EXHIBIT 99.2
PG&E
CORPORATION
LONG-TERM INCENTIVE PROGRAM
FORM OF
PERFORMANCE SHARE AGREEMENT
PG&E
CORPORATION , a California corporation, hereby grants
Performance Shares to the Recipient named below. The
Performance Shares have been awarded under the PG&E Corporation
Long-Term Incentive Program (the “LTIP”). The terms and
conditions of the Performance Shares are set forth in this cover
sheet and the attached Performance Share Agreement (the
“Agreement”).
Date of Grant:
January 3, 2005
Name of Recipient:
Recipient’s Social
Security Number: _____-____-_____
Number of Performance
Shares:
By signing this
cover sheet, you agree to all of the terms and conditions described
in the attached Agreement. You and PG&E Corporation agree
to execute such further instruments and to take such further action
as may reasonably be necessary to carry out the intent of this
Agreement. You are also acknowledging receipt of this
Agreement and a copy of the prospectus describing the LTIP and the
Performance Shares dated January 1, 2005.
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Recipient:
(Signature)
Attachment
Please
return your signed Agreement to PG&E Corporation, Human
Resources,
One Market Street, Spear Street Tower, Suite 400, San Francisco,
California 94105
PG&E
CORPORATION LONG-TERM INCENTIVE PROGRAM
PERFORMANCE SHARE AGREEMENT
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The LTIP and Other
Agreements
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This Agreement constitutes
the entire understanding between you and PG&E Corporation
regarding the Performance Shares, subject to the terms of the
LTIP. Any prior agreements, commitments or negotiations are
superseded. In the event of any conflict or inconsistency
between the provisions of this Agreement and the LTIP, the LTIP
shall govern.
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Grant of
Performance Shares
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PG&E Corporation
grants you the number of Performance Shares shown on the cover
sheet of this Agreement. The Performance Shares are subject
to the terms and conditions of this Agreement and the LTIP.
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Vesting of Performance
Shares
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As long as you remain
employed with PG&E Corporation (or any of its subsidiaries),
the Performance Shares will vest on the first business day of
January (the “Vesting Date”) of the third year
following the date of grant specified in the cover sheet.
Except as described below, all Performance Shares subject to this
Agreement that have not vested shall be forfeited upon termination
of your employment.
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Payment of Performance
Shares
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Upon the Vesting Date,
PG&E Corporation’s total shareholder return (TSR) will be
compared to the TSR of the fifteen other companies in PG&E
Corporation’s comparator group
1 for the prior three calendar years (the
“Performance Period”). Subject to rounding
considerations, there will be no payout for TSR below the 25
th percentile of the comparator group; TSR at the 25
th percentile will result in a 25% payout of Performance
Shares; TSR at the 75 th percentile will result in a
100% payout of Performance Shares; and TSR at the 90 th
percentile or greater will result in a 200% payout of Performance
Shares. The following table sets forth the payout percentages
for the various TSR rankings that could be achieved:
Number
of Companies in
Total
(Including
PG&E)
16
Performance Rounded
Rank Percentile Payout
1 100% 200%
2 93% 200%
3 87% 180%
4 80% 135%
5 73% 100%
6 67% 90%
7 60% 80%
8 53% 70%
9 47% 60%
10 40% 50%
11 33% 40%
12 27% 30%
13 20% 0%
14 13% 0%
15 7% 0%
16 0% 0%
The payment will equal the product of the number of
vested Performance Shares, the applicable payout percentage, and
the average closing price of a share of PG&E Corporation common
stock for the last 30 calendar days of the year preceding the
Vesting Date as reported on the New York Stock Exchange.
Payments will be made as soon as practicable following the Vesting
Date.
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Dividends
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Each time that PG&E
Corporation declares a dividend on its shares of common stock, an
amount equal to the dividend multiplied by the number of
Performance Shares granted to you by this Agreement shall be
accrued on your behalf. As soon as practicable following the
end of the Performance Period, you shall receive a cash payment, if
any, equal to the dividends accrued over the Performance Period
multiplied by the same payout percentage used to determine the
amount, if any, of the Performance Share payout as specified in the
preceding paragraph.
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Voluntary
Termination
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If you terminate your
employment with PG&E Corporation (or any of its subsidiaries)
voluntarily before the Vesting Date, all of the Performance Shares
shall be cancelled as of the date of such termination and any
dividends accrued with respect to your Performance Shares shall be
forfeited.
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Termination for
Cause
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If your employment with
PG&E Corporation (or any of its subsidiaries) is terminated by
PG&E Corporation or the subsidiary for cause before the Vesting
Date, all of the Performance Shares shall be cancelled as of the
date of such termination and any dividends accrued with respect to
your Performance Shares shall be forfeited. In general,
termination for “cause” means termination of employment
because of dishonesty
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