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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PG & E Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPIES
[PG&E LOGO] PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY
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Joint Notice of 2000 Annual Meetings - Joint Proxy Statement
March 13, 2000
To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:
You are cordially invited to attend the fourth annual meeting of PG&E
Corporation and the 94th annual meeting of Pacific Gas and Electric Company. The
meetings will be held concurrently on Wednesday, April 19, 2000, at 10:00 a.m.,
at the Four Seasons Hotel - Boston, 200 Boylston Street, Boston, Massachusetts.
PG&E Corporation is a national energy-based holding company, with businesses
that include a diverse group of U.S.-based power generating, gas pipeline, and
energy commodity trading and services businesses. PG&E Corporation also is the
parent company of Pacific Gas and Electric Company, the regulated utility that
delivers gas and electricity to one in every 20 Americans.
The accompanying Joint Proxy Statement contains information about matters to
be considered at both the PG&E Corporation and Pacific Gas and Electric Company
annual meetings. At the annual meetings, PG&E Corporation and Pacific Gas and
Electric Company shareholders will be asked to vote on the election of directors
and ratification of the selection of independent public accountants for 2000 for
their respective companies. The Boards of Directors and management of PG&E
Corporation and Pacific Gas and Electric Company recommend that you vote "FOR"
the nominees for directors and the ratification of the appointment of
Deloitte & Touche as the independent public accountants for 2000, as set forth
in the Joint Proxy Statement.
In addition to the matters described above, PG&E Corporation shareholders
will be asked to vote on two management proposals to amend PG&E Corporation's
Articles of Incorporation. The first proposal implements the elimination of a
"supermajority vote" provision in the corporation's Articles of Incorporation,
consistent with a vote of the shareholders at the 1999 Annual Meeting, and makes
related changes. The second management proposal, which amends the corporation's
Articles of Incorporation, reduces the size of the PG&E Corporation Board of
Directors to a range of between seven and 13 directors, from the current
authorized range of nine to 17. For the reasons stated in the Joint Proxy
Statement, the PG&E Corporation Board of Directors and management recommend that
PG&E Corporation shareholders vote "FOR" these proposals.
PG&E Corporation shareholders also will be asked to vote on the proposals
submitted by individual PG&E Corporation shareholders described in the Joint
Proxy Statement, if such proposals are properly presented at the annual meeting.
For the reasons stated in the Joint Proxy Statement, the PG&E Corporation Board
of Directors and management recommend that PG&E Corporation shareholders vote
"AGAINST" these proposals.
Your vote on the business at the annual meetings is important. If you hold
shares in both PG&E Corporation and Pacific Gas and Electric Company, you will
be provided with a separate proxy form for each company. Whether or not you plan
to attend, please mark, sign, date, and mail your proxy form as soon as possible
in the accompanying envelope so that your shares can be represented at the
annual meetings. As an alternative to mailing your proxy, you may have the
option of executing and submitting your proxy and voting instructions over the
Internet or by telephone. Please refer to "Voting on the Internet or by
Telephone" on page of the Joint Proxy Statement for details.
During the annual meetings, PG&E Corporation and Pacific Gas and Electric
Company management also will report on operations and other matters affecting
PG&E Corporation and Pacific Gas and Electric Company, act on such other matters
as may properly be presented at the meetings, and respond to shareholders'
questions.
Sincerely,
[/S/ ROBERT D. GLYNN, JR.]
Robert D. Glynn, Jr.
Chairman of the Board, Chief Executive Officer,
and President of PG&E Corporation
Chairman of the Board of
Pacific Gas and Electric Company
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Table of Contents
<TABLE>
<S> <C>
Joint Notice of Annual Meetings of Shareholders
Joint Proxy Statement
General Information 1
Item No. 1: Election of Directors 3
Information Regarding the Boards of Directors of PG&E 7
Corporation and
Pacific Gas and Electric Company
Item No. 2: Ratification of Appointment of 13
Independent Public Accountants
Item Nos. 3-4: Management Proposals 14
(To Be Voted on by PG&E Corporation
Shareholders Only)
Item Nos. 5-10: Shareholder Proposals 17
(To Be Voted on by PG&E Corporation
Shareholders Only)
Executive Compensation 25
Other Information 38
Appendix A--Article Eighth of the Restated Articles of A-1
Incorporation of PG&E Corporation
</TABLE>
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Joint Notice of Annual Meetings of Shareholders
of PG&E Corporation and Pacific Gas and Electric Company
March 13, 2000
TO THE SHAREHOLDERS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY:
The annual meetings of shareholders of PG&E Corporation and Pacific Gas and
Electric Company will be held concurrently on Wednesday, April 19, 2000, at
10:00 a.m., at the Four Seasons Hotel - Boston, 200 Boylston Street, Boston,
Massachusetts, for the purpose of considering the following matters:
(1) For PG&E Corporation and Pacific Gas and Electric Company shareholders,
to elect the following 11 and 12 directors, respectively, to each Board
for the ensuing year:
<TABLE>
<S> <C> <C>
Richard A. Clarke William S. Davila Carl E. Reichardt
Harry M. Conger Robert D. Glynn, Jr. John C. Sawhill
David A. Coulter David M. Lawrence, MD Gordon R. Smith*
C. Lee Cox Mary S. Metz Barry Lawson Williams
* Gordon R. Smith is a nominee for director of the Pacific Gas and Electric
Company Board only.
</TABLE>
(2) For PG&E Corporation and Pacific Gas and Electric Company shareholders,
to ratify each Board of Directors' appointment of Deloitte & Touche as
independent public accountants for 2000 for PG&E Corporation and Pacific
Gas and Electric Company,
(3) For PG&E Corporation shareholders only, to act upon two management
proposals described on pages [14?]- [16?] of the Joint Proxy
Statement,
(4) For PG&E Corporation shareholders only, to act upon six proposals
submitted by PG&E Corporation shareholders and described on
pages [17?]- of the Joint Proxy Statement, if such proposals are
properly presented at the meeting, and
(5) For PG&E Corporation and Pacific Gas and Electric Company shareholders,
to transact such other business as may properly come before the meetings
and any adjournments or postponements thereof.
Shareholders of record of PG&E Corporation and Pacific Gas and Electric
Company at the close of business on February 22, 2000, and valid proxyholders
may attend and vote at the respective annual meetings. If your shares are
registered in the name of a brokerage firm, bank, or trustee and you plan to
attend the meeting, please obtain from the firm, bank, or trustee a letter or
other evidence of your beneficial ownership of those shares to facilitate your
admittance to the meeting.
If you are a participant in the PG&E Corporation Dividend Reinvestment Plan,
please note that the PG&E Corporation proxy covers all shares of common stock in
your account with PG&E Corporation, including any shares which may be held in
that plan. If you hold shares in both PG&E Corporation and Pacific Gas and
Electric Company, you will be provided with a separate proxy form for each
company. Please mark, sign, date, and mail the proxy form promptly in the
accompanying envelope.
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If your shares are registered directly with PG&E Corporation and/or Pacific
Gas and Electric Company (including shares held by participants in the PG&E
Corporation Dividend Reinvestment Plan) or if you are a participant who holds
PG&E Corporation stock in any of the defined contribution retirement plans
maintained by PG&E Corporation or any of its subsidiaries, you have the option
of executing and submitting your proxy and voting instructions over the Internet
at http://www.eproxy.com/pcg/ or by telephone by calling the toll-free number
1-800-840-1208 from anywhere in the United States or Canada. If your PG&E
Corporation and/or Pacific Gas and Electric Company shares are held in an
account at a brokerage firm or bank, you also may have the option of submitting
your voting instructions over the Internet at http://www.proxyvote.com or by
telephone by calling the toll-free telephone number shown on the voting
instruction form; these voting options are provided by ADP Investor
Communication Services on behalf of participating brokerage firms and banks.
Please refer to "Voting on the Internet or by Telephone" on page of the Joint
Proxy Statement for details.
By Order of the Boards of Directors,
[/S/ LESLIE H. EVERETT]
Leslie H. Everett
Vice President and Corporate
Secretary,
PG&E Corporation and
Pacific Gas and Electric Company
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PG&E Corporation
Pacific Gas and Electric Company
JOINT PROXY STATEMENT
INTRODUCTION
This Joint Proxy Statement is provided to the shareholders of PG&E
Corporation and Pacific Gas and Electric Company in connection with their
respective annual meetings of shareholders and any adjournments or postponements
thereof. The annual meetings are scheduled to be held concurrently on Wednesday,
April 19, 2000, at 10:00 a.m., at the Four Seasons Hotel - Boston, 200 Boylston
Street, Boston, Massachusetts.
As a result of the formation of PG&E Corporation in 1997, the outstanding
shares of Pacific Gas and Electric Company common stock were converted, on a
one-for-one basis, into shares of PG&E Corporation common stock. PG&E
Corporation and a subsidiary hold 100 percent of the issued and outstanding
shares of Pacific Gas and Electric Company common stock. Together they own
approximately 95 percent of the total outstanding voting stock of Pacific Gas
and Electric Company. The outstanding shares of Pacific Gas and Electric
Company's first preferred stock are unchanged by the merger and continue to be
outstanding shares of that company. Holders of Pacific Gas and Electric
Company's first preferred stock hold approximately 5 percent of the Company's
total outstanding voting stock.
GENERAL INFORMATION
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric
Company are soliciting proxies hereunder for use at their respective annual
meetings to be held on April 19, 2000, and at any adjournments or postponements
thereof, and a respective form of proxy is provided with this Joint Proxy
Statement. This Joint Proxy Statement and the accompanying proxy form were first
mailed on or about March 13, 2000, to PG&E Corporation and Pacific Gas and
Electric Company shareholders entitled to vote at the annual meetings.
To the knowledge of the Boards of Directors of PG&E Corporation and Pacific
Gas and Electric Company, the only items of business to be considered at the
meetings are listed in the preceding PG&E Corporation and Pacific Gas and
Electric Company Joint Notice of Annual Meetings of Shareholders and are
explained in more detail on the following pages. By executing and submitting
your proxy and voting instructions, you authorize the proxyholders named in the
proxy to vote your shares as you indicate on these items of business and to vote
your shares in accordance with management's best judgment in response to other
proposals properly presented at the meeting.
As an alternative to executing and submitting your proxy and voting
instructions by mail, you may have the option of executing and submitting your
proxy and voting instructions over the Internet or by telephone. Please refer to
"Voting on the Internet or by Telephone" on page for further details. The use
of Internet or telephone voting procedures will not affect your right to vote in
person should you decide to attend the annual meeting.
You may revoke your proxy at any time before it is exercised at the annual
meeting. You may do this by advising the Vice President and Corporate Secretary
of PG&E Corporation or Pacific Gas and Electric Company (as the case may be) in
writing of your desire to revoke your proxy, or by submitting a duly executed
proxy bearing a later date. You also may revoke your proxy by attending the
annual meeting and indicating that you wish to vote in person.
The Boards of Directors of PG&E Corporation and Pacific Gas and Electric
Company have established February 22, 2000, as the record date for the
determination of shareholders of PG&E Corporation and Pacific Gas and Electric
Company entitled to receive notice of and to vote at their respective annual
meetings. As of February 22, 2000, there were shares of PG&E
Corporation common stock, without par value, outstanding and entitled to vote at
the PG&E Corporation annual meeting; each such share is entitled to one vote. As
of February 22, 2000, there were 17,258,280 shares of Pacific Gas and Electric
Company first preferred stock, $25 par value, and 326,926,667 shares of Pacific
Gas and Electric Company common stock, $5 par value, outstanding and entitled to
vote at the Pacific Gas and Electric Company annual meeting; each such share is
entitled to one vote.
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Shares represented by properly executed proxies received by PG&E Corporation
or Pacific Gas and Electric Company prior to or at the annual meetings will be
voted at the respective annual meetings in accordance with the instructions
specified in each proxy, and will be counted for purposes of establishing a
quorum, regardless of how or whether such shares are voted on any specific
proposal. If no instructions are specified in the PG&E Corporation proxy, the
subject shares will be voted (1) FOR the election of the nominees of the PG&E
Corporation Board of Directors, unless authority to vote is withheld as provided
in the proxy, (2) FOR ratification of the appointment of Deloitte & Touche as
PG&E Corporation's independent public accountants for 2000, (3) FOR the
management proposal to amend PG&E Corporation's Articles of Incorporation to
implement the elimination of a "supermajority vote" provision, (4) FOR the
management proposal to amend PG&E Corporation's Articles of Incorporation to
reduce the size of the Board of Directors to a range of between seven and 13,
and (5) AGAINST each of the shareholder proposals that are properly presented at
the meeting. If no instructions are specified in the Pacific Gas and Electric
Company proxy, the subject shares will be voted (1) FOR the election of the
nominees of the Pacific Gas and Electric Company Board of Directors, unless
authority to vote is withheld as provided in the proxy, and (2) FOR ratification
of the appointment of Deloitte & Touche as Pacific Gas and Electric Company's
independent public accountants for 2000.
The management proposals to amend PG&E Corporation's Articles of
Incorporation must be approved by a majority of the outstanding shares of voting
stock of PG&E Corporation. Except with respect to the election of directors,
each other proposal which may be presented at the meetings must receive the
affirmative vote of a majority of the shares represented and voting on the
proposal. In addition, the affirmative votes must constitute at least a majority
of the required quorum (i.e., more than 25 percent of the outstanding shares of
voting stock of PG&E Corporation or Pacific Gas and Electric Company, as the
case may be). The required quorum is a majority of the outstanding shares of
voting stock of PG&E Corporation or Pacific Gas and Electric Company (as the
case may be). PG&E Corporation and Pacific Gas and Electric Company intend to
count abstentions both for purposes of determining the presence or absence of a
quorum and in the total number of shares represented and voting with respect to
a proposal. Accordingly, abstentions will have the same effect as a vote against
a proposal. Broker non-votes, if any, with respect to a proposal will be counted
for purposes of determining the presence or absence of a quorum, but will not be
counted as shares represented and voting with respect to that proposal. Broker
non-votes occur when brokers or nominees have voted on some of the matters to be
acted on at a meeting, but fail to vote on certain other matters because, under
the rules of the New York Stock Exchange, they are not permitted to vote on such
other matters in the absence of instructions from the beneficial owners of
shares.
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Item No. 1:
Election of Directors of PG&E Corporation and
Pacific Gas and Electric Company
Eleven and 12 directors will be elected to serve on the Boards of Directors
of PG&E Corporation and Pacific Gas and Electric Company, respectively, to hold
office until the next annual meetings or until their successors shall be elected
and qualified. The 11 nominees for director of PG&E Corporation and the 12
nominees for director of Pacific Gas and Electric Company whom the respective
Boards propose for election are the same, except for Gordon R. Smith, who is a
nominee for the Pacific Gas and Electric Company Board only. The composition of
these slates of nominees is consistent with the policy of PG&E Corporation and
Pacific Gas and Electric Company that at least 75 percent of their Boards shall
be composed of directors who are neither current nor former officers or
employees of PG&E Corporation, Pacific Gas and Electric Company, or any of their
respective subsidiaries.
Information is provided on the following pages about the nominees for
directors, including their principal occupations for the past five years,
certain other directorships, age, and length of service as a director of PG&E
Corporation and Pacific Gas and Electric Company. Membership on Board
committees, attendance at Board and committee meetings, and ownership of stock
in PG&E Corporation and Pacific Gas and Electric Company are indicated in
separate sections following the individual resumes of the nominees.
Directors of PG&E Corporation and Pacific Gas and Electric Company are
elected from those nominated based on a plurality of votes cast. The nominees
receiving the highest number of affirmative votes (up to the number of directors
to be elected) are elected. Votes against a nominee or votes withheld have no
legal effect. Unless authority to vote is withheld or another contrary
instruction is indicated, properly executed proxies received by PG&E Corporation
or Pacific Gas and Electric Company prior to or at the annual meetings will be
voted FOR the election of the nominees listed on the following pages. All of the
nominees named below have agreed to serve if elected. Should any of the nominees
become unavailable at the time of the meeting to accept nomination or election
as a director, the respective proxyholders named in the enclosed PG&E
Corporation or Pacific Gas and Electric Company proxy will vote for substitute
nominees at their discretion.
THE BOARDS OF DIRECTORS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY
RECOMMEND THE ELECTION OF THEIR RESPECTIVE NOMINEES FOR DIRECTOR
PRESENTED IN THIS JOINT PROXY STATEMENT.
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Nominees for Directors of PG&E Corporation and
Pacific Gas and Electric Company
BIOGRAPHICAL INFORMATION
<TABLE>
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[PHOTO] RICHARD A. CLARKE
Mr. Clarke is former Chairman of the Board of Pacific Gas
and Electric Company. He was Chairman of the Board of
Pacific Gas and Electric Company from May 1986 until his
retirement in May 1995, and also was Chief Executive Officer
of Pacific Gas and Electric Company from May 1986 to June
1994. Mr. Clarke, 69, has been a director of Pacific Gas and
Electric Company since 1985 and a director of PG&E
Corporation since December 1996. He also is a director of
CNF Transportation Inc. and Potlatch Corporation.
[PHOTO] HARRY M. CONGER
Mr. Conger is Chairman and Chief Executive Officer, Emeritus
of Homestake Mining Company. He was Chairman of the Board of
Homestake Mining Company from 1982 until July 1998 and Chief
Executive Officer from December 1978 until his retirement in
May 1996. Mr. Conger, 69, has been a director of Pacific Gas
and Electric Company since 1982 and a director of PG&E
Corporation since December 1996. He also is a director of
Apex Silver Mines Limited and ASA Limited.
[PHOTO] DAVID A. COULTER
Mr. Coulter is a Partner in the Beacon Group, LLC. He is
former Chairman and Chief Executive Officer of BankAmerica
Corporation and Bank of America NT&SA. He joined Bank of
America in 1976 and held a variety of senior management
positions with BankAmerica Corporation and Bank of America
NT&SA until October 1998. Mr. Coulter, 52, has been a
director of Pacific Gas and Electric Company since May 1996
and a director of PG&E Corporation since December 1996.
[PHOTO] C. LEE COX
Mr. Cox is retired Vice Chairman of AirTouch
Communications, Inc. and retired President and Chief
Executive Officer of AirTouch Cellular (cellular telephone
and paging services). He was an executive officer of
AirTouch Communications, Inc. and its predecessor, PacTel
Corporation, from 1987 until his retirement in April 1997.
Mr. Cox, 58, has been a director of Pacific Gas and Electric
Company since February 1996 and a director of PG&E
Corporation since December 1996.
[PHOTO] WILLIAM S. DAVILA
Mr. Davila is President Emeritus of The Vons
Companies, Inc. (retail grocery). He was President of The
Vons Companies, Inc. from 1986 until his retirement in May
1992. Mr. Davila, 68, has been a director of Pacific Gas and
Electric Company since 1992 and a director of PG&E
Corporation since December 1996. He also is a director of
Home Depot, Inc., Hormel Foods Corporation, and Wells
Fargo & Company.
</TABLE>
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<TABLE>
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[PHOTO] ROBERT D. GLYNN, JR.
Mr. Glynn is Chairman of the Board, Chief Executive Officer,
and President of PG&E Corporation and Chairman of the Board
of Pacific Gas and Electric Company. He has been an officer
of PG&E Corporation since December 1996 and an officer of
Pacific Gas and Electric Company since January 1988.
Mr. Glynn, 57, has been a director of Pacific Gas and
Electric Company since 1995 and a director of PG&E
Corporation since December 1996.
[PHOTO] DAVID M. LAWRENCE, MD
Dr. Lawrence is Chairman and Chief Executive Officer of
Kaiser Foundation Health Plan, Inc. and Kaiser Foundation
Hospitals, and has been an executive officer of those
companies for more than the past five years. Dr. Lawrence,
59, has been a director of Pacific Gas and Electric Company
since 1995 and a director of PG&E Corporation since December
1996. He also is a director of Agilent Technologies Inc.
[PHOTO] MARY S. METZ
Dr. Metz is President of S. H. Cowell Foundation, and has
held that position since January 1999. Prior to that date,
she was Dean of University Extension, University of
California, Berkeley from July 1991 to June 1998. Dr. Metz,
62, has been a director of Pacific Gas and Electric Company
since 1986 and a director of PG&E Corporation since December
1996. She also is a director of Longs Drug Stores
Corporation, SBC Communications, and UnionBanCal
Corporation.
[PHOTO] CARL E. REICHARDT
Mr. Reichardt is retired Chairman of the Board and Chief
Executive Officer of Wells Fargo & Company (bank holding
company) and Wells Fargo Bank, N.A. He was an executive
officer of Wells Fargo Bank, N.A. from 1978 until his
retirement in December 1994. Mr. Reichardt, 68, has been a
director of Pacific Gas and Electric Company since 1985 and
a director of PG&E Corporation since December 1996. He also
is a director of Columbia/HCA Healthcare Corporation,
ConAgra, Inc., Ford Motor Company, McKesson HBOC, Inc., and
Newhall
Management Corporation.
