DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

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Portland General Electric Company

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Table of Contents

LOGO

Portland General Electric
Notice of 2021 Annual
Meeting of Shareholders
and Proxy Statement


Table of Contents

LOGO

Message from our Board Chair

Dear Portland General Electric shareholders,

Public companies’ proxy statements tell you, among other things, who serves on the company’s board of directors and how that board is selected, elected, organized, governed, and paid, as well as how you can communicate with directors.

However, it is much less common for proxy statements to tell you about what the board of directors worked on and accomplished during the year. As the independent chair of a very talented and engaged board, I want to fill that gap here by summarizing a few highlights of our work from 2020.

The year 2020 was challenging for most of us. Our employees, customers, and communities had to confront a pandemic, wildfires, the need to show leadership as the social justice movement brought important issues into acute focus, and, in our case, large energy trading losses.

We, as a board, along with our management team, stepped up to manage—and to learn from—each of these. To assess, manage and learn from the energy trading losses, we, the board, formed a special committee of independent directors assisted by independent counsel to conduct a thorough review. As a result of this effort, we, among other things:

 

   

Made clear we would not seek recovery for the losses through customer prices,

 

   

Enhanced our own oversight role and reporting to the board and audit and risk committee,

 

   

Determined that it would be inconsistent with our pay-for-performance philosophy for our CEO, our former CFO and one other executive officer to receive annual incentive compensation,

 

   

Oversaw management’s strengthening of energy trading policies and risk reporting, and

 

   

Engaged in active communication with our investors, regulators and other stakeholders.

We continued to set the governance tone at the top by continuing our steady board refreshment—with four new independent board members added over the past three years. We also made clear, via our own composition, the importance of diversity, equity and inclusion at PGE: a majority of our board nominees are diverse by gender or by race.

We also have responsibly designed and administered PGE’s compensation plans to align our incentives directly and explicitly with the core elements of our strategy, including:

 

   

Financial and operating health and performance,

 

   

Customer satisfaction,

 

   

Power availability and service quality,

 

   

The integration of our grid, and

 

   

Environmental leadership, including carbon reduction.

We hope this summary helps give you context as you read the pages that follow. We ask for your voting support on the items described in the accompanying proxy statement and invite your additional input via any of the means described in the proxy statement.

Sincerely,

 

LOGO   

LOGO

Jack Davis

Board Chair

 

                
   


Table of Contents

LOGO

Letter from our

Chief Executive Officer

Dear employees, customers, investors and PGE stakeholders,

The Indian activist and statesperson Jawaharlal Nehru observed that crises force us to think. We all had a lot to think about in 2020. But what strikes me most about the year is that, through it all, the PGE community pulled together and faced the challenges of 2020 head-on.

When faced with large trading losses in August, our board and leadership team acted with purpose to assess, manage, disclose and learn. We committed not to seek regulatory recovery to ensure that customer prices would not be impacted; strengthened energy trading policies, risk management, operational structures and reporting practices; and held individuals accountable.

When wildfires spread throughout parts of our service area, we proactively shut off power in our highest risk area and, in partnership with first responders and state agencies, shut power off in eight additional at-risk areas to ensure the safety of our customers and the people of Oregon. As the wildfires were contained, we restored power to a record number of our customers.

We also know that, more generally, the growing population’s increasing stress on our planet’s climate and resources requires urgent attention. In late 2020, we recommitted to our focus on clean, green energy and announced our aim to achieve companywide net zero greenhouse gas emissions by 2040. To meet this goal, we’ll transform every part of our business. Actions we took in 2020 demonstrated our focus on our strategy to decarbonize and electrify to deliver clean energy safely and affordably to our customers:

 

   

In October 2020, we closed our coal-fired Boardman plant after a decade of planning.

 

   

We brought online the wind power from the Wheatridge Renewable Energy Facility, a joint project between PGE and a subsidiary of NextEra Energy, and expect to make the solar and battery storage parts of that project operational around the end of 2021.

 

   

We began development (along with Daimler Trucks North America) of “Electric Island”—a large public charging station for medium and heavy-duty commercial vehicles, anticipated to be the first of its kind in the US.

 

   

We installed smart thermostats for our customers at no charge to help them use less energy when others are using more, saving money and furthering our renewables transition.

These efforts build on our eleven-year track record of having the largest renewable energy program in the US. You can read more in our SASB- and EEI-aligned environmental, social and governance reporting on our website.

We are also proud of our work, as one of the Pacific Northwest’s leading employers, to set an example for how a public company can address inequities in our system and communities. We consistently apply an equity lens to address disparities that can affect under-served households, communities of color and people with disabilities. We set the equity tone at the top as we do for customer service and business ethics: in addition to our diverse board, four of our ten executive officers are diverse by race or gender. While there is more work to be done, we are committed to ensuring that anyone who performs their best has a leadership path at Portland General.

Thank you for your support through a difficult year. We work every day to earn your trust. We ask for your voting support on the items described in the accompanying proxy statement.

Sincerely,

 

LOGO

  

LOGO

Maria Pope

President and CEO

 

                
   


Table of Contents

LOGO

Notice of Virtual Annual Meeting of

Shareholders

Annual Meeting Information

 

Meeting Date:    Wednesday, April 28, 2021
Meeting Time:    8:00 a.m., Pacific Time
Meeting Access:   

virtualshareholdermeeting.com/POR2021

*There will be no physical location for shareholders to attend.*

Record Date:    March 1, 2021

Ways to Vote

 

LOGO

 

 

ONLINE

Vote online in advance of the meeting: proxyvote.com

  

LOGO

 

 

BY PHONE

Vote by phone from the US
or Canada:

1-800-690-6903

  

LOGO

 

 

BY MAIL

If you have received a
printed version of our
proxy materials, you may
vote by mail.

  

LOGO

 

 

BY BALLOT

Attend our virtual Annual Meeting and vote by
following the instructions
on the meeting website.

 

      Vote the Board
Recommends
   Page Reference
(for more information)

Item 1  Election to our Board of Directors of the 12 nominees identified in the following proxy statement for a term of one year

   FOR    7

Item 2  Advisory vote on the compensation of our named executive officers

   FOR    62

Item 3  Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2021

   FOR    65

            Transaction of any other business that may properly come before our 2021 Annual Meeting of Shareholders

         

Please read the accompanying proxy statement for more information about the items of business we intend to cover during the meeting. Please see the “Questions and Answers” section on pages 69 to 72 for important information about the virtual annual meeting, the proxy materials, and voting.

Your vote is important to us. We encourage you to exercise your shareholder right to vote as soon as possible, regardless of whether you plan to attend the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

 

LOGO

Nora Arkonovich

Corporate Secretary

 

                
   


Table of Contents

Table of Contents

OUR COMPANY      1  

What Are We?

     1  

Who Are We?

     1  

How Did We Do In 2020?

     4  

How We Are Making a Difference for Our Environment

     4  

How We Are Making a Difference for and with our Employees

     5  

How We Are Making a Difference for our Communities

     5  

How We Are Structured and Governed to be Sustainable

     6  
ITEM 1: ELECTION OF OUR BOARD OF DIRECTORS      7  

Who We Are

     7  

Our Skills, Experience and Backgrounds

     14  

How We Are Selected, Elected and Evaluated

     15  

How We Are Organized

     18  

How We Govern

     22  

How We Are Paid

     27  

How You Can Communicate with Us

     29  
COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT      30  
COMPENSATION DISCUSSION AND ANALYSIS      31  

Executive Summary

     32  

2020 Executive Compensation

     36  

How We Set Executive Pay

     46  

Other Compensation Policies and Practices

     48  
EXECUTIVE COMPENSATION TABLES      51  

Summary Compensation Table

     51  

Grants of Plan-Based Awards

     53  

Outstanding Equity Awards at December 31, 2020

     54  

Stock Units Vested

     55  

Pension Benefits

     55  

Non-Qualified Deferred Compensation

     56  

Termination and Change in Control Benefits

     57  
PAY RATIO DISCLOSURE      61  
ITEM 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION      62  
AUDIT AND RISK COMMITTEE MATTERS      63  

Audit and Risk Committee Report

     63  

Principal Accountant Fees and Services

     64  

Pre-Approval Policy for Independent Auditor Services

     64  
ITEM 3: RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP      65  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      66  
ADDITIONAL INFORMATION      68  

Defined Terms and Acronyms

     68  

Find Information Online

     68  

Questions and Answers

     69  

2022 Annual Meeting of Shareholders

     73  
 

 

Important notice regarding the availability of proxy materials for the 2021 Annual Meeting of Shareholders

We are mailing our shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials and submit proxy votes online. Our proxy statement and 2020 Annual Report are available at investors.portlandgeneral.com/financial-information/annual-reports. You may also access our proxy materials at proxyvote.com.

We are making the proxy statement and the form of proxy first available on or about March 16, 2021.

Cautionary Note Regarding Forward-Looking Statements

The following proxy statement contains forward-looking statements, including those regarding implementation of our business plans, technology transitions, our business, strategies and financial performance, our offerings of new services, and other statements that are not historical fact, and actual results could differ materially from these forward-looking statements. Risk factors that could cause actual results to differ are set forth in the “Risk Factors” section, as well as other sections, of our 2020 Annual Report on Form 10-K, available on our website investors.portlandgeneral.com/financial-information/sec-filings, and other filings with the SEC. All forward-looking statements are based on management’s estimates, projections, and assumptions as of the date of this proxy statement, and the Company undertakes no obligation to update any such statements.

 

                
   


Table of Contents

Our Company

What Are We?

We are a 133-year-old integrated electric energy company engaged in the generation, wholesale purchase, transmission, distribution and retail sale of electricity in Oregon. We provide energy to approximately 908,000 residential, commercial and industrial customers and have a service area population of 1.9 million.

We meet the region’s energy needs with a diverse mix of generation that includes hydro, wind, solar, coal and natural gas. We have committed to a companywide goal of achieving net zero greenhouse gas emissions by 2040, and our voluntary renewable energy program is the largest in the U.S. We expect to meet or exceed our ambitious and public milestones to decarbonize and electrify, while continuing to serve our customers safely, efficiently, financially sustainably, and respectfully.

We are of, by, and for the people of Oregon. We strive to serve and address the needs of our customers and communities, and in doing so, to have a positive impact on the world.

Who Are We?

We are pleased to share with you in this proxy statement extensive information about our Board of Directors and our compensation practices. We are also a company with over 2,800 employees, millions of customers and an even larger collection of stakeholders in our communities. We would be remiss if we didn’t share with you, very briefly, some information about each of these, starting with our senior leaders, including our named executive officers for 2020.

