EXHIBIT 10.20
PG&E CORPORATION
EXECUTIVE STOCK OWNERSHIP PROGRAM
Administrative Guidelines
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(As amended September 19, 2000)
1. Description. The Executive Stock Ownership Program ("Program") was approved
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by the Nominating and Compensation Committee of the Board of Directors on
October 15, 1997. The Program is an important element of the Committee's
compensation policy of aligning executive interests with those of the
Corporation's shareholders. As an integral part of the Program, the
Committee also authorized the use of Special Incentive Stock Ownership
Premiums ("SISOPs") which are designed to provide incentives to Eligible
Executives to assist in achieving minimum stock ownership targets
established by the Committee. These Guidelines were originally adopted by
the Committee on November 19, 1997, amended by the Committee on July 22,
1998, October 21, 1998, February 16, 2000, and September 19, 2000. These
amended Guidelines, along with the written materials provided to the
Committee on October 15, 1997, describe the Program which became effective
on January 1, 1998. The Program is administered by the Corporation's Senior
Human Resources Officer.
2. Eligible Executives. The Chief Executive Officer shall designate the
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officers of the Corporation and its affiliates who shall be Eligible
Executives covered by the Program. The officers covered by the Guidelines
and the applicable total stock ownership target ("Target") are:
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Officer Band Position Total Stock
Ownership Target
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1 CEO 3 x base salary
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2 Heads of Business Lines, 2 x base salary
CFO, & General Counsel
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3 SVPs of Corp. & Utility 1.5 x base salary
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3. Annual Milestones. Under the Guidelines, Targets are designed to be
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achieved by the end of the fifth calendar year following the calendar year
in which an officer first becomes an Eligible Executive ("Target Date").
Annual Milestones have been established as a means of measuring progress
towards achieving Targets and of providing incentives for Eligible
Executives to expeditiously meet their Targets. The Annual Milestone at the
end of the first full calendar year is 20 percent of the Target, and the
Annual Milestone for each succeeding year is an additional 20 percent of
the Target. Annual Milestones shall be adjusted to reflect changes in base
salary; provided, however, that in each instance any such modification
shall be amortized over the remaining original five-year term. Following
the Target Date, Targets also shall be modified to reflect changes in base
salary.
4. Calculation of Stock Ownership Levels. Stock ownership level is the dollar
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value of stock and stock equivalents owned by an Eligible Executive and
calculated as of the last day of the calendar year ("Measurement Date").
The purpose of this calculation is to determine the value of the stock or
stock equivalents owned by the Eligible Executive as compared with the
Annual Milestone or Target for that executive. For purposes of this
calculation, the value per share of stock or stock equivalent ("Measurement
Value") is the average closing price of PG&E Corporation common stock as
traded on the New York Stock Exchange for the last thirty (30) trading days
of the year.
a) The value of stock beneficially owned by the Eligible Executive is
determined by multiplying the number of shares owned beneficially on
the Measurement Date times the Measurement Value.
b) The value of PG&E Corporation phantom stock units credited to the
Eligible Executive's account in the PG&E Corporation Supplemental
Retirement Savings Plan ("SRSP") is determined by multiplying the
number of phantom stock units credited to the Eligible Executive's
SRSP account on the Measurement Date times the Measurement Value.
c) The value of stock held in the PG&E Corporation stock fund of any
defined contribution plan maintained by PG&E Corporation or any of its
subsidiaries is determined by multiplying the number of shares in such
plan on the Measurement Date times the Measurement Value.
d) For Eligible Executive's whose Target Date is on or before 12/31/2004,
the value of the frozen share-equivalent units of the vested "in the
money" stock options as of 12/31/2000. The value of the frozen share-
equivalent units of the vested "in the money" stock options is the
difference between the number of options on 12/31/2000 multiplied by
the Measurement Value on 12/31/2000 minus the number of options on
12/31/2000 multiplied by the option exercise price (for purposes of
this calculation, any value attributable to dividend equivalents is
excluded).
5. Award of SISOPs. SISOPs are awarded to Eligible Executives who achieve and
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maintain stock ownership levels prior to the end of the third year
following the year in which an officer first became an Eligible Executive.
For purposes of determining awards, the total stock ownership level is
calculated as set forth under paragraph 4, on the Measurement Date. The
amount of a SISOP award shall be equal to:
a) For the first year, 20 percent of the amount of the Eligible
Executive's stock ownership level at the end of the year, up to the
Annual Milestone, plus an additional 30 percent of the amount by which
the stock ownership level exceeds the Annual Milestone up to the
Target; and
b) For each of the second and third years, the current stock ownership
level is reduced by the stock ownership level used to calculate
previous SISOP awards to determine the new ownership then 20 percent
of the amount up to the Annual Milestone by which the end of the year
stock ownership level exceeds the beginning of the year stock
ownership level, plus an additional 30 percent of the amount by which
the end of the year balance exceeds the Annual Milestone, up to the
Target.