[PHOTO] JOHN C. SAWHILL
Dr. Sawhill is President and Chief Executive Officer of The
Nature Conservancy (international environmental
organization) and has held that position since April 1990.
Dr. Sawhill, 63, has been a director of Pacific Gas and
Electric Company since 1990 and a director of PG&E
Corporation since December 1996. He also is a director of
NACCO Industries, Inc., Newfield Exploration Company,
Procter and Gamble, The Vanguard Group, Inc., and each of
the Vanguard Funds, registered investment companies.
</TABLE>
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Nominees for Directors of PG&E Corporation and
Pacific Gas and Electric Company
CONTINUED
<TABLE>
<S> <C>
[PHOTO] GORDON R. SMITH*
Mr. Smith is President and Chief Executive Officer of
Pacific Gas and Electric Company, and has been an officer of
Pacific Gas and Electric Company since June 1980.
Mr. Smith, 52, has been a director of Pacific Gas and
Electric Company since 1997.
[PHOTO] BARRY LAWSON WILLIAMS
Mr. Williams is President of Williams Pacific
Ventures, Inc. (business consulting and mediation), and has
held that position since May 1987. Mr. Williams, 55, has
been a director of Pacific Gas and Electric Company since
1990 and a director of PG&E Corporation since December 1996.
He also is a director of CH2M Hill Companies, Ltd.,
CompUSA Inc., Newhall Management Corporation, R.H.
Donnelley Inc., and Simpson Manufacturing Company Inc.
* Gordon R. Smith is a nominee for director of Pacific Gas
and Electric Company only.
</TABLE>
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Information Regarding the
Boards of Directors of PG&E Corporation and
Pacific Gas and Electric Company
BOARD COMMITTEES
The committees of the PG&E Corporation Board of Directors are the Executive
Committee, Audit Committee, Finance Committee, Nominating and Compensation
Committee, and Public Policy Committee. The Pacific Gas and Electric Company
Board of Directors has an Executive Committee. The current membership and duties
of these committees are as follows:
<TABLE>
<CAPTION>
NOMINATING AND
EXECUTIVE AUDIT FINANCE COMPENSATION PUBLIC POLICY
COMMITTEES COMMITTEE COMMITTEE COMMITTEE COMMITTEE
<S> <C> <C> <C> <C>
R. D. Glynn, Jr.* H. M. Conger* B. L. Williams* C. E. Reichardt* M. S. Metz*
H. M. Conger C. L. Cox R. A. Clarke D. A. Coulter R. A. Clarke
M. S. Metz W. S. Davila D. A. Coulter C. L. Cox W. S. Davila
C. E. Reichardt M. S. Metz C. E. Reichardt D. M. Lawrence, MD J. C. Sawhill
G. R. Smith(1) B. L. J. C. Sawhill J. C. Sawhill
B. L. Williams Williams
</TABLE>
* Chair
(1) Member of the Pacific Gas and Electric Company Executive Committee
only.
EXECUTIVE COMMITTEES
Each Executive Committee, subject to the provisions of law and certain
limits imposed by the PG&E Corporation or the Pacific Gas and Electric Company
Board (as the case may be), may exercise any of the powers and perform any of
the duties of the PG&E Corporation Board or the Pacific Gas and Electric Company
Board, respectively. The Executive Committees meet as needed. One PG&E
Corporation Executive Committee meeting was held in 1999 and no Pacific Gas and
Electric Company Executive Committee meetings were held in 1999.
AUDIT COMMITTEE
The Audit Committee of PG&E Corporation (five meetings were held in 1999)
advises and assists the Board in fulfilling its responsibilities in connection
with financial and accounting practices, internal controls, external and
internal auditing programs, business ethics, and compliance with laws,
regulations, and policies that may have a material impact on the consolidated
financial statements of PG&E Corporation and its subsidiaries. The Audit
Committee satisfies itself as to the independence and competence of PG&E
Corporation's and Pacific Gas and Electric Company's independent public
accountants, and reviews and discusses with the independent accountants and with
PG&E Corporation's or Pacific Gas and Electric Company's officers and internal
auditors the scope and results of the independent accountants' audit work,
consolidated quarterly and annual financial statements, internal audit and
control systems, and compliance with laws, regulations, policies, and programs.
The Audit Committee also recommends to the Board of Directors the firm of
independent public accountants to be selected to audit PG&E Corporation's and
Pacific Gas and Electric Company's accounts, and makes further inquiries as it
deems necessary or desirable to inform itself as to the conduct of PG&E
Corporation's or its subsidiaries' affairs.
The Audit Committee is composed entirely of directors who are (a) neither
current nor former officers or employees of PG&E Corporation or any of its
subsidiaries, (b) not consultants to PG&E Corporation or any of its
subsidiaries, and (c) neither current nor former officers or employees of any
other corporation on whose board of directors any PG&E Corporation officer
serves as a member. One member of the Committee is appointed by the Board of
Directors as the Committee's Chair.
FINANCE COMMITTEE
The Finance Committee of PG&E Corporation (eight meetings were held in 1999)
advises and assists the Board with respect to the financial and capital
investment policies and objectives of PG&E Corporation and its subsidiary
companies, including specific actions required to achieve those objectives. The
Finance Committee
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reviews long-term financial and investment plans and strategies, annual
financial plans, dividend policy, short-term and long-term financing plans,
proposed capital investments, proposed divestments, major commercial banking,
investment banking, financial consulting, and other financial relations of PG&E
Corporation or its subsidiaries, and price risk management activities.
One member of the Committee, who is neither a current nor former employee
of, nor current consultant to, PG&E Corporation or any of its subsidiaries, is
appointed by the Board of Directors as the Committee's Chair.
NOMINATING AND COMPENSATION COMMITTEE
The Nominating and Compensation Committee of PG&E Corporation (five meetings
were held in 1999) advises and assists the Boards of PG&E Corporation and
Pacific Gas and Electric Company with respect to the selection and compensation
of directors. It also advises and assists PG&E Corporation and its subsidiaries
on employment, compensation, benefits policies and practices, and the
development, selection, and compensation of policy-making officers. The
Nominating and Compensation Committee reviews and acts upon the compensation of
officers of PG&E Corporation and its subsidiaries, except that the compensation
of the Chief Executive Officers of PG&E Corporation and Pacific Gas and Electric
Company is established by the full PG&E Corporation or Pacific Gas and Electric
Company Board (as the case may be) upon recommendation of the Committee, and the
Committee has delegated to the PG&E Corporation Chief Executive Officer the
authority to approve compensation for certain officers of PG&E Corporation and
its subsidiaries. The Committee also reviews long-range planning for executive
development and succession, and the composition and performance of the Boards of
PG&E Corporation and Pacific Gas and Electric Company.
The Nominating and Compensation Committee is composed entirely of directors
who are (a) neither current nor former officers or employees of PG&E Corporation
or any of its subsidiaries, (b) not consultants to PG&E Corporation or any of
its subsidiaries, and (c) neither current nor former officers or employees of
any other corporation on whose board of directors any PG&E Corporation officer
serves as a member. One member of the Committee is appointed by the Board of
Directors as the Committee's Chair.
The Nominating and Compensation Committee will consider nominees recommended
by shareholders for election to the Boards of Directors of PG&E Corporation and
Pacific Gas and Electric Company. The names of such nominees, accompanied by
relevant biographical information, should be submitted in writing to the Vice
President and Corporate Secretary of PG&E Corporation or Pacific Gas and
Electric Company (as the case may be). The Nominating and Compensation Committee
seeks qualified, dedicated, and highly regarded individuals who have experience
relevant to PG&E Corporation's or Pacific Gas and Electric Company's business
operations, who understand the complexities of PG&E Corporation's or Pacific Gas
and Electric Company's business environment, and who will represent the best
interests of all the shareholders of PG&E Corporation or Pacific Gas and
Electric Company. In accordance with PG&E Corporation's and Pacific Gas and
Electric Company's commitment to equal opportunity, the Committee continues to
seek qualified women and minority candidates for the Boards.
PUBLIC POLICY COMMITTEE
The Public Policy Committee of PG&E Corporation (three meetings were held in
1999) advises and assists the Board of Directors with respect to public policy
issues which could affect significantly the interests of the customers,
shareholders, or employees of PG&E Corporation or its subsidiaries. The Public
Policy Committee reviews the policies and practices of PG&E Corporation and its
subsidiaries with respect to protection and improvement of the quality of the
environment, charitable and community service organizations and activities,
equal opportunity in hiring and promoting employees, and development of
minority-owned and women-owned businesses as suppliers to PG&E Corporation and
its subsidiaries. The Committee also reviews significant societal, governmental,
and environmental trends and issues that may affect the operations of PG&E
Corporation or its subsidiaries.
One member of the Committee, who is neither a current nor former employee
of, nor current consultant to, PG&E Corporation or any of its subsidiaries, is
appointed by the Board of Directors as the Committee's Chair.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Eight meetings of the PG&E Corporation Board of Directors and 22 meetings of
the PG&E Corporation Board committees were held in 1999. Overall attendance of
incumbent directors at such meetings was 95%. Individual attendance at meetings
of the PG&E Corporation Board of Directors and Board committees was as follows:
8
<PAGE>
R. A. Clarke 100%, H. M. Conger 93%, D. A. Coulter 95%, C. L. Cox 100%, W. S.
Davila 88%, R. D. Glynn, Jr. 100%, D. M. Lawrence 77%, M. S. Metz 100%, C. E.
Reichardt 95%, J. C. Sawhill 96%, and B. L. Williams 95%.
Six meetings of the Pacific Gas and Electric Company Board of Directors were
held in 1999. Overall attendance of incumbent directors at these meetings was
97%. Individual attendance at the meetings was as follows: R. A. Clarke 100%,
H. M. Conger 100%, D. A. Coulter 83%, C. L. Cox 100%, W. S. Davila 100%, R. D.
Glynn, Jr. 100%, D. M. Lawrence 83%, M. S. Metz 100%, C. E. Reichardt 100%,
J. C. Sawhill 100%, G. R. Smith 100%, and B. L. Williams 100%. There were no
meetings of the Pacific Gas and Electric Company Executive Committee in 1999.
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of PG&E Corporation or
Pacific Gas and Electric Company receives a quarterly retainer of $7,500 plus a
fee of $1,000 for each Board or Board committee meeting attended. Non-employee
directors who chair Board committees receive an additional quarterly retainer of
$625. Under the Deferred Compensation Plan for Non-Employee Directors, directors
of PG&E Corporation or Pacific Gas and Electric Company may elect to defer all
or part of such compensation for varying periods. Directors who participate in
the Deferred Compensation Plan may convert their deferred compensation into a
number of common stock equivalents, the value of which is tied to the market
value of PG&E Corporation common stock. Alternatively, participating directors
may direct that their deferred compensation earn interest.
No director who serves on both the PG&E Corporation and Pacific Gas and
Electric Company Boards and corresponding committees is paid additional
compensation for concurrent service on Pacific Gas and Electric Company's Board
or its committees, except that separate meeting fees are paid for each meeting
of the Pacific Gas and Electric Company Board, or a Pacific Gas and Electric
Company Board committee, that is not held concurrently or sequentially with a
meeting of the PG&E Corporation Board or a corresponding PG&E Corporation Board
committee. It is the usual practice of PG&E Corporation and Pacific Gas and
Electric Company that meetings of the respective Boards and corresponding
committees are held concurrently with each other and, therefore, that a single
meeting fee is paid to each director for each set of meetings.
In addition, directors of PG&E Corporation or Pacific Gas and Electric
Company are reimbursed for reasonable expenses incurred in attending Board or
committee meetings. Directors of PG&E Corporation or Pacific Gas and Electric
Company also are reimbursed for reasonable expenses incurred in connection with
other activities undertaken on behalf of or for the benefit of PG&E Corporation
or Pacific Gas and Electric Company.
Effective January 1, 1998, the PG&E Corporation Retirement Plan for
Non-Employee Directors was terminated. Directors who had accrued benefits under
the Plan were given a one-time option of receiving at retirement the benefit
accrued through 1997, or of converting the present value of their accrued
benefit into a PG&E Corporation common stock equivalent investment held in the
Deferred Compensation Plan for Non-Employee Directors. The payment of frozen
accrued retirement benefits, or distributions from the Deferred Compensation
Plan attributable to the conversion of retirement benefits, cannot be made until
the later of age 65 or retirement from the Board.
Under the Non-Employee Director Stock Incentive Plan, a component of the
PG&E Corporation Long-Term Incentive Program, on the first business day of
January of each year, each non-employee director of PG&E Corporation is entitled
to receive stock-based grants with a total aggregate equity value of $30,000,
composed of (1) restricted shares of PG&E Corporation common stock valued at
$10,000 (based on the closing price of PG&E Corporation common stock on the
first business day of the year), and (2) a combination of non-qualified stock
options and common stock equivalents with a total equity value of $20,000, based
on equity value increments of $5,000. The exercise price of stock options is
equal to the market value of PG&E Corporation common stock (i.e., the closing
price) on the date of grant. Restricted stock and stock options vest over the
five-year period following the date of grant, except that restricted stock and
stock options will vest immediately upon mandatory retirement from the Board at
age 70, upon a director's death or disability, or in the event of a change in
control. Common stock equivalents awarded are payable in the form of PG&E
Corporation common stock only following a director's retirement from the Board,
upon a director's death or disability, or in the event of a change in control.
Unvested awards are forfeited if the recipient ceases to be a director for any
other reason.
On January 4, 1999, each non-employee director received 323 restricted
shares of PG&E Corporation common stock. Directors who were granted stock
options received options to purchase 1,492 shares of PG&E Corporation common
stock for each $5,000 increment of equity value (subject to the aggregate
$20,000 limit) at an exercise
9
<PAGE>
price of $30.9375 per share, and directors who were granted common stock
equivalents received 161.616 common stock equivalent units for each $5,000
increment of equity value (subject to the aggregate $20,000 limit).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Katherine Quadros is a partner in the law firm of Quadros & Johnson.
Ms. Quadros is the sister of E. James Macias, Senior Vice President and General
Manager of the Generation, Transmission, and Supply Business Unit of Pacific Gas
and Electric Company. Quadros & Johnson was paid approximately $218,000 by
Pacific Gas and Electric Company during 1999 in connection with providing
certain legal services to that entity in the normal course of business. Such
services are expected to continue to be provided to Pacific Gas and Electric
Company in the future.
BOARD OF DIRECTORS RETIREMENT POLICY
It is the policy of the Boards of Directors of PG&E Corporation and Pacific
Gas and Electric Company that a person may not be designated as a candidate for
election or re-election as a director after he or she has reached the age
of 70.
10
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of PG&E Corporation
common stock beneficially owned (as defined in the rules of the Securities and
Exchange Commission) as of January 31, 2000, by the respective directors of PG&E
Corporation and Pacific Gas and Electric Company, the nominees for director, the
current and former executive officers of PG&E Corporation and Pacific Gas and
Electric Company named in the Summary Compensation Table on page , and all
directors and executive officers of PG&E Corporation and Pacific Gas and
Electric Company as a group. The number of shares shown for each such person,
and for the directors, nominees for director, and executive officers as a group,
constituted less than 1 percent of the outstanding shares of PG&E Corporation
common stock. As of January 31, 2000, no director, nominee for director, or
executive officer owned shares of any class of Pacific Gas and Electric Company
securities. The table also sets forth common stock equivalents credited to the
accounts of directors and executive officers under PG&E Corporation deferred
compensation and equity plans.
<TABLE>
<CAPTION>
(A) (B)
BENEFICIAL COMMON STOCK (C)
NAME STOCK OWNERSHIP(1)(2) EQUIVALENTS(3) TOTAL
<S> <C> <C> <C>
Richard A. Clarke(4) 130,047 4,177 134,224
Harry M. Conger(4) 7,984 2,397 10,381
David A. Coulter(4) 3,470 6,734 10,204
C. Lee Cox(4) 10,679 1,416 12,095
William S. Davila(4) 11,756 8,915 20,671
Robert D. Glynn, Jr.(4) 479,403 65,495 544,898
David M. Lawrence, MD(4) 10,458 2,169 12,627
Mary S. Metz(4) 7,425 682 8,107
Carl E. Reichardt(4) 5,729 11,829 17,558
John C. Sawhill(4) 28,384 6,950 35,334
Gordon R. Smith(5) 200,891 7,033 207,924
Barry Lawson Williams(4) 5,387 4,869 10,256
(6)
(6)
(6)
(7)
(8)
(8)
(8)
(8)
All PG&E Corporation directors and
executive officers as a group ( persons)
All Pacific Gas and Electric Company directors and
executive officers as a group ( persons)
</TABLE>
(1) Includes any shares held in the name of the spouse, minor children, or other
relatives sharing the home of the director or executive officer and, in the
case of executive officers, includes shares of PG&E Corporation common stock
held in the defined contribution retirement plans maintained by PG&E
Corporation, Pacific Gas and Electric Company, and their subsidiaries.
Except as otherwise indicated below, the directors, nominees for director,
and executive officers have sole voting and investment power over the shares
shown. Voting power includes the power to direct the voting of the shares
held, and investment power includes the power to direct the disposition of
the shares held.
Also includes the following shares of PG&E Corporation common stock in which
the beneficial owners share voting and investment power: Mr. Coulter 1,843
shares, Mr. Cox 6,912 shares, Mr. Davila 200 shares, Dr. Metz 3,886 shares,
Mr. Smith 3,884 shares, Mr. XX,XXX shares, all PG&E Corporation
directors and
11
<PAGE>
executive officers as a group XX,XXX shares, and all Pacific Gas and
Electric Company directors and executive officers as a group XX,XXX shares.
(2) Includes shares of PG&E Corporation common stock which the directors and
executive officers have the right to acquire within 60 days of January 31,
2000, through the exercise of vested stock options granted under the PG&E
Corporation Stock Option Plan, as follows: Mr. Clarke 125,000 shares,
Mr. Coulter 1,749 shares, Mr. Glynn 460,825 shares, Dr. Lawrence 1,749
shares, Dr. Metz 1,312 shares, Mr. Reichardt 1,749 shares, Dr. Sawhill 1,312
shares, Mr. Smith 179,635 shares, Mr. Williams 1,749 shares,
Mr. XX,XXX shares, Mr. XX,XXX shares, all PG&E
Corporation directors and executive officers as a group XXX,XXX shares, and
all Pacific Gas and Electric Company directors and executive officers as a
group XXX,XXX shares. The directors and executive officers have neither
voting power nor investment power with respect to shares shown unless and
until such shares are purchased through the exercise of the options,
pursuant to the terms of the Stock Option Plan.
(3) Reflects the number of stock units purchased by officers and directors
through salary and other compensation deferrals. The value of each stock
unit purchased is equal to the value of a share of PG&E Corporation common
stock and fluctuates daily based on the market price of PG&E Corporation
common stock. The directors and officers who have purchased these stock
units share the same market risk as PG&E Corporation shareholders, although
they do not have voting rights with respect to these stock units.
(4) Mr. Clarke, Mr. Conger, Mr. Coulter, Mr. Cox, Mr. Davila, Mr. Glynn,
Dr. Lawrence, Dr. Metz, Mr. Reichardt, Dr. Sawhill, and Mr. Williams are
directors of both PG&E Corporation and Pacific Gas and Electric Company.
(5) Mr. Smith is a director and an executive officer of Pacific Gas and Electric
Company, and also is an executive officer of PG&E Corporation. He is named
in the Summary Compensation Table on page .
(6) Mr. , Mr. , and Mr. are executive
officers of PG&E Corporation named in the Summary Compensation Table on page
.
(7) Mr. was an executive officer of PG&E Corporation until
, and is named in the Summary Compensation Table on page . The
information set forth in the table for Mr. includes shares of
PG&E Corporation common stock and common stock equivalents beneficially
owned by Mr. .
(8) Mr. , Mr. , Mr. , and
Mr. are executive officers of Pacific Gas and Electric Company
named in the Summary Compensation Table on page .
12
<PAGE>
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Item No. 2:
Ratification of Appointment of Independent Public Accountants
On the recommendation of the Audit Committee of PG&E Corporation, the Boards
of Directors of PG&E Corporation and Pacific Gas and Electric Company have
selected Deloitte & Touche as the independent public accountants to examine the
financial statements of PG&E Corporation, Pacific Gas and Electric Company, and
their respective subsidiaries for the year 2000. Deloitte & Touche is a major
national accounting firm with substantial expertise in the energy and utility
businesses. Deloitte & Touche has been employed to perform this function for
PG&E Corporation and Pacific Gas and Electric Company since 1999. The firm of
Arthur Andersen LLP was employed as independent public accountants from 1981
until the selection of Deloitte & Touche. During that period, good relations
were maintained and there were no disagreements on accounting principles or
practices, financial statement disclosure, or audit scope or procedures.
