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Thomas
B. King
Executive
Vice President and
Chief
Operating Officer
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Mailing
Address:
Mail
Code B32
P.
O. Box 770000
San
Francisco, CA 94177-0001
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November
21, 2005
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Overnight
Mail:
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Pacific
Gas and Electric Company
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77
Beale Street, 32nd Floor
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Mr.
John S. Keenan
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108
Braewynds Lane
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415.973.7431
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Holly
Springs, NC 27540
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Fax:
415.973.9485
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1.
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An
annual base salary of $350,000 ($29,166.67/month) subject to possible
increases through our annual salary review
plan.
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2.
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A
one-time bonus of $200,000 payable within 60 days of your date of hire,
subject to normal tax withholdings. Should you leave the
company or should your employment be terminated for cause within three
years of your date of hire, a prorated amount of this bonus must be
refunded to the company.
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3.
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A
target incentive of $175,000 (50% of your base salary) in an annual
short-term incentive plan under which your actual incentive dollars may
range from zero to $350,000 based on performance relative to established
goals. If your date of hire is in 2005, this incentive will be
prorated for the number of months worked from your date of hire and will
be payable in 2006.
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4.
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A
one-time additional incentive tied to the improvement of the performance
of Diablo Canyon Power Plan (DCPP). Specifically, 50 percent of
your 2006 annual short-term incentive plan award will be tracked in a
phantom account contingent upon INPO’s next rating of DCPP, which is
scheduled to occur in the spring of 2007. If the 2007 INPO
rating is a 1, the amount tracked in the phantom account will be paid to
you.
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5.
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Participation
in the PG&E Corporation Long-Term Incentive Plan (LTIP) as a band
3 officer. Grants under the LTIP are split equally
between restricted stock and performance shares, and are generally made
annually on the first business day of the year. Your initial
grant will be made on the first business day of January 2006 and will have
an estimated current value of $400,000. This estimated value is
used only for the purpose of determining the number of shares for your
grant. The ultimate value that you realize from this grant will
depend upon your employment status and the performance of PG&E
Corporation common stock.
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6.
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A
one-time supplement LTIP grant with an estimated current value of
$200,000. This grant will be apportioned and made in the same
manner as the grant described in item
5.
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7.
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Participation
in the PG&E Corporation Supplemental Executive Retirement Plan (SERP).
The basic benefit payable from the SERP at retirement is a monthly annuity
equal to the product of 1.7% x [average of the three highest years’
combination of salary and annual incentive for the last ten years of
service] x years of credited service x 1/12 less any amounts paid or
payable from the Pacific Gas and Electric Company Retirement
Plan (RP). During each of your first seven complete
years of employment, you will receive 1½ years of credited service,
resulting in a total of 10½ years of service at the end of seven years of
employment. Thereafter, you will receive one year of credited
service for each additional year of
employment.
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8.
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Conditioned
upon meeting plan requirements, you will also be eligible for
post-retirement life insurance and post-retirement medical benefits upon
retirement under the RP.
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9.
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Participation
in the PG&E Corporation Retirement Savings Plan (RSP), a 401(k)
savings plan. You will be eligible to contribute as much as 20%
of your salary on either a pre-tax or after-tax basis. After
your first year of service, we will match contributions you make up to 3%
of your salary at 75 cents on each dollar contributed. After
three years of service, we will match contributions up to 6% of your
salary at 75 cents on each dollar contributed. All of the above
contributions are subject to the applicable legal
limits.
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10.
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Participation
in the PG&E Corporation Supplemental Retirement Savings Plan (SRSP), a
non-qualified, deferred compensation plan. You may elect to
defer payment of some of your compensation on a pre-tax
basis. We will provide you with the full matching contributions
that cannot be provided through the RSP, due to legal limitations imposed
on highly compensated employees.
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11.
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As
a result of your officer level (officer band 3), you will become an
eligible participant under the Executive Stock Ownership Program effective
January 1, 2007. As an ancillary benefit to that program, you
will also be eligible to receive financial counseling from The AYCO
Company at a subsidized rate to assist you in your understanding of our
compensation and benefits programs and how those programs can help you to
achieve financial security. For this feature of the program,
you will be eligible as of January 1,
2006.
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12.
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Participation
in a cafeteria-style benefits program that permits you to select coverage
tailored to your personal needs and circumstances. The benefits
you elect will be effective the first of the month following the date of
your hire.
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13.
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An
annual vacation allotment of four weeks, subject to future increases based
on length of service. If your date of hire is in 2005, the
vacation allotment will be prorated based on your date of
hire. In addition, Pacific Gas and Electric Company recognizes
10 paid company holidays annually and provides 3 floating holidays
immediately upon hire and at the beginning of each
year.
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14.
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An
annual perquisite allowance of $20,000 to be used in lieu of individual
authorizations for cars and memberships in clubs and civic
organizations. If your date of hire is in 2005, you will
receive half of this amount ($10,000) for
2005.
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15.
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Participation
in the Employee Discount program after six months of continuous service
following your date of hire. The program offers participant’s a
25% discount on electricity and gas rates for their primary
residence. In order to receive this benefits, you must (a) live
within Pacific Gas and Electric Company’s service territory and (b) have
the service in your name at your primary
residence.
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16.
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A
comprehensive executive relocation assistance package, including: (1) the
reimbursement of closing costs on the sale of your current residence,
contingent upon using a PG&E-designated relocation company and
purchasing a new residence, (2) the move of your household goods,
including 60 days of storage and the movement of the goods out of storage,
and (3) a lump sum payment of $10,000 payable within 60 days of your date
of employment. In addition, the package will include financial
assistance in the form of a monthly mortgage subsidy of $3,000 (interest
only) for a period of 60 months. This subsidy is contingent
upon the following: (1) your purchase of a principal residence (within 50
miles of your work location) within one year of your date of hire, (2)
your satisfying typical mortgage qualification criteria, and (3) use of a
company-designated lender. Should you have any questions
regarding the relocation package, please contact Denise Nicco, Director of
Relocation at (415) 817-8230.
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