on the performance of the following funds available in the 401(k) plan: Large Company Stock Index Fund (2016 return of 12.0 percent), Small Company Stock Index Fund (2016 return of 16.5 percent), International Stock Index Fund (2016 return of 3.7 percent), Total U.S. Stock Index Fund (2016 return of 12.7 percent), Emerging Markets Enhanced Index Fund (2016 return of 11.9 percent), World Stock Index Fund (2016 return of 8.5 percent), Bond Index Fund (2016 return of 2.6 percent), U.S. Government Bond Index Fund (2016 return of 1.0 percent), Short Term Bond Index Fund (2016 return of 1.1 percent), Money Market Investment Fund (2016 return of 0.2 percent), Target Date Fund 2015 (2016 return of 6.7 percent), Target Date Fund 2020 (2016 return of 7.6 percent), Target Date Fund 2025 (2016 return of 8.3 percent), Target Date Fund 2030 (2016 return of 8.4 percent), Target Date Fund 2035 (2016 return of 8.7 percent), Target Date Fund 2040 (2016 return of 9.1 percent), Target Date Fund 2045 (2016 return of 9.5 percent), Target Date Fund 2050 (2016 return of 9.5 percent), Target Date Fund 2055 (2016 return of 9.5 percent), Target Date Fund 2060 (2016 return of 8.2 percent), and Retirement Income Fund (2016 return of 5.9 percent).
Fund Name | 2018 Return |
Bond Index Fund | 0.0% |
Emerging Markets Enhanced Index Fund | -14.5% |
International Stock Index Fund | -13.8% |
Large Company Stock Index Fund | -4.4% |
Money Market Investment Fund | 1.8% |
Retirement Income Fund | -2.8% |
Short Term Bond Index Fund | 1.5% |
Small Company Stock Index Fund | -9.2% |
Target Date Fund 2015 | -3.1% |
Target Date Fund 2020 | -4.5% |
Target Date Fund 2025 | -5.9% |
Target Date Fund 2030 | -6.7% |
Target Date Fund 2035 | -7.3% |
Target Date Fund 2040 | -7.9% |
Target Date Fund 2045 | -8.4% |
Target Date Fund 2050 | -8.6% |
Target Date Fund 2055 | -8.6% |
Target Date Fund 2060 | -8.7% |
Total US Stock Index Fund | -5.3% |
U.S. Government Bond Index Fund | 0.5% |
World Stock Index Fund | -9.1% |
Other available measures are
NON-QUALIFIED DEFERRED COMPENSATION – 2016(Continued)
the PG&E Corporation Phantom Stock Fund, which mirrors an investment in PG&E Corporation common stock (2016(2018 return of 17.9negative 45.7 percent), and the AA Utility Bond Fund. The AA Utility Bond Fund accrues interest based on the long-term corporate bond yield average for AA utilities reported by Moody’s Investors Service (yields reported during 20162018 ranged from 3.43.6 percent to 4.24.4 percent). Pre-2005 deferrals under the SRSP Plans are limited to the Large Company Stock Index Fund, the PG&E Corporation Phantom Stock Fund, and the AA Utility Bond Fund. In general, the earnings measures are selected by the officer and may be reallocated subject to restrictions imposed by regulations of the SEC. However, deferrals of Special Incentive Stock Ownership Premiums received under the prior Executive Stock Ownership Program before December 31, 2012 may only may be invested in the PG&E Corporation Phantom Stock Fund and may not be reallocated.
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY
The NEOs are eligible to receive certain benefits upon termination, or when a Change in Control (as defined in the Officer Severance Policy) occurs and either (1) the officerofficer’s employment is terminated (including constructive termination by the officer for good reason) in connection with the Change in Control, or (2) the acquiring company does not continue or assume outstanding LTIP awards, or substitute the LTIP awards with a substantially equivalent award.awards.
2019 Joint Proxy Statement | 85 |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
The following table estimates potential payments for each NEO as if, effective December 31, 2016,2018, that individualindividual’s employment was terminated from employment or an acquiror did not assume, continue, or grant substitute awards for LTIP awards previously granted by PG&E Corporation or the Utility. Estimates assume that the value of any stock-based compensation received was $60.77$23.75 per share, which was the closing price of PG&E Corporation common stock on December 31, 2016.2018. The table generally excludes (1) payments for services already rendered (such as unpaid and earned salary), which would be due to the NEO even if the individual had remained employed with the companies, (2) post-retirement benefits that would be available to employees generally, and (3) any deferred compensation that was previously earned but would become payable due to the termination (these deferred amounts are reflected in the table entitled “Non-Qualified Deferred Compensation—2016”2018”). The table also does not fully take into account changes and restrictions that apply following the commencement of the Chapter 11 Cases on January 29, 2019. Please see section 5 of the CD&A for a discussion of the potential future impacts of the Chapter 11 Cases.
The value of actual cash and equity received on or shortly after December 31, 20162018 would be less than the “total” amount listed below because (1) pension benefits are paid over time in the form of a life annuity, and (2) stock awards reflected in the table will be payable only after vesting, which may occur in subsequent years.
Name | Resignation/ Retirement ($) | Termination For Cause ($) | Termination Without Cause ($) | Change in Control ($)(1) | Death or Disability ($)(2) | |||||||||||||||
A. F. Earley, Jr. | ||||||||||||||||||||
Value of Accumulated Pension Benefits | 3,922,701 | 3,922,701 | 3,922,701 | 3,922,701 | 2,082,629 | |||||||||||||||
Value of Stock Awards Vesting(3) | 22,988,548 | 0 | 22,988,548 | 22,847,232 | 22,847,232 | |||||||||||||||
Severance Payment | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Short-Term Incentive Plan Award(4) | 1,648,438 | 0 | 1,648,438 | 1,648,438 | 1,648,438 | |||||||||||||||
Health Care Insurance | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Career Transition | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Relocation(5) | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |||||||||||||||
Total | 28,584,687 | 3,947,701 | 28,584,687 | 28,443,371 | 26,603,299 | |||||||||||||||
G. J. Williams | ||||||||||||||||||||
Value of Accumulated Pension Benefits | 2,169,601 | 2,169,601 | 2,169,601 | 2,169,601 | 1,474,652 | |||||||||||||||
Value of Stock Awards Vesting(3) | 5,142,881 | 0 | 5,440,424 | 5,690,209 | 5,690,209 | |||||||||||||||
Severance Payment | 0 | 0 | 1,225,000 | 2,443,750 | 0 | |||||||||||||||
Short-Term Incentive Plan Award(4) | 521,875 | 0 | 521,875 | 521,875 | 521,875 | |||||||||||||||
Health Care Insurance | 0 | 0 | 41,839 | 41,839 | 0 | |||||||||||||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||||||||||||
Total | 7,834,357 | 2,169,601 | 9,413,739 | 10,882,274 | 7,686,736 |
Since Mr. Stavropoulos retired on October 1, 2018, only payments that he received upon retirement are shown.
Name | Resignation/ Retirement ($) | Termination For Cause ($) | Termination Without Cause ($) | Change in Control ($)(1) | Death or Disability ($)(2) |
G. J. Williams | |||||
Value of Accumulated Pension Benefits | 3,189,564 | 3,189,564 | 3,189,564 | 3,189,564 | 2,002,036 |
Value of Stock Awards Vesting(3) | 3,915,462 | 0 | 3,915,462 | 3,915,462 | 3,915,462 |
Severance Payment | 0 | 0 | 2,495,500 | 4,975,833 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 48,939 | 48,939 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 7,105,026 | 3,189,564 | 9,661,465 | 12,141,798 | 5,917,498 |
J. Soto, Jr. | |||||
Value of Accumulated Pension Benefits | 925,248 | 925,248 | 925,248 | 925,248 | 486,800 |
Value of Stock Awards Vesting(3) | 0 | 0 | 263,787 | 803,096 | 803,096 |
Severance Payment | 0 | 0 | 800,000 | 800,000 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 48,939 | 48,939 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 925,248 | 925,248 | 2,049,973 | 2,589,283 | 1,289,896 |
S. Malnight | |||||
Value of Accumulated Pension Benefits | 1,553,145 | 1,553,145 | 1,553,145 | 1,553,145 | 858,796 |
Value of Stock Awards Vesting(3) | 0 | 0 | 400,291 | 657,803 | 657,803 |
Severance Payment | 0 | 0 | 866,250 | 1,620,260 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 48,939 | 48,939 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 1,553,145 | 1,553,145 | 2,880,624 | 3,892,147 | 1,516,599 |
P. Hogan | |||||
Value of Accumulated Pension Benefits | 110,633 | 110,633 | 110,633 | 110,633 | 102,004 |
Value of Stock Awards Vesting(3) | 0 | 0 | 212,684 | 440,923 | 440,923 |
Severance Payment | 0 | 0 | 686,400 | 686,400 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 16,876 | 16,876 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 110,633 | 110,633 | 1,038,593 | 1,266,832 | 542,927 |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
Resignation/ | Termination | Termination | Change in | Death or | ||||||
Retirement | For Cause | Without Cause | Control | Disability | ||||||
Name | ($) | ($) | ($) | ($)(1) | ($)(2) | |||||
N. Stavropoulos | ||||||||||
Value of Accumulated Pension Benefits | 1,465,934 | 1,465,934 | 1,465,934 | 1,465,934 | 939,332 | |||||
Value of Stock Awards Vesting(3) | 4,951,039 | 0 | 5,248,583 | 5,498,368 | 5,498,368 | |||||
Severance Payment | 0 | 0 | 1,163,750 | 2,321,250 | 0 | |||||
Short-Term Incentive Plan Award(4) | 495,625 | 0 | 495,625 | 495,625 | 495,625 | |||||
Health Care Insurance | 0 | 0 | 30,297 | 30,297 | 0 | |||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||
Total | 6,912,598 | 1,465,934 | 8,419,189 | 9,826,474 | 6,933,325 | |||||
J. P. Wells | ||||||||||
Value of Accumulated Pension Benefits | 621,771 | 621,771 | 621,771 | 621,771 | 363,380 | |||||
Value of Stock Awards Vesting(3) | 0 | 0 | 1,331,380 | 2,386,510 | 2,386,510 | |||||
Severance Payment | 0 | 0 | 875,000 | 1,750,000 | 0 | |||||
Short-Term Incentive Plan Award(4) | 375,000 | 0 | 375,000 | 375,000 | 375,000 | |||||
Health Care Insurance | 0 | 0 | 30,297 | 30,297 | 0 | |||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||
Total | 996,771 | 621,771 | 3,248,448 | 5,178,578 | 3,124,890 | |||||
D. S. Thomason | ||||||||||
Value of Accumulated Pension Benefits | 455,296 | 455,296 | 455,296 | 455,296 | 262,207 | |||||
Value of Stock Awards Vesting(3) | 0 | 0 | 435,754 | 631,857 | 631,857 | |||||
Severance Payment | 0 | 0 | 385,000 | 385,000 | 0 | |||||
Short-Term Incentive Plan Award(4) | 93,271 | 0 | 93,271 | 93,271 | 93,271 | |||||
Health Care Insurance | 0 | 0 | 25,969 | 25,969 | 0 | |||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||
Total | 548,567 | 455,296 | 1,410,290 | 1,606,393 | 987,335 | |||||
J. R. Simon | ||||||||||
Value of Accumulated Pension Benefits | 1,459,945 | 1,459,945 | 1,459,945 | 1,459,945 | 761,355 | |||||
Value of Stock Awards Vesting(3) | 0 | 0 | 2,124,777 | 3,359,800 | 3,359,800 | |||||
Severance Payment | 0 | 0 | 858,000 | 1,706,250 | 0 | |||||
Short-Term Incentive Plan Award(4) | 333,125 | 0 | 333,125 | 333,125 | 333,125 | |||||
Health Care Insurance | 0 | 0 | 41,839 | 41,839 | 0 | |||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||
Total | 1,793,070 | 1,459,945 | 4,832,686 | 6,915,959 | 4,454,280 | |||||
E. D. Halpin | ||||||||||
Value of Accumulated Pension Benefits | 917,009 | 917,009 | 917,009 | 917,009 | 655,889 | |||||
Value of Stock Awards Vesting(3) | 0 | 0 | 1,321,141 | 2,859,886 | 2,859,886 | |||||
Severance Payment | 0 | 0 | 892,335 | 892,335 | 0 | |||||
Short-Term Incentive Plan Award(4) | 314,600 | 0 | 314,600 | 314,600 | 314,600 | |||||
Health Care Insurance | 0 | 0 | 41,839 | 41,839 | 0 | |||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||
Total | 1,231,609 | 917,009 | 3,501,924 | 5,040,669 | 3,830,375 | |||||
D. B. Mistry | ||||||||||
Value of Accumulated Pension Benefits | 3,033,657 | 3,033,657 | 3,033,657 | 3,033,657 | 2,148,900 | |||||
Value of Stock Awards Vesting(3) | 0 | 0 | 887,327 | 1,855,039 | 1,855,039 | |||||
Severance Payment | 0 | 0 | 635,500 | 635,500 | 0 | |||||
Short-Term Incentive Plan Award(4) | 216,732 | 0 | 216,732 | 216,732 | 216,732 | |||||
Health Care Insurance | 0 | 0 | 14,427 | 14,427 | 0 | |||||
Career Transition | 0 | 0 | 15,000 | 15,000 | 0 | |||||
Total | 3,250,389 | 3,033,657 | 4,802,643 | 5,770,355 | 4,220,671 |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