One or more representatives of Deloitte & Touche will be present at the
annual meetings, and will be available to respond to appropriate questions.
The affirmative vote of a majority of the shares represented and voting on
the proposal is required to ratify the appointment of the independent public
accountants and the affirmative votes must constitute a majority of the required
quorum. Abstentions will have the same effect as a vote against the proposal.
Unless indicated to the contrary, properly executed proxies received by PG&E
Corporation or Pacific Gas and Electric Company prior to or at the annual
meetings will be voted for this proposal.
This appointment is not required to be submitted to a vote of the
shareholders. If the shareholders should not ratify the appointment, the PG&E
Corporation Audit Committee will investigate the reasons for rejection by the
shareholders and each Board of Directors will reconsider the appointment.
THE BOARDS OF DIRECTORS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY
RECOMMEND A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE &
TOUCHE.
- - --------------------------------------------------------------------------------
IF YOU DO NOT HOLD ANY SHARES OF PG&E CORPORATION COMMON STOCK, YOU ARE NOT
ENTITLED TO VOTE ON THE FOLLOWING TWO MANAGEMENT PROPOSALS.
- - --------------------------------------------------------------------------------
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Item Nos. 3 and 4:
Management Proposals
TO BE VOTED ON BY PG&E CORPORATION SHAREHOLDERS ONLY
ITEM NO. 3: MANAGEMENT PROPOSAL REGARDING PROPOSED AMENDMENT TO PG&E
CORPORATION'S ARTICLES OF INCORPORATION TO IMPLEMENT THE ELIMINATION OF A
"SUPERMAJORITY VOTE" PROVISION
At the 1999 annual meeting of PG&E Corporation shareholders, a majority of
the shares present and voting approved a shareholder proposal recommending that
the Board of Directors reinstate simple majority voting for all matters
submitted for shareholder approval. At present, the only matters that require
more than a simple majority vote of shareholders are those matters covered by
the Fair Price Provision contained in Article Eighth of the Restated Articles of
Incorporation of PG&E Corporation. A copy of Article Eighth of the Restated
Articles of Incorporation of PG&E Corporation as proposed to be amended is
attached to this proxy statement. Capitalized terms used but not defined in this
proxy statement shall have the meaning ascribed to such terms in
Article Eighth.
PROPOSED AMENDMENTS TO THE FAIR PRICE PROVISION
Under the current Fair Price Provision, the approval of the holders of not
less than 75 percent of the outstanding shares of voting stock of PG&E
Corporation (a "supermajority vote") is required to effect a Business
Combination involving PG&E Corporation or any of its subsidiaries and a Related
Person or any of its Affiliates. A "Business Combination" is broadly defined to
include (i) a merger or consolidation with a Related Person; (ii) a sale, lease,
or exchange to a Related Person of any of the Corporation's assets having an
aggregate fair market value of $100 million or more, or vice versa; (iii) an
issuance, pledge, or transfer of the Corporation's securities to a Related
Person in exchange for cash or other property having an aggregate fair market
value of $100 million or more; (iv) a reclassification of securities,
recapitalization, or other transaction which would directly or indirectly
increase the voting power or the proportionate share of the Corporation's
securities owned by a Related Person; or (v) any merger or consolidation of the
Corporation with any of its Subsidiaries if, after the merger, the surviving
entity's Articles of Incorporation do not contain the Fair Price Provision. A
supermajority vote is not required if any such Business Combination is approved
by the Board of Directors without counting the vote of any director who is not a
Disinterested Director or if certain specified minimum price criteria and
procedural requirements are satisfied.
The proposed amendments to the Fair Price Provision would replace the
requirement for a supermajority vote with the requirement that a Business
Combination be approved by the holders of a majority of PG&E Corporation's
outstanding shares of voting stock (a "majority vote"). A majority vote
requirement will make it easier for a Related Party or its Affiliate to effect a
Business Combination involving PG&E Corporation or any of its subsidiaries,
especially since a Related Party or its Affiliate may participate in the vote.
As a consequence, a majority vote requirement may make it easier for the Related
Party or its Affiliate to engage in transactions that are not necessarily in the
best interests of all shareholders. Therefore, in order to protect shareholders
against acts by a Related Party or its Affiliate that may be detrimental to
shareholders as a whole, the Board of Directors has proposed that the Fair Price
Provision be further amended to require that a proposed Business Combination, in
addition to approval by a majority vote, also (i) be approved by the Board of
Directors of PG&E Corporation without counting the vote of any director who is
not a Disinterested Director or (ii) satisfy the existing minimum price and
procedural requirements contained in the Fair Price Provision.
The proposed amendments also would change the definition of "Subsidiary" to
include non-corporate entities. The proposed amendment also would delete the
requirement that amendments to the Fair Price provision be approved by a
supermajority vote.
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<PAGE>
EFFECTS OF THE AMENDED FAIR PRICE PROVISION
As amended, the Fair Price Provision is not intended to prevent or impede a
third party from acquiring control of PG&E Corporation. Rather, the amended
provision is intended to inhibit abusive conduct on the part of a Related Party
or its Affiliate and is designed to protect shareholders against practices that
do not treat all shareholders fairly and equally, including inadequate or
coercive takeovers or self-dealing transactions. The proposed amendments to the
Fair Price Provision will ensure that either a proposal resulting in a Business
Combination will be scrutinized by the Disinterested Directors on the Board of
Directors or will ensure that the consideration paid to shareholders in the
Business Combination will be no less than the existing minimum price
requirements set forth in the Fair Price Provision.
As amended, the Fair Price Provision may discourage an unsolicited offer
that is favorable to a majority of shareholders but that does not otherwise
(i) have the support of the Disinterested Directors on the Board of Directors or
(ii) satisfy the fair price criteria and other procedural requirements contained
in the Provision. To the extent that the amended Fair Price Provision makes the
accomplishment of a Business Combination more difficult, it would make the
removal of management more difficult even if such removal would be beneficial to
the shareholders generally.
The Board of Directors of PG&E Corporation currently has no intention of
soliciting a shareholder vote on any other proposals that might affect a
possible change of control of PG&E Corporation. However, the Board of Directors
of PG&E Corporation will continue to monitor developments in this area and in
the future may recommend or pursue additional protective measures if it
determines that such measures would be in the best interests of PG&E Corporation
and its shareholders as a whole.
VOTE REQUIRED
The proposed amendments to the Fair Price Provision are permitted under
California law and the rules of the New York Stock Exchange, the principal
exchange upon which PG&E Corporation's stock is listed and traded. The proposed
amendments will not become effective until (i) they are approved by the
affirmative vote of the holders of a majority of the outstanding shares of
voting stock of PG&E Corporation, and (ii) a certificate of amendment is filed
with the California Secretary of State. Abstentions and broker non-votes will
have the same effect as a vote against the proposal. Properly executed proxies
received by PG&E Corporation prior to or at the annual meeting will be voted
"FOR" the proposal, unless PG&E Corporation shareholders specify otherwise in
their proxies.
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE FOREGOING AMENDMENTS TO THE ARTICLES OF INCORPORATION OF PG&E CORPORATION.
ITEM NO. 4: MANAGEMENT PROPOSAL REGARDING PROPOSED AMENDMENTS TO PG&E
CORPORATION'S ARTICLES OF INCORPORATION TO DECREASE THE AUTHORIZED MINIMUM AND
MAXIMUM NUMBER OF DIRECTORS
PG&E Corporation's Articles of Incorporation currently provide that the
authorized number of directors shall be within a range of between nine and
seventeen. The current authorized number of directors to be elected at the 2000
annual meeting is eleven. The Board of Directors of PG&E Corporation has
unanimously approved an amendment to the Corporation's Articles of Incorporation
to provide that the Board of Directors shall consist of not less than seven nor
more than thirteen directors. The exact number of directors within the new
authorized range will continue to be eleven until changed, within the limits
specified in the Articles of Incorporation, by an amendment to the Bylaws
adopted by the Board of Directors or the shareholders. The proposed amendments
would not affect the number of directors to be elected at the 2000 annual
meeting.
The Board of Directors believes that the current authorized number of
directors is an appropriate size enabling the Board as a whole to function
efficiently. The Board of Directors also believes that reducing the range of the
minimum and maximum number of directors to between seven and thirteen is
consistent with current corporate governance practices.
15
<PAGE>
The first paragraph of Article Third of the Corporation's Articles of
Incorporation currently provides:
I: The Board of Directors of the Corporation shall consist of such number
of directors, not less than nine (9) nor more than seventeen (17), as
shall be prescribed in the Bylaws.
The Board of Directors proposes to amend the first paragraph of
Article Third to read as follows:
I: The Board of Directors of the Corporation shall consist of such number
of directors, not less than seven (7) nor more than thirteen (13), as
shall be prescribed in the Bylaws.
VOTE REQUIRED
The proposed amendments to the Articles of Incorporation will not become
effective until (i) they are approved by the affirmative vote of the holders of
a majority of the outstanding shares of voting stock of PG&E Corporation, and
(ii) a certificate of amendment is filed with the California Secretary of State.
Abstentions and broker non-votes will have the same effect as a vote against the
proposal. Properly executed proxies received by PG&E Corporation prior to or at
the annual meeting will be voted "FOR" the proposal, unless PG&E Corporation
shareholders specify otherwise in their proxies.
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE FOREGOING AMENDMENT TO THE ARTICLES OF INCORPORATION OF PG&E CORPORATION.
- - --------------------------------------------------------------------------------
IF YOU DO NOT HOLD ANY SHARES OF PG&E CORPORATION COMMON STOCK, YOU ARE NOT
ENTITLED TO VOTE ON THE FOLLOWING SIX SHAREHOLDER PROPOSALS.
- - --------------------------------------------------------------------------------
16
<PAGE>
- - --------------------------------------------------------------------------------
Item Nos. 5 to 10
Shareholder Proposals
TO BE VOTED ON BY PG&E CORPORATION SHAREHOLDERS ONLY
The following proposals have been submitted by shareholders for action at
the PG&E Corporation annual meeting. To be approved, each properly presented
proposal must receive the affirmative vote of a majority of the PG&E Corporation
shares represented and voting on the proposal, and the affirmative votes must
constitute at least a majority of the required quorum. Abstentions will be
counted in the number of shares represented and voting, and will have the same
effect as a vote against the proposal. Broker non-votes with respect to a
particular proposal will be counted for purposes of determining the presence or
absence of a quorum, but will not be counted in the number of shares represented
and voting on the proposal. Properly executed proxies received by PG&E
Corporation prior to or at the annual meeting will be voted "AGAINST" these
proposals, unless PG&E Corporation shareholders specify otherwise in their
proxies.
ITEM NO. 5: SHAREHOLDER PROPOSAL REGARDING INDEPENDENT DIRECTORS
Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California
90278, on behalf of Mr. Ray T. Chevedden and Mrs. Veronica G. Chevedden, holders
of 3,000 shares of PG&E Corporation common stock, has given notice of his
intention to present the following proposal for action at the PG&E Corporation
annual meeting:
"RESOLVED:
APPOINT INDEPENDENT DIRECTORS TO ALL KEY BOARD COMMITTEES
Adopt a policy that Independent Directors are appointed for all Key Board
Committees to enhance management oversight (shareholder recommendation).
Key board committees include:
- Compensation
- Nomination &
- Audit Committees
These important oversight-committees require heightened independence,
free of Directors with significant financial and management ties to PG&E. A
director is deemed independent if his or her only non-trivial professional,
financial or familial connection to the company or its CEO within the past
10 years is his or her directorship.
The following Directors profited directly or indirectly from their
financial and management ties to PG&E (Source--1998 PG&E proxy):
<TABLE>
<S> <C> <C>
1. Dr. David Lawrence CEO of Kaiser Health Plan
- PG&E paid $23 million to Kaiser.
2. David Coulter CEO of BankAmerica Corp. (until fired Oct. 1998)
- PG&E paid $2.5 million to Bank of America
3. Lee Cox Vice Chairman of AirTouch Communications
- PG&E paid $1.5 Million to AirTouch.
4. Rebecca Morgan CEO of JVSV Network
- PG&E paid $100,000 to JVSV.
5. Richard Clark
- Former PG&E CEO--tends to protect entrenched policies.
</TABLE>
When this relationship was brought to the attention of shareholders in
1998, the company took the regressive step of deleting it from the 1999
proxy statement. The company was asked to reinstate this information in this
proxy statement as a sign of its integrity.
Deleting information that points to needed changes is a disturbing act.
It leads shareholders to believe that the company tends to conceal
information on its problems rather than correct its problems.
17
<PAGE>
Seven out of 15 seats on key committees are held by directors whose
companies are PG&E customers. PG&E regularly pays more than $27 million
annually to the employers of PG&E Directors.
Dr. Lawrence, whose company receives the largest payment, sits on the
Compensation Committee that determines CEO pay. In 1998 the Compensation
Committee more than doubled CEO pay--up 117%--Source:www.paywatch.org.
While paying $27 million to the employers of PG&E directors, PG&E
substantially under-performed the S&P 500 and the Dow Jones Utilities Index.
The graph on page shows the PG&E under-performance. ADDITIONALLY, THE 39%
DIVIDEND CUT OF 3 1/2 YEARS AGO HAS NOT BEEN RESTORED.
Dr. Lawrence's voice in determining CEO pay is a clear conflict of
interest and divided loyalty. It sends the wrong message to PG&E's 20,000
employees: It implies that the divided loyalty is acceptable.
Under the watered-down PG&E definition of independence, a compensation
committee stacked with directors whose employers have $27 million in annual
contracts with PG&E, could "ensure independent oversight of management."
Institutional Shareholder services (www.cda.com/iss), a leading proxy
analysis firm, said it is fundamental that a board is independent and
therefore capable of objective oversight of top management.
APPOINT INDEPENDENT DIRECTORS TO ALL KEY BOARD COMMITTEES
VOTE YES ON ITEM NO. 5"
------------------------
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
The Board of Directors believes this proposal is moot, as the Audit
Committee and the Nominating and Compensation Committee of the Board of
Directors are each composed entirely of independent directors as defined in the
Corporation's corporate governance guidelines. Independent directors are defined
in the guidelines as directors who are neither (a) current nor former employees
of, nor consultants to, PG&E Corporation or its subsidiaries, nor (b) current
nor former officers or employees of any other corporation on whose board of
directors any officer of PG&E Corporation serves as a member. All the members of
the Audit and Nominating and Compensation Committees are independent as defined
in the guidelines. Further, another requirement of the guidelines specifies that
75 percent of the Board be composed of directors who are neither current nor
former officers of PG&E Corporation or any of its subsidiaries, and the
Corporation is in compliance with this requirement.
The Board does not believe that business relationships of the type cited by
the proponent compromise the independence of the director. None of the named
directors possesses a personal interest in the business transactions that would
preclude the director's ability to exercise independent judgment or faithfully
fulfill his or her fiduciary duties to PG&E Corporation's shareholders. The
types of transactions cited by the proponent relate to ordinary business
dealings between the named companies and PG&E Corporation, Pacific Gas and
Electric Company (a subsidiary of PG&E Corporation), and their subsidiaries.
Neither the Board, any Board committee, nor the director affiliated with the
named business entity had any involvement in deciding whether to purchase goods
or services from, or provide financial support to, the named business entity.
Ordinary business transactions necessary to conduct the business of the
Corporation and its subsidiaries are implemented by employees in the course of
their employment, without direct Board involvement. For example, the dollar
amount cited by the proponent which was paid by the Corporation and its
subsidiaries to Kaiser Health Plan (the largest provider of healthcare services
in California) represents premium payments directed by individual Corporation
employees, who can choose among many healthcare providers. Neither the Board,
any Board committee, Dr. Lawrence, nor Kaiser Health Plan has any influence over
which health services provider an employee chooses.
The business relationships cited by the proponent were not required by
Securities and Exchange Commission (SEC) rules to be disclosed in PG&E
Corporation's 1999 and 2000 proxy statements, as these relationships do not meet
the threshold for determining which relationships are significant enough to
require proxy statement disclosure. Among other things, each of these business
relationships represents less than 5 percent of the consolidated gross revenues
of the Corporation and of each of the entities involved in the cited business
relationships for the relevant fiscal year.
The PG&E Corporation Board of Directors believes that the composition of its
Audit Committee and its Nominating and Compensation Committee (each consisting
solely of independent directors) and the presence of a majority of independent
directors on the Board pursuant to the Board's corporate governance policies
ensure independent oversight of management.
18
<PAGE>
Last year, of the Corporation's shares that were voted, approximately
71 percent voted against a similar proposal presented by this proponent.
For these reasons, the PG&E Corporation Board of Directors unanimously
recommends that shareholders vote AGAINST this proposal.
ITEM NO. 6: SHAREHOLDER PROPOSAL REGARDING CONFIDENTIAL SHAREHOLDER VOTING
Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California
90278, on behalf of Mrs. Ersilia N. Davis, 1488 San Pasqual Street, Pasadena,
California 91106, holder of 200 shares of PG&E Corporation common stock, has
given notice of his intention to present the following proposal for action at
the PG&E Corporation annual meeting:
"RESOLVED:
CONFIDENTIAL SHAREHOLDER VOTING
The shareholders request that the board of directors adopt and implement a
policy requiring all proxies, ballots and voting tabulations that identify
how shareholders vote be kept confidential and the inspectors of election be
independent and not the employees of the company.
SUPPORTING STATEMENT:
The confidential ballot is fundamental to the American political system.
This protection ensures that voters are not subjected to:
1) Actual
2) Perceived or
3) Potential coercive pressure.
The fundamental principle of the confidential ballot should be applied
to public corporations. While there is no inference that PG&E management
uses coercion the existence of this possibility is sufficient to justify
confidentiality.
Many major companies, such as Coca-Cola Co., Dow Chemical,
Georgia-Pacific Corp., Gillette, Kimberly Clark, Louisiana Pacific, and
Quaker Oats, use confidential voting.
The Investor Responsibility Research Center (IRRC) reported that
confidential voting resolutions won 47% shareholder approval in 1998. IRRC
surveyed 56 institutional investors and found that 75% said they
consistently support confidential voting resolutions. PG&E is 51% owned by
institutional shareholders.
Many shareholders believe confidential ownership is guaranteed when
shares are held in street name. This is not always the case. Management has
various means of determining actual ownership. For instance, proxy
solicitors have elaborate databases that can match account numbers with the
identity of some owners.
Moreover, why should shareholders be required to transfer their stock to
street-name in an attempt to maintain confidentiality? This resolution is
the only way to ensure a secret ballot for all shareholders irrespective of
how they own their shares.
The confidential vote is an important step toward improving PG&E
corporate governance.
WHY IMPROVE PG&E'S CORPORATE GOVERNANCE PRACTICES?
Fifty institutional investors, managing a total of $840 million, told
McKinsey & Co. they would pay an 11% average premium for the stock of a
company with good governance practices.
Why the big jump? Some investors said they believed that good governance
would help boost performance over time. Others felt good governance
decreases the risk of bad news--and when trouble occurs, they rebound
faster.
<TABLE>
<S> <C>
BUSINESS WEEK Sept. 15, 1997
</TABLE>
WHAT ISSUES HIGHLIGHT CONCERN ABOUT IMPROVING PG&E'S PERFORMANCE?
The 1998 directors, key-employees and consultants stock option plan has a
total potential stock dilution of 8%--compared to 2% stock dilution for PG&E
peer group.
<TABLE>
<S> <C>
Investor Responsibility Research Center
PG&E ANNUAL MEETING REPORT March 1999
</TABLE>
PG&E stock price is down 17% for the year.
<TABLE>
<S> <C>
STANDARD & POORS Sept. 18, 1999
</TABLE>
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An administrative law judge proposed that Pacific Gas & Electric Co. be
allowed to increase electric rates by less than a quarter of the $1 billion
plus the company had originally demanded.
<TABLE>
<S> <C>
REUTERS Oct. 19, 1999
</TABLE>
PG&E Corp. reported that third-quarter earnings fell nearly 13 percent.
<TABLE>
<S> <C>
REUTERS Oct. 15, 1999
</TABLE>
ABN AMRO said it has cut by 18% its 1999 earnings estimates for PG&E Corp.
