PG&E 2009 Annual Report Download - page 105

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DEFINED CONTRIBUTION BENEFIT PLANS
PG&E Corporation and its subsidiaries also sponsor
defined contribution benefit plans. These plans are
qualified under applicable sections of the Code and
provide for tax-deferred salary deductions, after-tax
employee contributions, and employer contributions.
Employer contribution expense reflected in PG&E
Corporation’s Consolidated Statements of Income was as
follows:
(in millions) PG&E
Corporation Utility
Year ended December 31,
2009 $52 $51
2008 53 52
2007 47 46
LONG-TERM INCENTIVE PLAN
The 2006 LTIP permits the award of various forms of
incentive awards, including stock options, stock
appreciation rights, restricted stock awards, restricted stock
units, performance shares, deferred compensation awards,
and other stock-based awards, to eligible employees of
PG&E Corporation and its subsidiaries. Non-employee
directors of PG&E Corporation are also eligible to receive
restricted stock and either stock options or restricted stock
units under the formula grant provisions of the 2006 LTIP.
A maximum of 12 million shares of PG&E Corporation
common stock (subject to adjustment for changes in capital
structure, stock dividends, or other similar events) have
been reserved for issuance under the 2006 LTIP, of which
9,703,937 shares were available for award at December 31,
2009.
Awards made under the PG&E Corporation Long-Term
Incentive Program before December 31, 2005 and still
outstanding continue to be governed by the terms and
conditions of the PG&E Corporation Long-Term Incentive
Program.
PG&E Corporation and the Utility use an estimated
annual forfeiture rate of 2.5% for stock options and
restricted stock and 3% for performance shares, based on
historic forfeiture rates, for purposes of determining
compensation expense for share-based incentive awards.
The following table provides a summary of total
compensation expense for PG&E Corporation and the
Utility for share-based incentive awards for the years ended
December 31, 2009 and 2008:
Year ended December 31, 2009
(in millions) PG&E
Corporation Utility
Stock Options $– $–
Restricted Stock 98
Restricted Stock Units 11 7
Performance Shares 37 26
Total Compensation Expense
(pre-tax) $57 $41
Total Compensation Expense
(after-tax) $34 $24
Year ended December 31, 2008
(in millions) PG&E
Corporation Utility
Stock Options $ 2 $ 2
Restricted Stock 22 15
Performance Shares 33 20
Total Compensation Expense
(pre-tax) $57 $37
Total Compensation Expense
(after-tax) $34 $22
Stock Options
Other than the grant of options to purchase 14,543 shares
of PG&E Corporation common stock to non-employee
directors of PG&E Corporation in accordance with the
formula and nondiscretionary provisions of the 2006 LTIP,
no other stock options were granted during 2009. The
exercise price of stock options granted under the 2006 LTIP
and all other outstanding stock options is equal to the
market price of PG&E Corporation’s common stock on the
date of grant. Stock options generally have a 10-year term
and vest over four years of continuous service, subject to
accelerated vesting in certain circumstances.
101