Corporate Governance

Strong corporate governance underpins 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, 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 each company’s Audit Committee and PG&E Corporation’s Compensation Committee members 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 Compliance and Public Policy Committee of PG&E Corporation’s 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 build a smarter grid and the pathways to increase our deliveries of renewable electricity.

The PG&E Corporation and Pacific Gas and Electric Company 2015 Joint Proxy Statement includes expanded disclosure of 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.

2014 Milestones

In 2014 and early 2015, the Boards took action on the following corporate governance matters:

  • Elected Anne Shen Smith to the PG&E Corporation and Pacific Gas and Electric Company (“Utility”) Boards of Directors effective February 18, 2015, and appointed her as a member of the Nuclear, Operations, and Safety Committee as well as the Compliance and Public Policy Committee.
  • Improved the depth of financial expertise on each respective Audit Committee by designating one additional member as a financial expert, based on Securities and Exchange Commission (SEC) requirements. Four out of the five Audit Committee members are now designated as SEC financial experts.
  • Refreshed the composition of several Board committees by appointing new chairs to the Audit, Compensation, and Compliance and Public Policy Committees, and appointing a new member to the Finance Committee.
  • Selected Pay Governance LLC, a consulting firm with experience in advising regulated utilities, as the Compensation Committee’s new independent executive compensation consultant.
  • Added two companies (based on business model and market capitalization) to the 2015 Performance Comparator Group, bringing the total number of peers in the comparator group to 14 companies. The Performance Comparator Group is used to compare PG&E Corporation’s relative total shareholder return, among other benchmarks.
  • Adopted a policy on public company board service for PG&E Corporation and Utility directors. Unless otherwise approved by the Boards, a director may not serve on more than three public company boards in addition to the PG&E Corporation and Utility Boards, and a director who is the principal executive officer of a public company may not serve on more than two public company boards in addition to his or her own company board. For these purposes, the boards of PG&E Corporation and the Utility count as one board.

Additionally, at the annual shareholder meeting, PG&E shareholders overwhelmingly approved proposed executive compensation in our annual advisory “say on pay” vote.

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 SEC guidelines; or published in the annual joint proxy statement to be voted on by shareholders at the annual meeting. A summary of the annual meeting voting results from 2012 to 2015 is provided below.

Annual Meeting Vote Summary: PG&E Corporation
Percent In Favor1
Proxy Item 2012 2013 2014 2015
Election of directors (average)2 96.1 97.9 97.6 98.2
Ratification of independent auditors2 99.3 99.0 99.2 98.5
Advisory vote on executive compensation2 80.7 96.3 89.6 94.3
Approval of long-term incentive plan2, 3 89.6
Independent board chairman4 33.4 45.6
Exclude sexual orientation from equal employment opportunity policy4 2.0
  • 1 Defined as For/(For+Against), expressed as a percentage
  • 2 Management proposal
  • 3 Defined as For/(For+Against+Abstain) as required by the New York Stock Exchange, expressed as a percentage
  • 4 Shareholder proposal
Annual Meeting Vote Summary: Pacific Gas and Electric Company
Percent In Favor1
Proxy Item 2012 2013 2014 2015
Election of directors (average)2 99.9 99.9 99.9 99.9
Ratification of independent auditors2 99.9 99.9 99.9 99.9
Advisory vote on executive compensation2 99.8 99.9 99.8 99.9
  • 1 Defined as For/(For+Against), expressed as a percentage
  • 2 Management proposal

Corporate Governance Rankings

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.

ISS Governance QuickScore Summary1
  Decile Rank2
Overall Governance QuickScore 1
Board Structure 2
Shareholder Rights 1
Compensation 2
Audit 103
  • 1 As of June 1, 2015
  • 2 A score of 1 indicates low risk; a score of 10 indicates high risk.
  • 3 The Audit sub-score reflects ISS’s view of the CPUC penalty decision related to the San Bruno accident adopted on April 9, 2015.

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 shareholders.

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