Name | Resignation/ Retirement ($) | Termination For Cause ($) | Termination Without Cause ($) | Change in Control ($)(1) | Death or Disability ($)(2) |
J. P. Wells | |||||
Value of Accumulated Pension Benefits | 997,646 | 997,646 | 997,646 | 997,646 | 576,525 |
Value of Stock Awards Vesting(3) | 0 | 0 | 664,593 | 1,365,907 | 1,365,907 |
Severance Payment | 0 | 0 | 1,102,500 | 2,197,500 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 35,438 | 35,438 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 997,646 | 997,646 | 2,812,177 | 4,608,491 | 1,942,432 |
D. S. Thomason | |||||
Value of Accumulated Pension Benefits | 605,348 | 605,348 | 605,348 | 605,348 | 342,761 |
Value of Stock Awards Vesting(3) | 0 | 0 | 92,662 | 176,684 | 176,684 |
Severance Payment | 0 | 0 | 471,250 | 471,250 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 48,939 | 48,939 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 605,348 | 605,348 | 1,230,198 | 1,314,220 | 519,445 |
J. R. Simon | |||||
Value of Accumulated Pension Benefits | 2,264,599 | 2,264,599 | 2,264,599 | 2,264,599 | 1,165,091 |
Value of Stock Awards Vesting(3) | 0 | 0 | 579,296 | 1,223,033 | 1,223,033 |
Severance Payment | 0 | 0 | 1,056,650 | 2,106,100 | 0 |
Short-Term Incentive Plan Award(4) | 0 | 0 | 0 | 0 | 0 |
Health Care Insurance | 0 | 0 | 48,939 | 48,939 | 0 |
Career Transition | 0 | 0 | 12,000 | 12,000 | 0 |
Total | 2,264,599 | 2,264,599 | 3,961,484 | 5,654,671 | 2,388,124 |
N. Stavropoulos | |||||
Value of Accumulated Pension Benefits | 2,174,796 | ||||
Value of Stock Awards Vesting(3) | 1,601,362 | ||||
Severance Payment | 0 | ||||
Short-Term Incentive Plan Award(4) | 0 | ||||
Health Care Insurance | 0 | ||||
Career Transition | 0 | ||||
Total | 3,776,158 |
(1) | Payments made in connection with a Change in Control may require shareholder approval, pursuant to the PG&E Corporation Golden Parachute Restriction Policy, discussed below. If excise taxes are levied in connection with Internal Revenue Code Section 4999, the aggregate benefits shown may be reduced to a level that does not trigger the excise tax, but only if doing so would be more beneficial to the officer on an after-tax basis. |
(2) | For pension payments, the number reflects the value of aggregated benefits upon termination due to death. Pension payments upon termination due to disability would be the same as in the event of resignation. |
(3) | Reflects the value of outstanding equity awards for which vesting is continued or accelerated due to the termination event. Based on performance through December 31, |
(4) | Assumes |
2019 Joint Proxy Statement | 87 |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
Pension Benefits in General
If any NEO is terminated for any reason, that officer generally is entitled to receive accrued and vested pension benefits, as described in the narrative accompanying the “Pension Benefits—2016”2018” table. The value of the pension benefit will be paid out over time in the form of an annuity, consistent with payment elections made by the NEO. The qualified plan trust is funded by contributions from both PG&E Corporation and the Utility. Payments from the non-qualified plan are paid by PG&E Corporation and are reduced by any benefit payable from the qualified plan.
The value of pension benefits reported in the table above is identical in all termination scenarios, except if an NEO’s employment is terminated due to that officer’s death. In that case, if (1) the officer was at least 55 years of age, or (2) the combined total of his or her age and the number of years worked exceeded 70, then the officer’s surviving spouse or beneficiary would be entitled to an immediate commencement of payment of 50 percent of the single lifesingle-life pension benefit that would otherwise have been available to the officer at age 65. For all other officers, the value of this pre-retirement survivor’s benefit would be 50 percent of the single life pension benefit that would otherwise have been available to the officer at age 55, and the benefit would commence inon the first of the month that startsafter the day after that officer would have reached age 55.
Officer Severance Policy
The Officer Severance Policy provides for severance payments and the treatment of certain LTIP awards upon termination with cause, termination without cause, and termination in connection with a Change in Control (unless such benefits have been waived).Control. Benefits under the Officer Severance Policy are paid by the individual’s former employer.
Mr. Earley generally waived his rights under the Officer Severance Policy.
Potential Payments – Resignation/Retirement
LTIP Awards
Unvested performance shares, stock options, and RSUs generally are cancelled upon resignation, unless that individual’s resignation qualifies as a “retirement.” For these purposes, “retirement” for the NEOs means a termination of employment, other than for cause, when an employee is at least 55 years old and has been employed for at least the last five consecutive years immediately before termination. If the individual “retires,” then:
• | Unvested performance shares continue to vest and will become payable as if the officer remained |
• | Unvested annual RSU awards continue to vest and will become payable as if the officer remained employed (unless retirement occurs within two years following a Change in Control, in which case shares underlying the RSUs vest and are paid out within 60 days following the retirement). |
Unvested annual stock options continue to |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
With respect to the RSUs granted as a promotional award to Ms. Williams and Mr. Stavropoulos in August 2015, Mr. Mistry in February 2016, and Mr. Halpin in November 2016,May 2017, the retirement provision does not apply and any unvested RSUs would bewere cancelled upon resignation.at the time his employment ended.
Mr. Earley, Ms. Williams and Mr. Stavropoulos werewas the only NEOs who were retirement-eligibleNEO eligible for retirement under the LTIP as of December 31, 2016.2018. Mr. Stavropoulos was retirement-eligible at the time his employment ended.
STIP
If an NEO resigns or retires on or after December 31 of a performance year, that officer will be entitled to receive a lump-sum STIP payment for that calendar year.
If an NEO resigns prior to December 31 of any calendar year, potential STIP payments for that year generally are forfeited. However, if the NEO is at least 55 years of age at the time of resignation, then potential STIP payments will be treated in the same manner as for a “retirement.”
2019 Joint Proxy Statement | 88 |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
If an NEO retires before December 31 of any calendar year, then the Compensation Committee may, in its discretion, approve providing the retired NEO with a lump-sum STIP payment for that calendar year. Any such STIP payment generally would reflect actual earnings, and thus be prorated to reflect the amount of time that the retired NEO was employed during the performance period.
Any STIP payment generally would reflect the STIP performance score applicable to active employees and would be paid by the former employer at the same time as for active employees.
Post-Retirement Life Insurance Benefits
Upon retirement (as defined under the qualified pension plan), all employees of PG&E Corporation, the Utility, and certain subsidiaries are eligible to receive a life insurance coverage benefit under the Post-Retirement Life Insurance Plan of Pacific Gas and Electric Company. If an employee retires at age 55 or older with at least 15 years of service (“qualifying retirement”) with the companies and their respective subsidiaries, the employee may qualify for a different “benefit level” and the value of the benefit may increase. Each retiree’s applicable “benefit level” is determined based on factors such as the participant’s position with the company at retirement and the date of hire or promotion. Prior to December 31, 2008, upon qualifying retirement, certain benefit levels also permitted the retiree to elect to receive the benefit in the form of a lump-sum cash payment equal to the present value of the insurance coverage benefit. Participants no longer may elect the cash payment upon retirement, but certain individuals who were employees as of December 31, 2008 and who were likely upon retirement to qualify for the benefit levels that previously offered the cash alternative were given the opportunity to make a one-time election as to whether to receive future benefits (if any) as insurance coverage or in the form of a lump-sum cash payment. Benefits are paid by the former employer.
Upon qualifying retirement, Ms. Williams Mr. Simon, and Mr. MistrySimon would receive a lump-sum cash benefit equal to the present value of a post-retirement life insurance policy with coverage equal to his or her last 12 months of salary. Upon qualifying for retirement, all other NEOs would be entitled to receive a life insurance benefit in the amount of $50,000.
No NEOs would have been eligible for such life insurance-related benefits if they had retired on December 31, 2016.
Potential Payments – Termination for Cause
If an officer is terminated for cause, all outstanding performance shares and RSUs are cancelled, stock options are forfeited, no severance payment is available, and the officer is not eligible to receive a STIP payment for that year.
As provided in the Officer Severance Policy, in general, an officer is terminated “for cause” if the employer determines in good faith that the officer has engaged in, committed, or is responsible for:
• | Serious misconduct, gross negligence, theft, or fraud against PG&E Corporation and/or the officer’s employer, |
• | Refusal or unwillingness to perform his or her duties, |
• | Inappropriate conduct in violation of the Corporation’s equal employment opportunity policy, |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
• | Conduct that reflects adversely upon, or making any remarks disparaging of, the Corporation, its Board, officers, or employees, or its affiliates or subsidiaries, |
• | Insubordination, |
• | Any willful act that is likely to injure the reputation, business, or business relationship of the Corporation or its subsidiaries or affiliates, or |
• | Violation of any fiduciary duty, or breach of any duty of loyalty. |
With respect to vesting of LTIP awards, “cause” generally is determined in the sole discretion of PG&E Corporation, and typically includes dishonesty, a criminal offense, or violation of a work rule. For Mr. Earley’s LTIP awards, “cause” is specifically defined in the same manner as in the Officer Severance Policy.
2019 Joint Proxy Statement | 89 |
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
Potential Payments – Termination Without Cause
LTIP Awards
Termination provisions are described in the Officer Severance Policy and LTIP award agreements.
• | Unvested performance shares generally vest based on actual performance proportionately based on the number of months during the performance period that the officer was employed divided by 36 months. Any vested performance shares are settled, if at all, at the end of the applicable performance period. |
• | Unvested RSUs generally continue to vest for 12 months. |
• | Unvested stock options that would have vested over the 12 months following termination will continue to vest. Vested stock options may be exercised for the shorter of one year or the remaining term. |
However, if the officer is at least 55 years of age with at least five years of service, his or her termination without cause is treated as a retirement under the terms of the LTIPs.LTIP. (Please see the section entitled “Potential Payments—Resignation/ Retirement” for a discussion of vesting provisions.) Mr. Earley, Ms. Williams and Mr. Stavropoulos werewas the only NEOs who were retirement-eligibleNEO eligible for retirement under the LTIP as of December 31, 2016.2018. Mr. Stavropoulos was retirement-eligible at the time his employment ended.
Severance Payment
All NEOs except Mr. Earley, would be entitled to a lump-sum payment of one times annual base salary and STIP target. Mr. Earley waived his rights to cash severance payments.
