ex1026.htm


    Exhibit
10.26

    


    2009 OFFICER SHORT-TERM
INCENTIVE PLAN

    


    On
February 17, 2009, the Compensation Committee of the PG&E Corporation Board
of Directors (“Committee”) approved the specific performance targets for each
component of the 2009 Short-Term Incentive Plan (“STIP”).  The
Committee previously approved the STIP structure and the weighting of each
component in December 2008.  Officers of PG&E Corporation and the
Utility are eligible to receive cash incentives under the STIP based on the
extent to which the adopted 2009 performance targets are met.  The
Committee will continue to retain full discretion as to the determination of
final officer STIP payments.

    


    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 2009 performance targets for each of the four other
measures set forth in the table below.  The 2008 performance results
for each of these measures are included for comparative purposes.

    


    2009 STIP Operational Performance
Targets(1)

    


    
      
        
          
            	
                    Measure

                  	 	
                    Relative
      Weight

                  	 	 	
                    2008
      Results

                  	 	 	
                    2009
      Target

                  	 
	
                    
                      Customer
      Satisfaction and Brand Health Index (Residential & Business)(2)

                    

                  	 	 	17.5	%	 	 	76.1	 	 	 	76.1	 
	
                    
                      Reliable Energy Delivery
      Index(3)

                    

                  	 	 	17.5	%	 	 	1.443	 	 	 	1.0	 
	
                    
                      Employee Survey (Premier)
      Index(4)

                    

                  	 	 	5	%	 	 	68.57	%	 	 	69.5	%
	
                    
                      Occupational
      Safety and Health Administration (OSHA) Recordable Injury Rate(5)

                    

                  	 	 	10	%	 	 	3.241	 	 	 	2.755	 


          

        

      

    

    


    
      	
              1.

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

            


    

     

    
      	
              2.

            	
              The
      Customer Satisfaction and Brand Health Index is the result of a quarterly
      survey performed by an independent research firm, Research International,
      and is a combination of a customer satisfaction score, which has a 75%
      weighting, as well as a brand favorability score (measuring the relative
      strength of the PG&E 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.

            


    

     

    
      	
              3.

            	
              The
      Reliable Energy Delivery Index is a composite index score that measures
      leading indicators of electric and gas reliability performance, including
      electric outage frequency and duration (System Average Interruption
      Frequency Index (SAIFI), Customer Average Interruption Duration Index
      (CAIDI)) and performance improvement in the resurvey of the Utility’s gas
      system.

            


    

     

    
      	
              4.

            	
              The
      Premier Survey is the primary tool used to measure employee engagement at
      PG&E Corporation and the Utility.  The employee index is
      designed around 15 key drivers of employee engagement and organizational
      health.  The average overall employee survey index score
      provides a comprehensive metric that is derived by adding the percent of
      favorable responses from all 40 core survey items (all of which fall into
      one of 15 broader topical areas), and then dividing the total sum by
      40.

            


    

     

    
      	
              5.

            	
              An
      “OSHA Recordable” is an occupational (job-related) injury or illness that
      requires medical treatment beyond first aid, or results in work
      restrictions, death or loss of consciousness. The “OSHA Recordable Rate”
      is the number of OSHA Recordables for every 200,000 hours worked, or for
      approximately 100 employees.  This metric measures the
      percentage reduction in the PG&E Corporation’s and the Utility’s OSHA
      Recordable rate from the prior year and is used to monitor the
      effectiveness of the companies’ safety programs, which are intended to
      significantly reduce the number and degree of employee injuries and
      illnesses.

            


    

    


     

    Cash
awards under the STIP may range from 30 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.