Exhibit 10.21

2011 OFFICER SHORT-TERM INCENTIVE PLAN

On February 15, 2011, the Compensation Committee of the PG&E Corporation Board
of Directors (“Committee”) approved the specific performance targets for each
component of the 2011 Short-Term Incentive Plan (“STIP”). The Committee
previously approved the STIP structure and the weighting of each component in
December 2010. Officers of PG&E Corporation and Pacific Gas and Electric Company
(“Utility”) (together, the “Companies”) are eligible to receive cash incentives
under the STIP based on the extent to which the adopted 2011 performance targets
are met. Target cash awards under the STIP may range from 40 percent to 100
percent of base salary depending on officer level, with a maximum payout of 200
percent of the officer’s targeted award, as determined by the Committee. The
Committee will retain complete discretion to determine and make final STIP
awards to all officers and non-officer employees.

The corporate financial performance target, with a weighting of 50%, is based on
PG&E Corporation’s budgeted earnings from operations that were previously
approved by the Board of Directors, consistent with the basis for reporting and
guidance to the financial community. As with previous earnings performance
scales, unbudgeted items impacting comparability such as changes in accounting
methods, workforce restructuring, and one-time occurrences will be excluded.

The Committee also approved the 2011 performance targets for each of the four
other measures set forth in the table below. The 2010 performance results for
each of these measures are included for comparative purposes.

2011 STIP Operational Performance Targets(1)

 

Measure

   Relative
Weight   2010
Results   2011
Target  

Operational Excellence Index(2)

(Previously Reliable Energy Delivery Index & Safety Index)

   25.0%   0.902 (REDI)
1.000 (Safety)     1.000   

Customer Satisfaction and Brand Health Index (Residential & Business)(3)

   15.0%   74.60     75.30   

Employee Engagement Index (Premier) Survey(4)

   5%   67.59     69.59   

Environmental Leadership(5)

   5%   1.842     1.000   

 

1. As explained above, 50% of the STIP award will be based on achievement of
corporate earnings from operations targets.

 

2. The Operational Excellence Index is a new measure that combines two
previously separate measures: the Reliable Energy Delivery Index (REDI) and the
Safety Index. This new measure is comprised of three subcomponents: (1) Electric
Reliable Energy Delivery, which measures the Utility’s reliable energy delivery
with respect to electricity, (2) Gas Reliable Energy Delivery, which measures
the Utility’s reliable energy delivery with respect to gas, and (3) Safety
Performance, which measures performance on employee safety and reinforces the
Companies’ commitment to employees and the importance of safety to the
Companies’ performance. The Safety Performance subcomponent includes the same
two metrics used in the 2010 STIP: (1) Occupational Safety and Health
Administration (OSHA) Recordable Rate, and (2) Motor Vehicle Incident (MVI)
Rate. The Committee will retain complete discretion to reduce the final Safety
Performance rating downward to zero based on the Companies’ overall safety
performance for 2011. The Companies’ overall safety performance will be measured
both by the quantitative measures described above and by qualitative
performance. With respect to qualitative performance, the Committee will
consider the collective impact that the Companies’ business operations have had
on public and employee safety.

 

3. The Customer Satisfaction and Brand Health Index measures Utility customer
perceptions of the Utility’s performance in delivering services, such as
reliability, pricing of services, customer service experience, and favorability
toward the Pacific Gas and Electric Company brand. The score on this measure is
the result of a quarterly survey performed by an independent research firm,
BlueOcean Market Intelligence, and is a combination of (1) a customer
satisfaction score, which has a 75% weighting, and (2) a brand favorability
score (measuring the relative strength of the Pacific Gas and Electric Company
brand against a select group of companies), which has a 25% weighting. The
customer satisfaction score will measure overall satisfaction with the Utility’s
operational performance in delivering its services. The brand favorability score
will measure residential, small business. and medium business customer
perceptions.

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4. The Employee Engagement Index is based on eight questions from the Premier
Survey that were developed by the Companies’ survey vendor, Valtera Corporation.
These eight questions are part of Valtera Corporation’s national survey that
includes more than 180 companies on Fortune’s “Best Companies to Work For” and
“Most Admired Companies” lists. The Premier Survey is the primary tool used to
measure employee engagement at PG&E Corporation and the Utility.

 

5. Environmental compliance is measured by the (1) number of Notices of
Violation (NOV) received, and (2) the Utility’s operational footprint in
reducing energy and water usage, and increasing administrative waste diversion
from landfill. Energy reduction is measured by the percent reduction in millions
of British thermal units for a subset of Utility facilities. Water use reduction
is measured by the percentage reduction in water consumption, in gallons, for a
subset of Utility facilities. Administrative waste diversion is measured by the
percentage reduction in administrative waste disposal at a subset of Utility
facilities. Administrative waste includes non-hazardous waste, such as glass,
paper, and certain metals produced by buildings. The focus of this measure is to
divert waste from landfills, primarily through increased recycling efforts.
Reductions are cumulative each year. Targets represent additional reductions
over those achieved in 2010.