STIP
If an officer is terminated without cause before December 31 of a given year and has at least six months of service in that year, the officer is eligible to receive a prorated lump-sum STIP award for that year. Such STIP payment generally would reflect the STIP performance score applicable to active employees and would be prorated to reflect the amount of time that the officer was employed during the performance period. Payments would be paid by the former employer and at the same time as for active employees.
Miscellaneous Benefits
The officer is entitled to receive a lump-sum cash payment equal to the estimated value of 18 months of COBRA premiums, based on the officer’s benefit levels at the time of termination (with such payment subject to taxation under applicable law), and career transition services. Mr. Earley waived his rights to these benefits.
Covenants
In consideration for severance benefits other than those relating to LTIP awards, (1) the officer agrees not to divulge any confidential or privileged information obtained during his or her employment, unless required or permitted by law, (2) during a period of 12 months following severance, the officer agrees to a covenant to, among other things, refrain from soliciting customers and employees, (3) the officer agrees to assist in legal proceedings as reasonably required during this period, (4) the officer must sign a release of claims, and (5) the officer must agree not to compete with the companies to the extent permitted by law.
POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
Potential Payments – Severance in Connection with Change in Control
Change-in-Control benefits require a “double trigger” and are not payable based on a Change-in-Control event alone. Benefits in connection with a Change in Control are provided by the Officer Severance Policy, the LTIPs, and related LTIP award agreements and guidelines. Benefits may be limited by the PG&E Corporation Golden Parachute Restriction Policy, which is discussed further below.
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POTENTIAL PAYMENTS UPON RESIGNATION, RETIREMENT, TERMINATION, CHANGE IN CONTROL, DEATH, OR DISABILITY(Continued)
Definition of Change in Control
Effective May 12, 2014, the definition of Change in Control for purposes of the officer severance programs and LTIP awards granted starting in 2015 under the 2014 LTIP was amended such that aA Change in Control occurs ifupon any of the following occur:events:
1. | Any person or entity (excluding employee benefit plans or a plan fiduciary) becomes the direct or indirect owner of more than 30 percent of PG&E Corporation’s outstanding common stock. |
2. | Over any two-year period, a majority of the PG&E Corporation directors in office at the beginning of the period are no longer in office (unless each new director was elected or nominated for shareholder election by at least two-thirds of the remaining active directors who also were in office at the beginning of the period or who were elected or nominated by at least two-thirds of the active directors at the time of election or nomination). |
3. | Following any shareholder-approved consolidation or merger of PG&E Corporation, the former Corporation shareholders own less than 70 percent of the voting power in the surviving entity (or parent of the surviving entity). |
4. | (a) Consummation of the sale, lease, exchange, or other transfer of all or substantially all of PG&E Corporation’s assets, or |
Because the amended definition of Change in Control would reduce the aggregate level of benefits for officers who were eligible for severance benefits prior to May 2014, the new definition will not become effective with respect to severance payments for NEOs until May 2017. For such payments, and for LTIP awards granted in 2013 and 2014 under the 2006 LTIP, a Change in Control occurs if any of the following occur:
LTIP Awards
Following a Change in Control, LTIP awards generally accelerate or automatically vest if either (a) the successor company fails to assume, continue, or substitute previously granted awards in a manner that preserves the value of those awards, or (b) the award recipient is terminated (including constructive termination) in connection with a Change in Control during a set period of time before or after the Change in Control. Specific acceleration, vesting, and settlement provisions are as follows (subject to any delays necessary to comply with Internal Revenue Code Section 409A).:
TREATMENT OF UNVESTED LTIP AWARDS UPON TERMINATION WITHOUT CAUSE IN CONNECTION WITH A CHANGE IN CONTROL (CIC)
CIC Occurs and Acquiror Does Not Assume, Continue, or Grant Substitute LTIP Awards | Termination Within Three Months Before CIC; Awards Are Assumed, Continued, or Substituted | Termination Within Two Years After CIC; Awards Are Assumed, Continued, or Substituted | ||||
PerformanceShares | Vest upon CIC, payable at end of the performance period, but based on a payout factor measuring TSR for the period from the beginning of the performance period to the date of CIC, and assuming safety and affordability performance was at target | Vest upon CIC, payable at the end of the performance period | Vest upon termination, payable at the end of the performance period | |||
RSUs | Vest upon CIC, settled under the normal schedule | Vest upon CIC, settled under the normal schedule (includes any RSUs that would have continued to vest after termination) | Vest upon termination, settled within 60 days | |||
Stock Options | Vest upon CIC and will be cancelled in exchange for fair value | Vest upon CIC; may be exercised within shorter of remaining term or one year | Vest upon termination; may be exercised within shorter of remaining term or one year |
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TREATMENT OF UNVESTED LTIP AWARDS UPON TERMINATION WITHOUT CAUSE IN CONNECTION WITH A CHANGE IN CONTROL (CIC)(Continued)
Severance Payment
The Officer Severance Policy provides enhanced Change-in-Control severance benefits to “covered officers” who are in officer compensation bands 1 or 2. Such covered officers include Ms. Williams, Mr. Stavropoulos,Malnight, Mr. Wells, and Mr. Simon. Mr. Earley waivedStavropoulos was a covered officer prior to the end of his rights to Change-in-Control severance benefits under the Officer Severance Policy.employment. If Mr. Halpin,Soto, Mr. Thomason,Hogan, or Mr. MistryThomason had been terminated in connection with a Change in Control as of December 31, 2016,2018, each would have been eligible for standard severance benefits, as discussed in the section entitled “Potential Payments—Termination Without Cause.”
If a covered officer is terminated without cause or is constructively terminated in connection with a Change in Control (which includes termination prior to a Potential Change in Control, as defined in the Officer Severance Policy), the officer generally would be eligible for a lump-sum payment equal to the total of:
1. | Unpaid base salary earned through the termination date, |
2. | Any accrued but unpaid vacation pay, and |
3. | Two times the sum of (a) target STIP for the fiscal year in which termination occurs, and (b) the officer’s annual base salary in effect immediately before either the date of termination or the Change in Control, whichever is greater. |
However, in connection with the elimination of reimbursement payments for excise taxes levied in connection with Internal Revenue Code Section 4999, eligible officers either (1) are responsible for paying any such excise taxes, or (2) have their aggregate change-in-controlChange-in-Control benefits reduced to a level that does not trigger the excise tax, but only if doing so would be more beneficial to the officer on an after-tax basis.
For these purposes, “cause” means:
(i) | The covered officer’s willful and continued failure to substantially perform the officer’s duties with PG&E Corporation or one of its affiliates, after a written Board demand for substantial performance is delivered to the officer, or |
(ii) | The willful engagement in illegal conduct or gross misconduct that is materially injurious to PG&E Corporation. |
Constructive termination includes resignation in connection with conditions that constitute Good Reason as defined in the Officer Severance Policy (which includes, among other things, a material diminution in duties, authority, or base compensation).
STIP
If a covered officer is terminated without cause or is constructively terminated in connection with a Change in Control, the Officer Severance Policy provides that the officer will receive a lump-sum payment equal to the officer’s prorated target STIP calculated for the fiscal year in which termination occurs. Mr. Earley waived his rights to Change-in-Control severance benefits under the Officer Severance Policy. If Mr. Halpin,Soto, Mr. Thomason,Hogan, or Mr. MistryThomason had been terminated in connection with a Change in Control as of December 31, 2016,2018, each would have been eligible for STIP payments, as discussedconsistent with the discussion in the section entitled “Potential Payments—Termination Without Cause.”
TREATMENT OF UNVESTED LTIP AWARDS UPON TERMINATION WITHOUT CAUSE IN CONNECTION WITH A CHANGE IN CONTROL (CIC)(Continued)
PG&E Corporation Golden Parachute Restriction Policy
The Golden Parachute Restriction Policy requires shareholder approval of executive severance payments provided in connection with any change in control, to the extent that those payments exceed 2.99 times the sum of a covered officer’s base salary and target annual bonus. This Policy was adopted by the PG&E Corporation Board in February 2006.
The policy applies to the value of cash, special benefits, or perquisites that are due to the executive following or in connection with both (1) a change in control, and (2) the termination or constructive termination of an officer of PG&E Corporation, the Utility, or their respective subsidiaries at the level of Senior Vice President or higher. It does not apply to the value of benefits that would be triggered by a change in control without severance, or to the value of benefits that would be triggered by severance in the absence of a change in control. The Golden Parachute Restriction Policy also does not apply to certain enumerated payments, including, among others, compensation for services rendered prior to termination, tax restoration payments, and accelerated vesting or settlement of equity awards.
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TREATMENT OF UNVESTED LTIP AWARDS UPON TERMINATION WITHOUT CAUSE IN CONNECTION WITH A CHANGE IN CONTROL (CIC)(Continued)
Potential Payments – Termination Due to Death or Disability
LTIP Awards
If an officer’s employment is terminated due to death or disability, LTIP awards are treated as follows:
• | Unvested performance shares vest immediately. Vested shares are payable, if at all, as soon as practicable after completion of the performance period relevant to the performance shares. |
• | If a participant’s death or disability (as defined under Internal Revenue Code Section 409A) occurs while employed, unvested RSUs vest immediately and will be settled within 60 days. |
• | If a participant’s death or disability (as defined under Internal Revenue Code Section 409A) occurs while employed, unvested stock options vest immediately. Vested stock options may be exercised within the shorter of one year or the remaining term. |
Vested LTIP awards are payable to the officer’s designated beneficiary(ies), in the case of death, or otherwise in accordance with the officer’s instructions or by law.
STIP
If an officer’s employment is terminated due to death or disability before December 31 of the STIP performance year, a prorated portion of the target STIP award will become payable to the officer, or, in the case of death, to the officer’s beneficiary(ies), by the former employer and at the same time as STIP payments are made to active employees.
PRINCIPAL EXECUTIVE OFFICERS’ (PEO) PAY RATIO – 2018
The PG&E Corporation PEO’s 2018 total compensation was $9,289,842. The total compensation of the median employee was $177,765. The ratio of PEO pay to median worker pay for PG&E Corporation was 52:1.
The Utility PEO’s 2018 total compensation was $1,727,251. The total compensation of the median employee was $177,765. The ratio of PEO pay to median worker pay for the Utility was 10:1.
December 31, 2018 was selected as the date to identify the “median employee.” The companies identified the same individual as was identified as the “median employee” on December 31, 2017, for purposes of disclosures in the 2018 Joint Proxy Statement, given that since December 31, 2017, there have been no changes to either company’s employee population or employee compensation arrangements that would result in significant changes to the pay ratio disclosure. To identify the “median employee” on December 31, 2017, Medicare wages from tax records were utilized to make the initial identification. At that time, of the companies’ total of 23,361 employees, an insignificant number (24) were employed by PG&E Corporation, so the same employee was used as the “median employee” for both PG&E Corporation and the Utility in 2017 and again in 2018. After identifying the median employee, all the elements of compensation, including cash compensation and change in pension value, for 2018 were combined in accordance with the requirements of Item 402(c)(2)(x) of SEC Regulation S-K.
As of December 31, 2018, three individuals concurrently served as PEOs of the Utility: Jesus Soto, Senior Vice President, Gas Operations; Steven Malnight, Senior Vice President, Energy Supply and Policy; and Patrick Hogan, Senior Vice President, Electric Operations. To reflect this structure, PEO compensation was calculated as the average compensation provided to Messrs. Soto, Malnight, and Hogan. Because these three individuals assumed the shared duties of PEO on September 1, 2018, PEO compensation, specifically salary and non-equity incentive plan compensation, was annualized to project the amount of compensation that would have been earned if each of the PEOs had been in his position for the full year.
These ratios are reasonable estimates calculated in a manner consistent with Item 402(u) of Regulation S-K.
