01—Abstract
Summary
Summary of the 10-K/A filed March 31, 2020. Cited figures are marked; the original filing is the authoritative source.
This Part III amendment to PG&E Corporation's annual report covers directors, executive compensation, security ownership, related-party transactions, director independence, and auditor fees for 2019.
It reports a GAAP loss for 2019 of $(7,656) million. The filing attributes the loss mainly to pre-tax charges of $11.9 billiona for costs related to the 2015 Butte fire, the 2017 Northern California wildfires, and the 2018 Camp fire, net of insurance, along with $773 million of electric asset inspection and repair costs and $199 million of Chapter 11 reorganization costs. The Chapter 11 Cases were filed on January 29, 2019, and the companies describe 2019 as a year in which settlements were reached with three key creditor constituencies, the companies elected to participate in the Wildfire Fund, and a Proposed Plan was filed and later amended.
The Boards were substantially refreshed in April 2019, and William D. Johnson became CEO and President of PG&E Corporation while Andrew M. Vesey became CEO and President of the Utility.
The filing reports negative shareholder returns on a one-, three-, and five-year basis. Its 2017-2019 relative TSR result was 81.7%b negative, so no performance share payout was made on the TSR component. Most executive officers received only base salary in 2019 after the Bankruptcy Court declined to approve the Key Employee Incentive Program.
Outstanding stock options are entirely underwater, and the 2018 RSU grants were worth approximately 26 percent of grant-date value as of December 31, 2019. The filing also lists 529,785,896 PG&E Corporation common shares outstanding as of March 10, 2020, and reports that Deloitte & Touche LLP was selected as the 2020 independent auditor.
Audit fees billed to PG&E Corporation were $2.111 millionc for 2019 and $5.505 million for 2018. Backstop commitment letters for a Chapter 11 plan with Knighthead, Abrams and Stonehill are disclosed, with Knighthead and Abrams committing $400 million and $300 million, respectively, under the March 1, 2020 letters.
02—Key points
Key Highlights
- 2019 GAAP loss of $(7,656) million for PG&E Corporation, with Non-GAAP Earnings From Operations of $2,074 million and Adjusted Non-GAAP Earnings From Operations of $1,818 million used for incentive purposes.
- Pre-tax charges of $11.9 billion for Butte, Northern California and Camp fire-related costs, net of insurance, plus $773 million of electric asset inspection and repair costs and $199 million of Chapter 11-related costs.
- Relative TSR for 2017-2019 was 81.7% negative, and the performance shares tied to TSR paid nothing; the 2017 safety and financial performance shares paid 152 percent of target.
- Most executive officers received only base salary in 2019 because the Bankruptcy Court declined to approve the Key Employee Incentive Program; the CEOs' 2019 compensation was approved separately by the Bankruptcy Court.
- William D. Johnson's 2019 total compensation was $18,529,842 as CEO and President of PG&E Corporation, including a $3 million one-time cash transition payment and performance-based stock options.
- Stock options are entirely underwater, and unvested 2018 RSU grants were worth approximately 26 percent of grant-date market value as of December 31, 2019.
- Audit fees billed to PG&E Corporation were $2.111 million for 2019, down from $5.505 million for 2018, and Deloitte & Touche LLP was selected as the 2020 independent auditor.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2019filed March 31, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $17.13B$16.76B | +2.2% |
| Operating Income | -$10.09B-$9.70B | −4.1% |
| Interest Expense | $934.00M$929.00M | +0.5% |
| Net Income | -$7.64B-$6.84B | −11.8% |
| EPS (Basic) | $-14.50$-13.25 | −9.4% |
| EPS (Diluted) | $-14.50$-13.25 | −9.4% |
| Shares Outstanding (Basic) | 528.00M517.00M | +2.1% |
| Shares Outstanding (Diluted) | 528.00M517.00M | +2.1% |
05—Questions
Frequently Asked Questions
What drove the 2019 loss and how large were the wildfire costs?
The filing reports a 2019 GAAP loss of $(7,656) million for PG&E Corporation. It attributes the loss primarily to pre-tax charges of $11.9 billion for Butte, Northern California and Camp fire-related costs, net of insurance, along with $773 million of electric asset inspection and repair costs and $199 million of Chapter 11 costs.
How did executive pay respond to the company's performance in 2019?
Because of the Chapter 11 Cases, most executive officers received only base salary in 2019 after the Bankruptcy Court declined to approve the Key Employee Incentive Program. The 2017-2019 performance shares tied to relative TSR paid nothing, since TSR was 81.7% negative, while the CEOs received separately approved equity-based packages. The filing also states that the 2020 compensation programs await Bankruptcy Court approval.
Who leads the company and what are the key governance changes?
In April 2019 the Boards of PG&E Corporation and the Utility were substantially refreshed, with 11 new directors joining two continuing directors. William D. Johnson became CEO and President of PG&E Corporation and Andrew M. Vesey became CEO and President of the Utility. Jeffrey L. Bleich and Nora Mead Brownell serve as the independent non-executive Chairs of the Utility Board and the Corporation Board, respectively.
Who are the major shareholders and what is the status of equity backstop commitments?
The filing lists The Vanguard Group with 7.26% of PG&E Corporation common stock, Abrams Capital Management with 4.7%, and Gallagher Fiduciary Advisors with 5.6% as of the stated dates. It also discloses Chapter 11 plan backstop commitment letters, including an amended March 1, 2020 letter under which Knighthead and Abrams committed $400 million and $300 million, respectively.
What did the company pay its independent auditor?
PG&E Corporation was billed audit fees of $2.111 million for 2019 and $5.505 million for 2018, plus audit-related fees of $0.095 million for 2019 and $0.245 million for 2018. No tax or other fees were billed in either year. Deloitte & Touche LLP was selected as the 2020 independent auditor.
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