PG&E 2008 Annual Report Download - page 137

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135
Performance Shares
During 2008, PG&E Corporation awarded 581,175 perfor-
mance shares to eligible participants of PG&E Corporation
and its subsidiaries, of which 396,230 shares were awarded
to the Utility’s eligible participants. Performance shares are
hypothetical shares of PG&E Corporation common stock
that vest at the end of a three-year performance period and
are settled in cash. Upon vesting, the amount of cash that
recipients are entitled to receive, if any, is determined by
multiplying the number of vested performance shares by the
average closing price of PG&E Corporation common stock
for the last 30 calendar days of the last year in the three-year
performance period. This result is then adjusted by a payout
percentage ranging from 0% to 200% as measured by PG&E
Corporation’s TSR relative to its comparator group for
the applicable three-year performance period. During 2008,
PG&E Corporation paid $6.9 million to performance share
recipients, of which $5 million related to Utility employees.
As of December 31, 2008, $46 million was accrued
as the performance share liability for PG&E Corporation,
of which $29.7 million related to Utility employees.
The number of performance shares that were outstanding
at December 31, 2008 was 1,422,302, of which 938,059
was related to Utility employees. Outstanding performance
shares are classifi ed as a liability on the Consolidated Balance
Sheets of PG&E Corporation and the Utility because the
performance shares can only be settled in cash. The liability
related to the performance shares is marked to market at the
end of each reporting period to refl ect the market price of
PG&E Corporation common stock and the payout percentage
at the end of the reporting period. Accordingly, compensa-
tion expense recognized for performance shares will fl uctuate
with PG&E Corporation’s common stock price and its TSR
relative to its comparator group.
The tax benefi t from restricted stock that vested during
2008 and 2007 totaled $2 million and $7 million, respec-
tively, of which approximately $1 million and $5 million
was recorded by the Utility.
The following table summarizes restricted stock activity
for PG&E Corporation and the Utility for 2008:
Number of Weighted
Shares of Average
Restricted Grant-Date
Stock Fair Value
Nonvested at January 1 1,261,125 $ 40.51
Granted 591,294 $ 37.91
Vested (440,652) $ 37.20
Forfeited (124,198) $ 43.27
Nonvested at December 31 1,287,569 $40.18
The following table summarizes restricted stock activity
for the Utility for 2008:
Number of Weighted
Shares of Average
Restricted Grant-Date
Stock Fair Value
Nonvested at January 1(1) 859,745 $ 40.65
Granted 396,854 $ 37.91
Vested (303,923) $ 37.46
Forfeited (95,746) $ 43.12
Nonvested at December 31 856,930 $40.24
(1) Includes net employee transfers between PG&E Corporation and the
Utility during 2008.
As of December 31, 2008, there was approximately
$20 million of total unrecognized compensation cost
relating to restricted stock, of which $15 million related
to the Utility. The cost is expected to be recognized over a
weighted average period of 1.2 years by PG&E Corporation
and the Utility.