<TABLE>
<S> <C>
REUTERS Oct. 22, 1999
</TABLE>
To improve corporate governance and company performance vote yes:
CONFIDENTIAL SHAREHOLDER VOTING
YES ON 6"
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
The Board of Directors supports policies and practices that maintain the
confidentiality of the Corporation's proxy solicitation and balloting processes,
and believes that the Corporation's current practices and policies enable
shareholders to vote or give a proxy free from coercive pressure. The proposed
confidential voting policy unnecessarily goes beyond the Corporation's existing
practices, to restrict access to proxy, ballot, and vote tabulation information
even if such access is legally required or otherwise is in the best interests of
shareholders, such as when shareholders use their proxy cards as a vehicle for
communicating with the Corporation or in the case of a proxy contest.
The Corporation does not use proxy or ballot information to identify how
individual registered shareholders vote on particular issues. For years, the
Corporation has used an independent inspector of elections and proxy tabulator,
and has no plans to discontinue this practice. Shareholder proxies are returned
directly to the independent proxy tabulator and are not reviewed by the
Corporation. Confidentiality of voting decisions is preserved even when
shareholders use the proxy card with its postage-paid return envelope to
communicate with the Corporation on items of interest to them, such as
historical account information, lost or stolen stock certificates, and other
matters relating to the Corporation's business. In such cases, the independent
tabulator maintains the confidentiality of the shareholder's vote by blocking
out voting information on the proxy card prior to making a copy for the
Corporation. Registered shareholders desiring additional assurances of
confidentiality can register their shares in the name of a nominee, such as a
stockbroker, bank, or other fiduciary. Since nominee holders do not disclose
specific information regarding how the beneficial owners vote, confidentiality
is preserved. Corporation employees who own stock through employee savings plans
submit their votes through plan trustees, who are required to keep such
information confidential and may not disclose such information to the
Corporation.
The proposed confidential voting policy is not only unnecessary, but also is
overly broad in that it contains no exemptions for proxy contests or situations
in which disclosure of a shareholder's vote is legally required. In the case of
a proxy contest, the proposed confidential voting policy would not apply to the
third party that was soliciting proxies, yet would continue to apply to the
Corporation, thereby giving the third party dissident an unfair advantage. The
dissident would be able to view shareholder voting decisions and other
information, and use that information to persuade individual shareholders to
vote in the dissident's favor. This advantage is not only unfair, but could be
detrimental to shareholders. In contesting the dissident's solicitation of
proxies, the Corporation's Board of Directors has a legal obligation to act in
the best interests of shareholders as a group, whereas the dissident would have
no such obligation and would be free to act purely in his or her own self
interest. Given the unfair advantage the dissident would gain from having access
to voting information, the Board's ability to act in the best interests of
shareholders would be hindered because the directors would not have the same
access to that information. The proposed confidential voting policy also fails
to permit exceptions when access to the shareholder voting information is
required in response to federal or state legal requirements, or may be necessary
to assist the Corporation in making a claim or defending against a claim.
For these reasons, the PG&E Corporation Board of Directors unanimously
recommends that shareholders vote AGAINST this proposal.
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ITEM NO. 7: SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER DEMOCRACY
Mrs. Sydell B. Lemerman, 1855 Capistrano, Berkeley, California 94707, holder
of 1,291 shares of PG&E Corporation common stock, has given notice of her
intention to present the following proposal for action at the PG&E Corporation
annual meeting:
"SHAREHOLDER DEMOCRACY
We live in a Democracy and our vote is our sacred right, yet PG&E Corp.
denies that right when it comes to voting on company proposals.
"ABSTENTIONS WILL BE COUNTED IN THE NUMBER OF SHARES REPRESENTED AND VOTING,
AND WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSAL."
page 21--Joint notice of 1999 Annual Meetings--Joint Proxy Statement.
It is not in the law! It is not in the rules an regulations of the S.E.C!
The Corporation is not mandated in overriding the shareholders majority vote
if it so wishes, it has made it's own ruling to do so.
A Yes vote means YES! A No vote means NO! An Abstention means I am present
but I am not voting.
In defense of their stance, the Corporation likes to state that the SEC does
not object and that all other companies do the same thing and therefore it
is the right thing to do. WRONG!! A Yes vote means YES! A No vote means NO!
An Abstention means neither yes or no and should NOT be counted. There is no
other way.
Make your vote count and mean what you would like it to mean. YES, NO,
NO VOTE!!!
Do not let the Corporation override our majority vote.
Vote YES for Shareholder Democracy."
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
The standard for determining whether shareholders have approved a matter
submitted to them is controlled by the law of the state under which the
corporation is incorporated. Although most publicly traded corporations are
incorporated in Delaware, PG&E Corporation is incorporated in California. Under
California law, most matters presented to shareholders are considered approved
by shareholders if (1) the matter receives the affirmative vote of a majority of
the shares "represented and voting," and if (2) the affirmative votes constitute
at least a majority of the required quorum. SEC rules require that the proxy
statement disclose the treatment of abstentions for each item to be voted upon
by shareholders (except for the ratification of accountants). PG&E Corporation
reports all affirmative votes, negative votes, and abstentions cast at each
annual meeting in its first quarterly report on Form 10-Q filed with the SEC
after the meeting.
Although California law does not specifically address the treatment of
abstentions, other states do. For example, in Delaware where the majority of
publicly traded corporations are incorporated, most matters submitted to
shareholders are considered approved if the matter receives the affirmative vote
of a majority of the shares "present and entitled to vote." Under Delaware law,
abstentions are included in determining the number of shares "present and
entitled to vote." In the absence of controlling authority under California law,
PG&E Corporation has chosen to follow the law of Delaware and treat abstentions
as shares "present and voting." PG&E Corporation believes that most investors in
public corporations understand and expect this treatment of abstentions. The
Corporation's proxy statement fully discloses this intended treatment so that a
shareholder can make an informed decision in deciding whether to cast an
abstention.
Further, California law requires that some matters submitted to
shareholders, such as the proposed amendments of the Corporation's Articles of
Incorporation under Item Nos. 3 and 4 above, be approved by the holders of a
majority of the Corporation's outstanding shares. Under this approval standard,
abstentions must be counted, since the abstaining shareholder's shares are
outstanding. Therefore, the shareholder proposal would be legally impossible to
implement, as it would require the Corporation to violate California law.
For these reasons, the PG&E Corporation Board of Directors unanimously
recommends that shareholders vote AGAINST this proposal.
21
<PAGE>
ITEM NO. 8: SHAREHOLDER PROPOSAL REGARDING CUMULATIVE VOTING
Mr. Simon Levine, Trustee of the Simon Levine Living Trust, 960 Shorepoint
Court, No. 306, Alameda, California 94501, holder of 5,706 shares of PG&E
Corporation common stock, has given notice of his intention to present the
following proposal for action at the PG&E Corporation annual meeting:
"The shareholders of PG&E Corporation request the Board of Directors take
the necessary steps to amend the company's governing instruments to adopt
the following:
REINSTATE CUMULATIVE VOTING FOR THE ELECTION OF PG&E CORP. DIRECTORS.
Cumulative Voting is of the utmost importance in order to let us, the
shareholders, have a voice in the corporation. It is essential in letting us
express ourselves as OWNERS.
When we are not in agreement with those in whom we put our faith and trust
and we want them to know that in no uncertain terms, cumulative voting HELPS
emphasize our concern by disavowing them and voting them out. It provides us
the necessary tools to CHOOSE the directors we want.
It is to US, the owners of the company, to PROVIDE the leadership necessary
to run the company well and profitably.
The following headlines from the San Francisco Chronicle illustrates some of
the problems.
December Blackout no Fluke, PUC Says, reads one headline with the sub-head
Staff report contends PG&E is error prone May 8, 1999
PG&E Fined for Poor Service in '95 Outage - June 25, 1999
PUC Urged To Continue PG&E PROBE - July 1, 1999
These examples, which are part of at least a half dozen negative articles,
demonstrate in no uncertain terms that our board is not doing their job.
This means that we, the owners, are not doing our job and that's SELECTING
the right people to lead and guide this company properly.
The Corporation argument is that a small percentage of shareholders can
elect a Director. True, but the board is doing the same with ONLY 13
Directors. The problem is that the Corporation is addressing the wrong item.
What they should be concerned about is "why did this come up in the first
place and what can we do to rectify it?"
It has been said that the beginning of a long trip is in taking the first
step. Our first step is to make sure we vote for cumulative voting. It is
our RIGHT and RESPONSIBILITY!!!
VOTE "YES" TO REINSTATE CUMULATIVE VOTING FOR THE ELECTION OF DIRECTORS."
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
PG&E Corporation believes that cumulative voting would erode shareholders'
ability to elect directors who represent the interests of the shareholders as a
whole.
Under cumulative voting, the total number of votes that each shareholder may
cast in an election for directors is determined by multiplying the number of
directors to be elected by the number of votes to which the shareholder's shares
are entitled. Each shareholder may "cumulate" his or her votes by giving them
all to one candidate, or may distribute his or her votes among as many
candidates as the shareholder sees fit. Thus, where 11 directors are to be
elected, a shareholder or group of shareholders holding less than 9 percent of
the shares voting at the meeting would be capable of electing a director. This
is true even if the holders of the remaining 91 percent of the voting shares are
opposed to the election of that candidate and cast their votes to elect 11 other
directors.
Cumulative voting would give a disproportionate and unfair weight to the
votes cast by a minority shareholder or shareholders. The elimination of
cumulative voting ensures that all directors are elected or removed only by a
majority vote of shareholders voting in the election.
Last year, of the Corporation's shares that were voted, approximately
67 percent voted against a similar proposal presented by this proponent.
For these reasons, the PG&E Corporation Board of Directors unanimously
recommends that shareholders vote AGAINST this proposal.
22
<PAGE>
ITEM NO. 9: SHAREHOLDER PROPOSAL REGARDING COMPENSATION OF DIRECTORS IN STOCK
Mr. Chris Rossi, P.O. Box 249, Boonville, California 95415, holder of 1,000
shares of PG&E Corporation common stock, has given notice of his intention to
present the following proposal for action at the PG&E Corporation annual
meeting:
"Resolved, the stockholders request that the Board of Directors adopt
the following policy:
Beginning in the 2001 P.G.&E. Corporation fiscal year, total
compensation of all members of the Board of Directors shall be at least 50%
in common stock with a significant portion of each year's distribution to be
held and not sold until their term as a director is ended.
The directors enjoy a much greater impact on the conduct of the
Corporation's business than do the shareholders and their compensation
reflects that impact. However, there is no reason that they should not
receive their compensation in a manner that would bring them closer to the
shareholders, namely in common stock. In this manner, the value of their
compensation is directly related to the performance of the corporation.
Many corporations are compensating their directors with common stock
without any loss of good prospective directors. There is no reason why
P.G.&E. Corporation could not do the same.
In October 21, 1999 of the S.F. Chronicle, the stock quote listed in the
last 52 weeks had gone from $34 down to $22.19. Why should the Directors
continue to earn the same compensation as if nothing happened while the
shareholders suffer?
Vote to compensate the directors in P.G.&E. common stock"
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
PG&E Corporation agrees that a portion of its directors' compensation should
be composed of equity ownership in the Corporation. In December 1997, the Board
of Directors, upon recommendation of the Nominating and Compensation Committee,
approved amendments to PG&E Corporation's Long-Term Incentive Program to
increase the portion of director pay that is equity-based. The Board believes
these changes have further aligned the interests of directors with those of PG&E
Corporation's shareholders, and provide a total director compensation package
that is more competitive with that provided to directors of other energy and
industrial companies. As a result of these changes, approximately 40 percent of
total director pay is composed of stock-based compensation, an increase from
less than 20 percent based on total director pay in 1997, prior to this change
in policy. Please refer to the discussion of "Compensation of Directors" on
page [9?] for details concerning these changes.
However, the Corporation requires flexibility to set standards for director
compensation and encourage such stock ownership through a variety of programs
and incentives, and should not be limited to the strict standard set forth in
the proposal. PG&E Corporation must be able to design and implement director
compensation packages that can attract quality candidates. Requiring that a set
percentage of compensation paid to directors be in the form of stock could
discourage or prevent highly qualified individuals from serving on the Board in
the future.
For these reasons, the PG&E Corporation Board of Directors unanimously
recommends that shareholders vote AGAINST this proposal.
ITEM NO. 10: SHAREHOLDER PROPOSAL REGARDING SEVERANCE BENEFITS RECEIVED DURING
MERGERS OR ACQUISITIONS
Mr. Nick Rossi, P.O. Box 249, Boonville, California 95415, holder of 600
shares of PG&E Corporation common stock, has given notice of his intention to
present the following proposal for action at the PG&E Corporation annual
meeting:
"Resolved, the stockholders request that the Board of Directors amend
the company's governing instruments to adopt the following:
Any severance benefits based on change of control of the company to
directors, officers and (or) employees will be prohibited. The prohibition
would not apply to existing contracts.
It is the duty and responsibility of the Board of directors to oversee
the general order of business toward providing a service and producing a
profit.
23
<PAGE>
If, in the course of doing their duties the Corporation is merged with
another company, any severance benefits a director, officer or employee of
the Corporation would receive would be in the same form of compensation the
shareholders would receive, namely through stock dividends and increase in
the value of the stock.
Vote to restrict severance benefits due to a merger or acquisition."
THE BOARD OF DIRECTORS OF PG&E CORPORATION RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
The Board of Directors believes that, consistent with its duties to
shareholders, the Board must retain the flexibility to consider and adopt
appropriate mechanisms to deal with the uncertainty that a change in control
situation would create. The Officer Severance Policy provides certain severance
benefits if an executive officer covered by the policy is terminated without
cause following a change in control, as discussed in the Executive Compensation
section under "Termination of Employment and Change in Control Provisions."
The Board believes that reasonable provisions regarding severance benefits
due to a change in control help allow senior management to remain focused on
aggressively maximizing shareholder value during change in control situations,
and not be distracted by concerns about the perceived need to remain on good
terms with management of the acquiring entity. In addition, these types of
change in control provisions are often part of a total compensation package
offered to senior executives in most public companies. In order for PG&E
Corporation to maintain a competitive compensation package to attract and retain
the best qualified personnel, the Board believes that it needs the flexibility
to adopt these types of change in control arrangements in the future if the
Board determines it is appropriate and in the best interests of shareholders to
do so.
For these reasons, the PG&E Corporation Board of Directors unanimously
recommends that shareholders vote AGAINST this proposal.
24
<PAGE>
- - --------------------------------------------------------------------------------
Executive Compensation
NOMINATING AND COMPENSATION COMMITTEE REPORT ON COMPENSATION
PG&E Corporation is a national energy-based holding company, with businesses
that include a diverse group of U.S.-based power generating, gas pipeline, and
energy commodity trading and services businesses. PG&E Corporation also is the
parent company of Pacific Gas and Electric Company, the regulated utility that
delivers natural gas and electricity to one in every 20 Americans.
The Nominating and Compensation Committee of the PG&E Corporation Board of
Directors (the "Committee") is responsible for overseeing and establishing
executive compensation policies for PG&E Corporation and its subsidiaries,
including Pacific Gas and Electric Company. The Committee also oversees the PG&E
Corporation Long-Term Incentive Program and other employee benefit plans.
This report relates to the compensation paid to executive officers of PG&E
Corporation and Pacific Gas and Electric Company during the fiscal year ended
December 31, 1999. Compensation for the Chief Executive Officers of PG&E
Corporation and Pacific Gas and Electric Company is approved by their respective
Boards of Directors based on the recommendation of the Committee, which is
composed of independent non-employee directors. In establishing the 1999
compensation of the Chief Executive Officers of PG&E Corporation and Pacific Gas
and Electric Company, the respective Boards approved the recommendations of the
Committee without modification. Compensation for all other PG&E Corporation and
subsidiary officers is approved by the Committee, except that the Committee has
delegated to the PG&E Corporation Chief Executive Officer the authority to
approve compensation for certain officers of PG&E Corporation and its
subsidiaries.
The Committee established compensation programs for 1999 to meet four
objectives:
- To attract, retain, and motivate employees with the necessary mix of
skills and experience for the development of PG&E Corporation's
unregulated businesses, as well as the successful operation and expansion
of its utility business.
- To minimize short-term and long-term costs and reduce corporate exposure
to longer-term financial risk.
- To emphasize long-term incentives to further align shareholder and
officers' interests and focus employees on enhancing total return for the
Corporation's shareholders.
- To achieve maximum value from PG&E Corporation's collective workforce by
designing compensation programs that facilitate movement by employees
among the Corporation and its subsidiaries.
The Committee retains an independent consultant, Hewitt Associates, to help
evaluate PG&E Corporation's compensation policies, to provide information about
industry compensation practices and competitive pay levels, and to recommend
compensation alternatives which are consistent with PG&E Corporation's
compensation policies. Founded in 1940, Hewitt Associates is an international
firm of consultants and actuaries specializing in the design and administration
of employee compensation and benefit programs.
To meet its objective of paying compensation that is competitive with
similar companies in 1999, the Committee selected a group consisting of 26 major
energy and general industry companies (the "comparator group"). These companies
were selected by the Committee because they are comparable to PG&E Corporation
in size and because their approach to compensation emphasizes long-term
incentives. Twenty-three of the 26 energy and general industry companies in the
comparator group are included in the Standard & Poor's 500 Stock Index.
For 1999, the Committee established the following specific compensation
targets for officers:
- A significant component of every officer's compensation should be tied
directly to PG&E Corporation's performance for shareholders.
- Annual cash compensation (base salary and target annual incentive) and
benefits should be equal to the average compensation paid to comparable
officers of companies in the comparator group.
- Long-term incentives should be equal to the average compensation paid to
comparable officers of companies in the comparator group, but provide the
opportunity to pay out at the 75th percentile and higher for superior
corporate performance.
25
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Finally, in evaluating compensation program alternatives, the Committee
considers the potential impact on PG&E Corporation of Section 162(m) of the
Internal Revenue Code. Section 162(m) eliminates the deductibility of
compensation over $1 million paid to the five highest paid executive officers of
public corporations, excluding "performance-based compensation." Compensation
programs will qualify as performance-based if (1) the performance targets are
pre-established objective standards, (2) the programs have been approved by
shareholders, and (3) there is no discretion to modify or alter payments after
the performance targets have been established for the year.
The Committee believes that compensation paid under two of PG&E
Corporation's three performance-based plans is deductible under Section 162(m).
A substantial portion of the compensation paid to the executive officers of PG&E
Corporation and Pacific Gas and Electric Company is paid under these qualifying
performance-based plans. Although short-term compensation paid under PG&E
Corporation's third performance-based plan will not be excluded from the
deduction limit under Section 162(m), payments under this plan are conditioned
primarily on the achievement of pre-established corporate financial objectives.
To the extent consistent with the Committee's overall policy of maintaining
a competitive, performance-based compensation program, it is PG&E Corporation's
intent to maintain the tax deductibility of the compensation which it pays.
However, due to the restrictive nature of Section 162(m), technical compliance
with its requirements can reduce or eliminate the value of using certain types
of plans designed to provide incentives to increase shareholder value. As a
result, although the Committee, in designing and maintaining a competitive
incentive compensation program, will qualify as much of the compensation for
deduction under Section 162(m) as is reasonably possible, such qualification is
not a mandatory precondition to payments where technical compliance is
inconsistent with the Committee's objective of incenting performance which
results in increased shareholder value. It is anticipated that the amount of any
tax deduction that may be forgone due to the impact of the
Section 162(m) limit will be insignificant.
PRINCIPAL COMPONENTS OF COMPENSATION
BASE SALARY
PG&E CORPORATION BASE SALARY
PG&E Corporation's executive salaries are reviewed annually by the Committee
based on (1) the results achieved by each individual, (2) expected corporate
financial performance, measured by combined earnings per share, dividends, and
stock price performance, and (3) changes in the average salaries paid to
comparable executives by companies in the comparator group.
In setting the 1999 salary levels for PG&E Corporation's executive officers,
the Committee's objective was that the overall average of the salaries paid to
all officers as a group (including the Chief Executive Officer) should be
approximately equal to the target competitive level.
Robert D. Glynn, Jr., Chief Executive Officer of PG&E Corporation, received
an annual base salary of $800,000 in 1999. The salary level for Mr. Glynn is
below the average salary of chief executive officers of the 26 companies in the
comparator group. The overall average of the base salaries received by all PG&E
Corporation officers (including Mr. Glynn) for 1999 was comparable to the
average salary paid to all officers of the comparator group.
PACIFIC GAS AND ELECTRIC COMPANY BASE SALARY
Pacific Gas and Electric Company's executive salaries are reviewed annually
by the Committee based on (1) the results achieved by each individual,
(2) expected corporate financial performance, measured by combined earnings per
share, dividends, and stock price performance, and (3) changes in the average
salaries paid to comparable executives by companies in the comparator group.
