PG&E Corporate Responsibility and Sustainability Report 2017

Corporate Governance

Robust corporate governance practices underpin our sustainability performance, helping to ensure that PG&E is managed and operated with integrity, accountability and transparency. The Corporate Governance section of our website details the policies and practices of the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company (together, the “Boards”), including governance guidelines, bylaws, disclosure standards, Board committee charters, and codes of conduct for directors and employees.

Our Approach

The foundation for strong corporate governance is the independence of the Boards and their fiduciary responsibilities to the companies and their respective shareholders. The companies’ Corporate Governance Guidelines promote board independence by requiring policies and practices such as the following:

  • At least 75 percent of the directors of each company must be independent.
  • An independent lead director is elected by the Board if the Chairman of the Board is not an independent director.
  • Only independent directors are allowed to serve on PG&E Corporation’s standing Board committees, and members of each company’s Audit Committee and PG&E Corporation’s Compensation Committee also meet additional independence standards.
  • Executive sessions of the independent directors are held at each regularly scheduled Board meeting, without the presence of each company’s management.

Board diversity also contributes to strong corporate governance, and we have practices in place to promote the development of balanced and multidisciplinary Boards. The Boards annually review director nominees and the extent to which diverse backgrounds, perspectives, skills and experiences are represented. The directors for each company reflect this diversity. Of the 13 PG&E Corporation directors, 54 percent are diverse (three are female, two are African-American, two are Asian or Asian-American, and two are Hispanic). Of the 14 Pacific Gas and Electric Company directors, 50 percent are diverse (three are female, two are African-American, two are Asian or Asian-American, and two are Hispanic).

The Compliance and Public Policy Committee of the PG&E Corporation Board of Directors has primary oversight of compliance and ethics and corporate sustainability issues, such as environmental compliance and leadership, workforce development and climate change. This includes an annual review of PG&E’s environmental performance and sustainability practices. Other committees of the PG&E Corporation Board and the full Boards address other components of PG&E’s sustainability commitment, such as public and employee safety, investments made to modernize our gas transmission and distribution systems and build a smarter grid, and partnerships with others to increase our deliveries of renewable energy.

The PG&E Corporation and Pacific Gas and Electric Company 2017 Joint Proxy Statement includes information on director qualifications and the oversight role of the Boards with respect to corporate responsibility and sustainability, risk management, political contributions and management succession, among other items.

Milestones

In 2016 and early 2017, the Boards took action on the following governance matters:

  • Refreshed the composition of the Audit, Compensation, and Finance Committees by appointing a new member to each of these committees,
  • Elected Eric D. Mullins to the PG&E Corporation and Pacific Gas and Electric Company Boards of Directors in September 2016, and appointed him as a member of the companies’ Audit Committees,
  • Nominated the following individuals for election to the PG&E Corporation and/or Pacific Gas and Electric Company Boards of Directors for the first time at the 2017 Annual Meetings: Jeh C. Johnson (for both PG&E Corporation and Pacific Gas and Electric Company) and Geisha J. Williams (for PG&E Corporation; Ms. Williams was elected as a director of Pacific Gas and Electric Company at the 2016 annual meetings and also stood for re-election to the Pacific Gas and Electric Company Board at the 2017 annual meetings),
  • Discussed and reviewed executive management succession planning, and elected Anthony F. Earley, Jr. as Executive Chair of the Board of PG&E Corporation, Geisha J. Williams as CEO and President of PG&E Corporation, and Nick Stavropoulos as President and COO of Pacific Gas and Electric Company, all effective March 1, 2017, and
  • Discussed and executed a Board leadership succession plan, and appointed Forrest E. Miller as lead director of PG&E Corporation and independent non-executive Chair of the Board of Pacific Gas and Electric Company effective upon Barry Lawson Williams’ retirement from the Boards at the adjournment of the 2017 annual meetings on May 30, 2017.

Measuring Progress

Annual Meeting Voting Results

Each year at the annual meeting, shareholders are asked to vote upon various items that may be proposed by management or by other shareholders. Proposals submitted by shareholders are either withdrawn by the shareholder (usually following discussions with management and a resolution of the shareholder’s concern); excluded from consideration, according to Securities and Exchange Commission guidelines; or published in the joint proxy statement to be voted on by shareholders at the annual meeting. A summary of the annual meeting voting results from 2013 to 2017 is provided below.

Annual Meeting Vote Summary: PG&E Corporation
Percent In Favor Footnote 1
Proxy Item 2013 2014 2015 2016 2017
Election of directors (average) Footnote 2a 97.9 97.6 98.2 97.6 99.5
Ratification of independent auditors Footnote 2b 99.0 99.2 98.5 97.9 97.9
Advisory vote on executive compensation Footnote 2c 96.3 89.6 94.3 80.1 95.8
Approval of long-term incentive plan Footnote 2d, Footnote 3 89.6
Independent board chairman Footnote 4a 33.4 45.6
Advisory vote on the frequency of the advisory vote on executive compensation (1 year) Footnote 2e 90.5
Customer approval of charitable giving program Footnote 4b 3.3
  • 1. Defined as For/(For+Against), expressed as a percentage.
  • 2. Management proposal. 2a, 2b, 2c, 2d, 2e
  • 3. Defined as For/(For+Against+Abstain) as required by the New York Stock Exchange, expressed as a percentage.
  • 4. Shareholder proposal. 4a, 4b
Annual Meeting Vote Summary: Pacific Gas and Electric Company
Percent In Favor Footnote 1
Proxy Item 2013 2014 2015 2016 2017
Election of directors (average) Footnote 2a 99.9 99.9 99.9 99.9 99.9
Ratification of independent auditors Footnote 2b 99.9 99.9 99.9 99.9 99.9
Advisory vote on executive compensation Footnote 2c 99.9 99.8 99.9 99.8 99.8
Advisory vote on the frequency of the advisory vote on executive compensation (1 year) Footnote 2d 99.9
  • 1. Defined as For/(For+Against), expressed as a percentage.
  • 2. Management proposal. 2a, 2b, 2c, 2d

Corporate Governance Rankings

ISS Governance QualityScore Summary Footnote 1
Score Footnote 2
Overall Governance QualityScore
Board Structure 5 Footnote 3
Shareholder Rights
Compensation 64
Audit
  • 1. As of May 29, 2017
  • 2. Scores indicate decile rank relative to index or region. A score of 1 indicates lower governance risk; a score of 10 indicates higher governance risk.
  • 3. The Board Structure sub-score primarily reflects ISS’s view on executives/insiders who also serve as chairs of the board.
  • 4. The Compensation sub-score reflects ISS’s view on company disclosure with respect to active equity incentive plans regarding options/stock appreciation rights (SARs) and restricted stock. As disclosed in PG&E’s 2017 joint proxy statement, PG&E’s equity-based incentive plan consists of performance shares and restricted stock units with time-based vesting, and does not currently include options/SARs or restricted stock awards.

PG&E’s corporate governance practices are evaluated by several institutional shareholder groups and corporate governance organizations, such as Institutional Shareholder Services Inc. (ISS), an independent provider of risk management and corporate governance products and services to financial market participants. We have consistently received above-average ratings, both within our industry and overall.

Looking Ahead

The Boards will continue to review PG&E’s corporate governance practices in line with industry best practices and investor feedback, and will amend these practices when doing so is in the best interest of the companies and their respective shareholders.