PG&E 2012 Annual Report Download - page 84

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6: COMMON STOCK AND SHARE-BASED COMPENSATION (Continued)
Performance Shares
In 2012, PG&E Corporation granted 834,420 contingent performance shares to eligible employees. Performance
shares vest after three years of service. Performance shares granted in 2012, 2011, and 2010 are settled in shares of
PG&E Corporation common stock and are classified as share-based equity awards. Performance-based awards
granted prior to 2010 are settled in cash and classified as a liability. The amount of common stock (or cash with
respect to grants before 2010) that recipients are entitled to receive, if any, will be determined based on PG&E
Corporation’s annual total shareholder return relative to the performance of a specified group of peer companies for
the applicable three-year performance period. Total compensation expense for performance shares is based on the
grant-date fair value, which is determined using a Monte Carlo simulation valuation model. Performance share
expense is recognized ratably over the requisite service period based on the fair values determined, except for the
expense attributable to awards granted to retirement-eligible participants, which is recognized on the date of grant.
Dividend equivalents on performance shares, if any, will be paid in cash upon the vesting date based on the amount
of common stock to which the recipients are entitled.
The weighted average grant-date fair value for performance shares granted during 2012, 2011, and 2010 was
$41.93, $33.91, and $35.60 respectively. There was no tax benefit associated with performance shares that vested
during 2012, 2011, and 2010, as awards that settle in cash have no tax impact, and awards that settle in shares do not
generate a tax benefit until vested. The performance shares awarded in March 2010 will vest in March 2013. As of
December 31, 2012, $29 million of total unrecognized compensation costs related to nonvested performance shares
are expected to be recognized over the remaining weighted average period of 1.28 years.
The following table summarizes performance shares classified as equity awards activity for 2012:
Number of Weighted Average Grant-
Performance Shares Date Fair Value
Nonvested at January 1 .............. 1,325,406 $ 34.64
Granted ......................... 834,420 $ 41.93
Vested .......................... (425) $ 34.86
Forfeited(1) ....................... (661,928) $ 35.71
Nonvested at December 31 ........... 1,497,473 $ 38.15
(1) Includes performance shares that expired with zero value as performance targets were not met.
NOTE 7: PREFERRED STOCK
PG&E Corporation
PG&E Corporation has authorized 80 million shares of no par value preferred stock and 5 million shares of
$100 par value preferred stock, which may be issued as redeemable or nonredeemable preferred stock. PG&E
Corporation does not have any preferred stock outstanding.
Utility
The Utility has authorized 75 million shares of $25 par value preferred stock and 10 million shares of $100 par
value preferred stock. The Utility specifies that 5,784,825 shares of the $25 par value preferred stock authorized are
designated as nonredeemable preferred stock without mandatory redemption provisions. All remaining shares of
preferred stock may be issued as redeemable or nonredeemable preferred stock.
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