In setting the 1999 salary levels for Pacific Gas and Electric Company's
executive officers, the Committee's objective was that the overall average of
the salaries paid to all officers as a group (including the Chief Executive
Officer) should be approximately equal to the target competitive level.
Gordon R. Smith, Chief Executive Officer of Pacific Gas and Electric
Company, received an annual base salary of $550,000 in 1999. The salary level
for Mr. Smith is comparable to the average salary of senior executives in
comparable positions in the 26 companies in the comparator group. The overall
average of the base salaries received by all Pacific Gas and Electric Company
officers (including Mr. Smith) for 1999 was comparable to the average salary
paid to all officers of the comparator group.
26
<PAGE>
SHORT-TERM INCENTIVES
PG&E CORPORATION ANNUAL INCENTIVE
The PG&E Corporation Short-Term Incentive Plan for 1999 was designed to
provide annual incentives to all executive officers based largely on PG&E
Corporation's success in meeting the 1999 corporate earnings per share
objective. To determine whether the earnings per share objective is met, the
Corporation's actual earnings per share is adjusted to eliminate the effect of
extraordinary gains or losses, emphasizing the impact of ongoing results of
operations.
At the beginning of the year, target awards are set based on each
executive's responsibilities and salary level. Final awards are determined by
the Committee and may range from zero to twice the target, depending on the
extent to which the earnings per share objective is achieved. The Committee has
discretion to modify or eliminate awards.
In 1999, PG&E Corporation achieved actual earnings per share of $ . .
For purposes of the Short-Term Incentive Plan, this number was adjusted to
eliminate the effect of extraordinary events not normally considered a part of
ongoing operations. Therefore, the majority of PG&E Corporation executive
officers received Short-Term Incentive Plan awards equal to percent of their
target awards.
PACIFIC GAS AND ELECTRIC COMPANY ANNUAL INCENTIVE
The Pacific Gas and Electric Company Short-Term Incentive Plan for 1999 was
designed to provide annual incentives to all executive officers based on meeting
financial, service, and other measures of the Company, as well as those of
specific business units and departments.
At the beginning of the year, target awards are set based on each
executive's responsibilities and salary level. Final awards are determined by
the Committee and may range from zero to twice the target, depending on the
extent to which the stated objectives are achieved. The Committee has discretion
to modify or eliminate awards.
In 1999, Pacific Gas and Electric Company executives received Short-Term
Incentive Plan awards ranging from percent to percent of their target
awards.
STOCK OPTIONS IN LIEU OF SHORT-TERM INCENTIVE PLAN AWARDS
In 1998, to further increase the officers' ability to align their individual
economic interests with those of the Corporation and its shareholders, the
Committee adopted a program whereby eligible officers could elect to convert up
to 50 percent of the award they otherwise would be entitled to receive under
their respective Short-Term Incentive Plan, and instead, receive stock options
under the PG&E Corporation Stock Option Plan described below.
LONG-TERM INCENTIVES
PG&E CORPORATION LONG-TERM INCENTIVE PROGRAM. The PG&E Corporation
Long-Term Incentive Program permits various stock-based incentive awards to be
granted to executive officers and other employees of the Corporation and its
subsidiaries. The Stock Option Plan and the Performance Unit Plan (each of which
is a component of the Long-Term Incentive Program) provide incentives based on
PG&E Corporation's financial performance over time.
PG&E CORPORATION STOCK OPTION PLAN. The Stock Option Plan provides
incentives based on PG&E Corporation's ability to sustain financial performance
over a 3- to 10-year period. Under the Plan, officers, managers, and other key
employees of PG&E Corporation and its subsidiaries receive stock options based
on their responsibilities and position. These options allow them to purchase a
certain number of shares of PG&E Corporation common stock at the market price on
the date of grant (typically the first business day of each year). Generally,
optionees must hold the options for at least two full years and exercise them
within 10 years. Options granted in lieu of Short-Term Incentive Plan awards, as
discussed above, will be vested immediately, although the options may not be
exercised for at least one year after the date of grant. PG&E Corporation does
not reprice or change the terms of options once they have been granted.
At the Committee's discretion, stock options may be granted with tandem
"stock appreciation rights" which have vesting periods and exercise guidelines
that are similar to the options. These rights allow option-holders to
27
<PAGE>
surrender their options when they have vested and receive a cash payment equal
to the difference between the exercise price and the current market price. No
stock appreciation rights have been granted since 1991.
Stock options also may be granted with or without tandem "dividend
equivalents" which provide for credits to be made to a dividend equivalent
account equal to the current common stock dividend multiplied by the recipient's
unexercised options. For options granted with dividend equivalents,
option-holders are entitled to receive the amounts accumulated in their dividend
equivalent account only when, and to the extent that, the underlying options or
stock appreciation rights are exercised. If a stock appreciation right is
exercised, the option-holder receives the associated dividend equivalent only if
the stock price has appreciated by at least 5 percent per year from the date of
grant or by at least 25 percent if the options have been held for more than five
years. In June 1997, the Committee adopted the policy that future stock option
grants will not include dividend equivalents, and no such grants with dividend
equivalents have been made since that time.
The size of the stock option grant for each executive officer of PG&E
Corporation and Pacific Gas and Electric Company in 1999 was determined by the
Committee based on the Committee's objectives of paying target total
compensation at the average total compensation of the companies in the
comparator group, and of tying a substantial component of target total
compensation directly to financial performance for shareholders. In making stock
option grants, the size of each executive officer's stock option grant was
determined primarily based on the compensation objectives described above.
PG&E CORPORATION PERFORMANCE UNIT PLAN. The Performance Unit Plan provides
incentives based on PG&E Corporation's ability to sustain superior total returns
for shareholders (dividends plus stock price appreciation) over a three-year
period. Under the Plan, officers of PG&E Corporation and its subsidiaries
receive performance units reflecting their level of responsibility. One-third of
the units vest each year. At the end of each year, the number of vested
performance units is increased or decreased based on PG&E Corporation's
three-year total return for shareholders (dividends plus stock price
appreciation) as compared with that of the 49 other largest energy-based
companies in the nation. Each officer receives an incentive payment equal to the
final number of vested units multiplied by the average market price of PG&E
Corporation common stock during the 30 calendar day period prior to the end of
the year.
In determining Performance Unit Plan results for a given year, PG&E
Corporation's corporate performance in the current year is weighted at
60 percent, the performance in the prior year at 25 percent, and the performance
in the year before that at 15 percent. Each time a cash dividend is declared on
PG&E Corporation common stock, an amount equal to the cash dividend per share
multiplied by the number of units held by a recipient will be accrued on behalf
of the recipient and, at the end of the year, the amount of accrued dividend
equivalents will be increased or decreased by the same percentage used to
increase or decrease the recipient's number of vested performance units for the
year.
For the three years ended December 31, 1999, PG&E Corporation's total
shareholder return had a weighted average ranking of 35th among the 50 largest
energy-based companies in the nation. Based on this ranking, officers received
awards that were based on 40 percent of the number of vested units.
EXECUTIVE STOCK OWNERSHIP PROGRAM. Effective January 1, 1998, the Committee
adopted the Executive Stock Ownership Program which contains certain stock
ownership targets for executives to be achieved within five years after becoming
an executive officer. The targets are set as a multiple of the executive's base
salary and vary according to the executive's level of responsibility within the
Corporation. The executive stock ownership targets are as follows: three times
base salary for the Chief Executive Officer of PG&E Corporation; two times base
salary for heads of the Corporation's lines of business, and the Chief Financial
Officer and the General Counsel of PG&E Corporation; and one and one-half times
base salary for the Senior Vice Presidents of PG&E Corporation. To the extent an
executive officer achieves and maintains the stock ownership targets within the
first three years of becoming an executive officer, the executive officer will
be entitled to receive additional common stock equivalents (called Special
Incentive Stock Ownership Premiums or SISOPs) to be credited to the deferred
compensation portion of his or her Supplemental Retirement Savings Plan account
balance. The additional common stock equivalents vest three years after the date
of grant, subject to accelerated vesting in accordance with the Officer
Severance Policy and upon a change in control of the Corporation. The additional
common stock equivalents are subject to forfeiture if the executive fails to
maintain the applicable stock ownership target.
28
<PAGE>
BENEFITS
Benefit plans are designed to meet the individual needs of PG&E Corporation
and its subsidiaries and to permit portability of benefits among the Corporation
and its subsidiaries. Tax-deferred savings arrangements provide employees with
an opportunity to supplement their retirement income through employee and
matching contributions by PG&E Corporation or one of its subsidiaries. PG&E
Corporation also provides excess retirement benefits for its executive officers
based on salary and incentive compensation.
The defined contribution benefit plans of PG&E Corporation and its
subsidiaries permit participants in those plans to direct the investment of
their contributions into PG&E Corporation common stock, providing another
opportunity for executive officers to increase their proprietary interest in
PG&E Corporation. The PG&E Corporation Supplemental Retirement Savings Plan also
permits the executives who participate in the plan to direct that the return on
their deferred compensation be tied directly to the performance of PG&E
Corporation common stock.
SUMMARY
We, the members of the Nominating and Compensation Committee of the Board of
Directors of PG&E Corporation, believe that the compensation programs of PG&E
Corporation and Pacific Gas and Electric Company are successful in attracting
and retaining qualified employees and in tying compensation directly to
performance for shareholders and service to customers. We will continue to
monitor closely the effectiveness and appropriateness of each of the components
of compensation to reflect changes in the business environment of PG&E
Corporation and Pacific Gas and Electric Company.
March 13, 2000
NOMINATING AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF PG&E
CORPORATION
Carl E. Reichardt, Chair
David A. Coulter
C. Lee Cox
David M. Lawrence, MD
John C. Sawhill
29
<PAGE>
SUMMARY COMPENSATION TABLE
[THIS TABLE SUMMARIZES THE PRINCIPAL COMPONENTS OF COMPENSATION PAID TO THE
CHIEF EXECUTIVE OFFICERS AND THE OTHER MOST HIGHLY COMPENSATED EXECUTIVE
OFFICERS OF PG&E CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY DURING THE
PAST YEAR.]
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- -------------------------
AWARDS PAYOUTS
(A) (B) (C) (D) (E) (F) (G) (H)
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
COMPEN- OPTIONS/ LTIP COMPEN-
SALARY BONUS SATION SARS (# OF PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) SHARES) ($)(3) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Glynn, Jr., 1999 $800,000 $XXX,XXX $XX,XXX 300,000 $XXX,XXX $XX,XXX
Chairman of the Board, Chief Executive 1998 700,000 931,350 42,180 235,000 452,858 32,280
Officer, and
President of PG&E Corporation; Chairman 1997 533,334 217,074 39,525 268,000 408,796 24,780
of the
Board of Pacific Gas and Electric
Company
1999
1998
1997
1999
1998
1997
1999
1998
1997
1999
1998
1997
Gordon R. Smith, 1999 $550,000 $XXX,XXX $XX,XXX 122,500 $XXX,XXX $XX,XXX
Senior Vice President of PG&E 1998 425,000 410,338 16,328 126,400 173,662 19,735
Corporation; President
and Chief Executive Officer of Pacific 1997 327,917 102,743 12,718 133,500 145,644 15,366
Gas and Electric Company
1999
1998
1997
1999
1998
1997
1999
1998
1997
1999
1998
1997
</TABLE>
30
<PAGE>
SUMMARY COMPENSATION TABLE
CONTINUED
(1) Represents payments received or deferred from 1998 through 2000 for
achievement of corporate and organizational objectives from 1997 through
1999, under the Short-Term Incentive Plan.
(2) Amounts reported consist of (i) reportable officer benefit allowances,
(ii) payments of related taxes, and (iii) dividend equivalent payments on
performance units under the Performance Unit Plan.
(3) Represents payments received or deferred in 2000, 1999, and 1998 for
achievement of corporate performance objectives for the periods 1997 through
1999, 1996 through 1998, and 1995 through 1997, respectively, under the
Performance Unit Plan.
(4) Amounts reported for 1999 consist of: (i) contributions to defined
contribution retirement plans (Mr. Glynn $XX,XXX, Mr. $XX,XXX,
Mr. $XX,XXX, Mr. $XX,XXX, Mr. $XX,XXX,
Mr. Smith $XX,XXX, Mr. $XX,XXX, Mr. $XX,XXX,
Mr. $XX,XXX, and Mr. $XX,XXX), (ii) premiums on
indemnity policies to secure the payment of benefits under the Supplemental
Executive Retirement Plan and the Deferred Compensation Plan (Mr. Glynn
$XXX, Mr. Smith $XXX, and Mr. $XXX), (iii) contributions
received or deferred under excess benefit arrangements associated with
defined contribution retirement plans (Mr. Glynn $XX,XXX, Mr.
$XX,XXX, Mr. $XX,XXX, Mr. Smith $XX,XXX, Mr.
$XX,XXX, Mr. $XX,XXX, Mr. $XX,XXX, and
Mr. $XX,XXX), and (iv) one-time payments, including
($X.X million) and relocation allowances (Mr. $XXX,XXX).
31
<PAGE>
OPTION/SAR GRANTS IN 1999
[THIS TABLE SUMMARIZES THE DISTRIBUTION AND THE TERMS AND CONDITIONS OF STOCK
OPTIONS GRANTED TO THE EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION
TABLE DURING THE PAST YEAR.]
<TABLE>
<CAPTION>
GRANT
DATE
INDIVIDUAL GRANTS VALUE
- - -------------------------------------------------------------------------------------------------- ------------
(A) (B) (C) (D) (E) (F)
% OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS EXERCISE OR GRANT DATE
UNDERLYING OPTIONS/SARS GRANTED TO BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1)(2) EMPLOYEES IN 1999(2) ($/SH)(3) DATE(4) VALUE ($)(5)
<S> <C> <C> <C> <C> <C>
Robert D. Glynn, Jr. 300,000 4.26% $30.9375 01-05-2009 $1,257,000
Gordon R. Smith 122,500 1.74% $30.9375 01-05-2009 $ 513,275
</TABLE>
(1) All options granted to executive officers in 1999 are exercisable as
follows: one-third of the options may be exercised on or after the second
anniversary of the date of grant, two-thirds on or after the third
anniversary, and 100 percent on or after the fourth anniversary, provided
that options will vest immediately upon the occurrence of certain events. No
options were accompanied by tandem dividend equivalents.
(2) No stock appreciation rights (SARs) have been granted since 1991.
(3) The exercise price is equal to the closing price of PG&E Corporation common
stock on the date of grant.
(4) All options granted to executive officers in 1999 expire 10 years and one
day from the date of grant, subject to earlier expiration in the event of
the officer's termination of employment with PG&E Corporation, Pacific Gas
and Electric Company, or one of their respective subsidiaries.
(5) Estimated present values are based on the Black-Scholes Model, a
mathematical formula used to value options traded on stock exchanges. The
Black-Scholes Model considers a number of factors, including the expected
volatility and dividend rate of the stock, interest rates, and time of
exercise of the option. The following assumptions were used in applying the
Black-Scholes Model to the 1999 option grants shown in the table above:
volatility of 16.79%, risk-free rate of return of 4.64%, dividend yield of
$1.20 (the annual dividend rate on the grant date), and an exercise date
five years after the date of grant. The ultimate value of the options will
depend on the future market price of PG&E Corporation common stock, which
cannot be forecast with reasonable accuracy. That value will depend on the
future success achieved by employees for the benefit of all shareholders.
The estimated grant date present value for the options shown in the table
was $4.19 per share.
32
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND YEAR-END OPTION/SAR VALUES
[THIS TABLE SUMMARIZES EXERCISES OF STOCK OPTIONS AND TANDEM STOCK APPRECIATION
RIGHTS (GRANTED IN PRIOR YEARS) BY THE EXECUTIVE OFFICERS NAMED IN THE SUMMARY
COMPENSATION TABLE DURING THE PAST YEAR, AS WELL AS THE NUMBER AND VALUE OF ALL
UNEXERCISED OPTIONS HELD BY SUCH NAMED EXECUTIVE OFFICERS AT THE END OF 1999.]
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED END OF 1999 (#) END OF 1999 ($)(1)
ON EXERCISE VALUE REALIZED (EXERCISABLE/ (EXERCISABLE/
NAME (#) ($) UNEXERCISABLE) UNEXERCISABLE)
<S> <C> <C> <C> <C> <C> <C>
Robert D. Glynn, Jr. 0 $0 153,834/ 852,990 $ 0/ $0
Gordon R. Smith 0 0 85,169/ 345,731 0/ 0
</TABLE>
(1) Based on the difference between the option exercise price (without reduction
for the amount of accrued dividend equivalents, if any) and a fair market
value of $20.50, which was the closing price of PG&E Corporation common
stock on December 31, 1999.
33
<PAGE>
LONG-TERM INCENTIVE PROGRAM--AWARDS IN 1999
[THIS TABLE SUMMARIZES THE LONG-TERM INCENTIVE AWARDS MADE TO THE EXECUTIVE
OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE DURING THE PAST YEAR.]
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
AWARDS NON-STOCK PRICE-BASED PLANS
-------------------------------------------- -----------------------------------------
(A) (B) (C) (D) (E) (F)
PERFORMANCE OR
OTHER PERIOD
NUMBER OF SHARES, UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS, OR OTHER RIGHTS(1) OR PAYOUT ($ OR #)(2) ($ OR #)(2) ($ OR #)(2)
<S> <C> <C> <C> <C> <C>
Robert D. Glynn, Jr. 20,000 3 years 0 units 20,000 units 40,000 units
Gordon R. Smith 10,800 3 years 0 units 10,800 units 21,600 units
</TABLE>
(1) Represents performance units granted under the Performance Unit Plan. The
units vest one-third in each of the three years following the grant year,
and are earned over the vesting period based on PG&E Corporation's
three-year total annual shareholder return (dividends plus stock price
appreciation) as compared with that achieved by the 49 other largest
domestic energy utilities. This performance target may be adjusted during
the vesting period, at the sole discretion of the Nominating and
Compensation Committee, to reflect extraordinary events beyond management's
control. In determining PG&E Corporation's total annual shareholder return
relative to the 49 other utilities, third-year performance is weighted at
60 percent, second-year performance at 25 percent, and first-year
performance at 15 percent. Each time a cash dividend is declared on PG&E
Corporation common stock, an amount equal to the cash dividend per share
multiplied by the number of units held by a recipient will be accrued on
behalf of the recipient and, at the end of the year, the amount of accrued
dividend equivalents will be increased or decreased by the same percentage
used to increase or decrease the recipient's number of vested performance
units for the year.
(2) Payments are determined by multiplying the number of units earned in a given
year by the average market price of PG&E Corporation common stock for the
last 30 calendar day period of the year.
RETIREMENT BENEFITS
PG&E Corporation and Pacific Gas and Electric Company provide retirement
benefits to some of the executive officers named in the Summary Compensation
Table on page . During 1999, the benefit formula for eligible executive
officers was 1.6 percent of the average of the three highest combined salary and
annual incentive awards during the last 10 years of service multiplied by years
of credited service. Effective January 1, 2000, the multiplier was increased
from 1.6 percent to 1.7 percent. As of December 31, 1999, the estimated annual
retirement benefits for the most highly compensated executive officers, assuming
credited service to age 65, are as follows: Mr. Glynn $XXX,XXX, Mr. Smith
$XXX,XXX, Mr. $XXX,XXX, Mr. $XXX,XXX,
Mr. $XXX,XXX, Mr. $XXX,XXX, and
Mr. $XXX,XXX. The amounts shown are single life annuity benefits and
would not be subject to any Social Security offsets.
34
<PAGE>
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL PROVISIONS
The PG&E Corporation Officer Severance Policy, which covers most officers of
PG&E Corporation and its subsidiaries, including the executive officers named in
the Summary Compensation Table, provides benefits if a covered officer is
terminated without cause. In most situations, benefits under the policy include
(i) a lump sum payment of one and one-half or two times annual base salary and
target Short-Term Incentive Plan award (the applicable severance multiple being
dependent on an officer's level), (ii) continued vesting of equity-based awards
for 18 months or two years after termination (depending on the applicable
severance multiple), (iii) accelerated vesting of up to two-thirds of the common
stock equivalents awarded under the Executive Stock Ownership Program (depending
on an officer's level), and (iv) payment of health care insurance premiums for
18 months or two years after termination (depending on the applicable severance
multiple). In lieu of all or a portion of the lump sum payment, a terminated
officer who is covered by PG&E Corporation's Supplemental Executive Retirement
Plan can elect additional years of service and/or age for purposes of
calculating pension benefits. Effective July 21, 1999, the policy was amended to
provide covered officers with alternative benefits that apply upon actual or
constructive termination following a change in control or potential change in
control. According to the policy, a "change in control" occurs upon (i) the
acquisition of 20 percent or more of the Corporation's outstanding voting
securities by a single entity or person, (ii) a change in the directors who
constitute a majority of the Board of Directors over a two-year period, unless
the new directors were nominated by at least two-thirds of the Board of
Directors who were directors at the beginning of the two-year period, or
(iii) shareholder approval of certain corporate transactions. Constructive
termination includes certain changes to a covered officer's responsibilities. In
the event of a change in control or potential change in control, the policy
provides for a lump payment of the sum of (i) unpaid base salary earned through
the termination date, (ii) target Short-Term Incentive Plan award calculated for
the fiscal year in which termination occurs ("Target Bonus"), (iii) any accrued
but unpaid vacation pay, and (iv) three times the sum of Target Bonus and the
officer's annual base salary in effect immediately before either the date of
termination or the change in control, whichever base salary is greater. Change
in control termination benefits also include reimbursement of excise taxes
levied upon the severance benefit pursuant to Internal Revenue Code
Section 4999.
