PG&E 2008 Annual Report Download - page 136

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134
Although the recipients of restricted stock can vote
their shares, they may not sell or transfer their shares
until the shares vest. For restricted stock awarded in 2005,
there were no performance criteria and the restrictions
lapsed ratably over four years. The terms of the restricted
stock awarded in 2006, 2007, and 2008 provide that 60%
of the shares will vest over a period of three years at the
rate of 20% per year. If PG&E Corporation’s annual total
shareholder return (“TSR”) is in the top quartile of its
comparator group, as measured for the three immediately
preceding calendar years, the restrictions on the remain-
ing 40% of the shares will lapse in the third year. If PG&E
Corporation’s TSR is not in the top quartile for such period,
then the restrictions on the remaining 40% of the shares
will lapse in the fi fth year. Compensation expense related
to the portion of the restricted stock award that is subject to
conditions based on TSR is recognized over the shorter of the
requisite service period and three years. Dividends declared
on restricted stock are paid to recipients only when the
restricted stock vests.
As of December 31, 2008, there was less than $1 million
of total unrecognized compensation cost related to outstand-
ing stock options. That cost is expected to be recognized
over a weighted average period of less than one year for
PG&E Corporation and the Utility.
Restricted Stock
During 2008, PG&E Corporation awarded 591,294 shares
of PG&E Corporation restricted common stock to eligible
participants of PG&E Corporation and its subsidiaries,
of which 396,854 shares were awarded to the Utility’s
eligible participants.
The following table summarizes stock option activity for PG&E Corporation and the Utility for 2008:
Weighted
Average
Remaining
Weighted Average Contractual Aggregate
Options Shares Exercise Price Term Intrinsic Value
Outstanding at January 1 3,882,672 $ 24.00
Granted(1) 4,032 $ 37.91
Exercised (900,732) $ 25.72
Forfeited or expired (17,711) $ 31.49
Outstanding at December 31 2,968,261 $23.45 3.75 $45,300,037
Expected to vest at December 31 254,854 $33.74 6.00 $ 1,270,206
Exercisable at December 31 2,712,725 $22.48 3.54 $44,029,831
(1) No stock options were awarded to employees in 2008; however, certain non-employee directors of PG&E Corporation were awarded stock options.
The following table summarizes stock option activity for the Utility for 2008:
Weighted
Average
Remaining
Weighted Average Contractual Aggregate
Options Shares Exercise Price Term Intrinsic Value
Outstanding at January 1(1) 2,912,552 $ 23.40
Granted — —
Exercised (588,333) $ 24.86
Forfeited or expired (14,396) $ 31.14
Outstanding at December 31(1) 2,309,823 $22.99 3.79 $36,318,945
Expected to vest at December 31 164,303 $33.09 5.80 $ 923,072
Exercisable at December 31 2,145,520 $22.21 3.64 $35,395,873
(1) Includes net employee transfers between PG&E Corporation and the Utility during 2008.