 

     LOGO

    

MARIA POPE

 

PRESIDENT AND CEO

 

Ms. Pope is President, Chief Executive Officer and a member of the Board of Directors of Portland General Electric Company. She was appointed President on October 1, 2017 and Chief Executive Officer on January 1, 2018. She served from 2013 to 2017 as Senior Vice President of Power Supply, Operations and Resource Strategy, overseeing PGE’s generation plants, energy supply portfolio, and long-term resource strategy. Ms. Pope joined PGE in 2009 as Senior Vice President of Finance, Chief Financial Officer and Treasurer. She served on PGE’s Board of Directors from 2006 to 2008. Prior to joining PGE, she served as Chief Financial Officer for Mentor Graphics Corporation and held senior operating and finance positions within the forest products and consumer products industries. She began her career in banking with Morgan Stanley.

 

EDUCATION

BA, College of Arts and Sciences, Georgetown University

MBA, Stanford Graduate School of Business

For more information, see Ms. Pope’s bio in Item 1: Election of our Board of Directors – Who We Are

 

 

   

    Portland General Electric 2021 Proxy    

 

   
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Table of Contents

    

 

    2021    

 

   

    

 

 

     LOGO

    

JAMES AJELLO

 

SENIOR VICE PRESIDENT, FINANCE, CHIEF FINANCIAL OFFICER AND TREASURER

 

Mr. Ajello has served as the Chief Financial Officer and Senior Vice President of Finance and Treasurer at Portland General Electric Company since January 1, 2021. He joined PGE in November 2020 as a senior advisor prior to his transition to the CFO role, bringing an extensive background in both energy and finance, including serving as executive vice president and CFO for Hawaiian Electric Industries (HEI) from 2009 to 2017, where he helped lead its clean energy transformation. In 2020, he became an independent director of HEI’s Hawaiian Electric Company, where he serves on the Audit Committee and from 2017 was an independent director of HEI’s American Savings Bank and a member of its Risk Committee and member of HEI’s compensation committee. Prior to joining HEI, Mr. Ajello served as senior vice president of Business Development at Reliant Energy and spent 15 years as managing director of the Energy and Natural Resources Group of UBS Warburg/UBS Securities. He has also chaired the U.S. Department of Energy’s Environmental Management Advisory Board.

 

EDUCATION

BA, State University of New York Oneonta

MPA, Syracuse University

 

Graduate, Advanced Management Program of the European Institute of Business Administration (INSEAD)

 

 

     LOGO     

JAMES LOBDELL

 

FORMER SENIOR VICE PRESIDENT, FINANCE, CHIEF FINANCIAL OFFICER AND TREASURER

 

Mr. Lobdell served as PGE’s Chief Financial Officer, Senior Vice President of Finance and Treasurer from March 1, 2013 until his retirement on December 31, 2020. Over the course of his 36-year career with the company, Mr. Lobdell was instrumental in driving financial improvements and helping ensure PGE continues to deliver safe, reliable and affordable electricity to our customers. Before assuming the role of CFO, Mr. Lobdell served as Vice President of Power Operations & Resource Strategy from 2004 to 2013, Vice President of Power Operations from 2002 to 2004, Vice President, Risk Management Reporting, Controls and Credit from 2001 to 2002, and Senior Director of Business Development from 1999 to 2001. He also served as Vice President, Finance and Administration for FirstPoint Utility Solutions from 1997 to 1998.

 

EDUCATION

BA, University of Oregon

 

 

 
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OUR COMPANY

 

     LOGO     

LISA KANER

 

VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE COMPLIANCE OFFICER

 

Ms. Kaner is responsible for all of PGE’s legal affairs. She coordinates the company’s ethics and governance and Federal Energy Regulatory Commission compliance activities. Before joining PGE in 2017, Ms. Kaner successfully handled contract, employment and other commercial litigation cases at the Portland office of Markowitz Herbold PC. In addition to being honored by the Portland Business Journal as one of the region’s most influential businesspeople, Ms. Kaner has been recognized for her public service by the Oregon State Bar. She is an active member of the community, where her contributions include serving on the board of Impact NW, an organization to prevent homelessness.

 

EDUCATION

BA, cum laude, University of Pennsylvania

JD, magna cum laude, Villanova University School of Law

 

 

     LOGO     

JOHN KOCHAVATR

 

VICE PRESIDENT, INFORMATION TECHNOLOGY AND CHIEF INFORMATION OFFICER

 

Mr. Kochavatr is responsible for the infrastructure, operations and development of all information systems at PGE. He joined the Company in 2018. Mr. Kochavatr has more than 20 years of experience in the Information Technology industry. Before joining PGE, he was senior vice president and CIO at SUEZ Water Technologies & Solutions (formerly General Electric Water and Process Technologies) from 2017-2018 and chief information officer and chief digital officer from 2012-2017 and served in several IT leadership positions at GE Power (formerly GE Energy) for 11 years. Mr. Kochavatr also currently serves as board chair of the Technology Association of Oregon.

 

EDUCATION

BA, University of California, Los Angeles

MBA, University of Chicago’s Booth School of Business

 

 

     LOGO     

LARRY BEKKEDAHL

 

VICE PRESIDENT, GRID ARCHITECTURE, INTEGRATION & SYSTEMS OPERATIONS

 

Mr. Bekkedahl oversees PGE operational areas and is responsible for advancing PGE’s integrated smart grid strategy since 2019. Mr. Bekkedahl joined PGE in 2014 and until 2019 served as vice president of Transmission & Distribution, bringing more than three decades of leadership experience in the energy industry. Before joining PGE, he was senior vice president for transmission services at the Bonneville Power Administration and held leadership positions at Clark Public Utilities, PacifiCorp and Montana Power Company. Mr. Bekkedahl serves on the Electric Power Research Institute, Research Advisory Committee, the Stanford University Bits and Watts Advisory Council, the University of Akron Energy Advisory Committee, and the All Hands Raised board for Portland Public Schools Foundation.

 

EDUCATION

BS, Electrical Engineering, Montana State University

 

 

   

    Portland General Electric 2021 Proxy    

 

   
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    2021    

 

   

    

 

 

How Did We Do In 2020?

In 2020, we faced a pandemic, social unrest, economic uncertainty, a devastating wildfire season, strong winds, and significant energy trading losses. Despite all of these challenges and changes, we were able to deliver solid results in 2020 and our underlying business remained strong:

 

   

We finished the year earning $1.72 per diluted share, which includes our previously disclosed $1.03 per diluted share of energy trading losses.

 

   

We raised our dividend.

 

   

We achieved a 6% reduction in our operating and maintenance expenses year-over-year, driven by efficiencies implemented throughout our operations.

 

   

We continued to advance our operational, environmental, social, and strategic imperatives.

 

   

We grew our overall customer base by 1.4%.

 

   

We maintained a solid balance sheet, including strong liquidity and investment-grade credit ratings.

 

   

We reaffirmed our long-term earnings growth guidance of 4% to 6% off a 2019 base year.

How We Are Making a Difference For Our Environment

Oregonians understand, as we do, the urgency of creating a low-carbon, clean-and-affordable energy, water-and-natural-resources-protected world in which we and future generations can live safely and comfortably. We are particularly proud that through the challenges of 2020 we accelerated progress on our ambitious environment-protecting programs. Here are a few highlights:

 

   

We closed our coal-fired Boardman plant, brought the Wheatridge Renewable Energy Facility online and established two partnerships to bring more solar and hydro power to Oregon customers.

 

   

We set new climate goals to reduce greenhouse gas emissions associated with the electricity we serve our customers by at least 80% (relative to 2010 levels) by 2030 and aim to achieve companywide net zero greenhouse gas emissions by 2040. We have also set an aspirational goal of achieving zero greenhouse gas emissions associated with the power we serve our customers by 2040.

 

   

We responded to the historic Oregon wildfires decisively.

 

   

We and our partner began construction on a large public charging station for medium and heavy-duty commercial vehicles, anticipated to be the first of its kind in the US.

 

   

We and our partners are completing a smart water and micro-hydro system to generate electricity from city water pipeline excess pressure.

 

   

We are piloting a residential-based energy storage system to increase accessibility of solar and smart battery resources.

 

   

We recently completed the largest habitat restoration project in the City of Portland and on the Willamette River. The Harborton Restoration Project will transform our Harborton substation property into a haven for wildlife, including threatened salmon and sensitive frog species, for decades to come. We will maintain the site for a decade until a long-term steward assumes responsibility for protecting and maintaining the site.

 

   

In 2020, we also achieved modern-day records for our adult coho salmon return to the West Side Hydropower Project on the Clackamas River–the only river system in the Lower Columbia Basin to do so. The investment of $90 million in our fish passage facilities and collaboration with various resources managers have allowed us to achieve this result.

 

   

We are working with the City of West Linn to redevelop the historic waterfront where our oldest hydro-electric facility is located. Our work balances historic preservation, environmental impacts, cost and human needs.

 

   

We continued our progress toward our goal of creating a smarter more integrated and reliable grid.

 

   

We undertook numerous steps to increase transportation electrification in our state and put a plan in place to convert 60% of our own fleet to electric vehicles in ten years.

 

 
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OUR COMPANY

 

How We Are Making a Difference For And With Our Employees

 

   

We provide over 2,800 benefits-paying, stable, full time jobs to members of our communities.

 

   

We provide employees with benefits that address their needs holistically and support their wellness.

 

   

We are a leader in diversity, equity and inclusion (DEI) practices, though we acknowledge that we have more work to do:

 

   

A majority of our board nominees are diverse by gender or race.

 

   

Black, Indigenous and People of Color (BIPOC) comprise over 22% of our employees and almost 19% of our management.

 

   

Almost a third of our employees and over 31% of our management, including our CEO, are female.

 

   

In 2021 we were once again recognized with two international awards that reflect our ongoing dedication to creating a diverse, equitable and inclusive workplace.

 

   

We scored a perfect 100 on the Human Rights Campaign Foundation’s Corporate Equality Index as a Best Place to Work for LGBTQ Equality.

 

   

Bloomberg LP recognized PGE by inclusion in its annual Gender-Equality Index, which tracks the performance of companies committed to supporting gender equality through policy development, representation and transparency.

 

   

Our DEI initiatives touch every aspect of our business. Examples include:

 

   

Over 95% of our job interview panels in 2020 were diverse by race and/or gender.

 

   

We have a leadership development program for BIPOC employees and a Women in Leadership program.

