01—Abstract
Summary
Summary of the 10-K/A filed April 30, 2019. Cited figures are marked; the original filing is the authoritative source.
This Amendment No. 1 to PG&E Corporation's and Pacific Gas and Electric Company's 2018 annual report, filed April 30, 2019, supplies Part III information (directors, executive compensation, security ownership, related transactions, and auditor fees) that was omitted from the original 10-K.
It reports that both companies filed voluntary Chapter 11 petitions on January 29, 2019, and that the Board was substantially refreshed in April 2019, with eleven new directors joining two continuing directors and William D. Johnson set to become CEO and President on May 2, 2019. Settlement with BlueMountain led to the resignation of Richard C.
Kelly and the appointment of Frederick W. Buckman, and the Board will propose increasing its size to 15 directors. The filing shows the financial strain behind compensation outcomes.
It states that 2018 combined pre-tax charges related to the Camp fire and 2017 Northern California wildfires totaled $14.0 billiona, with a full-year GAAP net loss of $6.9 billion, or $(13.35) per diluted share. Earnings from operations were $2,069 million ($4.00 per diluted share). The Compensation Committee reduced the 2018 short-term incentive company score to zero, so no 2018 STIP awards were paid, and no 2019 STIP participation is planned for named executive officers.
The 2016 TSR performance shares paid out at zero, and the company's TSR was negative 50.5 percent over the three-year period. For investors, the filing highlights the leadership transition, the ongoing bankruptcy-related limits on equity compensation, and the auditor fee disclosure, with Deloitte & Touche billing $5.505 millionb in audit fees to PG&E Corporation for 2018 and $0 for tax and other fees.
02—Key points
Key Highlights
- Both PG&E Corporation and the Utility filed voluntary Chapter 11 petitions on January 29, 2019.
- 2018 results: $14.0 billion in pre-tax charges tied to the 2018 Camp fire and 2017 Northern California wildfires; GAAP net loss of $6.9 billion ($(13.35) per diluted share); earnings from operations of $2,069 million ($4.00 per diluted share).
- Board refreshment: eleven new directors joined two continuing directors in April 2019, and eight of ten incumbent directors stepped down; the Board intends to increase its size to 15 directors.
- William D. Johnson, former President and CEO of the Tennessee Valley Authority, is expected to become CEO and President of PG&E Corporation on May 2, 2019.
- No 2018 short-term incentive payments were made to named executive officers after the Committee reduced the company performance score to zero; named executive officers will not participate in the 2019 STIP.
- The 2016 performance shares based on relative TSR paid out at zero, and the 2016-2018 TSR was negative 50.5 percent; outstanding stock options were described as entirely underwater.
- Deloitte & Touche was selected as independent auditor for 2019, with 2018 audit fees of $5.505 million billed to PG&E Corporation and no tax or other fees.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2018filed April 30, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $16.76B$17.14B | −2.2% |
| Operating Income | -$9.70B$2.90B | −433.9% |
| Interest Expense | $929.00M$888.00M | +4.6% |
| Net Income | -$6.84B$1.65B | −515.4% |
| EPS (Basic) | $-13.25$3.21 | −512.8% |
| EPS (Diluted) | $-13.25$3.21 | −512.8% |
| Shares Outstanding (Basic) | 517.00M512.00M | +1.0% |
| Shares Outstanding (Diluted) | 517.00M513.00M | +0.8% |
05—Questions
Frequently Asked Questions
Who is leading PG&E Corporation and what changes were made to the Board?
Geisha J. Williams resigned as CEO and President effective January 13, 2019, and John R. Simon became Interim CEO that day. William D. Johnson is expected to become CEO and President on May 2, 2019. In April 2019, eleven new directors joined two continuing directors on the Board, with eight of ten incumbent directors stepping down, and Frederick W. Buckman was appointed after Richard C. Kelly resigned on April 22, 2019.
How did the wildfires affect 2018 financial results and executive pay?
The company reported $14.0 billion in pre-tax charges for the 2018 Camp fire and 2017 Northern California wildfires and a full-year GAAP net loss of $6.9 billion. Although earnings from operations were above target, the Compensation Committee used discretion to reduce the 2018 STIP company score to zero, so no 2018 STIP awards were paid.
Are executives still receiving equity compensation after the Chapter 11 filing?
The filing states that the 2019 executive compensation program may differ significantly from prior years and that certain compensation during the Chapter 11 cases may require Bankruptcy Court approval. It also notes that post-petition, the companies may continue regular cash director fees but may be limited in issuing additional equity compensation to non-employee directors.
What are the main shareholder ownership and governance points?
The Vanguard Group, Inc. reported beneficial ownership of 47,523,913 PG&E Corporation common shares, or 9.2 percent of the class, as of December 31, 2018. Stonehill Capital Management LLC and related persons reported 6.5 percent of the Utility's first preferred stock. All directors of PG&E Corporation are independent under NYSE standards, and the Utility is a controlled subsidiary exempt from certain NYSE American requirements.
What did the company pay its independent auditor?
For 2018, Deloitte & Touche billed PG&E Corporation $5.505 million in audit fees and $0.245 million in audit-related fees, with no tax or other fees. For 2017, audit fees were $4.67 million and audit-related fees were $0.15 million.
06—Continue