Item No. 4: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation for PG&E Corporation and Pacific Gas and Electric CompanyNEW CEO COMPENSATION ARRANGEMENTS
PG&E Corporation and the Utility are required to provide shareholders at least once every six calendar years the opportunity to cast a non-binding advisory vote on whether a non-binding advisory vote regarding executive compensation (’’say-on-pay vote’’), such as the one included in Item No. 3 of this Proxy Statement, shall occur every one, two, or three years.
Since 2010, PG&E Corporation and the Utility each has provided shareholders with an annual advisory vote regarding the companies’ executive compensation policies.
Consistent with the companies’ existing policy and practice, the Boards recommend that the companies continue to provide shareholders with an annual opportunity to provide an advisory vote on executive compensation matters and, therefore, recommend that the frequency of the say-on-pay vote be one year.
This vote is non-binding and is required by Section 14A of the Securities Exchange Act of 1934. Shareholders are not voting to approve the Boards’ recommendation. Shareholders will be given choices of one, two, or three years (or abstain). Shareholders’ non-binding approval of a one-, two-, or three-year frequency will not require either company to adopt that frequency. However, if the shareholders of either PG&E Corporation or the Utility do not approve an annual say-on-pay vote,On April 10, 2019, the Board of the applicable companyCorporation appointed Bill Johnson as the new Chief Executive Officer and President of the Corporation.
In connection with the appointment, the independent members of the Corporation Board approved the terms and conditions of Mr. Johnson’s compensation arrangements, which are generally described below and are subject to the approval of the Bankruptcy Court, where the Chapter 11 Cases are pending.
During the three-year employment commitment, Mr. Johnson will examinereceive a base salary of $2.5 million annually. Mr. Johnson will also be eligible to receive a one-time transition payment of $3 million on the voting resultsfirst day of his employment, which is subject to claw-back in the event Mr. Johnson resigns or is terminated for cause within 12 months of his start date. Further, Mr. Johnson will be eligible for the Corporation’s standard relocation policy for expenses relating to moving to California.
In addition, Mr. Johnson will receive equity incentive compensation consisting of time-based RSUs, performance-based restricted stock units (“PRSUs”) and consider whether, among other things,performance-based stock options. Mr. Johnson will receive an annual equity award with a target value of $3.5 million, with 25 percent of such award consisting of RSUs and 75 percent of such award consisting of PRSUs. Additionally, on the company should changefirst day of his employment, Mr. Johnson will receive a one-time grant of three tranches of performance-based stock options, payable in cash or shares at Mr. Johnson’s option, as follows: (i) tranche 1 consists of a maximum 1.2 million options (i.e., 800,000 options at target level performance) with an exercise price of $25.00 per share exercisable until the frequencyfourth anniversary of its say-on-pay vote.the grant date, (ii) tranche 2 consists of a maximum 1.5 million options (i.e., 1 million options at target level performance) with an exercise price of $40.00 per share exercisable until the fourth anniversary of the grant date, and (iii) tranche 3 consists of a maximum 1.6 million options (i.e., approximately 1.1 million options at target level performance) with an exercise price of $50.00 per share exercisable until the fifth anniversary of the grant date, in each case subject to forfeiture if Mr. Johnson is terminated for cause.
The Boardsperformance-based vesting conditions applicable to the PRSUs and stock options will be weighted 65 percent safety-based performance conditions, 25 percent financial-based performance conditions and 10 percent customer-based performance conditions. All of DirectorsMr. Johnson’s equity incentive compensation will be subject to claw-back under the Corporation’s recoupment policy. The vesting conditions, including the performance periods and threshold, target and maximum performance levels applicable to the performance-based vesting conditions, and other material terms, including certain anti-dilution protections, of PG&E CorporationMr. Johnson’s equity incentive compensation are described in the Corporation’s Current Report on Form 8-K filed with the SEC on April 16, 2019 and Pacific Gas and Electric Company Unanimously Recommend a Vote thatin other subsequent related disclosures.
Mr. Johnson will also be eligible for severance payments under certain circumstances, as described in the Frequency ofCorporation’s Current Report on Form 8-K filed with the Advisory VoteSEC on Executive Compensation Be ONE YEAR.April 16, 2019.
Item No. 5:Nos. 5 and 6: PG&E Corporation Shareholder ProposalProposals
To Be Voted on by PG&E Corporation Shareholders Only
The following shareholder proposalproposals and related supporting statementstatements represent the views of the shareholdershareholders who submitted them, and not the views of PG&E Corporation. PG&E Corporation is not responsible for, and does not endorse, the content of any shareholder proposal or supporting statement. The shareholder proposalproposals and supporting statementstatements are included in this Proxy Statement pursuant to rules established by the SEC.SEC proxy Rule 14a-8.
Item No. 5: Shareholder Proposal
Mr. Thomas Strobhar, 3183 Beaver Vu Drive, Ste. A, Beavercreek, Ohio 45434,Jing Zhao, 1745 Copperleaf Court, Concord, CA 94519, beneficial owner of 65 shares of PG&E Corporation common stock, has given notice of his intention to present the following proposal for action at the PG&E Corporation annual meeting:
Whereas, charitable contributions are made possible largely by the utility bills our customers pay to keep their homes and businesses safe and comfortable. Our service alone is a great benefit to millions of people.Shareholder Proposal on Corporation Structure Reform
Whereas, many of our customers are of moderate or low income levelsResolved: shareholders recommend that PG&E Corporation reform PG&E’s structure to combine with Pacific Gas and struggle greatly to pay their bills.Electric Company into one organization under one board and one executive team, under applicable law and regulation rules.
Whereas,Supporting Statement
According to Joint Notice of 2018 Annual Meetings Joint Proxy Statement of PG&E distributes over twenty million dollars a yearCorporation and Pacific Gas and Electric Company summary compensation table (p.61), PG&E Corporation’s CEO and President Ms. Williams took $8,597,220, Pacific Gas and Electric Company’s President and COO Mr. Stavropoulos took $6,413,256, and PG&E Corporation’s Executive Chair of the Board Mr. Earley took $6,012,329 (with early retirement before the end of 2017), totaling $21,022,805 in 2017 when California residents suffered devastating lose and lives from wild fires and other natural and unnatural causes! Mr. Earley also took $11,730,646 in 2016 and $12,198,394 in 2015. Californians cannot afford to a long list of charities, most of which would not be recognizable to many of our customers. Inaward three bosses for one and same poor public utilities service at the past, we have given funds to LGBT groups to fund film festivals some might characterize as gay porn. We have also contributed tens of thousands of dollarssame time with such an absurd high compensation.
Furthermore, according to the CenterWall Street Journal “Better Ways to Measure Your Boss’s Pay” (July 4, 2017): “Summary compensation tables massively understate what executives earn and don’t tell investors what they need to know.” “In 2015—the last year for American Progress. Accordingwhich full data is available—the average pay of the 500 highest-paid U.S. executives was $17.1 million according to SourceWatch, the Center, “is a liberal think tank created and led by John Podesta, the head of Barack Obama’s Presidential Transition Team and a former Chief of Staff for President Bill Clinton.fair-value estimates, but $32.6 million according to realized pay.”
Whereas,The division of PG&E Corporation and Pacific Gas and Electric Company is unnecessary for and harmful to public service, and is unethical for two groups of executive officers to award themselves with absurd compensation. There is no such a “joint venture” of public service in other controversial charities we might give to include Planned Parenthood, which does over 300,000 abortions a year, or the Human Rights Campaign, which often characterizes people who oppose same-sex marriage as haters and bigots. This might include millions of our customers.advanced democratic societies.
Whereas, less controversial contributionsThe Board of Directors of PG&E Corporation Recommends a Vote AGAINST This Proposal.
The Board believes shareholders should vote against this proposal for the following reasons:
With the Corporation’s and the Utility’s January 29, 2019 filing of voluntary petitions for relief under Chapter 11, any transactions outside of the ordinary course of business, including transactions to alter or restructure the corporate structure of PG&E Corporation and its subsidiary, the Utility, will require approval from the Bankruptcy Court overseeing the companies’ jointly administered Chapter 11 Cases. A company restructuring, if any, likely would be addressed as part of the companies’ Chapter 11 plan(s) of reorganization that must be filed, voted on by holders of impaired claims and equity interests, and confirmed by the Bankruptcy Court before the companies emerge from Chapter 11. PG&E Corporation cannot unilaterally decide to combine with the Utility, even if PG&E Corporation’s shareholders approve such a recommendation, absent Bankruptcy Court approval.
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Furthermore, any confirmed Chapter 11 plan of reorganization will need to comport with applicable regulatory requirements, as well as take into account the numerous interests of stakeholders including shareholders, customers, communities served by PG&E Corporation and the Utility, regulators, parties affected by the 2017 and 2018 wildfires, creditors, and employees. A confirmed Chapter 11 plan of reorganization could reflect any number of possible corporate structures, from combining into one entity, splitting up into many different entities, or maintaining the status quo.
In this environment, it is not practical or meaningful for shareholders at the 2019 annual meeting to recommend combining PG&E Corporation and the Utility based on executive compensation concerns. Rather, it is in the best interests of PG&E Corporation and its shareholders for the Corporation to have gonethe flexibility and time to formulate and file a Chapter 11 plan of reorganization that (i) addresses and resolves the wildfire claims that have been asserted against it, (ii) enables PG&E Corporation and the Utility to provide prudent and efficient service to the International Bird Rescue Research CenterUtility’s customers and to properly invest in its business to provide safe and reliable service and to further mitigate future wildfire risks, (iii) enables PG&E Corporation and the Marin Boating Council. However, this later group might appearUtility to some as not particularly needy.help restore and rebuild communities affected by the wildfires, and (iv) maximizes value and positions PG&E Corporation and the Utility for long-term viability.
Whereas, we have never asked our customers if they would likeFor these reasons, the PG&E Corporation Board unanimously recommends a lower utility bill or have a portion of their remittance given to charities chosen by PG&E.voteAGAINST this proposal.
Resolved, it is requestedItem No. 6: Shareholder Proposal
Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, beneficial owner of 80 shares of PG&E Corporation common stock, has given notice of his intention to present the following proposal for action at the PG&E Corporation annual meeting:
Proposal 6 – Improve Shareholder Proxy Access
Shareholders request that our board of directors discontinuetake the charitable giving program unless a majoritysteps necessary to enable as many shareholders as may be needed to aggregate their shares to equal 3% of our customers positively affirmstock owned continuously for 3-years in order to make use of our shareholder proxy access provisions.
Under current provisions, even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the 3% criteria for a continuous 3-years at most companies examined by the Council of Institutional Investors. Additionally many of the largest investors of major companies are routinely passive investors who would be unlikely to be part of the proxy access shareholder aggregation process. Our company has a 20 participant limit for shareholder proxy access.
Under this proposal it is likely that the number of shareholders who participate in the aggregation process would still be a modest number due to the rigorous rules our company adopted for a shareholder to make an application to qualify as one of the aggregation participants. Plus it is easy for our management to reject potential aggregating shareholders because management simply needs to find lacking one item from a list of requirements.
This proposal deserves added attention since the price of PG&E stock fell 50% in one-month. Our Board of directors needs refreshment with a healthy concern for risk management of PG&E and a complete culture change. It seems unlikely that Board refreshment will be originating from the Chairman of our Nomination Committee, Richard Kelly. Mr. Kelly has been retired for 13-years and does not work on any other major Board of Directors to keep his skills up-to-date.
According to a San Francisco Chronicle article:
PG&E endured a turbulent ride on Wall Street as its legal and regulatory challenges continue to mount since the 2018 Camp fire broke out. Shares were at $25 – nearly half their opening price the day the fire started.
The 2018 Camp fire survivors have filed multiple suits against PG&E in San Francisco and Butte County, and a federal judge overseeing PG&E’s probation because of the 2010 San Bruno pipeline blast has opened a new, wildfire-related line of inquiry.
At the same time, the California Public Utilities Commission has said it wants to expand an investigation into PG&E’s safety culture, originally born out of the San Bruno fallout, to include wildfires.