 

   

Our leaders receive DEI dashboards quarterly and all managers receive unconscious bias training.

 

   

Beginning in 2021, our leaders’ incentive compensation includes DEI metrics.

 

   

We are committed to doubling our diversity supplier spend (currently approximately 9%) by 2022.

 

   

The seriousness with which we take safety is reflected in:

 

   

Our proactive response to wildfire threats.

 

   

A decrease in our OSHA recordable incident safety rate in 2020, continuing a trend from the prior two years.

 

   

Our comprehensive response to COVID-19:

 

   

We acted quickly to protect our employees by making changes to work schedules, work locations, cleaning practices, work protocols and information services—including encouraging employees to take advantage of our comprehensive health, wellness, family, and leave programs.

 

   

Our multi-faceted support for customers and communities is highlighted below.

 

   

We listen: we conduct quarterly all-employee pulse surveys and take follow-up actions based on the input we receive.

How We Are Making a Difference For Our Communities

 

   

When the pandemic reduced many customers’ ability to afford power, we stepped in to help, including by:

 

   

Suspending late fees and disconnections.

 

   

Providing proactive customer service to help our customers develop workable plans to meet their energy needs, including through time-payment arrangements.

 

   

Securing emergency assistance funds to be distributed through Oregon Housing Community Services.

 

   

Working with non-profits who provide energy assistance payments.

 

   

Partnering with other utilities to seek emergency federal assistance.

 

   

Providing financial support via the PGE Foundation to address food insecurity, energy assistance, small-business support and worker relief funds.

 

   

    Portland General Electric 2021 Proxy    

 

   
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    2021    

 

   

    

 

 

   

We continued our ongoing support of our communities in other ways:

 

   

PGE Foundation contributed close to $1.7 million to Oregon nonprofits in 2020. The foundation, which serves as the philanthropic arm of PGE, was created through an endowment for the purpose of improving the quality of life for Oregonians and has awarded more than $25 million to community organizations across the state since its inception in 1997.

 

   

We increased investments to address community needs associated with Oregon’s historic wildfires and racial equity.

 

   

We launched PGE Project Zero, a social impact initiative designed to engage youth in creating cleaner, greener, more equitable communities through climate and clean energy education, environmental stewardship projects and green job internships. As a part of PGE Project Zero, we partnered with Portland Public Schools to create the nation’s first K-12 open-source climate literacy program.

 

   

Our employees also stepped up their community support despite facing their own challenges:

 

   

55% of our employees participated in our employee giving program in 2020.

 

   

Together, PGE, our employees and retirees and PGE Foundation donated $5.6 million to community nonprofits.

 

   

Our employees also spent 18,200 hours volunteering in 2020.

 

   

We continued to use technology to improve customers’ experience, satisfaction, energy conservation and cost-saving capabilities:

 

   

We installed hundreds of smart thermostats for our customers at no charge to help them use less energy.

 

   

We launched a cloud-based platform and mobile app and integrated PGE Marketplace to more efficiently serve and empower customers.

 

   

We continued to increase customer trust and satisfaction, even in a difficult year:

 

   

Our customers’ trust increased 4% to 87% for residential customers and increased 1% to 98% with key customers (based on surveys conducted by a third-party market research firm).

 

   

“Customer delight” increased to an all-time high of 62% (based on residential, commercial and industrial customer ratings) and the 2020 J.D Power Customer Satisfaction Index placed us #4 overall among Large West utilities.

How We Are Structured And Governed To Be Sustainable

We have a best-practice governance profile designed to support financial, environmental and social sustainability. It includes:

 

   

An independent Board Chair,

 

   

Annually elected directors,

 

   

One share one vote (no dual class ownership),

 

   

No supermajority or “poison pill” provisions,

 

   

Majority voting for director elections,

 

   

Shareholder right to act by written consent,

 

   

A steadily refreshed board with a majority of nominees who are diverse by gender and/or race,

 

   

Good internal and external pay parity,

 

   

Strong shareholder support in our Say on Pay votes, and

 

   

Significant director-shareholder engagement.

In 2020, we undertook a comprehensive refresh of our enterprise risk management policies, systems and practices anchored to COSO (Committee of Sponsoring Organizations of the Treadway Commission) and ISO (International Organization for Standardization) 13000.

As an essential service provider, we are committed to providing our customers with clean, affordable and reliable energy, while supporting our employees and communities.

 

 
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Table of Contents

Item 1:

Election of our Board of Directors

Who We Are

We believe our slate of 12 director nominees, whose biographical information we share in the following pages, brings to our Board a diverse range of skills, attributes and experience needed to provide effective oversight of the Company. Our nominees have held senior leadership roles at public companies or other large organizations and have extensive experience in a variety of fields, including utility operations and regulation, technology, health care, academia, finance and accounting, corporate governance, law, public policy, and consulting. All of our nominees have a reputation for integrity, honesty and adherence to high ethical standards. The biographical information provided here is current as of March 1, 2020.

 

 

The Board of Directors

unanimously recommends that you vote “FOR” each of the following nominees.

 

 

LOGO   

RODNEY BROWN

 

Compensation and Human Resources
and Finance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2007

 

EDUCATION

BA, Political Science, Baylor University

JD, University of Texas School of Law

 

SELECTED CURRENT POSITIONS

Board member, National Audubon Society

Board of Trustees chair, Bullitt Foundation

 

SELECTED PAST POSITIONS

Co-Chair, Governor’s Carbon Emissions Task Force

Member, Governor’s Committee on Transforming

Washington’s Budget

Board member, Sightline Institute

 

BACKGROUND AND QUALIFICATIONS

Mr. Brown, 64, is a founding partner of Cascadia Law Group PLLC, a Seattle, Washington law firm that specializes in environmental law. Mr. Brown’s practice focuses on environmental and land use issues relating to pollution control, project permitting, and climate change. He is the principal author of Washington’s Superfund law, the Model Toxics Control Act, and works to improve environmental regulations. From 1992 to 1996, Mr. Brown was a Managing Partner at the Seattle office of Morrison & Foerster, LLP, a large international law firm. He has served numerous for-profit and non-profit boards. Mr. Brown’s qualifications to serve on our Board include his experience as an environmental lawyer, his extensive knowledge of environmental laws and regulations, his knowledge of government and public affairs, and his experience as a management consultant for organizations handling large infrastructure projects and projects with challenging environmental issues.

  

 

   

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LOGO   

JACK DAVIS

 

Board Chair

 

Nominating and Corporate Governance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2012;

Board Chair since 2013

 

EDUCATION

BS, Medical Technology, Electrical Engineering, New

Mexico State University

 

PUBLIC COMPANY BOARD EXPERIENCE

Pinnacle West Capital Corporation (2001-2008)

 

OTHER CORPORATE BOARD EXPERIENCE

Arizona Public Service Company (1998-2008)

 

SELECTED OTHER PAST POSITIONS

Chair, Western Systems Coordinating Council

Board member, Edison Electric Institute,

National Electric Reliability Council,

Arizona Community Foundation

 

BACKGROUND AND QUALIFICATIONS

Mr. Davis, 74, served as CEO of Arizona Public Service Company (APS), Arizona’s largest electricity provider, from September 2002 until his retirement in March 2008, and as President of APS from October 1998 to October 2007. During his 35 years at APS, Mr. Davis held executive and management positions in various areas of the company, including commercial operations, generation and transmission, customer service, and power operations. Mr. Davis also served as President and Chief Operating Officer of Pinnacle West Capital Corporation, the parent company of APS, from September 2003 to March 2008. Mr. Davis is a former chair of the Western Energy Supply and Transmission Associates and the Western Governors’ Association task force on energy issues. Mr. Davis’ qualifications to serve on our Board include his in-depth knowledge of the utility industry, including utility regulation, line and generation operations, and safety and environmental matters, his extensive leadership experience gained in senior executive positions at APS and Pinnacle West, and his knowledge and experience from serving on other public company boards.

  
        
LOGO   

KIRBY DYESS

 

Chair, Compensation and Human Resources Committee and Nominating and Corporate Governance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2009

 

EDUCATION

BA, Physics, University of Idaho

Postgraduate studies, Biochemistry,

Portland State University

Postgraduate studies, Management,

Stanford University

 

PUBLIC COMPANY BOARD EXPERIENCE

Itron, Inc. (2006-2018)

Viasystems Group, Inc. (2010-2015)

Merix Corporation (2002-2010)

 

OTHER CORPORATE BOARD EXPERIENCE

Prolifiq Software (current)

Compli (2007-2018)

Menasha Corporation (1997-2007)

 

SELECTED OTHER PAST POSITIONS

Member, College Savings Board

President and board member, Oregon Board of

Higher Education

Board member, Oregon Health & Science University

Chair, Oregon Community Foundation

 

 

BACKGROUND AND QUALIFICATIONS

Ms. Dyess, 74, is Principal at Austin Capital Management LLC, where she evaluates, invests in, and assists early-stage companies in the Pacific Northwest. Prior to forming Austin Capital Management LLC in 2003, Ms. Dyess spent 23 years in various executive and management positions at Intel Corporation, most recently as Corporate Vice President and Director of Intel Capital Operations from 2001-2002, where she oversaw the acquisition and integration of 50 businesses and management of a portfolio of over 400 companies worldwide. Her previous positions at Intel included VP and Director of Human Resources and VP, New Business Development. Ms. Dyess’ qualifications to serve on our Board include the experience she acquired during her career at Intel Corporation and work with early stage companies in the areas of risk management, human resources, operations, government relations, mergers and acquisitions, sales and marketing, information technology, and the initiation of start-up businesses, and her extensive experience serving on boards of other companies.

 

  

 

 
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LOGO   

MARK GANZ

 

Audit and Risk and Compensation and
Human Resources Committee Member

     

INDEPENDENT DIRECTOR SINCE 2006

 

EDUCATION

BA, History/Theology, Georgetown University

JD, Georgetown University

 

OTHER CORPORATE BOARD EXPERIENCE

Cambia Health Solutions, Inc. (2004-2020)

Prime Therapeutics, Inc. (2017-2020)

Trizetto Corporation (2009-2016)

Echo Health Ventures (2016-2020)

 

SELECTED OTHER CURRENT POSITIONS

Board of Regents, University of Portland

Board of Regents, Georgetown University

Chair, Cascade Pacific Council of the Boy Scouts of

America

Board member, Coalition to Transform Advanced

Illness Care

 

SELECTED OTHER PAST POSITIONS

Board & Executive Committee, Oregon Business

Council

BlueCross BlueShield Association

Chair, America’s Health Insurance Plans

Chair, Greater Portland Inc.

