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COMMON STOCK AND SHARE-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2022
Common Stock And Share-Based Compensation [Abstract] |
COMMON STOCK AND SHARE-BASED COMPENSATION | COMMON STOCK AND SHARE-BASED COMPENSATION PG&E Corporation had 1,987,784,948 shares of common stock outstanding at December 31, 2022, which excludes 247,743,590 shares of common stock owned by ShareCo, and 230,000,000 shares of common stock owned by the Utility. PG&E Corporation held all of the Utility’s outstanding common stock at December 31, 2022. Equity Offerings During 2020, PG&E Corporation issued approximately 16 million PG&E Corporation equity units. The equity units represent the right of the unitholders to receive, on the settlement date, between 138 million and 168 million shares of PG&E Corporation common stock. The common stock received will be based on the value of PG&E Corporation common stock over a measurement period specified in the equity units purchase contracts and subject to certain adjustments as provided therein. The settlement date of the equity unit purchase contracts is August 16, 2023, subject to acceleration or postponement as provided in the purchase contracts. At the Market Equity Distribution Program On April 30, 2021, PG&E Corporation entered into an Equity Distribution Agreement (“Equity Distribution Agreement”) with Barclays Capital Inc., BofA Securities, Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities, LLC, as sales agents and as forward sellers (in such capacities as applicable, the “Agents” and the “Forward Sellers,” respectively), and Barclays Bank PLC, Bank of America, N.A., Credit Suisse Capital LLC and Wells Fargo Bank, National Association, as forward purchasers (the “Forward Purchasers”), establishing an at the market equity distribution program, pursuant to which PG&E Corporation, through the Agents, may offer and sell from time to time shares of PG&E Corporation’s common stock having an aggregate gross sales price of up to $400 million. PG&E Corporation has no obligation to offer or sell any of its common stock under the Equity Distribution Agreement and may at any time suspend offers under the Equity Distribution Agreement. The Equity Distribution Agreement provides that, in addition to the issuance and sale of shares of common stock by PG&E Corporation to or through the Agents, PG&E Corporation may enter into forward sale agreements (collectively, the “Forward Sale Agreements”) pursuant to which the relevant Forward Purchaser will borrow shares from third parties and, through its affiliated Forward Seller, offer a number of shares of common stock equal to the number of shares of common stock underlying the particular Forward Sale Agreement. On October 31, 2022, PG&E Corporation suspended the At the Market Equity Distribution Program until further notice. As of the suspension date, PG&E Corporation had not sold any shares pursuant to the Equity Distribution Agreement. Ownership Restrictions in PG&E Corporation’s Amended Articles Under Section 382 of the IRC, if a corporation (or a consolidated group) undergoes an “ownership change,” net operating loss carryforwards and other tax attributes may be subject to certain limitations (which could limit PG&E Corporation or the Utility’s ability to use these DTAs to offset taxable income). In general, an ownership change occurs if the aggregate stock ownership of certain shareholders (generally five percent shareholders, applying certain look-through and aggregation rules) increases by more than 50% over such shareholders’ lowest percentage ownership during the testing period (generally three years). The Amended Articles limit Transfers (as defined in the Amended Articles) that increase a person’s or entity’s (including certain groups of persons) ownership of PG&E Corporation’s equity securities to 4.75% or more prior to the Restriction Release Date (as defined in the Amended Articles) without approval by the Board of Directors of PG&E Corporation. On July 8, 2021, PG&E Corporation, the Utility, ShareCo and the Fire Victim Trust entered into the Share Exchange and Tax Matters Agreement, pursuant to which PG&E Corporation and the Utility made a “grantor trust” election for the Fire Victim Trust effective retroactively to the inception of the Fire Victim Trust. As a result of the grantor trust election, shares of PG&E Corporation common stock owned by the Fire Victim Trust are treated as held by the Utility and, in turn attributed to PG&E Corporation for income tax purposes. Consequently, any shares owned by the Fire Victim Trust, along with any shares owned by the Utility directly, are effectively excluded from the total number of outstanding equity securities when calculating a person’s Percentage Stock Ownership (as defined in the Amended Articles) for purposes of the 4.75% ownership limitation in the Amended Articles. Shares owned by ShareCo are also effectively excluded because ShareCo is a disregarded entity for income tax purposes. For example, although PG&E Corporation had 2,466,208,388 shares outstanding as of February 16, 2023, only 1,800,721,208 shares (that is, the number of outstanding shares of common stock less the number of shares held by the Fire Victim Trust, the Utility and ShareCo) count as outstanding for purposes of the ownership