The Long-Term Incentive Program (LTIP) permits the grant of various types of
stock-based incentive awards, including awards granted under the Stock Option
Plan, the Performance Unit Plan, and the Non-Employee Director Stock Incentive
Plan, and stock-based incentive awards granted under the LTIP. The LTIP and the
component plans provide that, upon the occurrence of a change in control,
(1) any time periods relating to the exercise or realization of any incentive
award (including common stock equivalents awarded under the Executive Stock
Ownership Program) will be accelerated so that such award may be exercised or
realized in full immediately upon the change in control, (2) all shares of
restricted stock will immediately cease to be forfeitable, and (3) all
conditions relating to the realization of any stock-based award will terminate
immediately. Under the LTIP, a "change in control" will be deemed to have
occurred if any of the following occurs: (1) any "person" (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, but
excluding any benefit plan for employees or any trustee, agent, or other
fiduciary for any such plan acting in such person's capacity as such fiduciary),
directly or indirectly, becomes the beneficial owner of securities of PG&E
Corporation representing 20 percent or more of the combined voting power of PG&E
Corporation's then outstanding securities, (2) during any two consecutive years,
individuals who at the beginning of such a period constitute the Board of
Directors cease for any reason to constitute at least a majority of the Board of
Directors, unless the election, or the nomination for election by the
shareholders of the Corporation, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of the period, or (3) the shareholders of the Corporation shall
have approved (i) any consolidation or merger of the Corporation other than a
merger or consolidation that would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent of such surviving entity) at least
70 percent of the combined voting power of the Corporation, such surviving
entity, or the parent of such surviving entity outstanding immediately after the
merger or consolidation, (ii) any sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all or substantially all
of the assets of the Corporation, or (iii) any plan or proposal for the
liquidation or dissolution of the Corporation. For purposes of this definition,
the term "combined voting power" means the combined voting power of the then
outstanding voting securities of the Corporation or the other relevant entity.
35
<PAGE>
COMPARISON OF THREE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN(1)
[THIS GRAPH COMPARES THE CUMULATIVE TOTAL RETURN ON PG&E CORPORATION COMMON
STOCK (EQUAL TO DIVIDENDS PLUS STOCK PRICE APPRECIATION) DURING THE PAST THREE
FISCAL YEARS, SINCE PG&E CORPORATION WAS FORMED, WITH THAT OF THE STANDARD &
POOR'S 500 STOCK INDEX AND THE DOW JONES UTILITIES INDEX.]
[GRAPH]
(1) Assumes $100 invested on December 31, 1996, in Pacific Gas and Electric
Company common stock, the Standard & Poor's 500 Stock Index, and the Dow
Jones Utilities Index, and assumes quarterly reinvestment of dividends. The
total shareholder returns shown are not necessarily indicative of future
returns. PG&E Corporation was formed on January 1, 1997, and, on that date,
all outstanding shares of Pacific Gas and Electric Company common stock were
converted on a one-for-one basis to shares of PG&E Corporation common stock.
36
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN(1)
[THIS GRAPH COMPARES THE CUMULATIVE TOTAL RETURN ON PG&E CORPORATION COMMON
STOCK (EQUAL TO DIVIDENDS PLUS STOCK PRICE APPRECIATION) DURING THE PAST FIVE
FISCAL YEARS WITH THAT OF THE STANDARD & POOR'S 500 STOCK INDEX AND THE DOW
JONES UTILITIES INDEX.]
[GRAPH]
(1) Assumes $100 invested on December 31, 1996, in Pacific Gas and Electric
Company common stock, the Standard & Poor's 500 Stock Index, and the Dow
Jones Utilities Index, and assumes quarterly reinvestment of dividends. The
total shareholder returns shown are not necessarily indicative of future
returns. PG&E Corporation was formed on January 1, 1997, and, on that date,
all outstanding shares of Pacific Gas and Electric Company common stock were
converted on a one-for-one basis to shares of PG&E Corporation common stock.
37
<PAGE>
- - --------------------------------------------------------------------------------
Other Information
PRINCIPAL SHAREHOLDERS
The following table presents certain information regarding shareholders who
are known to PG&E Corporation or Pacific Gas and Electric Company to be the
beneficial owners of more than 5 percent of any class of voting securities of
PG&E Corporation or Pacific Gas and Electric Company as of January 31, 2000:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
CLASS OF STOCK BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C> <C>
Pacific Gas and PG&E Corporation(1) 326,926,667 100.00%
Electric Company One Market, Spear Tower, Suite 2400
common stock San Francisco, CA 94105
PG&E Corporation State Street Bank and 27,736,370 7.68%
common stock Trust Company(2)
225 Franklin Street
Boston, MA 02110
PG&E Corporation Sanford C. Bernstein & Co., Inc.(3) 18,300,743 5.07%
common stock 767 Fifth Avenue
New York, NY 10153
</TABLE>
(1) As a result of the formation of the holding company on January 1, 1997, PG&E
Corporation became the holder of all issued and outstanding shares of
Pacific Gas and Electric Company common stock. As of January 31, 2000, PG&E
Corporation and a subsidiary hold 100% of the issued and outstanding shares
of Pacific Gas and Electric Company common stock.
(2) The information relating to State Street Bank and Trust Company is based on
beneficial ownership as of December 31, 1999, as reported in a
Schedule 13G, dated February 9, 2000, filed with the Securities and Exchange
Commission. The bank holds 21,184,854 shares in its capacity as Trustee of
the Pacific Gas and Electric Company Saving Fund Plan. The Trustee may not
vote these shares in the absence of voting instructions from the Plan
participants. The bank also holds 6,551,516 shares of PG&E Corporation
common stock in various other fiduciary capacities. The bank has sole voting
power with respect to 5,977,799 of these shares, shared voting power with
respect to 12,747 of these shares, sole investment power with respect to
6,534,151 of these shares, and shared investment power with respect to
17,365 of these shares.
(3) The information relating to Sanford C. Bernstein & Co., Inc. is based on
beneficial ownership as of December 31, 1999, as reported in a
Schedule 13G, dated February 9, 2000, filed with the Securities and Exchange
Commission. Sanford C. Bernstein & Co. Inc. has sole voting power with
respect to 10,028,234 of these shares, shared voting power with respect to
1,614,133 of these shares, and sole investment power with respect to all
18,300,743 of these shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
In accordance with Section 16(a) of the Securities Exchange Act of 1934 and
Securities and Exchange Commission regulations, PG&E Corporation's and Pacific
Gas and Electric Company's respective directors, certain officers, and persons
who own greater than 10 percent of PG&E Corporation's or Pacific Gas and
Electric Company's equity securities are required to file reports of ownership
and changes in ownership of such equity securities with the Securities and
Exchange Commission and the principal national securities exchange on which such
equity securities are registered, and to furnish PG&E Corporation or Pacific Gas
and Electric Company (as the case may be) with copies of all such reports they
file.
Based solely on its review of copies of such reports received or written
representations from certain reporting persons, PG&E Corporation and Pacific Gas
and Electric Company believe that during 1999 all filing requirements applicable
to their directors, officers, and 10 percent shareholders were satisfied, except
as follows: a late Form 4 was filed for Thomas B. King regarding a purchase of
shares in October 1999.
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ANNUAL REPORT
PG&E Corporation's and Pacific Gas and Electric Company's joint 1999 annual
report to shareholders, including financial statements, accompanies this Joint
Proxy Statement.
VOTING ON THE INTERNET OR BY TELEPHONE
For your convenience, you may have the option of executing and submitting
your proxy and voting instructions over the Internet or by telephone. The
Internet and telephone voting procedures which have been made available by PG&E
Corporation and Pacific Gas and Electric Company are designed to authenticate
shareholders' identities, to allow shareholders to submit their proxies and
voting instructions, and to confirm that shareholders' instructions have been
recorded properly. Your proxy and voting instructions will be recorded as if you
submitted your proxy and voting instructions by mail. PG&E Corporation and
Pacific Gas and Electric Company have been advised by counsel that these
Internet and telephone voting procedures are consistent with the requirements of
California law.
Please note that there are separate Internet and telephone voting
arrangements depending upon whether (1) your shares are registered in your name
directly with PG&E Corporation and/or Pacific Gas and Electric Company
(including shares held by participants in the PG&E Corporation Dividend
Reinvestment Plan), or you are a participant who holds PG&E Corporation stock in
any of the defined contribution retirement plans maintained by PG&E Corporation
or any of its subsidiaries, or (2) your shares are held in an account at a
brokerage firm or bank.
FOR SHARES REGISTERED IN THE NAME OF A SHAREHOLDER DIRECTLY WITH
PG&E CORPORATION AND/OR PACIFIC GAS AND ELECTRIC COMPANY
(INCLUDING SHARES HELD IN THE PG&E CORPORATION DIVIDEND
REINVESTMENT PLAN), AND FOR PARTICIPANTS WHO HOLD PG&E CORPORATION
STOCK IN ANY OF THE DEFINED CONTRIBUTION RETIREMENT PLANS
MAINTAINED BY PG&E CORPORATION OR ANY OF ITS SUBSIDIARIES:
Holders of such shares may submit their proxies and voting
instructions anytime, 24 hours a day, 7 days a week, over the
Internet at the following address on the World Wide Web:
http://www.eproxy.com/pcg/
or by using a touch-tone telephone and calling the following
toll-free number from anywhere in the United States or Canada:
1-800-840-1208
FOR SHARES HELD IN AN ACCOUNT AT A BROKERAGE FIRM OR BANK:
A number of brokerage firms and banks are participating in a
program provided through ADP Investor Communication Services that
offers Internet and telephone voting options. (This program is
different from the program described above for shares registered
in the name of a shareholder directly with PG&E Corporation and/or
Pacific Gas and Electric Company or for participants who hold PG&E
Corporation stock in any of the defined contribution retirement
plans maintained by PG&E Corporation or any of its subsidiaries.)
For shares held in an account at a participating brokerage firm or
bank, shareholders may submit their voting instructions anytime,
24 hours a day, 7 days a week, over the Internet at the following
address on the World Wide Web:
http://www.proxyvote.com
or by using a touch-tone telephone and calling, from anywhere in
the United States, the toll-free telephone number shown on the
voting instruction form.
Shareholders submitting proxies or voting instructions over the Internet
should understand that there may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone companies,
that must be borne by the shareholder. There are no charges to shareholders who
use the telephone voting procedures.
Proxies submitted over the Internet or by telephone must be received by
4:00 p.m., Eastern time, on Tuesday, April 18, 2000. SHAREHOLDERS SUBMITTING
PROXIES AND VOTING INSTRUCTIONS OVER THE INTERNET OR BY TELEPHONE SHOULD NOT
MAIL THE PROXY VOTING INSTRUCTION FORM.
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METHOD AND COST OF SOLICITING PROXIES
PG&E Corporation and Pacific Gas and Electric Company intend to solicit
proxies principally by mail. Proxies also may be solicited by personal contact,
telephone, or other means by officers and other employees of PG&E Corporation or
Pacific Gas and Electric Company. PG&E Corporation and Pacific Gas and Electric
Company have retained D. F. King & Co., Inc. to assist in the solicitation of
proxies at an estimated fee of $11,500 plus reimbursement of reasonable
expenses. In addition, brokers, banks, and other fiduciaries and nominees will
be reimbursed for the reasonable expenses of forwarding the Joint Proxy
Statement and other proxy materials to beneficial owners of PG&E Corporation and
Pacific Gas and Electric Company stock. The entire cost of soliciting proxies
will be paid by PG&E Corporation and Pacific Gas and Electric Company.
PG&E Corporation and Pacific Gas and Electric Company also have retained
ChaseMellon Shareholder Services, L.L.C., to act as the independent tabulator of
proxies and as the independent inspector of election at the annual meetings.
PROPOSALS BY SHAREHOLDERS - 2001
Any proposal by a shareholder to be submitted for possible inclusion in
proxy soliciting materials for the annual meetings of shareholders of PG&E
Corporation and Pacific Gas and Electric Company (as may be applicable depending
on whether the matter relates to PG&E Corporation or Pacific Gas and Electric
Company, or both) to be held in 2001 must be received by the Vice President and
Corporate Secretary after April 19, 2000, but no later than November 13, 2000.
The Corporation's Bylaws provide that any shareholder wishing to make a
nomination for director, or wishing to introduce any business, at the annual
meeting of shareholders to be held in 2001 must provide timely and proper
written notice of the matter, in the manner described in the Bylaws. To be
timely, the shareholder's written notice must be received at the principal
executive office of the Corporation no later than January 27, 2001. However, if
the 2001 annual meeting is scheduled for a date that differs by more than
30 days from the anniversary date of the 2000 annual meeting, the shareholder's
notice must be received no later than the tenth day following the date on which
the Corporation publicly discloses the date of the 2001 annual meeting. In most
circumstances, the holders of proxies solicited by the PG&E Corporation Board of
Directors will have discretionary authority to vote on shareholder proposals and
shareholder nominations that have been timely submitted to the Corporation,
provided that the Corporation describes the proposal in its proxy statement and
states how the Corporation intends to vote on such proposals. Shareholder
proposals and shareholder nominations received after the deadline will not be
considered at the annual meeting. Shareholders may obtain a copy of the Bylaws
discussed above from the Corporation's reports filed with the Securities and
Exchange Commission which are available through the Corporation's web site at
www.pgecorp.com or by writing to PG&E Corporation's Office of the Corporate
Secretary.
The Bylaws of Pacific Gas and Electric Company do not contain any
requirement for shareholders to provide advance notice of proposals or
nominations they intend to present at the annual meeting. In most circumstances,
the holders of proxies solicited by the Board of Directors of Pacific Gas and
Electric Company will have discretionary authority to vote on shareholder
proposals and nominations that have been timely submitted to the company,
provided that the company describes the matters in its proxy statement and
states how the company intends to vote on such matters. To be timely submitted,
shareholder proposals and nominations must be provided to the Vice President and
Corporate Secretary of Pacific Gas and Electric Company no later than
January 27, 2001. However, if the date of the 2001 annual meeting is changed
more than 30 days from the anniversary date of the 2000 annual meeting, a
shareholder matter will be timely submitted if Pacific Gas and Electric Company
receives notice of the matter a reasonable time before the company mails its
2001 proxy materials. For shareholder proposals and nominations submitted after
the deadline, the proxyholders will have discretionary voting authority with
respect to such matters without including any information about the matter in
the proxy statement.
40
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OTHER MATTERS
Management does not know of any matter to be acted upon at the meetings
other than the matters described above. However, if any other matter should
properly come before the annual meetings, the proxyholders named in the enclosed
proxy will vote the shares for which they hold proxies at their discretion.
By Order of the Boards of Directors of
PG&E Corporation and Pacific Gas and
Electric Company,
/s/ Leslie H. Everett
Leslie H. Everett
Vice President and Corporate Secretary,
PG&E Corporation
and Pacific Gas and Electric Company
YOUR VOTE IS IMPORTANT.
IF YOU ARE NOT EXECUTING AND SUBMITTING YOUR PROXY AND VOTING INSTRUCTIONS OVER
THE INTERNET OR
BY TELEPHONE, PLEASE MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY FORM AS SOON
AS POSSIBLE.
AT THE ANNUAL MEETINGS OF SHAREHOLDERS, REAL-TIME CAPTIONING SERVICES AND
ASSISTIVE LISTENING DEVICES WILL BE AVAILABLE FOR THE HEARING IMPAIRED. PLEASE
CONTACT AN USHER AT THE MEETING IF YOU WISH TO BE SEATED IN THE REAL- TIME
CAPTIONING SECTION OR ASK A REPRESENTATIVE AT THE SHAREHOLDER REGISTRATION DESK
TO USE AN ASSISTIVE LISTENING DEVICE.
FOR SHAREHOLDERS WITH IMPAIRED VISION, AUDIO CASSETTE RECORDINGS OF THE
MEETINGS WILL BE AVAILABLE WITHOUT CHARGE. PLEASE CONTACT THE OFFICE OF THE VICE
PRESIDENT AND CORPORATE SECRETARY, ONE MARKET, SPEAR TOWER, SUITE 2400, SAN
FRANCISCO, CA 94105 OR CALL (415) 267-7070.
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- - --------------------------------------------------------------------------------
APPENDIX A
RESTATED ARTICLES OF INCORPORATION
OF PG&E CORPORATION
ARTICLE EIGHTH
EIGHTH:
I. The affirmative vote of the holders of not less than a majority of the
outstanding shares of "Voting Stock" (as hereinafter defined) shall be required
to implement or effect any "Business Combination" (as hereinafter defined)
involving the Corporation or any "Subsidiary" (as hereinafter defined) of the
Corporation and any "Related Person" (as hereinafter defined), or any
"Affiliate" or "Associate" (as hereinafter defined) of a Related Person,
notwithstanding the fact that no vote may be required or that a lesser
percentage may be specified by law, in any agreement with any national
securities exchange or otherwise. In addition, the provisions of either
subparagraph (1) or (2) must be satisfied:
(1) The Business Combination shall have been approved by the Board of
Directors without counting the vote of any director who is not a "Disinterested
Director" (as hereinafter defined); or
(2) All of the following conditions are met:
(i) The cash or "Fair Market Value" (as hereinafter defined) as of the
date of the consummation of the Business Combination (the "Combination
Date") of the property, securities or other consideration to be received per
share by holders of a particular class or series of capital stock, as the
case may be, of the Corporation in the Business Combination is not less than
the highest of:
(a) the highest per share price (including brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by or on behalf of the
Related Person in acquiring beneficial ownership of any of its holdings
of such class or series of capital stock of the Corporation (A) within
the two-year period immediately prior to the first public announcement of
the proposed Business Combination (the "Announcement Date") or (B) in the
transaction or series of transactions in which the Related Person became
a Related Person, whichever is higher; or
(b) the highest Fair Market Value per share of the shares of capital
stock being acquired in the Business Combination as of any date within
the one-year period preceding: (A) the Announcement Date or (B) the date
on which the Related Person became a Related Person, whichever is higher;
or
(c) in the case of Common Stock, the highest per share book value of
the Common Stock as reported at the end of the three fiscal quarters
which preceded the Announcement Date, and in the case of Preferred Stock
the highest preferential amount per share to which the holders of shares
of such class or series of Preferred Stock would be entitled as of the
Combination Date in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation,
regardless of whether the Business Combination to be consummated
constitutes such an event.
The provisions of this paragraph I(2)(i) shall be required to be met
with respect to every class or series of outstanding capital stock, whether
or not the Related Person has previously acquired any shares of a particular
class or series of capital stock. In all of the above instances, appropriate
adjustments shall be made for recapitalizations and for stock dividends,
stock splits and like distributions; and
(ii) The consideration to be received by holders of a particular class
or series of capital stock shall be in cash or in the same form as
previously has been paid by or on behalf of the Related Person in connection
with its direct or indirect acquisition of beneficial ownership of shares of
such class or series of stock. If the consideration so paid for any such
shares varied as to form, the form of consideration for such shares shall be
either cash or the form used to acquire beneficial ownership of the largest
number of shares of such class or series of capital stock previously
acquired by the Related Person; and
(iii) After such Related Person has become a Related Person and prior to
the consummation of such Business Combination: (a) except as approved by the
Board of Directors without counting the vote of any director who is not a
Disinterested Director, there shall have been no failure to declare and pay
at the regular date therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Preferred Stock;
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(b) there shall have been (A) no reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any subdivision of
the Common Stock) except as approved by the Board of Directors without
counting the vote of any director who is not a Disinterested Director, and
(B) an increase in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of reducing
the number of outstanding shares of the Common Stock, unless the failure so
to increase such annual rate is approved by the Board of Directors without
counting the vote of any director who is not a Disinterested Director; and
(c) such Related Person shall not have become the beneficial owner of any
additional shares of Voting Stock except as part of the transaction which
results in such Related Person becoming a Related Person; and
(iv) After such Related Person has become a Related Person, the Related
Person shall not have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise; and
(v) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange
Act of 1934 and the rules and regulations thereunder (or any provisions
subsequently replacing such Act, rules or regulations) shall be mailed to
public shareholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions).