 

 

BACKGROUND AND QUALIFICATIONS

Mr. Ganz, 60, served from 2003 until his retirement in 2020 as President and Chief Executive Officer of Cambia Health Solutions, Inc. (“Cambia”), a parent corporation of several companies offering healthcare products and services. Previously, Mr. Ganz held a number of positions with Cambia, including President and CEO of Regence BlueCross of Oregon, Chief Legal Officer, Corporate Secretary, and Chief Ethics and Compliance Officer and had responsibility for federal public policy. Mr. Ganz was a member of Cambia’s board of directors until his retirement in 2020, as well as a board member of a number regional and national organizations. Mr. Ganz’s qualifications to serve on our Board include his experience overseeing multiple companies within a large diversified corporate group, his knowledge of health care as a regulated industry, his experience in various executive roles, his 29 years of experience in the practice of corporate and regulatory law, and his expertise in executive compensation and compensation structures, corporate governance, and ethics and compliance programs.

  
        
LOGO   

MARIE OH HUBER

 

Compensation and Human Resources and Nominating and Corporate Governance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2019

 

EDUCATION

BA, Economics, Yale University

JD, Northwestern University School of Law

 

SELECTED CURRENT POSITIONS

Board, Silicon Valley Community Foundation

University Council, Yale University

Law Board, Northwestern Pritzker School of Law

 

SELECTED PAST POSITIONS

Board, James Campbell Company LLC

 

BACKGROUND AND QUALIFICATIONS

Ms. Huber, 59, has over 25 years of strategic business, legal and public policy experience in global Fortune 500 companies. She heads the global legal and government relations and public policy functions for eBay, Inc., where she serves as Senior Vice President, Chief Legal Officer, General Counsel & Secretary. Previously, Ms. Huber was responsible for communications, regulatory affairs and quality assurance, government affairs and philanthropy at Agilent Technologies. Huber joined eBay in 2015 from Agilent where she served as senior vice president, general counsel and secretary since 2009. For the previous ten years she also held positions of increasing responsibility at Agilent and prior to that at HP. She started her career at large law firms in New York and San Francisco. Ms. Huber’s qualifications to serve on our Board include her extensive track record as a business leader and in advising boards of directors and executive leadership on business and operational matters, M&A, corporate governance, legal and compliance, IP, litigation, privacy and cybersecurity matters.

 

  

 

 

   

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LOGO   

KATHRYN JACKSON, PhD

 

Compensation and Human Resources
and Finance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2014

 

EDUCATION

BS, Physics, Grove City College

MS, Industrial Engineering Management,

University of Pittsburgh

MS and PhD, Engineering and Public Policy,

Carnegie Mellon University

 

PUBLIC COMPANY BOARD EXPERIENCE

Cameco Corporation (current)

EQT (current)

Rice Acquisition Corporation (current)

Rice Energy, Inc. (2017)

Hydro One, Inc. (2015-2018)

 

OTHER CORPORATE BOARD EXPERIENCE

Duquesne Light Holdings, Inc. (current)

Duquesne Light Company (current)

 

SELECTED CURRENT POSITIONS

Member, National Academy of Engineering

Advisory Boards, Carnegie Mellon University and

University of Pittsburgh

 

SELECTED PAST POSITIONS

Board member, Independent System Operator of

New England

 

BACKGROUND AND QUALIFICATIONS

Dr. Jackson, 63, has served since 2016 as the Director of Energy and Technology Consulting at KeySource, Inc., where she provides strategic consulting services to clients in business growth, technology development and energy services. From 2014-2015 Dr. Jackson was Chief Technology Officer and SVP at RTI International Metals, Inc., a leading U.S. producer of titanium mill products. She served as Chief Technology Officer and SVP of Research & Technology at Westinghouse Electric Company, LLC from 2009 to 2014; and as the VP of Strategy, Research & Technology from 2008 to 2009. Prior to joining Westinghouse Electric Company, LLC, Dr. Jackson served for 17 years at the Tennessee Valley Authority, where she held various executive positions, including EVP of River System Operations and Environment and the corporate environmental officer. Dr. Jackson’s qualifications to serve on our Board include her background in engineering, her experience in senior executive roles and as a member and chair of the board of the Independent System Operator of New England, and her knowledge and experience in the areas of technology, large capital projects, contracts and vendor negotiations, generation facilities and energy trading operations, research and development on utility assets and systems, and environmental health and safety.

  
        
LOGO   

MICHAEL LEWIS

 

Audit and Risk and Finance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2021

 

EDUCATION

BS, Electrical Engineering, University of Florida

MBA, Nova Southeastern University

 

PUBLIC COMPANY BOARD EXPERIENCE

Newpark Resources, Inc. (current)

 

OTHER CORPORATE BOARD EXPERIENCE

Pacific Gas and Electric Co. (Aug–Dec 2020)

 

SELECTED CURRENT POSITIONS

Board member, Bay Area Chapter of the

American Red Cross

Member, California Governor’s Earthquake

Advisory Commission

Board member, Association of Edison Illuminating

Companies

 

BACKGROUND AND QUALIFICATIONS

Mr. Lewis, 58, is a retired senior executive with more than 35 years of experience in electric utility operations. Lewis served as Interim President of Pacific Gas and Electric Company (PG&E) from August to December 2020. During that time, he oversaw PG&E’s gas and electric operations, including wildfire prevention and response efforts, grid resiliency initiatives, vegetation management programs, and emergency preparedness. Prior to that, Lewis served as PG&E’s SVP of Electric Operations and VP of Electric Distribution. Before joining PG&E in 2018, Mr. Lewis held a number of senior executive positions at Duke Energy, including SVP and Chief Distribution Officer (2016 to 2018), with responsibility for distribution operations across six states, and SVP and Chief Transmission Officer (2015 to 2016). Before the Duke Energy/Progress Energy merger in 2012, Lewis was SVP of energy delivery for Progress Energy Florida, where he was responsible for hurricane preparedness and grid hardening initiatives. Mr. Lewis’s qualifications to serve on our Board include his executive leadership experience and in-depth knowledge of utility operations, including electric transmission and distribution, wildfire prevention and response, disaster preparedness, grid resiliency, large capital projects and risk management and safety programs.

  

 

 
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LOGO   

MICHAEL MILLEGAN

 

Audit and Risk and Finance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2019

 

EDUCATION

BA, MBA, Angelo State University

 

PUBLIC COMPANY BOARD EXPERIENCE

Wireless Technology Group, Inc. (current)

CoreSite Realty Corporation (current)

 

SELECTED CURRENT POSITIONS

Strategic advisor and investor, Windpact, Inc.,

Vettd, Inc.

Board, Virginia Mason Foundation

 

SELECTED PAST POSITIONS

President, Verizon Global Wholesale Group

 

BACKGROUND AND QUALIFICATIONS

Mr. Millegan, 62, is the Founder and Chief Executive Officer of Millegan Advisory Group 3 LLC, where he advises early-stage companies on strategy that drives technology innovation and shareholder value since 2018. Previously, he held a variety of executive leadership and management positions within Verizon, where he led large-scale and scope business units. As president of Verizon Global Wholesale Group, he was responsible for $11 billion in sales revenue, 13,000 employees and $1 billion in annual capital spending. Mr. Millegan’s qualifications to serve on our Board include his experience overseeing significant business units within a large corporate group, his experience in various executive and management roles, and his background in operations in a regulated industry, global sales and marketing, digital media platforms, network infrastructure deployment, cloud computing, cybersecurity, and supply chain management and operations.

  
        
LOGO   

NEIL NELSON

 

Chair, Audit and Risk Committee and Nominating
and Corporate Governance Committee Member

     

INDEPENDENT DIRECTOR SINCE 2006

 

EDUCATION

BA, Chemical Engineering, Brigham Young University

 

OTHER CORPORATE BOARD EXPERIENCE

Siltronic Corporation (2003-2020)

 

SELECTED PAST EXPERIENCE

Chair & Vice Chair, Oregon Business and Industry

 

BACKGROUND AND QUALIFICATIONS

Mr. Nelson, 62, is a former President of Siltronic Corporation, a Portland-based global leader in hyperpure silicon wafers and a partner to many top-tier chip manufacturers, where he served from 2003 until his retirement in 2020. He previously served as Vice President of Operations of Siltronic from 2000 to 2003, and as VP of Operations at Mitsubishi Silicon America from 1998 to 2000. Mr. Nelson’s qualifications to serve on our Board include his experience in overseeing company-wide and divisional operations for Siltronic Corporation and divisional operations for Mitsubishi Silicon America, his experience in overseeing manufacturing operations at the department, division and company-wide levels, his experience in risk oversight and environmental issues, and his experience overseeing safety systems and the financial reporting process for Siltronic Corporation.

  

 

   

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LOGO   

LEE PELTON, PhD

 

Chair, Nominating and Corporate Governance Committee and Audit and Risk Committee Member

     

INDEPENDENT DIRECTOR SINCE 2006

 

EDUCATION

BA, English/Psychology, Wichita State University

PhD, English, Harvard University

 

OTHER CORPORATE BOARD EXPERIENCE

PLATO Learning, Inc. (2005-2008)

 

SELECTED CURRENT POSITIONS

Board and Executive Committee, Boston Chamber of Commerce

Board chair, Boston Arts Academy Foundation

Trustee, Barr Foundation

Boston Municipal Research Bureau

Board chair, Boston Racial Equity Fund

 

BACKGROUND AND QUALIFICATIONS

Dr. Pelton, 70, is President of Emerson College in Boston, Massachusetts, where he has served since 2011. He is scheduled to retire from Emerson College and assume the role of President and Chief Executive Officer of The Boston Foundation, a philanthropic organization with over $1 billion in assets, in June 2021. Before joining Emerson, he served as President of Willamette University in Salem, Oregon (1999 to 2011), Dean and Professor of English Literature at Dartmouth College (1991 to 1998), and Dean of Students and later Dean of Colgate University (1986 to 1991). Dr. Pelton has served on numerous educational and cultural boards and committees, including the Board of Directors of the American Council on Education (past chair), the National Association of Independent Colleges and Universities, the Association of American Colleges & Universities, the Museum of African American History (Boston), and the Harvard University Board of Overseers. In 2020, he was recognized by the Boston Chamber of Commerce as a 2020 Distinguished Bostonian and included in the Boston Business Journal’s 50 Most Powerful Leaders in Boston list. Dr. Pelton’s qualifications to serve on our Board include his executive leadership at academic institutions, his civic leadership, his experience serving on boards of other companies, and the unique perspective he brings to various issues considered by the board as a result of his professional background and accomplishments.