restrictions in the Amended Articles. As such, based on the total number of outstanding equity securities and taking into account the shares of PG&E Corporation common stock known to have been sold by the Fire Victim Trust as of February 16, 2023, a person’s effective Percentage Stock Ownership limitation for purposes of the Amended Articles as of February 16, 2023 was 3.46% of the outstanding shares. At various dates throughout 2022, the Fire Victim Trust exchanged Plan Shares for an equal number of New Shares in the manner contemplated by the Share Exchange and Tax Matters Agreement; in each case, the Fire Victim Trust thereafter reported that it sold the applicable New Shares. During the year ended December 31, 2022, the Fire Victim Trust’s sale of PG&E Corporation common stock in the aggregate amount of 230,000,000 shares resulted in an aggregate tax benefit of $870 million recorded in PG&E Corporation’s and the Utility’s Consolidated Financial Statements. As of February 16, 2023, to the knowledge of PG&E Corporation, the Fire Victim Trust had sold 290,000,000 shares of PG&E Corporation common stock in the aggregate. As of the date of this report, it is more likely than not that PG&E Corporation has not undergone an ownership change and consequently, its net operating loss carryforwards and other tax attributes are not limited by Section 382 of the IRC. Dividends On December 20, 2017, the Boards of Directors of PG&E Corporation and the Utility suspended quarterly cash dividends on both PG&E Corporation’s and the Utility’s common stock, beginning the fourth quarter of 2017, as well as the Utility’s preferred stock, beginning the three-month period ending January 31, 2018. On June 15, 2022, the Board of Directors of the Utility reinstated the dividend on the Utility’s common stock and declared a common stock dividend of $425 million that was paid to PG&E Corporation on June 17, 2022. On September 15, 2022, the Board of Directors of the Utility declared a common stock dividend of $425 million that was paid to PG&E Corporation on September 16, 2022. On December 15, 2022, the Board of Directors of the Utility declared a common stock dividend of $425 million that was paid to PG&E Corporation on December 20, 2022. No dividend is payable until declared by the Board of Directors of the Utility. In addition, the Corporation Revolving Credit Agreement requires that PG&E Corporation (1) maintain a ratio of total consolidated debt to consolidated capitalization of no greater than 70% as of the end of each fiscal quarter and (2) if revolving loans are outstanding as of the end of a fiscal quarter, a ratio of adjusted cash to fixed charges, as of the end of such fiscal quarter, of at least 150% prior to the date that PG&E Corporation first declares a cash dividend on its common stock and at least 100% thereafter. Under the Utility’s Articles of Incorporation, the Utility cannot pay common stock dividends unless all cumulative preferred dividends on the Utility’s preferred stock have been paid. Additionally, the CPUC requires the Utility to maintain a capital structure composed of at least 52% equity on average. On May 28, 2020, the CPUC approved a final decision in the Chapter 11 Proceedings OII, which, among other things, grants the Utility a temporary, five-year waiver from compliance with its authorized capital structure for the financing in place upon the Utility’s emergence from Chapter 11. Subject to the foregoing restrictions, any decision to declare and pay dividends in the future will be made at the discretion of the Boards of Directors and will depend on, among other things, results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Boards of Directors may deem relevant. Pursuant to the Confirmation Order, PG&E Corporation may not pay dividends on shares of its common stock until it recognizes $6.2 billion in Non-GAAP Core Earnings following the Emergence Date. “Non-GAAP Core Earnings” means GAAP earnings adjusted for certain non-core items as described in the Plan. PG&E Corporation is unable to predict when it will commence the payment of dividends on its common stock. Long-Term Incentive Plans The LTIP (i.e., the PG&E Corporation 2014 LTIP or the PG&E Corporation 2021 LTIP, as applicable) permits various forms of share-based incentive awards, including stock options, restricted stock units, performance shares, and other share-based awards, to eligible employees of PG&E Corporation and its subsidiaries. Non-employee directors of PG&E Corporation are also eligible to receive certain share-based awards. A maximum of 91 million shares of PG&E Corporation common stock (subject to certain adjustments) has been reserved for issuance under the LTIP, of which 53,350,101 shares were available for future awards at December 31, 2022. The following table provides a summary of total share-based compensation expense recognized by PG&E Corporation for share-based incentive awards for 2022:
(in millions) | 2022 |  | 2021 |  | 2020
Stock Options | $ | — |  |  | $ | — |  |  | $ | 3 |
Restricted stock units | 60 |  |  | 35 |  |  | 15 |
Performance shares | 55 |  |  | 21 |  |  | 17 |
Total compensation expense (pre-tax) | $ | 115 |  |  | $ | 56 |  |  | $ | 35 |
Total compensation expense (after-tax) | $ | 83 |  |  | $ | 40 |  |  | $ | 25 |
