PG&E Corporate Responsibility and Sustainability Report 2018

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Corporate Governance

PG&E’s corporate governance practices support and fortify our sustainability performance by providing the foundation for our commitment to operate and communicate 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 (PDF), bylaws (PDF), disclosure standards, Board committee charters, and Codes of Conduct for directors and employees.

Our Approach

An underlying factor for strong corporate governance is the independence of the Boards and their fiduciary responsibilities to the companies and their respective shareholders. The companies’ respective Corporate Governance Guidelines (PDF) 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 Chair of the Board or independent lead director (if the Chair is not independent) is elected by the Board.
  • Only independent directors are allowed to serve on PG&E Corporation’s standing key Board committees. Further, members of each company’s Audit Committee and PG&E Corporation’s Compensation Committee also must 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 our policy considers diversity, among other factors, as part of the Boards’ assessment of the skills and characteristics required of Board members. The Boards believe in developing a balanced and multidisciplinary Board, and 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 12 PG&E Corporation directors, 50 percent are diverse (three are female, one is African-American, two are Asian or Asian-American, and two are Hispanic). Of the 13 Pacific Gas and Electric Company directors, 46 percent are diverse (three are female, one is 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 Pacific Gas and Electric Company Board and the full Boards address other components of PG&E’s sustainability commitment, such as public and employee safety, operational excellence and investments to increase our delivery of affordable clean energy to our customers, and enabling a low-carbon future.

The PG&E Corporation and Pacific Gas and Electric Company 2018 Joint Proxy Statement (PDF) includes information on director qualifications and the oversight role of the Boards with respect to corporate responsibility and sustainability, compliance and ethics, risk management, political contributions and management succession, among other items.

In connection with the 2017 settlement of shareholder derivative suits relating to the San Bruno accident, PG&E Corporation and Pacific Gas and Electric Company committed to making several enhancements (“therapeutics”) to its corporate governance and gas safety practices.

The corporate governance “therapeutics” include establishment and enhancement of Board committees responsible for safety oversight; regular public disclosure of API 1173 certification status; enhanced commitment to shareholder involvement through regular dialogue regarding corporate governance; updating the employee and supplier Codes of Conduct to incorporate various enhancements and updates, including updates to more fully promote and ensure safety culture and reporting; stating the respective responsibilities of the Chief Safety Officer (CSO) and the Chief Ethics and Compliance Officer (CECO), and the Boards and their committees, regarding instillation of safety culture, including responsibilities for communication and reporting; providing for regular attendance and reporting by the CSO and the CECO at Board and Board committee meetings, and providing those officers with access to senior management and employees; clarification regarding the incorporation of safety, compliance, and ethics into officer compensation; enhancement of a speak-up culture for employees and Board members; and enhancement of safety training for employees and Board members. To date, PG&E has implemented all of these corporate governance practices, with the exception of revisions to the Supplier Code of Conduct, which are in progress.

2017 Milestones

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

  • Separated the Chair and CEO positions at PG&E Corporation.
    • Effective March 1, 2017, Geisha J. Williams became CEO and President of PG&E Corporation, and Anthony F. Earley, Jr. became Executive Chair of the Board.
    • Effective December 16, 2017, Richard C. Kelly became independent non-executive Chair of the Board, following Mr. Earley’s retirement on December 15, 2017.
  • Refreshed the composition of three of the standing Board committees by adding new committee members. The three committees were the PG&E Corporation Compensation Committee, the PG&E Corporation Compliance and Public Policy Committee, and the PG&E Corporation and Pacific Gas and Electric Company Safety and Nuclear Oversight Committees.
  • Amended PG&E Corporation’s Corporate Governance Guidelines to strengthen the Board’s commitment to open communications with shareholders by providing opportunities for the Corporation’s largest shareholders to have regular dialogue with the Corporation, including with the independent chair or lead director and senior management.
  • Established the Safety and Nuclear Oversight Committees of both the PG&E Corporation and Pacific Gas and Electric Company Boards, replacing the Corporation’s former Nuclear, Operations, and Safety Committee. This change clarifies the Boards’ oversight responsibilities related to enterprise-wide safety matters.
  • Explicitly added safety experience to the list of experience, skills and characteristics that the Boards consider, among other factors, in assessing potential candidates for the Boards.
  • Amended each Board’s director retirement policy to change the retirement age to 75, with a target average tenure for all directors of 10 years or less. The Boards believe in balancing regular board refreshment with established board experience.
  • Amended the companies’ clawback policy to add additional events under which recoupment applies, such as fraud or intentional misconduct, to reflect prevailing market practices.

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 2014 to 2018 is provided below.

Annual Meeting Vote Summary: PG&E Corporation
Percent In Favor Footnote 1
Proxy Item 2014 2015 2016 2017 2018
Election of directors (average) Footnote 2a 97.6 98.2 97.6 99.5 99.2
Ratification of independent auditors Footnote 2b 99.2 98.5 97.9 97.9 97.1
Advisory vote on executive compensation Footnote 2c 89.6 94.3 80.1 95.8 94.9
Approval of long-term incentive plan Footnote 2d, Footnote 3 89.6
Independent board chairman Footnote 4a 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 1.0
Amendment of proxy access bylaw provisions Footnote 4c 26.6
  • 1. Defined as For/(For+Against), expressed as a percentage, unless otherwise specified.1
  • 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.1
  • 4. Shareholder proposal. 4a, 4b, 4c
Annual Meeting Vote Summary: Pacific Gas and Electric Company
Percent In Favor Footnote 1
Proxy Item 2014 2015 2016 2017 2018
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 99.8 99.9 99.8 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, unless otherwise specified.1
  • 2. Management proposal. 2a, 2b, 2c, 2d

Corporate Governance and Environment and Social Rankings

PG&E Corporation’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.

ISS Governance QualityScore Summary Footnote 1
Score Footnote 2
Overall Governance QualityScore 1
Board Structure 2
Shareholder Rights 1
Compensation 3
Audit 1
  • 1. As of May 22, 2018.1
  • 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.2
ISS Environmental and Social (E&S) QualityScore Summary Footnote 1
Environment Score
Overall Environment Score 1
Social Score
Overall Social Score 2
  • 1. As of May 16, 2018. A score of 1 indicates higher disclosure; a score of 10 indicates lower disclosure.1

Looking Ahead

The Boards will continue to review PG&E’s corporate governance and disclosure 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.