 

  
        
LOGO   

MARIA POPE

 

President and Chief Executive Officer, Portland General Electric Company

     

DIRECTOR SINCE 2018

 

EDUCATION

BA, College of Arts and Sciences, Georgetown University

MBA, Stanford Graduate School of Business

 

PUBLIC COMPANY BOARD EXPERIENCE

Umpqua Holdings Corp. (current)

Pope Resources, LP (2012- 2020)

Sterling Financial Corp. (2013-2014)

TimberWest Forest Corp. (2008-2013)

 

OTHER CORPORATE BOARD EXPERIENCE

Premera Blue Cross (2001-2013)

 

SELECTED CURRENT POSITIONS

Executive Committee, Edison Electric Institute

Director, Electric Power Research Institute

Member, Oregon Global Warming Commission

Member, Oregon Business Council

Director, The Nature Conservancy in Oregon

Director, Federal Reserve Bank of San Francisco

 

SELECTED PAST POSITIONS

Chair, OHSU Governing Board

Chair, Oregon Symphony

Chair, Council of Forest Industries

 

 

BACKGROUND AND QUALIFICATIONS

Ms. Pope, 56, is President and Chief Executive Officer of Portland General Electric Company. She was appointed President on October 1, 2017 and Chief Executive Officer on January 1, 2018. She served from 2013 to 2017 as SVP of Power Supply, Operations and Resource Strategy, overseeing PGE’s generation plants, energy supply portfolio, and long-term resource strategy. Ms. Pope joined PGE in 2009 as SVP of Finance, Chief Financial Officer and Treasurer. She served on PGE’s Board of Directors from 2006 to 2008. Prior to joining PGE, she served as Chief Financial Officer for Mentor Graphics Corporation and held senior operating and finance positions within the forest products and consumer products industries. She began her career in banking with Morgan Stanley. Ms. Pope’s qualifications to serve on our Board include her current role as President and Chief Executive Officer, her extensive knowledge of the Company and the utility industry, her diverse leadership experience in business and financial roles, and her corporate and civic board experience.

 

  

 

 
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LOGO   

JAMES TORGERSON

 

Finance and Compensation and Human Resources Committee Member

     

INDEPENDENT DIRECTOR SINCE 2021

 

EDUCATION

BBA Accounting, Cleveland State University

 

PUBLIC COMPANY BOARD EXPERIENCE

Rice Acquisition Corporation (current)

AVANGRID, Inc. (2015-2020)

UIL Holdings Corporation (2006-2015)

 

SELECTED CURRENT POSITIONS

Board of Trustees, Yale-New Haven Hospital

Board of Trustees, Yale New Haven Health System

 

SELECTED PAST POSITIONS

Chair, American Gas Association

Board and Executive Committee member,

Edison Electric Institute (EEI)

Co-Chair, EEI Committee on Reliability, Security

and Business Continuity

Member, Electricity Subsector Coordinating Council

 

BACKGROUND AND QUALIFICATIONS

Mr. Torgerson, 68, served as CEO of AVANGRID, Inc., a sustainable energy company with approximately $30 billion in assets and operations in 24 states, from 2015 until his retirement in 2020. Mr. Torgerson was president and CEO of UIL Holdings Corporation from 2006 until 2015, when it merged with Iberdrola USA to form AVANGRID. During his time at UIL Holdings, Mr. Torgerson oversaw its expansion from a regional electric utility to a diversified energy delivery company and one of the largest generators of wind electricity in the U.S., serving natural gas and electric utility customers across multiple states. Before joining UIL Holdings, Torgerson was president, CEO and director of the Midwest Independent Transmission System Operator, Inc. from 2000 to 2006. He also previously served as chief financial officer for several natural gas and electric utilities, including Puget Sound Energy and Washington Energy Company. Before transitioning to the utility industry, Mr. Torgerson served as VP of development for Diamond Shamrock Corporation, where he also held various finance and strategic planning positions. Mr. Torgerson’s qualifications to serve on our Board include his executive leadership experience and extensive knowledge of the utility industry, including clean energy development, finance and accounting, Northwest energy markets, regulation, risk management and strategic planning.

        

 

   

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Our Skills, Experience and Backgrounds

Our Board of Directors brings diverse skills, experiences and backgrounds to inform and enrich their oversight functions and deliberations. The following skills matrix captures just some of these characteristics. We considered these skills, experiences and backgrounds, together with the biographical information provided on pages 7 to 13, in determining that our nominees should be members of our Board. Check marks indicate featured skills and the absence of a check mark should not be read to suggest no relevant expertise in the specified area.

 

                         
    

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Senior Leadership

Service in executive leadership position at a large organization

                         
                         

Public Company Boards

Service on the board of another public company or other significant public company experience

                               
                         

Finance and Accounting

Knowledge of or experience in finance, accounting, financial reporting or auditing processes and standards

                             
                         

Utility Operations

Experience in the management of a regulated utility

                                   
                         

Technology and Transformation

Experience and knowledge of technology and/or business transformation

                           
                         

Environmental and Sustainability

Experience with environmental policy, regulation, and compliance and/or sustainability practices

                               
                         

Regulation and Public Policy

Experience with the regulatory or public policy process

                               
                         

Human Capital and Culture

Expertise in the areas of employee development, succession planning, compensation and organizational ethics

                               
                         

Major Capital Projects

Experience overseeing, managing or advising on large scale capital projects in the industrial sector

                                   
                         

Risk Management and Compliance

Skills and experience with the identification, assessment and management of business or financial risk factors

                             
                         

Business Development and/or M&A

Experience with developing and implementing strategies for growth, including with M&A transactions

                             
                         

Regional Business Ties

Experience working in the business and public policy environment in which the Company operates

                                   
                         

Gender

  M   M   F   M   F   F   M   M   M   M   F   M
                         

Racial/Ethnic Diversity

                                       

 

 
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Table of Contents

How We Are Selected, Elected and

Evaluated

Our bylaws provide our Board of Directors with authority to determine the number of directors and to fill vacancies on the Board. Our Board currently has 14 members; however, directors John Ballantine and Charles Shivery will not be standing for reelection and will no longer be board members following the election of directors at the Annual Meeting. The Board has reduced the number of directors from 14 to 12, effective upon the election of directors at the Annual Meeting.

Directors are elected by a majority of the votes cast at the Annual Meeting. Election by a majority means that a director nominee is elected if the number of votes cast “FOR” a director nominee exceeds the number of votes cast “AGAINST” that director nominee. A shareholder can vote to “ABSTAIN,” but that vote will not have any effect in determining the election results. In an uncontested election, a director who does not receive a majority of “FOR” votes cast must submit a letter of resignation to the Board. See page 17 for more information about our director resignation policy.

If a nominee becomes unwilling or unable to serve as a director, the Board may propose another person in place of that nominee, and the individuals designated as shareholders’ proxies will vote to appoint that proposed person. Alternatively, the Board may decide to reduce the number of directors constituting the full Board.

Board Recruitment and Succession Planning

Identifying and recommending individuals for appointment or election to our Board is a core responsibility of the Nominating and Corporate Governance Committee (Governance Committee). The committee carries out this responsibility through a year-round process described below:

 

LOGO

Evaluation of Board Composition. Each year the Governance Committee evaluates the size and composition of the Board to assess whether they are appropriate in light of the Company’s evolving needs. In making this evaluation, the committee considers the Company’s strategic direction, current director qualifications, the results of Board and committee self-assessments, and legal and regulatory requirements. The committee also considers whether there may be a need to fill a future Board vacancy in light of our director retirement and tenure policy or anticipated dates of retirement. Generally, under our director retirement and tenure policy, which is contained in our Corporate Governance Guidelines, candidates will not be nominated for election after age 75, and candidates elected after July 25, 2018 will not be nominated to serve on the Board for more than 12 years.

If the Governance Committee identifies a need to fill a future Board vacancy or add to the mix of skills and qualifications represented on the Board, the committee oversees the director recruitment process described below.

 

   

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Candidate Recruitment. The Governance Committee identifies new Board candidates through a variety of methods, including the use of third-party search firms, suggestions from current directors, shareholders, or employees, and self-nominations. Our two newest directors, Michael Lewis and James Torgerson, were recommended by a third-party search firm prior to their nomination and election to the Board of Directors.

Director candidates identified by shareholders are evaluated by the same criteria applied to other director nominees, which are described below. To have a candidate considered by the Governance Committee, a shareholder should submit the recommendation in writing and include the following information:

 

   

The shareholder’s name and evidence of ownership of the Company’s common stock, including the number of shares owned and the length of time of ownership, and

 

   

The candidate’s name, resume, or listing of qualifications to be a director and consent to be named as a director nominee if selected by the Governance Committee and nominated by the Board.

The recommendation and information described above should be sent to the Chair of the Governance Committee, in care of our Corporate Secretary, at Portland General Electric Company, 121 SW Salmon Street, 1WTC1301, Portland, Oregon 97204.

Candidate Evaluation. In evaluating director candidates, the Governance Committee seeks to identify individuals who, at a minimum, have the following characteristics:

 

   

A reputation for honesty, ethical conduct and sound business judgment,

 

   

Demonstration of significant accomplishment in their field,

 

   

Experience and skills in the utility industry or other areas important to the strategic direction and operation of the Company,

 

   

Availability and willingness to be diligent in fulfilling the responsibilities of Board membership, and

 

   

Freedom from conflicts of interest.

In addition to evaluating a candidate’s individual qualifications, the Board and the Governance Committee consider how a candidate would contribute to the overall mix of experience, qualifications, skills and other attributes represented on our Board. The Company believes it is important that the Board exhibit diversity across a variety of parameters, including age, gender, and race and our Board is diverse in each of those ways as well as others; the Board has therefore not felt the need to adopt a formal diversity policy to capture its current practices.

Recommendation to the Board of Directors. Each year in advance of our Annual Meeting of Shareholders, the Governance Committee recommends a group of nominees to be presented to the shareholders for election to the Board. As appropriate, the committee also recommends candidates for appointment to the Board between annual meetings. Directors who are appointed by the Board between annual meetings stand for election at the next Annual Meeting of Shareholders.

For our 2021 Annual Meeting of Shareholders, the Board selected our 12 director nominees based on their demonstration of the core attributes described above, and the belief that each can make substantial contributions to our Board and Company. See pages 7 to 14 for more information about the backgrounds and qualifications of our nominees.