PG&E also faces the prospect that its equipment may be found responsible for starting the Tubbs Fire, the most destructive of the devastating 2017 Wine Country wildfires. The cause of that fire is still under investigation, but investigators have said PG&E equipment started 17 other fires that burned through a public vote.Northern California in 2017.
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Please vote yes:
Improve Shareholder Proxy Access – Proposal 6
The Board of Directors of PG&E Corporation Recommends a Vote AGAINST This Proposal.
The Board believes shareholders should vote against this proposal for the following reasons:
PG&E Corporation’s charitable giving program supportscurrent proxy access bylaw provisions strike an appropriate balance between the benefits and risks of proxy access, and are consistent with current proxy access market standards. The proposal seeks the adoption of provisions that would unnecessarily disrupt that balance and are inconsistent with current market practice. Further, given the composition of PG&E Corporation’s shareholder base, the proposed changes would not significantly increase the ability for our shareholders to take advantage of proxy access, and therefore are unnecessary.
Our shareholders already have meaningful and appropriate proxy access rights. On February 17, 2016, the Utility’s (together, “PG&E”) overall vision and values by making contributions and taking actionsPG&E Corporation Board adopted proxy access bylaw provisions that address the needspermit shareholders owning 3 percent or more of the communities served byCorporation’s outstanding common stock for at least three years to nominate the greater of two directors or 20 percent of the Board, and to include these nominees in the Corporation’s proxy materials. The number of shareholders who may aggregate their shares to meet the ownership threshold is limited to 20. Nominations are subject to the eligibility, procedural, and disclosure requirements set forth in the Corporation’s bylaws.
Our proxy access bylaw provisions’ specific requirements reflect a broad range of perspectives, including (1) current practices among other large companies and (2) the views of PG&E CorporationCorporation’s largest investors. The Board considered and weighed these perspectives when developing the Utility, building communityCorporation’s proxy access bylaw provisions, and civic partnerships,believes that these provisions strike an appropriate and meaningful balance between enhancing employee engagement,shareholder rights and furthering local involvement inadequately protecting the communities served by the Utility.
Furthermore, PG&E is proudbest interests of the breadth of its program and the impact it has on communities.
Suspending the charitable giving program, even temporarily, would deprive PG&ECorporation and its shareholders of the many benefits provided by this program, could cause PG&E to violate any promises and signed contractual obligations to make future contributions, and would suspend needed support to the communities that PG&E serves.through reasonable procedures for conducting election contests.
Further, giving customers approval rights overPG&E Corporation is committed to strong corporate governance practices, including accountability to our shareholders. In addition to proxy access, shareholders have other ways to provide input. Our Corporate Governance Guidelines reflect the Board’s commitment to open communications with shareholders, and provide opportunities for direct communication and dialogue with the Board and management.
Removing the shareholder aggregation limit from the Corporation’s proxy access bylaw provisions would not significantly increase benefits to shareholders because the current 20-shareholder limit is not prohibitive, given the Corporation’s current shareholder base. As of January 2019, PG&E Corporation’s charitable giving program is30 largest institutional shareholders held approximately 62 percent of the Corporation’s outstanding common stock. As a practical matter, some of these shareholders could utilize proxy access individually, and a number of the others could easily form a group among themselves to submit a proxy access nomination. More importantly, any shareholder seeking to form a nominating group, regardless of the size of its holdings, could achieve the 3 percent minimum required ownership by combining with one or more of the 30 largest investors. Of course, nominating groups are not consistentlimited to these large institutional investors, and a shareholder seeking to nominate a director candidate may approach any other shareholders to meet the 3 percent ownership threshold.
Therefore, the 20-shareholder aggregation limit does not unduly restrict any shareholder from forming a group to submit a proxy access nomination, and provides ample opportunities for all holders of less than 3 percent of the Corporation’s common stock to combine with howother shareholders to reach the charitable giving program is funded. Shareholder dollars are used3 percent ownership threshold.
In addition, and as discussed elsewhere in this Joint Proxy Statement and public statements, the Board of PG&E Corporation began conducting a Board refreshment process in January 2019 in order to fundadd fresh perspectives to the charitable giving program;Board to help address the rates paid by customers cannot be used for charitable giving. It is notserious challenges the business faces now and in the shareholders’ interest forfuture. Throughout this process, PG&E Corporation engaged in constructive dialogue with shareholders to give customersand other stakeholders on potential new director nominees and on the authority to determine whether and how shareholder dollars can be used for charitable purposes.composition of the Board as a whole.
For these reasons, the PG&E Corporation Board unanimously recommends a voteAGAINST this proposal.
The following table presents certain information regarding shareholders that PG&E Corporation and the Utility know are beneficial owners of more than 5 percent of any class of voting securities of the Corporation or the Utility as of March 8, 2017April 24, 2019 (except as noted below).
Class of Stock | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
Pacific Gas and Electric Company stock(1) | PG&E Corporation(2) 77 Beale Street P.O. Box 770000 San Francisco, CA 94177 | 264,374,809 | 96.24% | PG&E Corporation(2) 77 Beale Street P.O. Box 770000 San Francisco, CA 94177 | 264,374,809 | 96.24% | |||||
Pacific Gas and Electric Company first preferred stock | Stonehill Capital(3) 885 Third Avenue, 30th Fl New York, NY, 10022 | 672,126 | (3) | 6.5% | |||||||
PG&E Corporation common stock | �� | BlackRock, Inc.(3) 55 East 52ndStreet New York, NY 10055 | 33,531,617 | (3) | 6.6% | The Vanguard Group Inc.(4) 100 Vanguard Blvd. Malvern, PA 19355 | 47,523,913 | (4) | 9.2% | ||
PG&E Corporation common stock | T. Rowe Price Associates Inc.(4) 100 E. Pratt Street Baltimore, MD 21202 | 45,571,223 | (4) | 9.0% | |||||||
PG&E Corporation common stock | The Vanguard Group Inc.(5) 100 Vanguard Blvd. Malvern, PA 19355 | 34,066,802 | (5) | 6.73% |
(1) | The Utility’s common stock and preferred stock vote together as a single class. Each share is entitled to one vote. |
(2) | As |
shares. | |
(3) | The information relates to beneficial ownership as of |
the shares: John Motulsky. Christopher Wilson, Jonathan Sacks, Peter Sisitsky, Michael Thoyer, Michael Stern and Samir Arora. | |
(4) | The information relates to beneficial ownership as of December 31, |
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of PG&E Corporation common stock beneficially owned (as defined in the rules of the SEC) as of March 8, 2017April 15, 2019 by the directors, the nominees for director, the NEOs, and all directors and executive officers of PG&E Corporation and the Utility as a group. As of March 8, 2017,April 15, 2019, no listed individual owned shares of any class of Utility securities. The table also sets forth common stock equivalents credited to the accounts of directors and executive officers under the Corporation’s deferred compensation and equity plans. Directors and Section 16 Officers of the Corporation and the Utility may not engage in any hedging or monetization transactions that limit or eliminate the officer’s ability to profit from an increase in the value of company stock, and generally are prohibited from pledging company stock as collateral for a loan.
Name | Beneficial Stock Ownership(1)(2) | Percent of Class(3) | Common Stock Equivalents(4) | Total | ||||
Lewis Chew(5) | 17,481 | * | 1,349 | 18,830 | ||||
Anthony F. Earley, Jr.(5)(6) | 294,228 | * | 0 | 294,228 | ||||
Fred J. Fowler(5) | 9,514 | * | 0 | 9,514 | ||||
Maryellen C. Herringer(5) | 19,315 | * | 41,956 | 61,271 | ||||
Jeh C. Johnson(5) | 0 | 0 | 0 | |||||
Richard C. Kelly(5) | 4,871 | * | 6,876 | 11,747 | ||||
Roger H. Kimmel(5) | 15,361 | * | 12,033 | 27,394 | ||||
Richard A. Meserve(5) | 15,695 | * | 5,857 | 21,552 | ||||
Forrest E. Miller(5) | 10,555 | * | 26,016 | 36,571 | ||||
Eric D. Mullins(5) | 0 | * | 1,000 | 1,000 | ||||
Rosendo G. Parra(5) | 12,461 | * | 1,381 | 13,842 | ||||
Barbara L. Rambo(5) | 17,336 | * | 8,497 | 25,833 | ||||
Anne Shen Smith(5) | 2,320 | * | 2,054 | 4,374 | ||||
Nickolas Stavropoulos(5)(6) | 39,748 | * | 2,456 | 42,204 | ||||
Barry Lawson Williams(5) | 28,699 | * | 14,782 | 43,481 | ||||
Geisha J. Williams(5)(6) | 58,966 | * | 4,176 | 63,142 | ||||
Jason P. Wells(6) | 18,640 | * | 0 | 18,640 | ||||
David S. Thomason(7) | 4,533 | * | 0 | 4,533 | ||||
John R. Simon(8) | 22,572 | * | 156 | 22,728 | ||||
Edward D. Halpin(7) | 29,887 | * | 0 | 29,887 | ||||
Dinyar B. Mistry(7) | 14,910 | * | 0 | 14,910 | ||||
All PG&E Corporation directors, director nominees, and executive officers as a group (23 persons) | 656,666 | * | 132,643 | 789,309 | ||||
All Utility directors, director nominees, and executive officers as a group (29 persons) | 771,245 | * | 132,643 | 903,888 |
* Less than 1 percent
Name | Beneficial Stock Ownership(1)(2) | Percent of Class(3) | Common Stock Equivalents(4) | Total | |||
Richard R. Barrera(5) | 0 | * | 0 | 0 | |||
Jeffrey L. Bleich(5) | 0 | * | 0 | 0 | |||
Nora Mead Brownell(5) | 0 | * | 0 | 0 | |||
Frederick W. Buckman(5) | 0 | * | 0 | 0 | |||
Cheryl F. Campbell(5) | 0 | * | 0 | 0 | |||
Fred J. Fowler(5) | 14,043 | * | 0 | 14,043 | |||
William D. Johnson(5) | 0 | * | 0 | 0 | |||
Michael J. Leffell(5)(8) | 80,360 | * | 0 | 80,360 | |||
Kenneth Liang(5)(10) | 12,000 | * | 0 | 12,000 | |||
Dominique Mielle(5) | 0 | * | 0 | 0 | |||
Meridee A. Moore(5)(9) | 140,000 | * | 0 | 140,000 | |||
Eric D. Mullins(5) | 2,099 | * | 6,353 | 8,452 | |||
Kristine M. Schmidt(5) | 0 | * | 0 | 0 | |||
Alejandro D. Wolff(5) | 0 | * | 0 | 0 | |||
Geisha J. Williams(6)(7) | 159,632 | * | 4,282 | 163,914 | |||
Jesus Soto Jr.(6) | 36,219 | * | 0 | 36,219 | |||
Steven E. Malnight(6)(7) | 23,367 | * | 0 | 23,367 | |||
Patrick M. Hogan(6)(7) | 26,247 | * | 0 | 26,247 | |||
Jason P. Wells(6) | 56,882 | * | 0 | 56,882 | |||
David S. Thomason(6) | 8,549 | * | 0 | 8,549 | |||
John R. Simon(6) | 56,674 | * | 160 | 56,834 | |||
Nickolas Stavropoulos(6)(7) | 68,229 | * | 2,518 | 70,747 | |||
All PG&E Corporation directors and executive officers as a group (24 persons) | 743,352 | * | 13,313 | 756,665 | |||
All Utility directors and executive officers as a group (28 persons) | 809,208 | * | 13,313 | 822,521 |
* | Less than 1 percent |
(1) | This column includes any shares held in the name of the spouse, minor children, or other relatives sharing the home of the listed individuals and, in the case of current and former executive officers, includes shares of PG&E Corporation common stock held in the defined contribution retirement plan maintained by PG&E Corporation. Except as otherwise indicated below, the listed individuals have sole voting and investment power over the shares shown in this column. Voting power includes the power to direct the voting of the shares held, and investment power includes the power to direct the disposition of the shares held. |
This column also includes the following shares of PG&E Corporation common stock in which the listed individuals share voting and investment power: Ms. | |
(2) | This column includes the following shares of PG&E Corporation common stock that the individuals have the right to acquire within 60 days of |
(3) | The percent of class calculation is based on the number of shares of PG&E Corporation common stock outstanding as of |
2019 Joint Proxy Statement | 99 |
(4) | This column reflects the number of stock units that were purchased by listed individuals through salary and other compensation deferrals or that were awarded under equity compensation plans. The value of each stock unit is equal to the value of a share of PG&E Corporation common stock and fluctuates daily based on the market price of PG&E Corporation common stock. The listed individuals who own these stock units share the same market risk as PG&E Corporation shareholders, although they do not have voting rights with respect to these stock units. |
(5) | Mr. |
Utility and a director nominee of PG&E Corporation. | |
(6) | Ms. Williams, Mr. |
Mr. | |
(7) | Ms. Williams, Mr. Malnight, Mr. Hogan, and Mr. Stavropoulos were NEOs during 2018 but are no longer with PG&E Corporation or the Utility. |
(8) | Mr. |
(9) | Ms. Moore beneficially owns 140,000 shares of PG&E Corporation common stock through her interest in Watershed Asset Management, LLC, an asset management firm. Ms. Moore has sole voting and investment power over all such shares. |
(10) | 12,000 shares of PG&E Corporation common stock are held by the Liang Family Trust, for which Kenneth and Laura Liang are trustees. In his capacity as a trustee together with Laura Liang, Mr. Liang has sole voting and investment power over all such shares. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
In accordance with Section 16(a) of the Securities Exchange Act of 1934 and SEC regulations, PG&E Corporation’s and the Utility’s directors and certain officers, as well as persons who own greater than 10 percent of the Corporation’s or the Utility’s equity securities, must file reports of ownership and changes in ownership of such equity securities with the SEC and the principal national securities exchange on which those securities are registered, and must furnish the Corporation or the Utility with copies of all such reports that they file.