II. For purpose of this Article EIGHTH:
(1) The term "Business Combination" shall mean any (i) merger or
consolidation of the Corporation or a Subsidiary with a Related Person or any
other person which is or after such merger or consolidation would be an
Affiliate or Associate of a Related Person; (ii) sale, lease, exchange,
mortgage, pledge, transfer or other disposition or guarantee (in one transaction
or a series of transactions) to or with or for the benefit of any Related Person
or any Affiliate or Associate of any Related Person, of any assets of the
Corporation or of a Subsidiary having an aggregate Fair Market Value of
$100 million or more; (iii) sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions), to the
Corporation or a Subsidiary of any assets of a Related Person or any Affiliate
or Associate of any Related Person having an aggregate Fair Market Value of
$100 million or more; (iv) issuance, pledge or transfer of securities of the
Corporation or a Subsidiary (in one transaction or a series of transactions) to
or with a Related Person or any Affiliate or Associate of any Related Person in
exchange for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $100 million or more;
(v) reclassification of securities (including any reverse stock split) or
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction that would
have the effect, either directly or indirectly, of increasing the voting power
or the proportionate share of any class of equity or convertible securities of
the Corporation or any Subsidiary which is directly or indirectly beneficially
owned by any Related Person or any Affiliate or Associate of any Related Person;
and (vi) any merger or consolidation of the Corporation with any of its
Subsidiaries after which the provisions of this Article EIGHTH of the Articles
of Incorporation shall not be contained in the Articles of Incorporation of the
surviving entity.
(2) The term "person" shall mean any individual, firm, corporation or other
entity and shall include any group comprised of any person and any other person
with whom such person or any Affiliate or Associate of such person has any
agreement, arrangement or understanding, directly or indirectly, for the purpose
of acquiring, holding, voting or disposing of Voting Stock of the Corporation.
(3) The term "Related Person" shall mean any person (other than the
Corporation, or any Subsidiary and other than any dividend reinvestment plan or
profit-sharing, employee stock ownership or other employee benefit or savings
plan of the Corporation or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who or which:
(i) is the beneficial owner (as hereinafter defined) of five percent
(5%) or more of the Voting Stock;
(ii) is an Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date in question was the
beneficial owner of five percent (5%) or more of the then outstanding Voting
Stock; or
(iii) is an assignee of or has otherwise succeeded to the beneficial
ownership of any shares of Voting Stock which were at any time within the
two-year period immediately prior to such time beneficially owned by any
Related Person, if such assignment or succession shall have occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
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(4) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) which such person or any of its Affiliates or Associates has,
directly or indirectly, (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b) the right
to vote pursuant to any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(5) For the purposes of determining whether a person is a Related Person
pursuant to subparagraph (3) of this paragraph II, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned through
application of subparagraph (4) of this paragraph II but shall not include any
other shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(6) The term "Affiliate," used to indicate a relationship with a specified
person, shall mean a person that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified person. The term "Associate," used to indicate a relationship
with a specified person, shall mean (i) any person (other than the Corporation
or a Subsidiary) of which such specified person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities, (ii) any trust or other estate in which such specified person
has a substantial beneficial interest or as to which such specified person
serves as trustee or in a similar fiduciary capacity, (iii) any relative or
spouse of such specified person or any relative of such spouse, who has the same
home as such specified person or who is a director or officer of the Corporation
or any Subsidiary, and (iv) any person who is a director or officer of such
specified person or any of its parents or subsidiaries (other than the
Corporation or a Subsidiary).
(7) The term "Subsidiary" means any corporation or other entity of which a
majority of any class of equity securities is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the definition of
Related Person set forth in subparagraph (3) of this paragraph II, the term
"Subsidiary" shall mean only a corporation of which a majority of the
outstanding shares of capital stock of such corporation entitled to vote
generally in the election of directors is owned, directly or indirectly, by the
Corporation or, in the case of other entities, the Corporation has the direct or
indirect contractual power to designate a majority of the individuals or
representatives exercising functions similar to those exercised by directors of
a corporation, or the Corporation has the power to approve a transaction which
would otherwise be a Business Combination involving such entity.
(8) The term "Disinterested Director" means any member of the Board of
Directors, while such person is a member of the Board of Directors, who is not
an Affiliate, Associate or a representative of the Related Person involved in a
proposed Business Combination and was a member of the Board of Directors
immediately prior to the time that the Related Person became a Related Person,
and any successor of a Disinterested Director, while such successor is a member
of the Board of Directors, who is not an Affiliate, Associate or a
representative of the Related Person and is recommended or elected to succeed a
Disinterested Director by the Board of Directors without counting the vote of
any director who is not a Disinterested Director.
(9) For the purposes of paragraph I(2)(i) of this Article EIGHTH, the term
"other consideration to be received" shall include, without limitation, capital
stock retained by the shareholders.
(10) The term "Voting Stock" shall mean all of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, and each reference to a proportion of shares of Voting Stock shall
refer to such proportion of the votes entitled to be cast by such shares voting
together as one class.
(11) The term "Fair Market Value" means: (i) in case of capital stock, the
highest closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for the New York
Stock Exchange Listed Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such stock exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any successor system then in use,
or if no such quotations are available, the fair market value on the
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<PAGE>
date in question of a share of such stock as determined in good faith by the
Board of Directors without counting the vote of any director who is not a
Disinterested Director; and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in question as
determined in good faith by the Board of Directors without counting the vote of
any director who is not a Disinterested Director.
(12) A Related Person shall be deemed to have acquired a share of Voting
Stock at the time when such Related Person became the beneficial owner thereof.
If the Board of Directors without counting the vote of any director who is not a
Disinterested Director is not able to determine the price at which a Related
Person has acquired a share of Voting Stock, such price shall be deemed to be
the Fair Market Value of the shares in question at the time when the Related
Person becomes the beneficial owner thereof. With respect to shares owned by
Affiliates or other persons whose ownership is attributed to a Related Person
under the foregoing definition of Related Person, the price deemed to be paid
therefor by such Related Person shall be the price paid upon the acquisition
thereof by such Affiliate, Associate or other person, or, if such price is not
determinable by the Board of Directors without counting the vote of any director
who is not a Disinterested Director, the Fair Market Value of the shares in
question at the time when the Affiliate, Associate, or other such person became
the beneficial owner thereof.
III. The fact that any Business Combination complies with the provisions of
paragraph I(2) of this Article EIGHTH shall not be construed to impose any
fiduciary duty, obligation or responsibility on the Board of Directors, or any
member thereof, to approve such Business Combination or recommend its adoption
or approval to the shareholders of the Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to evaluations of or actions and responses
taken with respect to such Business Combination.
IV. The Board of Directors of the Corporation shall have the power and duty
to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry and in accordance with the
terms of this Article EIGHTH, whether a person is a Related Person and whether a
director is a Disinterested Director. Once the Board of Directors has made a
determination pursuant to the preceding sentence that a person is a Related
Person, the Board of Directors of the Corporation, without counting the vote of
any director who is not a Disinterested Director with respect to such Related
Person, shall have the power and duty to interpret all of the terms and
provisions of this Article EIGHTH and to determine on the basis of the
information known to them after reasonable inquiry all facts necessary to
ascertain compliance with this Article EIGHTH including, without limitation,
(1) the number of shares of Voting Stock beneficially owned by any person,
(2) whether a person is an Affiliate or Associate of another, (3) whether the
assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary of the Corporation in any Business Combination
has, an aggregate Fair Market Value of $100 million or more, and (4) whether all
of the applicable conditions set forth in paragraph I(2) of this Article EIGHTH
have been met with respect to any Business Combination. Any determination
pursuant to this Article EIGHTH made in good faith shall be binding and
conclusive on all parties.
V. The directors of the Corporation, when evaluating any proposal or offer
which would involve a Business Combination or the merger or consolidation of the
Corporation or any of its Subsidiaries with another corporation, the sale of all
or substantially all of the assets of the Corporation or any of its
Subsidiaries, a tender offer or exchange offer for any capital stock of the
Corporation or any of its Subsidiaries or any similar transaction shall give due
consideration to all factors they may consider relevant. Such factors may
include, without limitation, (a) the adequacy, both in amount and form, of the
consideration offered in relation not only to the current market price of the
Corporation's outstanding securities, but also the current value of the
Corporation in a freely negotiated transaction with other potential acquirers
and the Board's estimate of the Corporation's future value (including the
unrealized value of its properties, assets and prospects) as an independent
going concern, (b) the financial and managerial resources and future prospects
of the acquirer, and (c) the legal, economic, environmental, regulatory and
social effects of the proposed transaction on the Corporation's and its
Subsidiaries' employees, customers, suppliers and other affected persons and
entities and on the communities and geographic areas in which the Corporation
and its Subsidiaries provide utility service or are located, and in particular,
the effect on the Corporation's and its Subsidiaries' ability to safely and
reliably meet any public utility obligations at reasonable rates.
VI. Nothing herein shall be construed to relieve any Related Person from any
fiduciary obligation imposed by law.
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PRELIMINARY COPIES
[LOGO]PG&E CORPORATION-TM-
--------------------
YOUR PROXY IS SOLICITED BY THE PG&E CORPORATION BOARD OF DIRECTORS. UNLESS
CONTRARY INSTRUCTIONS ARE GIVEN ON THE REVERSE SIDE OF THIS PROXY CARD, THE
DESIGNATED PROXIES WILL VOTE THE PG&E CORPORATION SHARES FOR WHICH THEY HOLD
PROXIES FOR ITEMS 1, 2, 3, AND 4 AND AGAINST ITEMS 5, 6, 7, 8, 9, AND 10.
The undersigned hereby appoints Robert D. Glynn, Jr. and Leslie H. Everett, or
either of them, proxies of the undersigned, with full power of substitution, to
vote the stock of the undersigned at the annual meeting of shareholders of PG&E
Corporation, to be held at 200 Boylston Street, Boston, Massachusetts, on
Wednesday, April 19, 2000, at 10:00 a.m., and at any adjournment or postponement
thereof, as instructed on the reverse hereof and upon all motions and
resolutions which may properly be presented for consideration at said meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE.)
<PAGE>
YOUR PROXY IS SOLICITED BY THE PG&E CORPORATION BOARD OF DIRECTORS. PG&E
CORPORATION DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2, 3, AND 4. PG&E
CORPORATION DIRECTORS RECOMMEND A VOTE AGAINST ITEMS 5, 6, 7, 8, 9, 10, AND 11.
Please mark
your votes as /X/
indicated in
this example
ITEM 1. ELECTION OF DIRECTORS FOR WITHHOLD
ALL FOR ALL
/ / / /
NOMINEES ARE:
01-Richard A. Clarke, 02-Harry M. Conger, 03-David A. Coulter, 04-C. Lee Cox,
05-William S. Davila, 06-Robert D. Glynn, Jr., 07-David M. Lawrence, MD, 08-Mary
S. Metz, 09-Carl E. Reichardt, 10-John C. Sawhill, 11-Barry Lawson Williams
WITHHOLD vote only for:
- - ------------------------------------------
FOR AGAINST ABSTAIN
ITEM 2. RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS / / / / / /
ITEM 3. PROPOSAL TO ELIMINATE
"SUPERMAJORITY VOTE" PROVISION / / / / / /
ITEM 4. PROPOSAL TO REDUCE AUTHORIZED
MINIMUM AND MAXIMUM NUMBER OF / / / / / /
DIRECTORS
ITEM 5. SHAREHOLDER PROPOSAL REGARDING
INDEPENDENT DIRECTORS / / / / / /
ITEM 6. SHAREHOLDER PROPOSAL REGARDING
CONFIDENTIAL SHAREHOLDER VOTING / / / / / /
ITEM 7. SHAREHOLDER PROPOSAL REGARDING
SHAREHOLDER DEMOCRACY / / / / / /
ITEM 8. SHAREHOLDER PROPOSAL REGARDING
CUMULATIVE VOTING / / / / / /
ITEM 9. SHAREHOLDER PROPOSAL REGARDING
COMPENSATION OF DIRECTORS IN / / / / / /
STOCK
ITEM 10. SHAREHOLDER PROPOSAL REGARDING
SEVERANCE BENEFITS RECEIVED DURING / / / / / /
MERGERS OR ACQUISITIONS
SPECIAL ACTION
Mark here to discontinue duplicate Annual Report mailing for this
account (for multiple-account holders only). / /
I/we plan to attend the annual
meeting in Boston, Massachusetts. / /
SIGNATURE____________________________SIGNATURE_____________________________DATE
If you are signing for the shareholder, please sign the shareholder's
name and your name, and specify the capacity in which you act.
<PAGE>
PRELIMINARY COPIES
[LOGO]PG&E CORPORATION-TM-
--------------------
YOUR PROXY IS SOLICITED BY THE PG&E CORPORATION BOARD OF DIRECTORS. UNLESS
CONTRARY INSTRUCTIONS ARE GIVEN ON THE REVERSE SIDE OF THIS PROXY CARD, THE
DESIGNATED PROXIES WILL VOTE THE PG&E CORPORATION SHARES FOR WHICH THEY HOLD
PROXIES FOR ITEMS 1, 2, 3, AND 4 AND AGAINST ITEMS 5, 6, 7, 8, 9, AND 10.
The undersigned hereby appoints Robert D. Glynn, Jr. and Leslie H. Everett,
or either of them, proxies of the undersigned, with full power of
substitution, to vote the stock of the undersigned at the annual meeting of
shareholders of PG&E Corporation, to be held at 200 Boylston Street, Boston,
Massachusetts, on Wednesday, April 19, 2000, at 10:00 a.m., and at any
adjournment or postponement thereof, as instructed on the reverse hereof and
upon all motions and resolutions which may properly be presented for
consideration at said meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE.)
As an alternative to completing and mailing this proxy card, you may execute
and submit your proxy and voting instructions over the Internet at
HTTP://WWW.EPROXY.COM/PCG/ or by touch-tone telephone at 1-800-840-1208 (from
anywhere in the United States or Canada). These Internet and telephone voting
procedures comply with California law.
- - -------------------------------------------------------------------------------
^IF YOU ARE NOT SUBMITTING YOUR PROXY OVER THE INTERNET OR BY
TELEPHONE, PLEASE DETACH HERE AND MAIL THIS PROXY CARD IN THE ACCOMPANYING
ENVELOPE.^
[LOGO]PG&E CORPORATION-TM-
--------------------
ANNUAL MEETING OF SHAREHOLDERS
To be held at:
Four Seasons Hotel - Boston
200 Boylston Street
Boston, Massachusetts
April 19, 2000, at 10:00 a.m.
[down arrow]PLEASE USE THE ATTACHED TICKET TO ATTEND THE PG&E CORPORATION
ANNUAL MEETING, OR YOU MAY REGISTER AT THE MEETING.[down arrow]
- - -------------------------------------------------------------------------------
Note: Cellular telephones, cameras, tape recorders, etc., will not be allowed
in the meeting room during the annual meeting, other than for PG&E
Corporation purposes. A checkroom will be provided. For your protection, all
briefcases, purses, packages, etc., will be subject to inspection as you
enter the meeting. We regret any inconvenience this may cause you.
Real-time captioning services and assistive listening devices will be
available at the meeting for shareholders with impaired hearing. Please
contact an usher at the meeting if you wish to be seated in the real-time
captioning section, or request an assistive listening device from a
representative at the shareholder registration desk.
<PAGE>
YOUR PROXY IS SOLICITED BY THE PG&E CORPORATION BOARD OF DIRECTORS. PG&E
CORPORATION DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2, 3, AND 4. PG&E
CORPORATION DIRECTORS RECOMMEND A VOTE AGAINST ITEMS 5, 6, 7, 8, 9, 10, AND 11.
Please mark
your votes as /X/
indicated in
this example
FOR ALL WITHHOLD FOR ALL
ITEM 1. ELECTION OF DIRECTORS / / / /
NOMINEES ARE:
01-Richard A. Clarke, 02-Harry M. Conger, 03-David A. Coulter,
04-C. Lee Cox, 05-William S. Davila, 06-Robert D. Glynn, Jr.,
07-David M. Lawrence, MD, 08-Mary S. Metz, 09-Carl E. Reichardt,
10-John C. Sawhill, 11-Barry Lawson Williams
WITHHOLD vote only for:
- - -------------------------------------
FOR AGAINST ABSTAIN
ITEM 2. RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS / / / / / /
ITEM 3. PROPOSAL TO ELIMINATE
"SUPERMAJORITY VOTE" PROVISION / / / / / /
ITEM 4. PROPOSAL TO REDUCE AUTHORIZED
MINIMUM AND MAXIMUM NUMBER OF / / / / / /
DIRECTORS
ITEM 5. SHAREHOLDER PROPOSAL REGARDING
INDEPENDENT DIRECTORS / / / / / /
ITEM 6. SHAREHOLDER PROPOSAL REGARDING
CONFIDENTIAL SHAREHOLDER VOTING / / / / / /
ITEM 7. SHAREHOLDER PROPOSAL REGARDING
SHAREHOLDER DEMOCRACY / / / / / /
ITEM 8. SHAREHOLDER PROPOSAL REGARDING
CUMULATIVE VOTING / / / / / /
ITEM 9. SHAREHOLDER PROPOSAL REGARDING
COMPENSATION OF DIRECTORS IN STOCK / / / / / /
ITEM 10. SHAREHOLDER PROPOSAL
REGARDING SEVERANCE BENEFITS / / / / / /
RECEIVED DURING MERGERS OR
ACQUISITIONS
SPECIAL ACTION
Mark here to discontinue duplicate Annual Report mailing for this
account (for multiple-account holders only). / /
I/we plan to attend the annual meeting in Boston, Massachusetts. / /
SIGNATURE____________________________SIGNATURE_____________________________DATE
If you are signing for the shareholder, please sign the shareholder's
name and your name, and specify the capacity in which you act.
- - -------------------------------------------------------------------------------
IF YOU ARE NOT SUBMITTING YOUR PROXY OVER THE INTERNET OR BY TELEPHONE, PLEASE
DETACH HERE AND MAIL THIS PROXY CARD IN THE ACCOMPANYING ENVELOPE.
(RETAIN ANNUAL MEETING TICKET BELOW)
PRIOR TO VOTING, READ THE ACCOMPANYING JOINT PROXY
STATEMENT AND THE ABOVE PROXY CARD.
VOTE ON THE INTERNET
1. Go to the website HTTP://WWW.EPROXY.COM/PCG/ anytime, 24 HOURS A DAY, 7
DAYS A WEEK and follow the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the lower-right
portion of this proxy form.
VOTE BY TELEPHONE
1. Using any touch-tone telephone in the U.S. or Canada, call the TOLL-FREE
number 1-800-840-1208 - anytime, 24 HOURS A DAY, 7 DAYS A WEEK and follow
the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the lower-right
portion of this proxy form.
VOTE BY MAIL
1. Mark, sign, and date the proxy card.
2. Detach the proxy card (the top portion of this page) and mail it promptly, in
the accompanying POSTAGE-PAID envelope.
PROXIES AND VOTING INSTRUCTIONS SUBMITTED OVER THE
INTERNET OR BY TELEPHONE MUST BE RECEIVED BY 4:00
P.M., EASTERN TIME, ON TUESDAY, APRIL 18, 2000.
- - -------------------------------------------------------------------------------
[LOGO]PG&E CORPORATION-TM-
--------------------
2000 ANNUAL MEETING TICKET
Ticket for the annual meeting on April 19, 2000, at 10:00 a.m. to be held at the
Four Seasons Hotel - Boston, 200 Boylston Street, Boston, Massachusetts. Doors
open at 9:00 a.m. You may bypass the shareholder registration area and present
this ticket at the entrance to the meeting room.
(See reverse side for additional information)
<PAGE>
[LOGO] PG&E CORPORATION-TM-
--------------------
2000 ANNUAL MEETING
PG&E CORPORATION
RETIREMENT SAVINGS PLAN
VOTING INSTRUCTIONS TO THE TRUSTEE - 2000
TO FIDELITY MANAGEMENT TRUST COMPANY, TRUSTEE
Pursuant to the provisions of the PG&E Corporation Retirement Savings Plan,
you are instructed as indicated on the reverse side of this voting
instruction card with respect to voting the shares of stock credited to my
account in the Plan as of February 22, 2000, at the annual meeting of
shareholders of PG&E Corporation to be held on April 19, 2000, and at any
adjournment or postponement thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE)
TO PARTICIPANTS IN THE RETIREMENT SAVINGS PLAN
As an alternative to completing and mailing this voting instruction card, you
may execute and submit your voting instructions over the Internet at
HTTP://WWW.EPROXY.COM/PCG/ or by touch-tone telephone at 1-800-840-1208 (from
anywhere in the United States or Canada). These Internet and telephone voting
procedures comply with California law.