Determination of Director Independence

The New York Stock Exchange (NYSE) corporate governance listing standards require a majority of our directors and each member of our Audit and Risk Committee, Compensation Committee, and Governance Committee to be independent. Our Corporate Governance Guidelines also require a majority of our directors to be independent. For a director to be considered independent under the NYSE listing standards, the Board must affirmatively determine that the director does not have any direct or indirect material relationship with the Company, including any of the relationships specifically proscribed by the NYSE independence standards.

To assist the Company in determining the independence of Board members and candidates, the Board has adopted Director Independence Standards, which identify types of relationships that could exist between the Company and a director that would prevent the director from being independent. Our Director Independence Standards are contained in our Corporate Governance Guidelines, published on our website at investors.portlandgeneral.com/corporate-governance. Our Board considers a director or director nominee independent if he or she meets the criteria for independence in both the NYSE listing standards and our Director Independence Standards. The Board considers all relevant information available to it in making its independence determinations.

 

 
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During its annual review of director independence in 2021, the Board considered whether there were any transactions or relationships between the Company and any director or any member of his or her immediate family (or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder) and whether there were charitable contributions to not-for-profit organizations for which a director or an immediate family member of a director serves as a board member or executive officer.

As a result of this review, the Board affirmatively determined that the following directors nominated for election at the 2021 Annual Meeting of Shareholders are independent under the NYSE listing standards and our Director Independence Standards: Rodney Brown, Jack Davis, Kirby Dyess, Mark Ganz, Marie Oh Huber, Kathryn Jackson, Michael Lewis, Michael Millegan, Neil Nelson, Lee Pelton and James Torgerson. The Board had previously determined that John Ballantine and Charles Shivery, who are not standing for re-election, were independent under the NYSE listing standards and our Director Independence Standards. The Board determined that Maria Pope is not independent in light of her service as the Company’s President and CEO.

Board and Committee Self-Assessments

Each year the Board conducts a self-assessment of its performance and effectiveness as well as that of its committees. The Chair of the Governance Committee leads the Board’s assessment process, which requires each director to complete a written evaluation of the performance of both the Board as a whole and, to the extent applicable, the committees on which the director serves. These evaluations are anonymous, except to the extent a director elects otherwise. In addition, at least every two years, the Governance Committee Chair conducts confidential interviews with each of the Board members to solicit additional feedback on Board and committee performance. The results of our directors’ feedback are summarized and provided to all of the Board members and the Chair of the Governance Committee leads a discussion regarding the results with the Governance Committee as well as the full Board. As a result of these reviews, in 2020 the Board made adjustments to the topics handled by its committees and management.

Director Resignation Policy

The Company has adopted a director resignation policy, which is contained in our Corporate Governance Guidelines. Under the policy, any incumbent director who fails to receive a majority vote in an uncontested election is expected to tender a resignation within five days following the certification of election results. The Governance Committee will consider the offer of resignation and, within 45 days following the date of the election of directors, recommend to the Board whether to accept or reject the offer of resignation. The committee will base its decision on factors the committee deems relevant, including the stated reason or reasons why shareholders voted against the director’s reelection and whether the director’s resignation from the Board would be in the best interests of the Company and its shareholders. The Board will act on the committee’s recommendation within 90 days after the date of the shareholders’ meeting at which the election of directors occurred. A director who is required to tender a resignation may not participate in the deliberations or decision regarding the offer of resignation. Within four business days after the Board’s decision with respect to an offer of resignation, the Company will publicly disclose the Board’s decision and, if applicable, reasons for rejecting the offer of resignation, in a Form 8-K filed with the SEC.

 

   

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How We Are Organized

Leadership Structure

Our Board believes that the Company is best served by maintaining the flexibility to determine its leadership structure based on the evolving needs of the Company. Our Corporate Governance Guidelines call for the appointment of a Board Chair but permit the Board to appoint any director to serve in this role. The duties of our Board Chair include:

 

   

Presiding over and managing meetings of the Board,

 

   

Approving agendas and materials for Board meetings,

 

   

Serving as the primary liaison between management and the other non-management directors,

 

   

Advising senior management on strategy and significant matters as appropriate, and

 

   

Representing the Board at the Company’s Annual Meeting of Shareholders.

We currently separate the roles of CEO and Board Chair. Jack Davis, our current Board Chair, is independent as defined in the NYSE listing standards and our own Director Independence Standards, which are contained in our Corporate Governance Guidelines. We believe our current leadership structure promotes strong independent Board oversight and management accountability and allows our CEO to focus her time and efforts on establishing our strategic direction and managing the affairs of the Company.

Our Board periodically reviews our leadership structure to determine whether it continues to serve the interests of the Company. Our Corporate Governance Guidelines require the independent directors to appoint a Lead Independent Director if the Board Chair is not independent. The Lead Independent Director’s duties would include coordinating the activities of the independent directors, coordinating the agenda for and moderating sessions of the non-management directors, and facilitating communications among the other members of the Board.

Board Committees

Each year our Governance Committee reviews the composition and mandates of our standing committees to ensure that they continue to support the effective execution of the Board’s responsibilities. The Board approves committee and chair assignments at least annually.

The Board has established four active standing committees: the Audit and Risk Committee, the Nominating and Corporate Governance Committee, the Compensation and Human Resources Committee, and the Finance Committee. Each standing committee has a Board-approved charter, which is reviewed annually by the respective committee and by our Governance Committee. The Board may also establish temporary committees as needed to address specific issues that arise from time to time. As discussed below, in 2020 the Board established a special committee to review matters related to our 2020 energy trading losses. The Board has also established a committee that is available to act on behalf of the Board in the event of a significant cybersecurity incident.

Each Board committee may retain and compensate consultants or other advisors as necessary for it to carry out its duties. To the extent permitted by law and the NYSE listing standards, Board committees may form subcommittees and delegate authority to the subcommittees, or to a committee chair individually.

All of the current members of the Board’s committees have been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and our Director Independence Standards. Directors who serve on the Audit and Risk Committee and the Compensation and Human Resources Committee meet additional, heightened independence and qualification criteria applicable to directors serving on these committees under NYSE listing standards.

Below are brief descriptions of each standing Board committee. For more detailed descriptions, please refer to the committee charters available on our website at investors.portlandgeneral.com/corporate-governance.

 

 
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AUDIT AND RISK COMMITTEE

 

   

Chair

Neil Nelson

 

Other Members

Mark Ganz

Michael Lewis (as of 1/1/2021)

Michael Millegan

Lee Pelton

Charles Shivery (retiring 4/28/21)

 

Meetings in 2020: 5

 

Average attendance: 92%

 

Independence/Qualifications:

 

•  All members are independent within the meaning of the NYSE listing standards and the Company’s Director Independence Standards.

 

•  All members are “financially literate” within the meaning of the NYSE listing standards.

 

•  Messrs. Ganz, Lewis, Nelson and Shivery are “audit committee financial experts” within the meaning of applicable SEC rules.

  

Key Responsibilities

 

•  Assists the Board in its oversight of our financial statements, independent auditors’ qualifications, independence and performance, and internal controls over financial reporting

 

•  Appoints and oversees the work of our registered public accounting firm

 

•  Reviews the annual audited financial statements and quarterly financial information with management and the independent registered public accounting firm

 

•  Pre-approves all audit, audit-related, tax and other services, if any, provided by the registered public accounting firm

 

•  Appoints and oversees the work of the Company’s Director of Internal Audit Services, reviews the performance and approves the compensation of the Internal Audit Director, and approves the Company’s annual internal audit plan and budget

 

•  Approves the Audit and Risk Committee Report for inclusion in the Company’s proxy statement

 

•  Oversees the development and implementation of the Company’s ethics and compliance programs

 

•  Assists the Board with the oversight of the Company’s enterprise risk management program

COMPENSATION AND HUMAN RESOURCES COMMITTEE

 

   

Chair:

Kirby Dyess

 

Other Members:

John Ballantine (retiring 4/28/2021)

Rodney Brown

Mark Ganz

Marie Oh Huber

Kathryn Jackson

James Torgerson

 

Meetings in 2020: 7

 

Average attendance: 100%

 

Independence/Qualifications:

•  All members are independent within the meaning of the NYSE listing standards and the Company’s Director Independence Standards.

  

Key Responsibilities

 

•  Evaluates the performance of the CEO and makes a recommendation regarding her compensation to the independent directors

 

•  Approves the compensation of the executive officers other than the CEO

 

•  Reviews the Company’s non-management director compensation program and recommends to the Board appropriate levels of compensation for non-management directors

 

•  Advises on human capital management matters, including talent management and diversity, equity and inclusion

 

•  Reviews succession plans for executive officers other than the CEO, either as a committee or together with the full Board

 

•  Reviews the Compensation Discussion and Analysis contained in the Company’s proxy statement and approves the Compensation and Human Resources Committee Report for inclusion in the proxy statement

 

•  Together with the other independent directors, oversees the application of the Company’s Incentive Compensation Clawback and Cancellation Policy

 

•  Approves severance or termination payment arrangements for executive officers

 

   

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    2021    

 

   

    

 

 

No Compensation Committee Interlocks

The individuals who served on the Compensation Committee during 2020 were John Ballantine, Rodney Brown, Kirby Dyess, Mark Ganz, Marie Oh Huber, and Kathryn Jackson. All members of the committee during 2020 were independent directors and no member was an employee or former employee of the Company or any of its subsidiaries. During 2020, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on our Compensation Committee or Board or had any relationship with the Company requiring disclosure under SEC regulations.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

 

   

Chair:

Lee Pelton

 

Other Members:

Jack Davis

Kirby Dyess

Marie Oh Huber (as of 1/1/2021)

Neil Nelson

 

Meetings in 2020: 5

 

Average attendance: 100%

 

Independence/Qualifications:

 

•  All members are independent within the meaning of the NYSE listing standards and the Company’s Director Independence Standards.

  

Key Responsibilities

 

•  Reviews the size of the Board and recommends to the Board any appropriate changes

 

•  Identifies and recommends to the Board individuals qualified to serve as directors and on committees of the Board

 

•  Takes a leadership role in shaping our corporate governance, including the policies and practices described in our Corporate Governance Guidelines

 

•  Reviews environmental and social trends and recommends appropriate oversight of relevant environmental and social issues by the Board and its standing committees

 

•  Oversees the Company’s political spending in accordance with our Political Engagement Policy

 

•  Oversees the self-assessment of the Board and its standing committees

 

•  Reviews any Company transactions involving directors, nominees, executive officers and other “related persons” in accordance with the Company’s Related Person Transaction Policy

FINANCE COMMITTEE

 

   

Chair:

Charles Shivery (retiring 4/28/2021)

Michael Lewis (effective 4/28/2021)

 

Other Members:*

John Ballantine (retiring 4/28/2021)

Rodney Brown

Kathryn Jackson

Michael Millegan

James Torgerson (as of 1/1/2021)

 

Meetings in 2020: 5

 

Average attendance: 92%

 

Independence/Qualifications:

•  All members are independent within the meaning of the NYSE listing standards and the Company’s Director Independence Standards.