Share-based compensation costs are generally not capitalized. There was no material difference between PG&E Corporation and the Utility for the information disclosed above. Stock Options The exercise price of stock options granted under the LTIP and all other outstanding stock options is equal to the market price of PG&E Corporation’s common stock on the date of grant. Stock options generally have a 10-year term and vest over three years of continuous service, subject to accelerated vesting in certain circumstances. As of December 31, 2022, there were no unrecognized compensation costs related to nonvested stock options for PG&E Corporation. The fair value of each stock option on the date of grant is estimated using the Black-Scholes valuation method. No stock options were granted in 2022 or 2021. Expected volatilities are based on historical volatility of PG&E Corporation’s common stock. The expected dividend payment is the dividend yield at the date of grant. The risk-free interest rate for periods within the contractual term of the stock option is based on the U.S. Treasury rates in effect at the date of grant. The expected life of stock options is derived from historical data that estimates stock option exercises and employee departure behavior. There was no tax benefit recognized from stock options for the year ended December 31, 2022. The following table summarizes stock option activity for PG&E Corporation and the Utility for 2022:
| Number of Stock Options |  | Weighted Average Grant- Date Fair Value |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Outstanding at January 1 | 2,195,834 |  |  | $ | 7.42 |  |  |  |  | $ | — |
Granted (1) | — |  |  | — |  |  |  |  | — |
Exercised | — |  |  | — |  |  |  |  | — |
Forfeited or expired | (43,702) |  |  | 10.23 |  |  |  |  | — |
Outstanding at December 31 | 2,152,132 |  |  | 7.36 |  |  | 2.41 |  | — |
Vested or expected to vest at December 31 | 2,152,132 |  |  | 7.36 |  |  | 2.41 |  | — |
Exercisable at December 31 | 2,152,132 |  |  | $ | 7.36 |  |  | 2.41 |  | $ | — |
(1) Represents additional payout of existing stock option grants. Restricted Stock Units Restricted stock units generally vest equally over three years. Vested restricted stock units are settled in shares of PG&E Corporation common stock accompanied by cash payments to settle any dividend equivalents associated with the vested restricted stock units. Compensation expense is generally recognized ratably over the vesting period based on grant-date fair value. The weighted average grant-date fair value for restricted stock units granted during 2022, 2021, and 2020 was $11.40, $11.01, and $9.25, respectively. The total fair value of restricted stock units that vested during 2022, 2021, and 2020 was $46 million, $19 million, and $31 million, respectively. The tax detriment from restricted stock units that vested in 2022 was $4 million. In general, forfeitures are recorded ratably over the vesting period, using historical averages and adjusted to actuals when vesting occurs. As of December 31, 2022, $74 million of total unrecognized compensation costs related to nonvested restricted stock units was expected to be recognized over the remaining weighted average period of 1.48 years. The following table summarizes restricted stock unit activity for 2022:
| Number of Restricted Stock Units |  | Weighted Average Grant- Date Fair Value
Nonvested at January 1 | 10,090,375 |  |  | $ | 11.00 |
Granted | 5,850,945 |  |  | 11.40 |
Vested | (4,175,008) |  |  | 10.96 |
Forfeited | (788,192) |  |  | 11.18 |
Nonvested at December 31 | 10,978,120 |  |  | $ | 11.21 |
Performance Shares Performance shares generally vest three years after the grant date. Following vesting, performance shares are settled in shares of common stock based on either PG&E Corporation’s total shareholder return relative to a specified group of industry peer companies over a three-year performance period (“TSR”) or an internal PG&E Corporation metric (subject in some instances to a multiplier based on TSR). Dividend equivalents, if any, are paid in cash based on the amount of common stock to which the recipients are entitled. Compensation expense attributable to performance shares is generally recognized ratably over the applicable three-year period based on the grant-date fair value determined using a Monte Carlo simulation valuation model for the TSR-based awards or the grant-date market value of PG&E Corporation common stock for internal metric based awards. The weighted average grant-date fair value for performance shares granted during 2022, 2021, and 2020 was $13.44, $11.83, and $9.62 respectively. In general, forfeitures are recorded ratably over the vesting period, using historical averages and adjusted to actuals when vesting occurs. As of December 31, 2022, $43 million of total unrecognized compensation costs related to nonvested performance shares was expected to be recognized over the remaining weighted average period of 0.94 years. The following table summarizes activity for performance shares in 2022:
| Number of Performance Shares |  | Weighted Average Grant- Date Fair Value
Nonvested at January 1 | 8,567,009 |  |  | $ | 9.64 |
Granted | 3,105,604 |  |  | 13.44 |
Vested | — |  |  | — |
Forfeited | (650,559) |  |  | 10.15 |
Nonvested at December 31 | 11,022,054 |  |  | $ | 10.68 |

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