PG&E CORPORATION 2006 LONG-TERM INCENTIVE PLAN PERFORMANCE SHARE GRANT
Exhibit 99.2
PG&E CORPORATION
2006 LONG-TERM INCENTIVE PLAN
PG&E CORPORATION, a California corporation, hereby grants Performance Shares to the Recipient named below. The Performance Shares have been granted under the PG&E Corporation 2006 Long-Term Incentive Plan (the “LTIP”). The terms and conditions of the Performance Shares are set forth in this cover sheet and the attached Performance Share Agreement (the “Agreement”).
Date of Grant: January 3, 2006
Name of Recipient:
Last Four Digits of Recipient’s Social Security Number:
Number of Performance Shares:
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By signing this cover sheet, you agree to all of the terms and conditions described in the attached Agreement. You and PG&E Corporation agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of the attached Agreement. You are also acknowledging receipt of this Grant, the attached Agreement, and a copy of the prospectus describing the LTIP and the Performance Shares dated January 1, 2006. |
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Recipient:
(Signature)
Attachment
Please sign and return to PG&E Corporation, Human Resources,
Xxx Xxxxxx Xxxxxx, Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
PG&E CORPORATION 2006 LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE AGREEMENT
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The LTIP and Other Agreements |
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This Agreement constitutes the entire understanding between you and PG&E Corporation regarding the Performance Shares, subject to the terms of the LTIP. Any prior agreements, commitments or negotiations are superseded. In the event of any conflict or inconsistency between the provisions of this Agreement and the LTIP, the LTIP shall govern. For purposes of this Agreement, employment with PG&E Corporation shall mean employment with any member of the Participating Company Group. |
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Grant of Performance Shares |
PG&E Corporation grants you the number of Performance Shares shown on the cover sheet of this Agreement. The Performance Shares are subject to the terms and conditions of this Agreement and the LTIP. |
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Vesting of Performance Shares |
As long as you remain employed with PG&E Corporation, the Performance Shares will vest on the first business day of January (the “Vesting Date”) of the third year following the date of grant specified in the
cover sheet. Except as described below, all Performance Shares subject to this Agreement that have not vested shall be forfeited upon termination of your employment. |
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Payment of Performance Shares |
Upon the Vesting Date, PG&E Corporation’s total shareholder return (TSR) will be compared to the TSR of the twelve other companies in PG&E Corporation’s comparator group1 for the prior three calendar years (the “Performance Period”). Subject to rounding considerations, there will be no payout for TSR below the 25th percentile of the comparator group; TSR at the 25th percentile will result in a 25% payout of Performance Shares; TSR at the 75th percentile will result in a 100% payout of Performance Shares; and TSR in the xxx xxxx will result in a 200% payout of Performance Shares. The following table sets forth the payout percentages for the various TSR rankings that could be achieved: Number of Companies in Performance Rounded
The payment will equal the product of the number of vested Performance Shares, the applicable payout percentage, and the average closing price of a share of PG&E Corporation common stock for the last 30 calendar days of
the year preceding the Vesting Date as reported on the New York Stock Exchange. Payments will be made as soon as practicable following the Vesting Date. |
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Dividends |
Each time that PG&E Corporation declares a dividend on its shares of common stock, an amount equal to the dividend multiplied by the number of Performance Shares granted to you by this Agreement shall be accrued on your
behalf. As soon as practicable following the end of the Performance Period, you shall receive a cash payment, if any, equal to the dividends accrued over the Performance Period multiplied by the same payout percentage used to determine the amount, if any, of
the Performance Share payout as specified in the preceding paragraph. |
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Voluntary Termination |
If you terminate your employment with PG&E Corporation voluntarily before the Vesting Date, all of the Performance Shares shall be cancelled as of the date of such termination and any dividends accrued with respect to your
Performance Shares shall be forfeited. |
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Termination for Cause |
If your employment with PG&E Corporation is terminated by PG&E Corporation for cause before the Vesting Date, all of the Performance Shares shall be cancelled as of the date of such termination and any dividends
accrued with respect to your Performance Shares shall be forfeited. In general, termination for “cause” means termination of employment because of dishonesty, a criminal offense or violation of a work rule, and will be determined by and in the sole
discretion of PG&E Corporation. |
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Termination other than for Cause |
If your employment with PG&E Corporation is terminated by PG&E Corporation other than for cause before the Vesting Date, your unvested Performance Shares will vest proportionally based on the number of months during
the Performance Period that you were employed (rounded down) divided by the number of months in the Performance Period (36 months). All other outstanding Performance Shares (and any associated accrued dividends) shall automatically be cancelled upon such
termination. Your vested Performance Shares will be payable, if at all, after the completion of the Performance Period based on the same formula applied to active employees. You shall also receive a cash payment, if any, equal to the amount of dividends
accrued over the Performance Period with respect to your vested Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout. |
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Retirement |
If you retire before the Vesting Date, your outstanding Performance Shares will continue to vest as though your employment had continued and will be payable, if at all, as soon as practicable following the Vesting Date.