  

Key Responsibilities

 

•  Reviews and recommends to the Board annual financing plans and capital and operating budgets

 

•  Reviews and approves or recommends to the Board certain costs for projects, initiatives, transactions and other activities within the ordinary business of the Company

 

•  Reviews our capital and debt structure, approves or recommends to the Board the issuance of debt, and recommends to the Board the issuance of equity

 

•  Reviews and recommends to the Board dividends, dividend payout goals and objectives

 

•  Reviews earnings forecasts

 

•  Assists the Board in overseeing the management of risks associated with capital projects, finance activities, credit and liquidity

 

•  Reviews and recommends to the Board investment policies and guidelines

 

•  Oversees the management of benefit plan assets

* Ms. Huber also served as a member of the Finance Committee in 2020.

 

 
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Cyber Incident Response Committee of the Board

In 2020 the Board established a committee with authority to act on behalf of the Board in the event of a significant cybersecurity incident that, in the judgment of the CEO, should be referred to the Board for advice and decision-making. Although the Audit and Risk Committee continues to have oversight responsibility for matters related to cybersecurity and information technology, in the event of a cyber incident, the Cyber Incident Response Committee would be available to facilitate timely feedback and decision-making by the Board. The Cyber Incident Response Committee is made up of those directors who serve as Chair of the Board and the members of the Audit and Risk Committee. There were no meetings of the Cyber Incident Response Committee in 2020.

Special Committee of the Board

In addition to these standing committees, in August 2020 our Board established a special committee of the Board (the Special Committee) to review the circumstances surrounding the Company’s third quarter energy trading losses. The Committee members, each of whom is independent, were Jack Davis, our Board Chair who also served as chair of the Special Committee, and John Ballantine, Kathryn Jackson, Neil Nelson and Charles Shivery. The Special Committee held 11 meetings in 2020. Each meeting included an executive session at which no Company employees were present. The Special Committee engaged its own independent counsel to assist it in its review. As previously announced, the Special Committee concluded its work in December 2020.

 

   

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    2021    

 

   

    

 

 

How We Govern

Role of the Board of Directors

Our Board of Directors is elected by our shareholders to oversee management in its operation of the Company. In exercising its fiduciary duties, the Board’s goal is to build long-term value for our shareholders and ensure the vitality of the Company for our customers, employees, and the other individuals, organizations and communities who depend on us.

Key responsibilities of our Board of Directors include:

 

   

Establishing a corporate governance framework,

 

   

Overseeing and advising management on Company strategy,

 

   

Overseeing the Company’s enterprise risk management program,

 

   

Overseeing the Company’s human capital management and corporate culture, and

 

   

Conducting Board and executive succession planning.

Corporate Governance Framework

We are committed to maintaining sound corporate governance policies and practices that promote the long-term interests of our stakeholders. Our Nominating and Corporate Governance Committee regularly reviews our key corporate governance policies to ensure that they reflect evolving best practices and comply with legal and regulatory requirements. The committee refers suggestions for how to improve our governance policies to the full Board for approval.

Highlights of our corporate governance program include:

Strong independent oversight of management

 

   

Independent Board Chair

 

   

Independent membership on all Board committees

 

   

All directors independent other than CEO

 

   

Executive sessions of non-management directors at all regularly scheduled Board meetings

Leadership accountability

 

   

Directors elected annually by majority vote of the shareholders

 

   

Shareholder right to act by written consent

 

   

No dual class ownership structure or “poison pill” anti-takeover defenses

 

   

No supermajority voting requirements

 

   

Robust Board and executive stock ownership guidelines (see pages 27 and 49 for details)

Focus on leadership refreshment and quality

 

   

Active Board refreshment program (2 new directors joined the Board in 2021, with 2 not standing for reelection)

 

   

Annual Board review of succession planning and talent development for senior leadership

 

   

Regular Board training focused on significant business risks and opportunities

 

   

Annual anonymous Board and committee self-evaluations

 

 
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Engaged Board oversight of strategy and risk management

 

   

Annual offsite Board strategy and enterprise risk session

 

   

Quarterly updates to Audit and Risk Committee on enterprise risk management program

 

   

Annual independent compensation program risk analysis

 

   

Nominating and Corporate Governance Committee oversight of corporate sustainability

 

 

FIND OUR CORPORATE GOVERNANCE GUIDELINES AND OTHER GOVERNANCE DOCUMENTS ONLINE

 

The Board has adopted Corporate Governance Guidelines, which, together with our articles of incorporation and bylaws, establish the governance framework for the management of the Company. Our Corporate Governance Guidelines address, among other matters, the role of our Board, Board membership criteria, director retirement policies, director independence criteria, director and officer stock ownership requirements, Board committees, and leadership development. Our Corporate Governance Guidelines, Board committee charters, and certain other corporate governance policies are available on our website at investors.portlandgeneral.com/corporate-governance. These documents are also available in print to shareholders, without charge, upon request to Portland General Electric Company at its offices at 121 SW Salmon Street, 1WTC1301, Portland, Oregon 97204, Attention: Corporate Secretary.

 

Board Oversight of Strategy

The Board takes an active role in assisting management with the development of the Company’s long-term business strategy. In recent years, our Board has conducted annual offsite Board sessions focused on our strategy. During these sessions, the Board and management discuss the competitive landscape in our industry, emerging technologies, significant business risks and opportunities, and strategic priorities of the Company. These sessions have generally included training provided by outside experts and business leaders on matters of strategic significance to the Company.

Throughout the year, our management team regularly reports to the Board on the execution of our long-term strategic plans, the status of important projects and initiatives, and the key opportunities and risks facing the Company.

Senior Management Succession Planning

Our Board oversees senior management succession planning and talent development with the assistance of the Governance Committee and the Compensation Committee in an effort to maximize the pool of internal candidates who can assume executive officer positions without undue disruption of the business. In recent years, the full Board has conducted reviews of succession plans for senior management, including a review of the qualifications and development plans of potential internal candidates. Directors also regularly have an opportunity to meet and engage with potential internal senior management successors at Board and committee meetings. In addition, the Compensation Committee regularly conducts more in-depth reviews of development plans for promising management talent.

 

   

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    2021    

 

   

    

 

 

Board Oversight of Human Capital Management and Culture

Our Board understands that our people and our culture are critical to our continued success. We seek to attract and retain a talented, motivated, and diverse workforce and to maintain a culture that reflects our core values, our drive for performance, and our commitment to acting with the highest levels of honesty, integrity and compliance.

 

HUMAN CAPITAL MANAGEMENT

Primary responsibility for overseeing the Company’s human capital management programs lies with our Compensation Committee. In addition to providing input on leadership succession planning and talent development, the Compensation Committee regularly engages with management on a broad range of human capital management topics, including health and safety, diversity and inclusion, pay equity, strategic workforce planning, employee engagement, and performance management.

 

In 2020, an important area of focus for our Board has been our progress towards our diversity, equity and inclusion goals. Key enhancements to our programs in this area include (i) our commitment to publish an annual Equity Report in 2021, including a snapshot of our workforce relative to Oregon (All Industry) EEO-1 data and National Utility EEO-1 data; and (ii) our inclusion, beginning in 2021, of diversity, equity and inclusion metrics in our annual cash incentive plan. To read more about our diversity, equity and inclusion programs, as well as other highlights of our human capital management programs, see page 5 of this proxy statement.

 

ETHICS AND COMPLIANCE

To establish the foundation of our ethics and compliance culture, the Board has adopted a Code of Business Ethics and Conduct, which all directors, officers, and employees are expected to adhere to and affirm biannually. The code covers all areas of workplace conduct, including conflicts of interest, unfair or unethical use of corporate opportunities, protection of confidential information, and legal and regulatory compliance. In addition, our CEO, CFO, and Controller must abide by the Code of Ethics for Chief Executive and Senior Financial Officers. Employees are expected to report any violation of our ethics codes and may do so using a variety of methods, including an anonymous third-party hotline. The Audit and Risk Committee has also adopted procedures for receiving and addressing complaints regarding accounting, internal accounting controls, or auditing matters. The committee receives quarterly reports from management on key compliance metrics and employee conduct matters.

 

 

 

FIND OUR ETHICS CODES ONLINE

The Code of Business Ethics and Conduct and the Code of Ethics for Chief Executive and Senior Financial Officers are available on our website at investors.portlandgeneral.com/corporate-governance or in print to shareholders, without charge, upon request to Portland General Electric Company, 121 SW Salmon Street, 1WTC1301, Portland, Oregon 97204, Attention: Corporate Secretary or by email at Ethics&Governance@pgn.com. Any amendments to either of these codes, and any waiver of the Code of Ethics for Chief Executive and Senior Financial Officers, and of certain provisions of the Code of Business Ethics and Conduct for directors, executive officers or our Controller, will be disclosed to our shareholders to the extent required by law.

 

 

Board Oversight of Risk Management

Identifying and managing material risks facing the Company is a core responsibility of our Board, the committees of the Board, and our senior management, and we are committed to maintaining an effective risk and control environment.

The Board of Directors is responsible for assessing whether management has put in place effective systems to identify, evaluate, and manage the material risks facing the Company. The Board satisfies its oversight function through reporting from management on areas of material risk, including strategic, operational, cybersecurity, environmental, financial, legal, and regulatory risks. In addition, management reports quarterly to the Audit and Risk Committee on activities and findings of the Company’s risk management program.

