PG&E Corporate Responsibility and Sustainability Report 2021

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Corporate Governance

PG&E’s corporate governance practices are integral to our sustainability performance and how we operate as a business. 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 (PDF), disclosure standards, and Codes of Conduct for directors and employees.

Governance Reforms

In July 2020, PG&E Corporation and the Utility seated eleven new board members with increased diversity and deep California roots, following a comprehensive nation-wide search. The new members, together with three existing board members, possess unique skills and a diversity of experiences that will help shape how PG&E can best serve customers in the future.

The Utility’s Board of Directors is composed of the same directors as the Board of PG&E Corporation with the addition of the Utility’s Chief Operating Officer (COO). In January 2021, the Boards appointed Patricia K. Poppe as the Chief Executive Officer of PG&E Corporation, followed by the appointment of Adam Wright as the COO of the Utility in February 2021. Ms. Poppe sits on the PG&E Corporation and Utility boards, and Mr. Wright sits on the Utility Board.

To create stability, as part of our Plan of Reorganization, PG&E agreed to create a classified Board, with half of the Board members standing for re-election each year through 2024. This change, as well as other governance changes from the Plan of Reorganization, are documented in our corporate governance guidelines, charters and other documents, posted in the Corporate Governance section of our website.

PG&E Corporation and the Utility also strengthened their matrix of skills for board members, with input from regulators and other stakeholders, which emphasizes specific experience in utility management, natural gas systems, nuclear generation, emergency management, wildfire management and financial literacy. Each board member is evaluated with this list of skills, as well as other criteria such as integrity, character and fit with board culture. Our corporate governance guidelines require that we review this skills matrix, as well as assessing other needs such as diversity, when filling open Board seats.

Our Governance Practices

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 promote board independence by requiring policies and practices such as the following:

  • All directors of each company must be independent, except for the CEO of PG&E Corporation and the COO of the Utility.
  • 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 People and Compensation Committee also must meet additional independence standards. Members of the Safety and Nuclear Oversight Committees and the Utility Chair must meet additional safety expertise criteria.
  • 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. Our current Board exceeds the requirements of California’s AB 979 on Board diversity and includes the following:

  • Nine of 14 directors of PG&E Corporation, and 10 of 15 directors of Pacific Gas and Electric Company identify as being members of an under-represented community with respect to gender, identity or ethnicity.
  • On the Pacific Gas and Electric Company Board, five Directors identify as female, one as Asian or Pacific Islander and four as Black or African American (three on the PG&E Corporation Board).

The Boards and Committees have oversight responsibility for key sustainability issues. The Sustainability and Governance Committee of the PG&E Corporation Board of Directors has primary oversight of corporate sustainability issues, such as environmental compliance and leadership, corporate governance, charitable contributions and public policy issues. This includes an annual review of PG&E’s environmental performance and sustainability practices.

The Safety and Nuclear Oversight Committees have oversight of climate adaptation planning, as it impacts PG&E’s assets and operations. Other committees of the PG&E Corporation Board and the Pacific Gas and Electric Company Board, as well as the full Boards, address other components of PG&E’s sustainability commitment, such as public and employee safety, diversity, equity and inclusion, operational excellence and investments in technology designed to increase our delivery of safe, affordable, and clean energy to customers, and enabling a low-carbon future. We have also, through our Chief Risk Officer and Chief Safety Officer as well as other company leaders, enhanced reporting and oversight of key operational issues, such as safety, wildfire safety, cybersecurity and asset management.

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.

Measuring Progress

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. Our Governance QualityScore from ISS has recently been rated as 1, the highest ranking.

Corporate Governance Rankings ISS Governance QualityScore Summary Footnote 1
Decile RankFootnote2
Overall Governance Score 1
Board Structure 3Footnote3
Shareholder Rights 1
Compensation 1
Audit 9Footnote4
  • 1. As of March 1, 2021.1
  • 2. A score of 1 indicates low risk; a score of 10 indicates high risk.2
  • 3. The Board Structure reflects the fact that there was no annual meeting in 2020 and thus no votes were cast for the current Board; in addition, the scores were issued ahead of key disclosures pending in the 2021 Joint Proxy Statement.3
  • 4. The Audit sub-score reflects ISS’s view of the going-concern of risks identified by auditors during bankruptcy. PG&E emerged from Chapter 11 bankruptcy in 2020.4