Based solely on review of copies of such reports received or written representations from certain reporting persons, PG&E Corporation and the Utility believe that during 2016,2018, all filing requirements applicable to their respective directors, officers, and 10 percent shareholders were satisfied, with the exception of one Statement of Change of Beneficial Ownership of Securities on Form 4 that was filed after the required filing date for Mr. Jason P. Wells reporting the withholding of 257 shares of PG&E Corporation common stock to pay tax withholding obligations upon the vesting of RSUs.satisfied. No information is reported for individuals during periods in which they were not directors, officers, or 10 percent shareholders of the applicable company.
Approval Policies
The Boards of PG&E Corporation and the Utility each adopted a written policy (the companies’ Related Party Transaction Policy (“Policy”)) which generally requires Audit Committee approval or ratification of transactions that would require disclosure under Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934 (“Item 404(a)”), except that the Policy has a lower dollar threshold than Item 404(a).
Under the Policy, at the first meeting of each year, each company’s Audit Committee reviews, approves, and/or ratifies related party transactions (other than the types of transactions that are excluded from disclosure under Item 404(a), as described below) with values exceeding $10,000 in which either company participates and in which any “Related Party” has a material direct or indirect interest. For these purposes, “Related Party” generally includes (1) any director, nominee for director, or executive officer, (2) holders of greater than 5 percent of that company’s voting securities, and (3) those parties’ immediate family members.
After the annual review and approval of related party transactions, if either company wishes to enter into a new related party transaction, then that transaction must be either pre-approved or ratified by the applicable Audit Committee. If a transaction is not ratified in accordance with the Policy, management will make all reasonable efforts to cancel or annul that transaction.
Where it is not practical or desirable to wait until the next Audit Committee meeting to obtain approval or ratification, the Chair of the applicable Audit Committee may elect to approve a particular related party transaction. If the Chair of the applicable Audit Committee has an interest in the proposed related party transaction, then that transaction may be reviewed and approved by another independent and disinterested member of the applicable Audit Committee. In either case, the individual approving the transaction must report such approval to the full Committee at the next regularly scheduled meeting.
When reviewing any related party transaction, the Audit Committees consider whether the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party. The Policy also requires that each Audit Committee disclose to the respective Board any material related party transactions.
As provided in Item 404(a), the following types of transactions are excluded:
• | Transactions where the rates or charges are determined by competitive bids, |
• | Transactions for the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority, |
• | Transactions for services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services, |
• | Benefits received on a pro rata basis by holders of PG&E Corporation or Utility securities, |
• | Transactions where the individual’s interest arises solely (1) from such person’s position as a director of another corporation or organization which is a party to the transaction, (2) from the direct or indirect ownership of such person and a specific group (consisting of directors, nominees for director, and executive officers of the corporation, or any member of their immediate families), in the aggregate, of less than a 10 percent equity interest in another person (other than a partnership) that is a party to the transaction, or (3) from both such position and ownership, |
• | Transactions where the individual’s interest arises solely from the holding of an equity interest (including a limited partnership interest, but excluding a general partnership interest) or a creditor interest in another person that is party to the transaction with PG&E Corporation, the Utility, or any of their respective subsidiaries or affiliates, and the transaction is not material to such other person, |
• | Transactions where the individual’s interest arises only from such person’s position as a limited partner in a partnership engaged in a transaction with PG&E Corporation or the Utility, in which the individual’s interest (when aggregated with any other Related Parties) is less than 10 percent and the individual does not serve as a general partner of, nor hold another position in, the partnership, |
• | An employment relationship or transaction involving an executive officer of the respective company (and any related compensation resulting solely from that relationship or transaction), if the compensation is reported pursuant to Regulation S-K, Item 402, |
• | An employment relationship or transaction involving an executive officer of the respective company (and any related compensation resulting solely from that relationship or transaction), if the compensation would have been reported pursuant to Regulation S-K, Item 402 as compensation earned for services if that individual were an executive officer named in the Summary Compensation Table, and such compensation had been approved or recommended to the Board by the PG&E Corporation Compensation Committee (and the executive officer is not an immediate family member of another Related Party), or |
• | Compensation provided to a director, provided that such compensation is reported pursuant to Regulation S-K, Item 407. |
Since January 1, 2016,2018, all related party transactions have been approved or ratified by the applicable Audit Committee in accordance with this Policy.
Related Person Transactions
Since January 1, 2016, three providers2018, one provider of asset management services in excess of $120,000 havehas been beneficial ownersowner of at least 5 percent of PG&E Corporation common stock: BlackRock, Inc. (“BlackRock”), T. Rowe Price Associates Inc. (“Price Associates”), and The Vanguard Group, Inc. (“Vanguard”). Vanguard (including its affiliates), provided asset management services to grantor trusts associated with certain of the companies’ non-qualified and deferred income benefit plans, and to The nature and value ofPG&E Corporation Foundation. In exchange for these services, provided by these 5 percent shareholders and their affiliates since January 1, 2016 are described below.
In each of these cases, the services were (1) approved by the PG&E Corporation Audit Committee, and (2) subject to terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party. PG&E Corporation expects that these entitiesVanguard will continue to provide similar services and products in the future, at similar levels, in the normal course of business operations.
Kathy Thomason is employed by the Utility as a Business Finance Analyst, Expert, and she is the spouse of David S. Thomason, who is Vice President, Chief Financial Officer, and Controller of the Utility. During 2016,Since January 1, 2018, Ms. Thomason received compensation and related payments and benefits from the Utility with a value of approximately $120,000. Payments providedAny payments to Ms. Thomason for services rendered during 20172019 are expected to be similar in nature and value to payments provided during 2016,2018, consistent with the Utility’s policies and practices that apply to employee compensation generally.
There are seven shareholderWildfire-Related Derivative Litigation
Two purported derivative lawsuits alleging claims for breach of fiduciary duties and unjust enrichment were filed in the San Francisco County Superior Court on November 16, 2017 and November 20, 2017, respectively, naming as defendants current and certain former members of the Board of Directors and certain current and former officers of PG&E Corporation and the Utility. PG&E Corporation and the Utility are named as nominal defendants. These lawsuits were consolidated by the court on February 14, 2018, and are denominated In Re California North Bay Fire Derivative Litigation. On April 13, 2018, the plaintiffs filed a consolidated complaint. After the parties reached an agreement regarding a stay of the derivative proceeding pending resolution of certain related tort actions and any regulatory proceeding relating to the 2017 Northern California wildfires, on April 24, 2018, the court entered a stipulation and order to stay. The stay is subject to certain conditions regarding the plaintiffs’ access to discovery in other actions. On January 28, 2019, the plaintiffs filed a request to lift the stay for the purposes of amending their complaint to add allegations regarding the 2018 Camp fire.
On August 3, 2018, a third purported derivative lawsuit, entitled Oklahoma Firefighters Pension and Retirement System v. Chew, et al., was filed in the U.S. District Court for the Northern District of California, naming as defendants certain current and former members of the Board of Directors and certain current and former officers of PG&E Corporation and the Utility. PG&E Corporation is named as a nominal defendant. The lawsuit alleges claims for breach of fiduciary duties and unjust enrichment as well as a claim under Section 14(a) of the federal Securities Exchange Act of 1934 alleging that PG&E Corporation’s and the Utility’s 2017 proxy statement contained misrepresentations regarding the companies’ risk management and safety programs. On October 15, 2018, PG&E Corporation filed a motion to stay the litigation. Prior to the scheduled hearing on this motion, this matter was automatically stayed by PG&E Corporation’s and the Utility’s commencement of bankruptcy proceedings, as discussed below.
On October 23, 2018, a fourth purported derivative lawsuit, entitled City of Warren Police and Fire Retirement System v. Chew, et al., was filed in San Francisco County Superior Court, alleging claims for breach of fiduciary duty, corporate waste and unjust enrichment. It names as defendants certain current and former members of the Board of Directors and certain current and former officers of PG&E Corporation, and names PG&E Corporation as a nominal defendant. Plaintiff filed a request with the court seeking recoverythe voluntary dismissal of this matter without prejudice on January 18, 2019.
On November 21, 2018, a fifth purported derivative lawsuit, entitled Williams v. Earley, Jr., et al., was filed in federal court in San Francisco, alleging claims identical to those alleged in the Oklahoma Firefighters Pension and Retirement System v. Chew, et al. lawsuit listed above against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. This lawsuit includes allegations related to the 2017 Northern California wildfires and the 2018 Camp fire. This action was stayed by stipulation of the parties and order of the court on December 21, 2018, subject to resolution of the pending securities class action.
On December 24, 2018, a sixth purported derivative lawsuit, entitled Bowlinger v. Chew, et al., was filed in San Francisco Superior Court, alleging claims for breach of fiduciary duty, abuse of control, corporate waste, and unjust enrichment in connection with the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants. The court has scheduled a case management conference for December 13, 2019.
On January 25, 2019, a seventh purported derivative lawsuit, entitled Hagberg v. Chew, et al., was filed in San Francisco Superior Court, alleging claims for breach of fiduciary duty, abuse of control, corporate waste, and unjust enrichment in connection with the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation and the Utility as nominal defendants.
On January 28, 2019, an eighth purported derivative lawsuit, entitled Blackburn v. Meserve, et al., was filed in federal court alleging claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets in connection with the 2017 Northern California wildfires and the 2018 Camp fire against certain current and former officers and directors, and naming PG&E Corporation as a nominal defendant.
Due to the commencement of the Chapter 11 Cases, PG&E Corporation and the Utility filed notices in each of these proceedings on February 1, 2019, reflecting that the proceedings are automatically stayed pursuant to Section 362(a) of the Bankruptcy Code. On February 5, 2019, the plaintiff in Bowlinger v. Chew, et al. filed a response to the notice asserting that the automatic stay did not apply to his claims. PG&E Corporation and the Utility accordingly filed a Motion to Enforce the Automatic Stay with the Bankruptcy Court as to theBowlinger action, which motion was granted.
