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Corporate Governance

A commitment to strong corporate governance practices 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 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 2016 Joint Proxy Statement includes 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.

2015 Milestones

In 2015, a PG&E Corporation shareholder proposal requesting adoption of an independent board chairman policy was supported by approximately 46 percent of the shares voted. To better understand the reasons for this level of shareholder support, management reached out to the Corporation’s top institutional investors who had voted in favor of the proposal. We learned that while some institutional investors always support independent board chair proposals as a matter of policy, other investors vote on a case-by-case basis and considered the lead director’s role and duties in their decision to support the shareholder proposal. Some of the investors that voted on a case-by-case basis conveyed the view that we could clarify or strengthen our description of the lead director’s role and duties. We amended our Corporate Governance Guidelines based on this feedback.

In 2015 and early 2016, the Boards took action on the following corporate governance matters:

  • Refreshed the composition of the Compensation Committee, the Finance Committee, and the Nominating and Governance Committee of the PG&E Corporation Board by appointing new members to those committees.
  • Clarified the description of the lead director’s role and duties in the companies’ Corporate Governance Guidelines to reflect the independent and active nature of this position and the interface between the lead director and the Chairman of the Board/Chief Executive Officer (CEO).
  • Reinforced the companies’ commitment to a best-in-class compliance and ethics culture and program by electing a Chief Ethics and Compliance Officer. This newly created position reports directly to the PG&E Corporation Chairman and CEO and the Boards of Directors, including the Audit Committees and the PG&E Corporation Compliance and Public Policy Committee.
  • Enhanced Board oversight of the companies’ compliance and ethics program by establishing the Compliance and Public Policy Committee. This Committee was established from the former Public Policy Committee of the PG&E Corporation Board of Directors. In addition to its responsibilities for public policy and corporate responsibility issues, this committee also assists the Boards and their respective Audit Committees in fulfilling the Boards’ oversight duties with respect to compliance with legal and regulatory requirements and coordinating the compliance-related oversight work of the Boards’ various committees.
  • Proactively adopted proxy access bylaw provisions for PG&E Corporation. These provisions permit shareholders owning 3 percent or more of the Corporation’s common stock for at least three years to nominate the greater of two directors or up to 20 percent of the Board, and to include these nominees in the Corporation’s proxy materials. The number of shareholders who may aggregate their shares to meet the ownership threshold is limited to 20. Nominations are subject to the eligibility, procedural and disclosure requirements set forth in the Corporation’s Bylaws.

Additionally, at the 2016 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 Securities and Exchange Commission 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 2016 is provided below.

Annual Meeting Vote Summary: PG&E Corporation
Percent In Favor Footnote 1
Proxy Item 2012 2013 2014 2015 2016
Election of directors (average) Footnote 2 96.1 97.9 97.6 98.2 97.6
Ratification of independent auditors Footnote 2 99.3 99.0 99.2 98.5 97.9
Advisory vote on executive compensation Footnote 2 80.7 96.3 89.6 94.3 80.1
Approval of long-term incentive plan Footnote 2, Footnote 3 89.6
Independent board chairman Footnote 4 33.4 45.6
Exclude sexual orientation from equal employment opportunity policy Footnote 4 2.0
Annual Meeting Vote Summary: Pacific Gas and Electric Company
Percent In Favor Footnote 1
Proxy Item 2012 2013 2014 2015 2016
Election of directors (average) Footnote 2 99.9 99.9 99.9 99.9 99.9
Ratification of independent auditors Footnote 2 99.9 99.9 99.9 99.9 99.9
Advisory vote on executive compensation Footnote 2 99.8 99.9 99.8 99.9 99.8

Corporate Governance Rankings

ISS Governance QuickScore Summary Footnote 1
Decile Rank Footnote 2
Overall Governance QuickScore 1
Board Structure 4 Footnote 3
Shareholder Rights 1
Compensation 2
Audit 10 Footnote 4
  • 1. As of September 1, 2016. Return to table
  • 2. A score of 1 indicates low risk; a score of 10 indicates high risk. Return to table
  • 3. The Board Structure sub-score primarily reflects ISS’s view on lengthy tenure for certain Board members. Return to table
  • 4. The Audit sub-score reflects ISS’s view of the CPUC penalty decision related to the San Bruno accident adopted on April 9, 2015, and does not take into consideration the corrective actions taken and improvements made to address issues underlying the San Bruno accident. Return to table

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 shareholders.





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