- - ------------------------------------------------------------------------------
^ IF YOU ARE NOT SUBMITTING YOUR VOTING INSTRUCTIONS OVER THE INTERNET OR BY
TELEPHONE, PLEASE DETACH HERE AND MAIL THIS CARD IN THE ACCOMPANYING ENVELOPE. ^
TO PARTICIPANTS IN THE RETIREMENT SAVINGS PLAN:
AS A PARTICIPANT, YOU ARE ENTITLED TO DIRECT THE TRUSTEE HOW TO VOTE THE
SHARES OF PG&E CORPORATION COMMON STOCK ALLOCATED TO YOUR ACCOUNT. The above
voting instruction card is provided for your use in giving the Trustee of the
Plan confidential instructions to vote your stock held in the Plan at PG&E
Corporation's annual meeting of shareholders on April 19, 2000. You have one
vote for each share of PG&E Corporation common stock credited to your account
as of February 22, 2000. Enclosed is a joint proxy statement which sets forth
the business to be transacted at the meeting. Please mark your instructions
on the above card and sign, date, and return it in the accompanying envelope.
IF YOU SIGN BUT DO NOT OTHERWISE COMPLETE THE CARD, YOU WILL BE INSTRUCTING
THE TRUSTEE TO VOTE ALL SHARES IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
PG&E CORPORATION BOARD OF DIRECTORS. As an alternative to completing and
mailing the card, you may enter your voting instructions by touch-tone
telephone at 1-800-840-1208 (only available in the United States and Canada)
or over the Internet at HTTP://WWW.EPROXY.COM/PCG/. Stock in your Plan
account for which the Trustee has not received voting instructions will not
be voted by the Trustee. Participants who also own stock outside the Plan
will receive a separate proxy voting instruction card for those shares.
<PAGE>
- - ----------------------------------------------------------------------------
PG&E CORPORATION DIRECTORS RECOMMEND A VOTE FOR Please mark
ITEMS 1, 2, 3, AND 4. PG&E CORPORATION DIRECTORS your votes as [X]
RECOMMEND A VOTE AGAINST ITEMS 5, 6, 7, 8, 9, indicated in
AND 10. this example
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOR WITHHOLD ITEM 2. RATIFICATION OF FOR AGAINST ABSTAIN
ITEM 1. ELECTION OF DIRECTORS ALL FOR ALL APPOINTMENT OF [ ] [ ] [ ]
[ ] [ ] INDEPENDENT PUBLIC
NOMINEES ARE: ACCOUNTANTS
01-Richard A. Clarke, 02-Harry M. Conger, 03-David A. ITEM 3. PROPOSAL TO
Coulter, 04-C. Lee Cox, 05-William S. Davila, 06-Robert ELIMINATE [ ] [ ] [ ]
D. Glynn, Jr., 07-David M. Lawrence, MD, 08-Mary S. "SUPERMAJORITY
Metz, 09-Carl E. Reichardt, 10-John C. Sawhill, VOTE" PROVISION
11-Barry Lawson Williams
WITHHOLD vote only for: ITEM 4. PROPOSAL TO REDUCE
AUTHORIZED MINIMUM [ ] [ ] [ ]
______________________________________________________ AND MAXIMUM NUMBER
OF DIRECTORS
- - -------------------------------------------------------------------------------------------------------------
</TABLE>
- - ------------------------------------------------------
ITEM 5. SHAREHOLDER PROPOSAL FOR AGAINST ABSTAIN
REGARDING INDEPENDENT [ ] [ ] [ ]
DIRECTORS
ITEM 6. SHAREHOLDER PROPOSAL
REGARDING CONFIDENTIAL [ ] [ ] [ ]
SHAREHOLDER VOTING
ITEM 7. SHAREHOLDER PROPOSAL
REGARDING SHAREHOLDER [ ] [ ] [ ]
DEMOCRACY
ITEM 8. SHAREHOLDER PROPOSAL
REGARDING CUMULATIVE [ ] [ ] [ ]
VOTING
ITEM 9. SHAREHOLDER PROPOSAL
REGARDING COMPENSATION [ ] [ ] [ ]
OF DIRECTORS IN STOCK
ITEM 10. SHAREHOLDER PROPOSAL
REGARDING SEVERANCE [ ] [ ] [ ]
BENEFITS RECEIVED
DURING MERGERS OR
ACQUISITIONS
- - ------------------------------------------------------
Signature_____________________________________________ Date____________________
- - -------------------------------------------------------------------------------
^ IF YOU ARE NOT SUBMITTING YOUR VOTING INSTRUCTIONS OVER THE INTERNET OR BY
TELEPHONE, PLEASE DETACH HERE AND MAIL THIS CARD IN THE ACCOMPANYING ENVELOPE. ^
PRIOR TO VOTING, READ THE ACCOMPANYING JOINT PROXY STATEMENT AND THE ABOVE
VOTING INSTRUCTION CARD.
VOTE ON THE INTERNET
1. Go to the website HTTP://WWW.EPROXY.COM/PCG/ anytime, 24 HOURS A DAY, 7
DAYS A WEEK and follow the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the
lower-right portion of this voting instruction form.
VOTE BY TELEPHONE
1. Using any touch-tone telephone in the U.S. or Canada, call the TOLL-FREE
number 1-800-840-1208 - anytime, 24 HOURS A DAY, 7 DAYS A WEEK and follow
the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the
lower-right portion of this voting instruction form.
VOTE BY MAIL
1. Mark, sign, and date the voting instruction card.
2. Detach the voting instruction card (the top portion of this page) and mail
it promptly in the accompanying POSTAGE-PAID envelope.
FOR SHARES IN YOUR PLAN ACCOUNT, VOTING INSTRUCTIONS SUBMITTED OVER THE
INTERNET, BY TELEPHONE, OR BY MAIL MUST BE RECEIVED BY THE TRUSTEE
BY 4:00 P.M., EASTERN TIME, ON SUNDAY, APRIL 16, 2000.
VOTING INSTRUCTIONS RECEIVED AFTER THAT TIME WILL NOT BE COUNTED.
(SEE REVERSE SIDE FOR ADDITIONAL INFORMATION)
- - -------------------------------------------------------------------------------
<PAGE>
- - -------------------------------------------------------------------------------
[LOGO] PG&E CORPORATION-TM-
--------------------
2000 ANNUAL MEETING
PACIFIC GAS AND ELECTRIC COMPANY
SAVINGS FUND PLAN
VOTING INSTRUCTIONS TO THE TRUSTEE - 2000
TO STATE STREET BANK AND TRUST COMPANY, TRUSTEE
Pursuant to the provisions of the Pacific Gas and Electric Company
Savings Fund Plan, you are instructed as indicated on the reverse side of
this voting instruction card with respect to voting the shares of stock
credited to my account in the Plan as of February 22, 2000, at the
annual meeting of shareholders of PG&E Corporation to be held on April
19, 2000, and at any adjournment or postponement thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE)
TO PARTICIPANTS IN THE SAVINGS FUND PLAN
As an alternative to completing and mailing this voting instruction
card, you may execute and submit your voting instructions over the
Internet at HTTP://WWW.EPROXY.COM/PCG/ or by touch-tone telephone at
1-800-840-1208 (from anywhere in the United States or Canada). These
Internet and telephone voting procedures comply with California law.
- - -------------------------------------------------------------------------------
^ IF YOU ARE NOT SUBMITTING YOUR VOTING INSTRUCTIONS OVER THE INTERNET OR
BY TELEPHONE, PLEASE DETACH HERE AND MAIL THIS CARD IN THE ACCOMPANYING
ENVELOPE. ^
TO PARTICIPANTS IN THE SAVINGS FUND PLAN:
AS A PARTICIPANT, YOU ARE ENTITLED TO DIRECT THE TRUSTEE HOW TO VOTE THE
SHARES OF PG&E CORPORATION COMMON STOCK ALLOCATED TO YOUR ACCOUNT. The
above voting instruction card is provided for your use in giving the
Trustee of the Plan confidential instructions to vote your stock held in
the Plan at PG&E Corporation's annual meeting of shareholders on April
19, 2000. You have one vote for each share of PG&E Corporation common
stock credited to your account as of February 22, 2000. Enclosed is a
joint proxy statement which sets forth in the business to be transacted
at the meeting. Please mark your instructions on the above card and
sign, date, and return it in the accompanying envelope. IF YOU SIGN BUT
DO NOT OTHERWISE COMPLETE THE CARD, YOU WILL BE INSTRUCTING THE TRUSTEE
TO VOTE ALL SHARES IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE PG&E
CORPORATION BOARD OF DIRECTORS. As an alternative to completing and
mailing the card, you may enter your voting instructions by touch-tone
telephone at 1-800-840-1208 (only available in the United States and
Canada) or over the Internet at HTTP://WWW.EPROXY.COM/PCG/. Stock in
your Plan account for which the Trustee has not received voting
instructions will not be voted by the Trustee. Participants who also
own stock outside the Plan will receive a separate proxy voting
instruction card for those shares.
- - -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S><C>
- - ----------------------------------------------------------------------------------------------------------------------------------
PG&E CORPORATION DIRECTORS RECOMMEND A VOTE FOR ITEMS Please mark
1, 2, 3, AND 4. PG&E CORPORATION DIRECTORS RECOMMEND your votes as /x/
A VOTE AGAINST ITEMS 5, 6, 7, 8, 9, AND 10. indicated in
this example
- - ----------------------------------------------------------------------------------------------------------------------------------
FOR WITHHOLD
ITEM 1. ELECTION OF DIRECTORS ALL FOR ALL ITEM 2. RATIFICATION OF FOR AGAINST ABSTAIN
----- ----- APPOINTMENT OF ----- ----- -----
NOMINEES ARE: INDEPENDENT PUBLIC
----- ----- ACCOUNTANTS ----- ----- -----
01-Richard A. Clarke, 02-Harry M. Conger, 03- ITEM 3. PROPOSAL TO ELIMINATE ----- ----- -----
David A. Coulter, 04-C. Lee Cox, 05-William S. "SUPERMAJORITY VOTE"
Davila, 06-Robert D. Glynn, Jr., 07-David M. PROVISION ----- ----- -----
Lawrence, MD, 08-Mary S. Metz, 09-Carl E.
Reichardt, 10-John C. Sawhill, 11-Barry Lawson ITEM 4. PROPOSAL TO REDUCE ----- ----- -----
Williams AUTHORIZED MINIMUM
AND MAXIMUM NUMBER ----- ----- -----
WITHHOLD vote only for: OF DIRECTORS
---------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
ITEM 5. SHAREHOLDER PROPOSAL FOR AGAINST ABSTAIN
REGARDING INDEPENDENT ----- ----- -----
DIRECTORS
----- ----- -----
ITEM 6. SHAREHOLDER PROPOSAL ----- ----- -----
REGARDING CONFIDENTIAL
SHAREHOLDER VOTING ----- ----- -----
ITEM 7. SHAREHOLDER PROPOSAL ----- ----- -----
REGARDING SHAREHOLDER
DEMOCRACY ----- ----- -----
ITEM 8. SHAREHOLDER PROPOSAL ----- ----- -----
REGARDING CUMULATIVE
VOTING ----- ----- -----
ITEM 9. SHAREHOLDER PROPOSAL ----- ----- -----
REGARDING COMPENSATION
OF DIRECTORS IN STOCK ----- ----- -----
----- ITEM 10. SHAREHOLDER PROPOSAL
| REGARDING SEVERANCE ----- ----- -----
| BENEFITS RECEIVED
DURING MERGERS OR ----- ----- -----
ACQUISITIONS
- - ----------------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE
------------------------------------------------- -------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
^ IF YOU ARE NOT SUBMITTING YOUR VOTING INSTRUCTIONS OVER THE INTERNET OR BY TELEPHONE, PLEASE DETACH HERE AND MAIL THIS CARD ^
IN THE ACCOMPANYING ENVELOPE.
PRIOR TO VOTING, READ THE ACCOMPANYING JOINT PROXY STATEMENT AND THE ABOVE VOTING INSTRUCTION CARD.
VOTE ON THE INTERNET
1. Go to the website HTTP://WWW.EPROXY.COM/PCG/ anytime, 24 HOURS A DAY, 7 DAYS A WEEK and follow the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the lower-right portion of this voting instruction form.
VOTE BY TELEPHONE
1. Using any touch-tone telephone in the U.S. or Canada, call the TOLL-FREE number 1-800-840-1208 - anytime, 24 HOURS A
DAY, 7 DAYS A WEEK and follow the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the lower-right portion of this voting instruction form.
VOTE BY MAIL
1. Mark, sign, and date the voting instruction card.
2. Detach the voting instruction card (the top portion of this page) and mail it promptly in the accompanying POSTAGE-PAID
ENVELOPE.
FOR SHARES IN YOUR PLAN ACCOUNT, VOTING INSTRUCTIONS SUBMITTED OVER THE INTERNET, BY TELEPHONE, OR BY MAIL
MUST BE RECEIVED BY THE TRUSTEE BY 4:00 P.M., EASTERN TIME, ON TUESDAY, APRIL 18, 2000.
VOTING INSTRUCTIONS RECEIVED AFTER THAT TIME WILL NOT BE COUNTED.
(SEE REVERSE SIDE FOR ADDITIONAL INFORMATION)
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- - --------------------------------------------------------------------------------
[LOGO] PG&E CORPORATION-TM-
--------------------
2000 ANNUAL MEETING
PG&E GAS TRANSMISSION
NORTHWEST CORPORATION
SAVINGS FUND PLAN
VOTING INSTRUCTIONS TO THE TRUSTEE - 2000
TO MERRILL LYNCH TRUST COMPANY, FSB, TRUSTEE
Pursuant to the provisions of the PG&E Gas Transmission - Northwest
Corporation Savings Fund Plan, you are instructed as indicated on the
reverse side of this voting instruction card with respect to voting the
shares of stock held for my account in the Plan as of February 22, 2000, at
the annual meeting of shareholders of PG&E Corporation to be held on April
19, 2000, and at any adjournment or postponement thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE)
TO PARTICIPANTS IN THE SAVINGS FUND PLAN
As an alternative to completing and mailing this voting instruction card,
you may execute and submit your voting instructions over the Internet at
HTTP://WWW.EPROXY.COM/PCG/ or by touch-tone telephone at 1-800-840-1208
(from anywhere in the United States or Canada). These Internet and
telephone voting procedures comply with California law.
- - --------------------------------------------------------------------------------
^ IF YOU ARE NOT SUBMITTING YOUR VOTING INSTRUCTIONS OVER THE INTERNET OR BY
TELEPHONE, PLEASE DETACH HERE AND MAIL THIS CARD IN THE ACCOMPANYING ENVELOPE. ^
TO PARTICIPANTS IN THE SAVINGS FUND PLAN:
AS A PARTICIPANT, YOU ARE ENTITLED TO DIRECT THE TRUSTEE HOW TO VOTE THE
SHARES OF PG&E CORPORATION COMMON STOCK ALLOCATED TO YOUR ACCOUNT. The
above voting instruction card is provided for your use in giving the
Trustee of the Plan confidential instructions to vote your stock held in
the Plan at PG&E Corporation's annual meeting of shareholders on April 19,
2000. You have one vote for each share of PG&E Corporation common stock
credited to your account as of February 22, 2000. Enclosed is a joint proxy
statement which sets forth the business to be transacted at the meeting.
Please mark your instructions on the above card and sign, date, and return
it in the accompanying envelope. IF YOU SIGN BUT DO NOT OTHERWISE COMPLETE
THE CARD, YOU WILL BE INSTRUCTING THE TRUSTEE TO VOTE ALL SHARES IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE PG&E CORPORATION BOARD OF
DIRECTORS. As an alternative to completing and mailing the card, you may
enter your voting instructions by touch-tone telephone at 1-800-840-1208
(only available in the United States and Canada) or over the Internet at
HTTP://WWW.EPROXY.COM/PCG/. Stock in your Plan account for which the Trustee
has not received voting instructions will not be voted by the Trustee.
Participants who also own stock outside the Plan will receive a separate
proxy voting instruction card for those shares.
- - --------------------------------------------------------------------------------
<PAGE>
Please mark
PG&E CORPORATION DIRECTORS RECOMMEND A VOTE FOR your vote as / X /
ITEMS 1, 2, 3, AND 4. PG&E CORPORATION DIRECTORS indicated in
RECOMMEND A VOTE AGAINST ITEMS 5, 6, 7, 8, 9, AND 10. this example
<TABLE>
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD
ITEM 1. ELECTION OF DIRECTORS ALL FOR ALL ITEM 2. RATIFICATION OF FOR AGAINST ABSTAIN
APPOINTMENT OF
INDEPENDENT PUBLIC / / / / / /
NOMINEES ARE: / / / / ACCOUNTANTS
01-Richard A. Clarke, 02-Harry M. Conger, 03-David A. Coulter,
04-C. Lee Cox, 05-William S. Davila, 06-Robert D. Glynn, Jr., ITEM 3. PROPOSAL TO ELIMINATE
07-David M. Lawrence, MD, 08-Mary S. Metz, 09-Carl E. Reichardt, "SUPERMAJORITY VOTE" / / / / / /
10-John C. Sawhill, 11-Barry Lawson Williams PROVISION
ITEM 4. PROPOSAL TO REDUCE
WITHHOLD vote only for: AUTHORIZED MINIMUM
AND MAXIMUM NUMBER / / / / / /
- - ---------------------------------------------------------------- OF DIRECTORS
ITEM 5. SHAREHOLDER PROPOSAL
REGARDING INDEPENDENT
DIRECTORS / / / / / /
ITEM 6. SHAREHOLDER PROPOSAL
REGARDING CONFIDENTIAL / / / / / /
SHAREHOLDER VOTING
ITEM 7. SHAREHOLDER PROPOSAL
REGARDING
SHAREHOLDER / / / / / /
DEMOCRACY
ITEM 8. SHAREHOLDER PROPOSAL
REGARDING CUMULATIVE / / / / / /
VOTING
ITEM 9. SHAREHOLDER PROPOSAL
REGARDING
COMPENSATION OF / / / / / /
DIRECTORS IN STOCK
ITEM 10. SHAREHOLDER PROPOSAL
REGARDING SEVERANCE
BENEFITS RECEIVED / / / / / /
DURING MERGERS OR
ACQUISITIONS
--------------------------------------------------------------
</TABLE>
SIGNATURE_________________________________________________ DATE_______________
- - --------------------------------------------------------------------------------
^ IF YOU ARE NOT SUBMITTING YOUR VOTING INSTRUCTIONS OVER THE INTERNET OR BY
TELEPHONE, PLEASE DETACH HERE AND MAIL THIS CARD IN THE ACCOMPANYING ENVELOPE. ^
PRIOR TO VOTING, READ THE ACCOMPANYING JOINT PROXY STATEMENT AND THE
ABOVE VOTING INSTRUCTION CARD.
----------------------
VOTE ON THE INTERNET
----------------------
1. Go to the website HTTP://WWW.EPROXY.COM/PCG/ anytime, 24 HOURS A DAY, 7
DAYS A WEEK and follow the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the
lower-right portion of this voting instruction form.
-------------------
VOTE BY TELEPHONE
-------------------
1. Using any touch-tone telephone in the U.S. or Canada, call the TOLL-FREE
number 1-800-840-1208 - anytime, 24 HOURS A DAY, 7 DAYS A WEEK and
follow the instructions.
2. When prompted, enter the 11-DIGIT CONTROL NUMBER located in the
lower-right portion of this voting instruction form.
--------------
VOTE BY MAIL
--------------
1. Mark, sign, and date the voting instruction card.
2. Detach the voting instruction card (the top portion of this page) and
mail it promptly in the accompanying POSTAGE-PAID envelope.
FOR SHARES IN YOUR PLAN ACCOUNT, VOTING INSTRUCTIONS SUBMITTED OVER
THE INTERNET, BY TELEPHONE, OR BY MAIL MUST BE RECEIVED BY
THE TRUSTEE BY 4:00 P.M., EASTERN TIME, ON SUNDAY,
APRIL 16, 2000. VOTING INSTRUCTIONS RECEIVED
AFTER THAT TIME WILL NOT BE COUNTED.
(SEE REVERSE SIDE FOR ADDITIONAL INFORMATION)