2019 Joint Proxy Statement | 103 |
Wildfire-Related Securities Class Action Litigation
In June 2018, two purported securities class actions were filed in the United States District Court for the Northern District of California, naming PG&E Corporation and certain of its current and former officers as defendants, entitled David C. Weston v. PG&E Corporation, et al. and Jon Paul Moretti v. PG&E Corporation, et al., respectively. The complaints alleged material misrepresentations and omissions related to, among other things, vegetation management and transmission line safety in various PG&E Corporation public disclosures. The complaints asserted claims under Section 10(b) and Section 20(a) of the federal Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and sought unspecified monetary relief, interest, attorneys’ fees and other costs. Both complaints identified a proposed class period of April 29, 2015 to June 8, 2018. On September 10, 2018, the court consolidated both cases and the litigation is now denominated In Re PG&E Corporation Securities Litigation. The court also appointed the Public Employees Retirement Association of New Mexico as lead plaintiff. The plaintiff filed a consolidated amended complaint on November 9, 2018. After the plaintiff requested leave to amend their complaint to add allegations regarding the 2018 Camp fire, the plaintiff filed a second amended consolidated complaint on December 14, 2018.
Due to the commencement of the Chapter 11 Cases, PG&E Corporation and the Utility filed a notice on February 1, 2019, reflecting that the proceedings are automatically stayed pursuant to Section 362(a) of the Bankruptcy Code. On February 15, 2019, PG&E Corporation and the Utility filed a complaint in Bankruptcy Court against the plaintiff seeking preliminary and permanent injunctive relief to extend the stay to the claims alleged against the individual officer defendants.
On February 22, 2019, a purported securities class action was filed in the United States District Court for the Northern District of California, entitled York County on behalf of the York County Retirement Fund, et al. v. Rambo, et al. (the “York County Action”) The complaint names as defendants certain current and former officers and directors, as well as the underwriters of four public offerings of notes from 2016 to 2018. Neither PG&E Corporation nor the Utility is named as a defendant. The complaint alleges material misrepresentations and omissions in connection with the note offerings related to, among other things, PG&E Corporation’s and the Utility’s vegetation management and wildfire safety measures. The complaint asserts claims under Section 11 and Section 15 of the federal Securities Act of 1933, and seeks unspecified monetary relief, attorneys’ fees and other costs, and injunctive relief.
On May 7, 2019, the District Court granted the parties’ stipulation to consolidate theYork County Action withIn re PG&E Corporation Securities Litigation. Pursuant to the terms of the stipulation, the parties agreed that the plaintiff may file a third amended consolidated complaint inIn re PG&E Corporation Securities Litigation by May 28, 2019 incorporating the allegations from theYork County Action. In a separate stipulation granted by the Bankruptcy Court on May 2, 2019, PG&E Corporation and the Utility’s pending complaint against the plaintiff was dismissed. This stipulation further provides that within 21 days of the plaintiff’s filing of the third amended consolidated complaint inIn re PG&E Corporation Securities Litigation, PG&E Corporation and the Utility may file a new complaint against the plaintiff in the Bankruptcy Court seeking preliminary and permanent injunctive relief to extend the stay to the claims alleged against the individual officer, director and underwriter defendants in the third amended consolidated complaint.
Bankruptcy Proceedings
Other than the executive officers of PG&E Corporation and the Utility for alleged breaches of fiduciary duty by certain current and former officers and directors (the “Individual Defendants”), among other claims. Fourwith respect to the Chapter 11 Cases, none of the cases were consolidated as theSan Bruno Fire Derivative Casesand are pending in the Superior Courtdirectors, executive officers, or persons nominated to become directors of California, County of San Mateo (the “Court”). The remaining three cases areTellardin v. Anthony F. Earley, Jr., et al., Iron Workers Mid-South Pension Fund v. Johns, et al., and Bushkin v. Rambo, et al.(the “Additional Derivative Cases”).
On March 15, 2017, the parties in theSan Bruno Fire Derivative Casesfiled with the Court a settlement that they reached to resolve the consolidated shareholder derivative lawsuit and certain additional claims against the Individual Defendants. Pursuant to the settlement stipulation: (1) the Individual Defendants’ directors and officers liability insurance carriers will pay $90 million to PG&E Corporation within 11 business days of the entry of the judgment approving settlement in theSan Bruno Fire Derivative Cases,(2) PG&E Corporation andor the Utility will implement certain corporate governance therapeutics, and (3)has been a general partner or executive officer of a debtor in, or personally the Utility will implement certain gas operations therapeutics, at an estimated costsubject of, up to approximately $32 million.a bankruptcy or similar proceeding during the past ten years.
2019 Joint Proxy Statement | 104 |
In addition, PG&E Corporation agreed to pay any fee and expense award that the Court may grant to counsel for the plaintiffs in theSan Bruno Fire Derivative Casesin an amount not to exceed $25 million for fees and $500,000 for expenses. PG&E Corporation and the Utility have also agreed, under their indemnification obligations to the Individual Defendants, to pay the Individual Defendants’ costs, fees, and expenses incurred in connection with responding to, defending, and settling theSan Bruno Fire Derivative Casesand the Additional Derivative Cases, and certain fees and expenses for investigating these claims, up to $18.3 million.
The settlement is expressly conditioned on, among other things, the Additional Derivative Cases being dismissed with prejudice, which condition can only be waived by PG&E Corporation and a majority of the Individual Defendants.
The settlement is subject to the Court’s approval and its terms may change as a result of the settlement approval process. PG&E Corporation expects that the final settlement approval hearing will be held during the second or third quarter of 2017. If the Court approves the settlement and enters a judgment substantially in the form requested by the parties, the settlement will become effective when certain conditions specified in the settlement stipulation are satisfied, including the expiration of any right to appeal the judgment.
Website Availability of Governance Documents
Current copies of the following corporate governance documents are available online through the Corporate Governance section of PG&E Corporation’s website ((www.pgecorp.com/aboutus/corp_gov)corp/about-us/corporate-governance.page) or the Company Information section of the Utility’s website (www.pge.com/about/company,en_US/about-pge/company-information/company-information.page, under the “Visit Corporate Governance” icon)“Get more information about our corporate governance practices” link), as appropriate.
• | Corporate Governance Guidelines for PG&E Corporation and Pacific Gas and Electric Company (which include definitions of “independence” for directors) (under the “PG&E Corporation Policies and Bylaws” and “Pacific Gas and Electric Company Policies and Bylaws” links) |
• | Charters for the standing committees of the PG&E Corporation and Utility Boards of Directors, |
– Audit Committees of PG&E Corporation and the Utility
– Compensation Committee of PG&E Corporation
– Compliance and Public Policy Committee of PG&E Corporation
– Executive Committees of PG&E Corporation and the Utility
– Finance Committee of PG&E Corporation
– Nominating and Governance Committee of PG&E Corporation
– Nuclear, Operations, and Safety Committee of PG&E Corporation
– | Audit Committees of PG&E Corporation and the Utility | |
– | Compensation Committee of PG&E Corporation | |
– | Compliance and Public Policy Committee of PG&E Corporation | |
– | Executive Committees of PG&E Corporation and the Utility | |
– | Finance Committee of PG&E Corporation | |
– | Nominating and Governance Committee of PG&E Corporation | |
– | Safety and Nuclear Oversight Committees of PG&E Corporation and the Utility |
Current copies of the following codes of conduct, applicable to both companies, are available online through the Compliance and Ethics section of PG&E Corporation’s website ((www.pgecorp.com/aboutus/ethics_compliance/index.shtml)corp/about-us/compliance-ethics/program.page)or the Company Information section of the Utility’s website (https://www.pge.com/en_US/about-pge/company-information/company-information.page,under the “Visit Compliance“Find out why we emphasize compliance and Ethics” icon)ethics” link), as appropriate.
• | Code of Conduct for Employees (including executive officers) |
• | Code of Conduct for Directors |
General Information About the 2017 Annual Meetings and Voting
You can attend and vote at the annual meetings (see location information on the back cover of this Proxy Statement), or the proxy holders will vote your shares as you indicate.
If your shares are not registered to you directly but are held indirectly through a broker, bank, trustee, nominee, or other third party (“nominee”), follow the instructions provided by your nominee to vote your shares.
If your shares are registered to you directly, there are three ways to submit your Proxy:
If you are a registered owner or a 401(k) Plan participant, specific instructions for voting also are included on the Notice of Internet Availability and on the Proxy Card or Voting Instruction Card.
If you hold your shares directly and submit your Proxy over the Internet or by telephone, your vote must be received by 6:00 a.m., Eastern time, on Tuesday, May 30, 2017. These Internet and telephone voting procedures comply with California law. If you submit your Proxy by mail, your vote must be received by 10:00 a.m., Pacific time, on Tuesday, May 30, 2017. You also may vote in person at the 2017 Annual Meetings.
If you are a participant in a 401(k) Plan, your voting instructions must be received by 6:00 a.m., Eastern time, on Wednesday, May 24, 2017, for the 401(k) Plan trustee to vote your shares.
If your shares are not registered to you directly but are registered in the name of your nominee (such as a broker, bank, trustee, or other third party), please consult information provided by the nominee.
What am I voting on, and what are each Board’s voting recommendations?
PG&E Corporation shareholders will be voting on the following items:
The Utility’s shareholders will be voting on the following items:
What vote is required to approve each item?
A majority voting standard applies to the election of each director nominee and to the approval of Item Nos. 2, 3, and 5. For Item No. 4, a majority voting standard will determine which choice of frequency is approved by shareholders. Under a majority voting standard, approval occurs if the shares voted “for” a director nominee or other item or choice of frequency exceed the number of shares voted “against” that nominee or item or choice. In addition, the shares voting affirmatively must equal at least a majority of the quorum that is required to conduct business at each meeting. This means that the shares voting affirmatively must be greater than 25 percent of the outstanding shares entitled to vote.
In determining whether a majority of the shares represented and voting have elected a director nominee or approved a proposal or choice of frequency, abstentions and any broker non-votes (see the definition below under “What is a broker non-vote”) will not be considered. As explained below, broker non-votes do not apply to the ratification of the appointment of the Independent Auditor.
Abstentions and broker non-votes that occur with respect to the election of a director nominee or a proposal or choice of frequency could prevent the election of a nominee or the approval of a proposal or choice of frequency if the number of shares voting affirmatively does not constitute a majority of the required quorum.
Abstentions and broker non-votes also are considered in determining whether a quorum is present at each meeting.
Where shareholders are being asked for an advisory vote or for ratification (Item Nos. 2, 3, and 4), any voting results with respect to these items will be non-binding on the affected company but will be considered by that company’s Board.
If any incumbent director fails to receive the votes required to be elected, then that director’s term will end 90 days after the election results are certified, unless he or she resigns before that time.
If you hold your shares indirectly through your broker, then your broker is the registered holder of your shares and submits the Proxy to vote your shares. You are the beneficial owner of the shares, and typically you will be asked to provide your broker with instructions as to how you want your shares to be voted. Under the rules of the NYSE, if you fail to provide your broker with voting instructions, your broker can use its discretion to vote your shares on certain routine matters, like the ratification of the appointment of the Independent Auditor. However, your broker may not use its discretion to vote your shares on certain other matters, like director elections and advisory votes on executive compensation. When a broker votes your shares on routine matters but is unable to vote your shares on other matters because you have failed to provide instructions, a “broker non-vote” occurs with respect to these other matters.
What shares am I entitled to vote?
If you are a PG&E Corporation registered shareholder, you are entitled to vote all the shares of PG&E Corporation common stock in your account as of the close of business on March 31, 2017 (the “record date”). If you are a Utility registered shareholder, you are entitled to vote all the shares of Utility preferred stock in your account as of the record date.
If you are a registered holder of both PG&E Corporation common stock and Utility preferred stock, you are entitled to vote separately on each company’s proposals. If you receive more than one copy of the Notice of Internet Availability or more than one Proxy Card for either company, it means that your shares are held in more than one account. You should vote the shares in all of your accounts.
How many copies of the Proxy Statement and the 2016 Annual Report (together, the “2017 Proxy Materials”) will I receive?