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Each time a SISOP award calculation is made, a second calculation also is
made to determine the minimum number of shares which must be retained by
the Eligible Executive to avoid forfeiture of the SISOP award ("Minimum
Ownership Level") as discussed below in paragraph 8. This calculation
converts the dollar value of the stock ownership level used as the basis
for qualifying for SISOPs into a number of shares of stock. It is
calculated by dividing the stock ownership level by the Measurement Value.
Thus, for example, if an Eligible Executive's stock ownership level was
$250,000 and the Measurement Value was $25 per share, then the Minimum
Ownership Level would be 10,000 shares.
For purposes of this calculation, the maximum share ownership level used is
the Eligible Executive's Target. If an Eligible Executive has a share
ownership level higher than his/her Target, the increment over the Target
is not included. Thus, for example, if an Eligible Executive has a Target
of $750,000 and his/her share ownership level is $900,000, then only
$750,000 is used to calculate the Minimum Ownership Level.
6. SISOPs Credited to the SRSP. Upon award, SISOPs are credited to the
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Eligible Executive's SRSP account and converted into units of phantom stock
each equal in value to a share of PG&E Corporation common stock ("SISOP
units") as determined in accordance with the SRSP. The SISOP units
constitute "incentive awards" authorized to be awarded by the Committee to
Eligible Executives under the PG&E Corporation Long-Term Incentive Program
("LTIP"). Upon credit of SISOP units to an Eligible Executive's SRSP
account, an equal number of shares of PG&E Corporation common stock shall
be reserved for issuance from the pool of shares authorized for issuance
under the LTIP. Once a SISOP unit is credited to the Eligible Executive's
SRSP account, it shall be subject to all of the terms and conditions
specifically applicable to SISOP units under the SRSP. Once vested in
accordance with paragraph 7 below, SISOP units are distributed in the form
of an equal number of shares of PG&E Corporation common stock as provided
in the SRSP.
7. Vesting. SISOPs vest only upon the expiration of three years after the date
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of award (provided the Eligible Executive continues to be employed on such
date), or, if earlier, upon an Eligible Executive's death, disability,
Retirement, upon a Change in Control, as defined in the LTIP, or upon a
termination of employment coincident with the sale of all or substantially
all of the assets of a subsidiary of PG&E Corporation. An Eligible
Executive's unvested SISOPs will be forfeited upon termination of
employment unless otherwise provided in the PG&E Corporation Officer
Severance Policy or by another separation agreement
8. Forfeiture of SISOP Units. So long as SISOP units remain unvested, such
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units are subject to forfeiture if, on each Measurement Date, the Eligible
Executive's stock ownership is less than the Minimum Ownership Level
established when the SISOPs were granted (see paragraph 5). To determine
forfeiture, the following steps are followed on each Measurement Date:
a) The total stock and stock equivalents owned by an Eligible Executive
is determined as set forth under paragraph 4. This total ("Current
Holdings") is compared with the Minimum Ownership Level determined
when the SISOPs were granted. If the Current Holdings are equal to or
greater than the Minimum Ownership Level, then no unvested SISOP units
are forfeited. If the Current Holdings are less than the Minimum
Ownership Level, then the unvested SISOP units are forfeited in the
same proportion as the Current Holdings are less than Minimum
Ownership Level (for
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example, if the Current Holdings are 20 percent less than the Minimum
Ownership Level, then 20 percent of the SISOP units are forfeited).
9. Failure to Achieve or Maintain Target. Failure to achieve stock ownership
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levels at Target on the Target Date, or to maintain stock ownership levels
at Target on any Measurement Date thereafter, will result in the deferral
into the PG&E Corporation Phantom Stock Fund of the SRSP of annual awards
from the Performance Unit Plan ("PUP") and the Short-Term Incentive Plan
("STIP"). As of any Measurement Date, to the extent that stock ownership
levels are below Target, PUP awards shall be converted into PG&E
Corporation Phantom Stock Units and held in the PG&E Corporation Phantom
Stock Fund of the SRSP. If, with the addition of the phantom stock units
attributable to the PUP award, the stock ownership level is still below
Target for any Measurement Date, any STIP award above target STIP also
shall be converted into phantom stock units, to the extent necessary to
achieve the Target stock ownership level. Such conversion of PUP and STIP
awards shall continue for successive Measurement Dates, if necessary, until
Target is met. Phantom stock units attributable to PUP and STIP awards
described in this paragraph 9 will be paid from the SRSP in a lump sum in
January of the year following the year in which the Eligible Executive's
employment terminates, or upon such earlier date as may have been elected
by the Eligible Executive within thirty days after the date of mandatory
deferral of PUP and/or STIP awards which date shall not be earlier than
three (3) years after the date of mandatory deferral.
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