1
Exhibit 10.16
Perquisites
Executive Flexible Perquisites Program
The Flexible Perquisites Program provides you
with a wide range of services and gives you
the flexibility to create a personalized
spending or savings program.
How The
Program Works
As an officer, you are automatically enrolled
in the plan. In January of each year you may
receive an annual flexible allowance to apply
to the cost of certain services. A menu of
services is provided from which you may build
the program most valuable to you. Current
allowances are as follows:
o Chairman and Chief Executive Officer,
President, Executive Vice Presidents,
and Senior Vice Presidents $15,500
o All other officers $14,000
Perquisite allowances are subject to income
tax withholding at the time of grant.
Officers appointed on or after July 1 of any
year are eligible for a 50 percent allowance
for the year of appointment.
Flexible Perquisite Menu
The following is a list of approved
perquisites. You may choose the provider for
any given service and authorize payments or
reimbursements from your account
accordingly.* There are no cost limits for
these perquisites as long as you do not
exceed the current year's allowance plus any
unused allowance carried over from prior
years.
* The company will not recognize statements
for services rendered from PG&E employees
or from relatives of a participating
officer.
-1-
2
Executive Flexible Perquisites Program
Financial Planning includes retirement
counseling, insurance analysis, cash-flow
planning, investment planning, debt
management, estate planning, portfolio
management, and stock option and Savings Fund
Plan counseling.
Tax Preparation includes annual fees for
preparing federal and state income tax
returns, as well as tax consultation and
assistance with revenue examining agencies on
tax returns filed.
Legal Counsel includes advice pertaining to
financial, estate, or legal matters. Your
allowance cannot be used for fees incurred in
any action in which your interest is inimical
to the company.
Health, Business, or Professional Club
Membership includes annual membership dues
and related annual fees (such as locker,
storage, or rental fees). Clubs with
discriminatory practices are ineligible for
payment. You may also use your allowance to
purchase home exercise equipment.
The company wants you to maintain good
health, and therefore will continue to pay
for annual physical examinations under the
Executive Health Program. This cost will not
be charged against your flexible perquisite
allowance. (Refer to the Executive Health
Program section of this binder for more
information.)
Insurance includes the purchase of
supplemental life, disability, and accidental
death and dismemberment insurance, as well as
personal liability and automobile insurance
coverage to meet your personal needs.
Home Security System includes any home
security device for use in your primary
residence (such as electrical or mechanical
alarms, lighting, electrical fences or
cameras).
-2-
3
For your convenience, a list of various
providers of perquisite services is provided
in the Contacts section of the binder. Of
course, this list is not meant as a
recommendation. The choice of providers is
entirely yours.
-3-
4
Executive Flexible Perquisites Program
Unused Allowance
Your perquisite dollars accrue in a non
interest-bearing account until you wish to
use those amounts. You may accrue unused
allowances from year to year, up to a maximum
of four times the annual allowance. Once this
maximum is reached, no further allowances
will be granted until the accrued allowances
are used. Further allowances will be granted
only in amounts that will not exceed the
maximum. The four-year maximum accrued amount
cannot be exceeded at any time.
Reimbursement Procedures
Reimbursement payments may be made in one of
three ways:
1. You may pay the invoice and submit it
with a completed payment authorization
form to Executive Payroll. (Refer to the
Forms section of this binder for a sample
of this form.) This form must be
submitted to Executive Payroll during the
year the benefit is received (or, if the
benefit was provided in November or
December, no later than March 31 of the
following year). The reimbursement check
will be sent directly to you.
2. You may have a provider of the service
forward the unpaid invoice directly to
Executive Payroll. A payment
authorization form, completed by you,
must accompany the provider's invoice.
The form and unpaid invoice must be
submitted to the company during the year
the benefit is received (or, if the
benefit was provided in November or
December, no later than March 31 of the
following year). The check will be sent
directly to the provider of the service.
3. The company may pay for eligible expenses
and charge your allowance account
accordingly. Executive Payroll will issue
all checks within 10 working days after
-4-
5
receiving proper documentation.
-5-
6
Executive Flexible Perquisites Program
More You
Should Know
o In connection with the perquisites
program, you will be sent:
- Quarterly statements itemizing
activity and unused allowances.
- An annual statement summarizing the
current year's activities and
itemizing eligible perquisites and
available dollars (including
accumulated amounts, if any) for the
following year.
o If you are promoted to a senior officer
position, changes in your allowance will
become effective on the date of your
promotion.
o If your employment is terminated due to
death, unused balances in your perquisite
account will be paid or reimbursed to
your beneficiary or estate.
o If you retire or become disabled, or if
your employment is terminated for any
other reason, unused balances in your
perquisite account will be paid to you as
soon as practicable.
o You may defer all or a portion of your
annual Flexible Perquisites allowance
through the Deferred Compensation Plan.
-6-