In 2011, we appointed a lead safety officer who is working with an Executive Safety Steering Committee to spearhead a comprehensive safety strategy for PG&E.

We also created a Chairman’s Safety Review Committee to regularly review PG&E’s safety practices and programs. Led by the Chairman, CEO and President of PG&E Corporation, the committee is focused on fostering a culture that embeds safety into all aspects of our operations and our relationships with employees, customers, suppliers and others. It includes leadership from both the IBEW and ESC labor unions, as well as both management and union-represented employees, to bring a diversity of perspectives and experience to bear on this crucial element of our success.

There are many complementary efforts as well, including a quarterly health and safety meeting with the IBEW labor union, safety discussions at ongoing labor-management meetings with the IBEW and ESC, and an active employee-driven safety program in which union-represented employees participate and often lead.

As part of our commitment to safety, in 2011, the Compensation Committee of the PG&E Corporation Board of Directors applied both a quantitative and qualitative assessment to our public and employee safety performance when determining management employee compensation.

We are now tying safety more closely to compensation than ever before. Safety performance measures—which have been expanded now to encompass not only employee safety but also public safety—determine 40 percent of management’s annual at-risk performance-based pay in 2012. This is now the single largest driver for annual at-risk performance-based pay, with financial performance and customer service each representing 30 percent of the total.

Together, these steps are helping to change our safety climate and helping eliminate serious employee and public safety incidents. In fact, in 2011, we extended a trend of recent improvements by once again reducing on-the-job injuries as well as the numbers of lost workdays and motor vehicle incidents. However, our continued progress was overshadowed by the loss of three employees last year and our ongoing need to improve our operations to the level our customers deserve. These events served as a somber reminder of our need for continuous improvement and have further sharpened our focus on ensuring that the safety of the public and our employees is at the center of everything we do.