You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share
payout. You will be considered to have retired if you are age 55 or older on the date of termination and if you were employed by PG&E Corporation for at least five consecutive years ending on the date of termination of your employment. |
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Death/Disability |
If your employment terminates due to your death or disability before the Vesting Date, all of your Performance Shares shall immediately vest and will be payable, if at all, as soon as practicable after the completion of the
Performance Period based on the same formula applied to active employees. You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your Performance Shares multiplied by the same payout
percentage used to determine the amount, if any, of the Performance Share payout. |
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Termination Due to Disposition of Subsidiary |
If (1) your employment is terminated (other than for cause or your voluntary termination) by reason of a divestiture or change in control of a subsidiary of PG&E Corporation, which divestiture or change in control results
in such subsidiary no longer qualifying as a subsidiary corporation under Section 424(f) of the Code or (2) if your employment is terminated (other than for cause or your voluntary termination) coincident with the sale of all or substantially all of the assets of a
subsidiary of PG&E Corporation, all Performance Shares shall vest proportionally based on the number of months during the Performance Period that you were employed (rounded down) divided by the number of months in the Performance Period (36 months). All
other outstanding Performance Shares (and any associated accrued dividends) shall automatically be cancelled upon such termination. Your vested Performance Shares will be payable, if at all, after the completion of the Performance Period based on the same
formula applied to active employees. You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your vested Performance Shares multiplied by the same payout percentage used to determine
the amount, if any, of the Performance Share payout. |
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Withholding Taxes |
PG&E Corporation will withhold amounts necessary to satisfy applicable taxes from the payment to be made with respect to your Performance Shares. You will receive the remaining proceeds in cash. |
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Change in Control |
All of your outstanding Performance Shares shall automatically vest, and become nonforfeitable if there is a Change in Control of PG&E Corporation before the Vesting Date. Such vested Performance Shares will become
payable on the first business day of the year following the Change in Control. The payment, if any, will be based on PG&E Corporation’s TSR for the period from the date of grant to the date of the Change in Control compared to the TSR of the other
companies in PG&E Corporation’s comparator group2 for the same period. The payment will be calculated by multiplying the number of vested Performance Shares by the payout percentage. The resulting number of Performance Shares
will be multiplied by the average closing price of a share of PG&E Corporation common stock for the last 30 calendar days preceding the Change in Control as reported on the New York Stock Exchange. You shall also receive a cash payment, if any, equal to the
amount of dividends accrued with respect to your Performance Shares to the first business day of the year following the Change in Control multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout. |
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Leaves of Absence |
For purposes of this Agreement, if you are on an approved leave of absence from PG&E Corporation, or a recipient of PG&E Corporation sponsored disability benefits, you will continue to be considered as employed. If you do not return to active employment upon the expiration of your leave of absence or the expiration of your PG&E Corporation sponsored disability benefits, you will be considered to have voluntarily terminated your employment. See above under “Voluntary Termination.” PG&E Corporation reserves the right to determine which leaves of absence will be considered as continuing employment and when your employment terminates for all purposes under this Agreement. |
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No Retention Rights |
This Agreement is not an employment agreement and does not give you the right to be retained by PG&E Corporation. Except as otherwise provided in an applicable employment agreement, PG&E Corporation reserves the
right to terminate your employment at any time and for any reason. |
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Applicable Law |
This Agreement will be interpreted and enforced under the laws of the State of California. |
By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the LTIP.