Registered Holders and 401(k) Plan Participants
You will receive one Notice of Internet Availability for each account, unless you have requested paper copies of the proxy materials, in which case you will receive one copy of the 2017 Proxy Materials for each account.
Beneficial Owners
If you receive your proxy materials through Broadridge Investor Communication Solutions (“Broadridge”), and there are multiple beneficial owners at the same address, you may receive fewer Notices of Internet Availability or fewer copies of the 2017 Proxy Materials than the number of beneficial owners at that address. SEC rules permit Broadridge to deliver only one Notice of Internet Availability or only one copy of the 2017 Proxy Materials to multiple beneficial owners sharing an address, unless the applicable company receives contrary instructions from any beneficial owner at that address.
If you receive your proxy materials through Broadridge and (1) you currently receive only one copy of the Notice of Internet Availability or only one copy of the 2017 Proxy Materials at a shared address but you wish to receive an additional copy of the Notice of Internet Availability or of the 2017 Proxy Materials or any future notices or proxy materials, or (2) you share an address with other beneficial owners who also receive their separate notices of Internet availability or proxy materials through Broadridge and you wish to request delivery of a single copy of any notice of Internet availability or of the proxy materials to the shared address in the future, please contact the office of the Corporate Secretary of PG&E Corporation or Pacific Gas and Electric Company, as appropriate, at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, or call 1-415-973-8200.
Are proxy materials for the 2017 Annual Meetings available online?
Yes. You can go online atinvestor.pgecorp.com/financials/annual-reports-and-proxy-statementsto access the 2017 Proxy Materials.
What if I submit my Proxy but I do not specify how I want my shares voted?
For PG&E Corporation’s registered shareholders, the Corporation’s proxy holders will vote your shares in accordance with the Corporation Board’s recommendations, which are as follows: “For” each of the nominees for director, “For” Item Nos. 2 and 3, “1 Year” for Item No. 4, and “Against” Item No. 5. For the Utility’s registered shareholders, the Utility’s proxy holders will vote your shares in accordance with the Utility Board’s recommendations, which are as follows: “For” each of the nominees for director, “For” Item Nos. 2 and 3, and “1 Year” for Item No. 4.
If your shares are registered to you directly, you can change your vote or revoke your Proxy any time before it is exercised by doing one of the following before the applicable deadline: (1) returning a signed Proxy Card with a later date, (2) entering a new vote over the Internet or by telephone, (3) notifying the Corporate Secretary of PG&E Corporation or the Utility, as appropriate, in writing, or (4) submitting a written ballot at the annual meetings.
If you are a participant in a 401(k) Plan, you may change your vote at any time prior to 6:00 a.m., Eastern time, on Wednesday, May 24, 2017. The last vote that the 401(k) Plan trustee receives from you within this timeframe will be the vote that is counted. Participants in a 401(k) Plan are not eligible to vote in person at the 2017 Annual Meetings.
If your shares otherwise are not registered to you directly but are registered in the name of your nominee (such as a broker, bank, trustee, or other third party), follow the instructions provided by your nominee to change your vote or revoke your voting instructions.
What if I do not submit my Proxy or Voting Instruction Card?
If you are a registered shareholder, your shares will not be voted if you do not submit your Proxy or vote in person at the 2017 Annual Meetings. If you are a participant in a 401(k) Plan, your shares will not be voted if you do not submit your Voting Instruction Card. If you hold your shares through a broker (or other intermediary), your broker may vote your shares in the broker’s discretion, as discussed above under “What is a broker non-vote?”
PG&E Corporation and the Utility each have adopted a confidential voting policy under which shareholder votes are revealed only to a non-employee proxy tabulator or an independent inspector of election, except (1) as necessary to meet legal requirements, (2) in a dispute regarding authenticity of proxies and ballots, (3) in the event of a proxy contest if the other party does not agree to comply with the confidential voting policy, and (4) where disclosure may be necessary for either company to assert or defend claims. The policy allows the companies to engage shareholders, and to directly or indirectly (1) accept voting information that is voluntarily provided by shareholders, or (2) request and obtain final shareholder voting information that is or will be publicly disclosed pursuant to law, regulation, or similar requirements.
Corporate Election Services will act as the proxy tabulators and the inspectors of election for the 2017 Annual Meetings. Corporate Election Services is independent of PG&E Corporation and the Utility and the companies’ respective directors, officers, and employees.
How many shares are entitled to vote at the 2017 Annual Meetings?
As of the record date, there were 510,610,267 shares of PG&E Corporation common stock, without par value, outstanding and entitled to vote. Each share is entitled to one vote.
As of the record date, there were 10,319,782 shares of Utility preferred stock, $25 par value, and 264,374,809 shares of Utility common stock, $5 par value, outstanding and entitled to vote. Each share is entitled to one vote.
May I attend the 2017 Annual Meetings?
Only PG&E Corporation and Utility shareholders who held shares as of the proxy record date (March 31, 2017), or their duly appointed Proxies, may attend the 2017 Annual Meetings. If you plan to attend the meeting, you must:
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If a registered shareholder chooses to appoint a legal proxy to attend the meeting and vote their shares on their behalf, the shareholder must provide advance written notice to the Corporate Secretary of PG&E Corporation or the Utility, as appropriate. The notice must include the name and address of the legal proxy, and must be received at the principal executive office of the applicable company by5:00 p.m., Pacific time, on May 23, 2017. We recommend that shareholders send their notice using a delivery method that indicates when the notice was received at the principal executive office of the applicable company.
May I bring a guest to the 2017 Annual Meetings?
Each registered shareholder or beneficial owner may bring either a spouse or a domestic partner as their guest to the 2017 Annual Meetings.
How will the 2017 Annual Meetings be conducted?
The Executive Chair of the Board of PG&E Corporation or his designee will preside over the 2017 Annual Meetings and will make any and all determinations regarding the conduct of the meetings.
All items of business described in this Proxy Statement will be deemed presented at the 2017 Annual Meetings.
There will be a general question and answer period. Questions and comments should pertain to corporate performance, items for consideration at the 2017 Annual Meetings, or other matters of interest to shareholders generally. The meetings are not a forum to present general economic, political, or other views that are not directly related to the business of the Corporation or the Utility.
Shareholders will be recognized on a rotating basis. When you are called upon, please direct your questions and comments to the individual chairing the meetings. Each person called upon during the meetings will have a maximum of three minutes on any one question or comment.
Can shareholders introduce other proposals (including director nominations) during the 2017 Annual Meetings?
The Bylaws of PG&E Corporation and the Utility each require advance written notice of the intention to introduce a shareholder proposal or bring other matters for action (including introducing nominees for director) at an annual meeting. The notice for proposals and other matters to be considered by shareholders at the 2017 Annual Meetings must have been received at the principal executive office of the applicable company no earlier than January 23, 2017 and no later than 5:00 p.m., Pacific time, on February 23, 2017. The companies did not receive timely advance written notice of any shareholder matters that will be introduced at the 2017 Annual Meetings.
How much will this Proxy solicitation cost?
PG&E Corporation and the Utility hired D.F. King to assist in the distribution of proxy materials and solicitation of votes. The estimated fee is $17,000 plus reasonable out-of-pocket expenses. In addition, the Corporation and the Utility will reimburse brokerage houses and other custodians, nominees, and fiduciaries for reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders. The solicitation of Proxies also may be made in person, by telephone, or by electronic communications by the companies’ respective directors, officers, and employees, who will not receive additional compensation for those solicitation activities.
What is the date of the 20182020 annual meetings?
PG&E Corporation and the Utility currently anticipate that the date of their 20182020 annual meetings will be roughly one year after the date of the 20172019 Annual Meetings. Exact dates will be communicated to shareholders in the proxy materials for that meeting.
Can I submit nominees for inclusion in proxy materials for the 20182020 annual meetings?
PG&E Corporation recently amended its Bylaws toCorporation’s bylaws include proxy access provisions. Under these provisions, shareholders of PG&E Corporation who meet the requirements set forth in the Bylawsbylaws may submit director nominations for inclusion in the Corporation’s proxy materials. Proxy access nominations for the Corporation’s 20182020 annual meeting must be provided to the PG&E Corporation Corporate Secretary no earlier thanNovember 19, 2017 December 26, 2019 and no later thanDecember 19, 2017, January 25, 2020 and must meet all requirements set forth in the Bylaws.bylaws. However, if the Corporation’s 20182020 annual meeting is scheduled on a date that is more than 30 days before or after the anniversary date of the 2017 annual meeting,2019 Annual Meetings, a proxy access nomination for the 20182020 meeting generally will be timely if it is received no later than the close of the business on the date that is 180 days prior to the 20182020 annual meeting date or the 10thday after the date on which the date of the 20182020 annual meeting is disclosed, whichever is later. The Utility did not adopt proxy access bylaw provisions, given the fact that over 95 percent of the Utility’s common stock is held by PG&E Corporation; no Utility shareholders may submit director nominations via proxy access.
Can shareholders introduce proposals (other than proxy access proposals, but including director nominations) during the 20182020 annual meetings?
If you are a shareholder of PG&E Corporation or the Utility and would like to introduce a proposal or other business during that company’s 20182020 annual meeting, each company’s Bylawsbylaws require that your proper advance written notice of the matter be received at the principal executive office of the applicable company no earlier thanJanuary 30, 2018 February 22, 2020 and no later than5:00 p.m., Pacific time, on March 1, 2018.23, 2020. However, if the 20182020 annual meeting of either company is scheduled on a date that differs by more than 30 days from the anniversary date of the 2017 annual meetings,2019 Annual Meetings, your notice will be timely if it is received no later than the 10thday after the date on which that company publicly discloses the date of its 20182020 annual meeting. You must also provide information regarding your proposal, and satisfy other requirements as set forth in the applicable company’s Bylaws.bylaws.
If your proposal involves nominating an individual for director during the annual meetings, certain additional information regarding the nominees and the nomination must be provided in your advance written notice regarding the nominee. For more information on the director nomination process in general, see page 24.36.
What is the submission deadline if I want my shareholder proposal to be included in the proxy statement for the 20182020 annual meetings?
If you would like to submit a proposal to be included in the proxy statement for PG&E Corporation’s or the Utility’s 20182020 annual meeting pursuant to SEC Rule 14a-8, the applicable company’s Corporate Secretary must receive your proposal no later thanDecember 19, 2017. January 25, 2020.
2019 Joint Proxy Statement | 106 |
How and where can I make a submission?
If you wish to submit advance notice of any business to be brought before the 20182020 annual meetings (including notice of any proxy access nominees), or a shareholder proposal for inclusion in the 20182020 joint proxy statement, you may submit such notice or proposal via e-mail, fax, or U.S. mail (all shown below). If you submit a notice or proposal via U.S. mail, we recommend that you use a delivery method that indicates when your submission was received at the principal executive office of the applicable company.
E-Mail:CorporateSecretary@pge.com
Fax:415-973-8719
U.S. Mail:
Office of the Corporate Secretary
PG&E Corporation/Pacific Gas and Electric Company
P.O. Box 770000
San Francisco, California 94177
Location of the 20172019 Annual Meetings
The 2017 annual meetings2019 Annual Meetings of PG&E Corporation and Pacific Gas and Electric Company (together, “PG&E”) will be held concurrently on Tuesday, May 30, 2017,Friday, June 21, 2019, at 10:00 a.m., Pacific Time at the PG&E headquarters, located at 77 Beale Street in downtown San Francisco, California. Entry to the meetings will be through the atrium on Beale Street, between Market Street and Mission Street.
The meetings are easily accessible using public transportation. If you are traveling by MUNI or BART, exit at the Embarcadero station.
There is no parking available at the PG&E headquarters. Parking is available at public garages in the area. Directions are provided below for shareholders driving to the meetings.
Please note that the following items will not be allowed in the meetings: cameras, video or tape recorders, and other electronic recording devices, or any other items that might be disruptive or pose a safety or security risk. For your protection, all purses, briefcases, backpacks, and packages will be subject to inspection. Photography and video/audio recording are not permitted at the meetings.
Assistive listening devices will be available at the meetings.