corporate governance practices have rated well above average compared with other utility companies

Strong corporate governance practices help 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 must meet additional independence standards.
  • Executive sessions of the independent directors are held at each regularly scheduled Board meeting, without the presence of management.

Board diversity also contributes to strong governance, and we have practices in place to support the development of balanced and multi-disciplinary boards given the current needs of the Boards. The Boards annually review the director nominees and the extent to which diverse backgrounds, perspectives, skills and experiences are represented.

The Public Policy Committee of PG&E Corporation’s Board of Directors has primary oversight of corporate sustainability issues, such as environmental leadership and compliance, climate change, community investments and workforce development. This oversight includes an annual review of PG&E’s sustainability practices and performance. Other committees of the PG&E Corporation Board and the full PG&E Corporation and Utility 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 increasing our deliveries of renewable energy.

The PG&E Corporation and Pacific Gas and Electric Company 2014 Joint Proxy Statement includes expanded disclosure 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.

2013 Milestones

In 2013, the Boards took action on the following corporate governance matters:

  • Increased the depth of financial expertise on the companies’ Audit Committees by designating two additional committee members as financial experts, based on Securities and Exchange Commission (SEC) requirements.
  • Refreshed the composition of several Board committees by adding new members to the PG&E Corporation Compensation Committee; Nominating and Governance Committee; Nuclear, Operations, and Safety Committee; and Public Policy Committee.
  • Amended the PG&E Corporation Compensation Committee charter to add the requirement that all members of the Compensation Committee must meet the independence and qualification criteria established by the SEC.
  • Elected Richard C. Kelly to the Boards in June, and appointed him as a member of the companies’ Audit Committees and the PG&E Corporation Nuclear, Operations and Safety Committee.
  • Reviewed and discussed a Board succession plan, and appointed Barry Lawson Williams as lead director of the PG&E Corporation Board and as independent non-executive Chairman of the Utility Board upon C. Lee Cox’s retirement from the Boards effective as of the adjournment of the 2014 Joint Annual Meeting of Shareholders.

Additionally, at the annual shareholders’ meeting, PG&E and Utility shareholders overwhelmingly approved our executive compensation in each company’s annual advisory “say on pay” vote.

Measuring Progress

Proxy 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 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 these annual meeting votes from 2011 – 2014 is provided below.

Shareholder Voting Summary: PG&E Corporation
Percent In Favor1
Proxy Item 2011 2012 2013 2014
Election of directors (average)2 95.9 96.1 97.9 97.6
Ratification of independent auditors2 99.3 99.3 99.0 99.2
Advisory vote on executive compensation2 97.8 80.7 96.3 89.6
Advisory vote on frequency of advisory vote on executive compensation2, 3 84.6
Approval of long-term incentive plan2, 4 89.6
Independent board chairman5 29.9 33.4
Exclude sexual orientation from equal employment opportunity policy5 3.2 2.0
  • 1 Defined as For/(For+Against), expressed as a percentage, except as noted in footnotes 3 and 4, below.
  • 2 Management proposal.
  • 3 Percentage of votes for frequency of 1 year.
  • 4 Defined as For/(For+Against+Abstain) as required by the NYSE, expressed as a percentage.
  • 5 Shareholder proposal.
Shareholder Voting Summary: Pacific Gas and Electric Company
Percent In Favor1
Proxy Item 2011 2012 2013 2014
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 99.9 99.8 99.9 99.8
Advisory vote on frequency of advisory vote on executive compensation2, 3 99.9
  • 1 Defined as For/(For+Against), expressed as a percentage.
  • 2 Management proposal.
  • 3 Percentage of votes for frequency of one year.

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 3
Shareholder Rights 1
Compensation 4
Audit 1
  • 1 As of May 12, 2014.
  • 2 A score of 1 indicates low risk; a score of 10 indicates high risk.

Looking Ahead

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

Our Sustainability Journey





Economic Vitality