 

 
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While the full Board of Directors has ultimate responsibility for oversight of risk management, particularly with regard to strategic risks, each of the standing committees of the Board has been assigned a role in assisting the Board with its oversight responsibilities. Key risk areas overseen by the Board’s committees are shown below:

 

Committee

  

Key Areas of Risk Oversight

Audit and Risk

  

•  Company’s governance, policies and procedures to identify, assess, manage, monitor and report on material risks

 

•  Material risk exposures and the Company’s programs, practices and activities designed to mitigate such risk exposures, including cybersecurity and information technology and energy and fuel trading risk

 

•  Quarterly reports from management on cybersecurity and information technology

 

•  Financial reporting and internal controls

 

•  Ethics and compliance and litigation (including environmental)

Compensation and Human Resources

  

•  Compensation plans and programs

 

•  Succession planning for senior leaders (other than the CEO)

 

•  Human capital management, including talent acquisition and retention, diversity, equity and inclusion

Finance

  

•  Financial risks, including operations, capital projects, cash flow, capital markets and insurance

Nominating and Corporate Governance

  

•  Board organization, membership and structure

 

•  CEO succession planning

 

•  Corporate governance

 

•  Political spending

Management is responsible for day-to-day identification and management of risk. To ensure the consistency and comprehensiveness in its approach, the Company has established an Executive Risk Committee (ERC) to oversee the Company’s risk management programs. The current members of the ERC are the CEO; CFO; General Counsel; Vice President, Utility Operations; Vice President, Chief Information Officer; Vice President, Strategy, Regulatory and Power Supply; and the Senior Director, Treasury, Investor Relations and Risk Management. The ERC supports the mission of PGE’s enterprise risk management program, which is to enable risk-informed decision-making by providing a consistent framework for identifying, assessing and managing, monitoring, and reporting on enterprise risks.

In 2020, the Board oversaw management’s efforts to strengthen our risk management program, work that is continuing into 2021. Some of the key improvements we have implemented include:

 

   

Adoption of a new risk framework and risk appetite statement,

 

   

Consolidation of energy trading risk oversight at the management level in our Executive Risk Committee,

 

   

Enhanced risk reporting at the board level, and

 

   

Personnel additions to our enterprise risk management and Power Operations risk management teams.

Board Oversight of Political Engagement

In February 2021, the Board amended the charter of the Nominating and Corporate Governance Committee, assigning it oversight responsibility for the Company’s political spending practices, in accordance with our Political Engagement Policy, which governs the political activities and expenditures of the Company and its political action committees. Under the policy, the committee is responsible for discussing the strategic priorities for the Company’s political and policy lobbying, political contributions, and industry association affiliations and reviewing an annual report on political expenditures of the Company and its political action committees for the prior year. The policy also calls for the publication of the annual report on political expenditures on our external website. Our Political Engagement Policy is available at investors.portlandgeneral.com/corporate-governance.

 

   

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    2021    

 

   

    

 

 

Board Meetings

Directors are expected to attend all Board meetings and meetings of committees on which they serve, as well as the Company’s Annual Meeting of Shareholders. While the Board understands that circumstances may arise from time to time that prevent a director from attending a meeting, directors are expected to make these meetings a priority. During 2020, each director attended at least 75% of the meetings of the Board and meetings of the committees on which the director served, and average board meeting attendance was 97%. All of the directors also attended the Company’s 2020 Annual Meeting of Shareholders. There were 15 meetings of the Board of Directors in 2020.

Under our Corporate Governance Guidelines, the non-management directors must meet in executive session without management at least quarterly. The Chair of the Board presides over executive sessions of the non-management directors. In the event that the non-management directors include directors who are not independent under the NYSE listing standards, our Corporate Governance Guidelines require the independent directors to meet separately in executive session at least once a year. There were 12 executive sessions of the non-management directors in 2020. Throughout 2020, all of our non-management directors were independent under the NYSE listing standards and our Director Independence Standards. Accordingly, the 12 executive sessions of our non-management directors in 2020 also constituted meetings of our independent directors.

Transactions With Related Persons

Our Board recognizes that transactions between the Company and certain individuals and entities, including the Company’s directors and officers, may raise questions as to whether those transactions are consistent with the best interests of the Company and its shareholders. Accordingly, the Board has adopted a written Related Person Transactions Policy, which addresses the Company’s policies regarding the review, approval, or ratification of certain transactions between the Company and certain “related persons,” including our directors, executive officers, director nominees, and owners of more than 5% of any class of our voting securities. Under the policy, transactions between the Company and a related person involving more than $120,000 in which the related person has a direct or indirect material interest are not permitted unless the Governance Committee determines that the transaction is not inconsistent with the best interests of the Company and its shareholders. Before entering into such a transaction with the Company, the related person or the business unit leader responsible for the potential transaction is required to provide notice to the General Counsel of the facts and circumstances of the proposed transaction. Certain types of transactions—including executive and director compensation that is required to be disclosed under SEC disclosure rules and the provision of tariff-based utility service—are exempt from the policy.

Our Related Person Transactions Policy supplements and does not supersede other policies that apply to transactions with related persons, such as our Code of Business Ethics and Conduct. Under our Code of Business Ethics and Conduct, our directors, officers, and employees must report any violation of the code or any situation or matters that may be considered to be unethical or a conflict of interest. Any potential conflict of interest under the code involving a director, an executive officer, or our Controller is reviewed by the Audit and Risk Committee. Only the Audit and Risk Committee may waive such a conflict, which will be promptly disclosed to our shareholders as required by law.

 

 
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How We Are Paid

Stock Ownership Guidelines for Directors

Our Corporate Governance Guidelines require each non-employee director to own shares of PGE common stock with a value equal to at least five times the value of the annual base cash retainer for non-employee directors. Non-employee directors must meet this requirement within five years following the first meeting at which they are elected. All of our directors either meet the stock ownership requirement or are on track to do so by the applicable target date. Our stock ownership policy for executive officers is described on page 49 of this proxy statement. None of our current directors has sold shares of PGE common stock while serving as a director.

2020 Compensation Program Overview

The compensation of our non-management directors is determined by the Board of Directors upon a recommendation from the Compensation and Human Resources Committee, which reviews our director compensation program annually, considering factors such as workload and market data. The Company does not pay Ms. Pope for her Board service in addition to her regular employee compensation.

The Company offers non-management directors both cash and equity compensation. Cash compensation is provided in the form of annual cash retainers for Board and committee service. Equity is provided in the form of an annual grant of restricted stock units with time-based vesting conditions (RSUs). The Company’s 2020 compensation arrangements are described below.

 

Annual Cash and Equity Compensation

   Amount
($)
 

Annual Cash Retainer for Board Service

     50,000  

Annual Cash Retainer for Board Chair

     100,000  

Annual Cash Retainer for Audit and Risk Committee Chair

     15,000  

Annual Cash Retainer for Other Active Standing Committee Chairs

     12,500  

Annual Cash Retainer for Committee Service (per committee)

     18,000  

Grant-Date Value of Annual RSU Award

     110,000  

Members of the Cyber Incident Response Committee and the Special Committee of the Board established in August 2020 to review matters related to the Company’s energy trading losses did not receive additional compensation for their service on those committees.

CASH COMPENSATION

Directors’ cash retainers for Board and committee service are paid quarterly in arrears. We also reimburse certain expenses related to their Board service, including expenses related to attendance at Board and committee meetings.

RSU AWARDS

Under our 2020 equity compensation arrangements, each non-management director received an annual grant of a number of RSUs determined by dividing $110,000 by the closing price of the Company’s common stock on the grant date, rounding to the nearest whole share. These grants were made on April 22, 2020 the date of our 2020 Annual Meeting of Shareholders. Each RSU represents the right to receive one share of the Company’s common stock at a future date. Provided that the director continues to serve on the Board, all of the RSUs will vest on April 22, 2021. If a director terminates his or her Board service before the normal vesting date for any reason other than for cause, a pro rata portion of the director’s RSUs will vest. In addition, if the director experiences a termination effective upon consummation of a change in control of the Company, or experiences a termination following a change in control for any reason other than for cause or resignation, then any RSUs that have not previously vested will immediately vest in full.

Each non-management director is also granted one dividend equivalent right with respect to each RSU he or she is awarded. Each dividend equivalent right represents the right to receive an amount equal to the dividends that are paid on one share of common stock and that have a record date between the grant date and vesting date of the related RSU. The amount payable with respect to a dividend under a dividend equivalent right is paid in a number of shares of common stock determined by using the NYSE closing price

 

   

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of the Company’s common stock as of the payment date for such dividend (or in a case where the final vesting date of the related RSU falls between a dividend record date and the related payment date, the NYSE closing price of the Company’s common stock the last preceding trading day before the RSU vesting date). Dividend equivalent rights vest and become payable on the same terms as the related RSUs.

Awards of RSUs and dividend equivalent rights are made pursuant to the terms of the Portland General Electric Company Stock Incentive Plan and are subject to the terms and conditions of the plan and agreements between the Company and each director.

DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS

Directors first appointed or elected to the Board before April 23, 2019 are eligible to participate in the Company’s 2006 Outside Directors’ Deferred Compensation Plan. The plan allows participants to defer the payment of Board retainers as well as any other form of cash compensation they may receive from the Company. Deferral elections must be made no later than December 15 of the taxable year preceding the year in which the compensation is earned. Deferrals accumulate in an account that earns interest at a rate that is one-half a percentage point higher than the Moody’s Average Corporate Bond rate. Directors may elect to receive payments under the plan in a lump sum or in monthly installments for a period of up to 180 months.

2020 Director Compensation Table

The table below shows the compensation earned by each individual who served as a director during the year ended December 31, 2020 (excluding Ms. Pope, whose compensation is described in the Summary Compensation Table and related tables and disclosure beginning on page 51).

 

Name

Fees Earned or

Paid in Cash

($)(1)

Stock Awards
($)(2)

All Other

Compensation
($)(3)

Total

($)

John Ballantine

  86,000 109,991 2,876 198,867

Rodney Brown

  86,000 109,991 2,876 198,867

Jack Davis

  168,000 109,991 2,876 280,867

Kirby Dyess

  98,500 109,991 2,876 211,367

Mark Ganz

  86,000 109,991 2,876 198,867

Marie Oh Huber

  86,000 109,991 2,732 198,723

Kathryn Jackson

  86,000 109,991 2,876 198,867

Michael Millegan

  86,000 109,991 2,876 198,867

Neil Nelson

  101,000 109,991 2,876 213,867

Lee Pelton

  98,500 109,991 2,876 211,367

Charles Shivery

  98,500 109,991 2,876 211,367

 

(1)

Amounts in this column include all fees earned for Board and committee service, regardless of whether such amounts were deferred under the Company’s 2006 Outside Directors’ Deferred Compensation Plan.

(2)

Amounts in this column represent the aggregate grant date fair value of RSU awards made in 2020, computed in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, without taking into account estimated forfeitures, based on the NYSE closing price of our common stock on the grant date (April 22, 2020). As of December 31, 2020, each non-employee director held 2,218 outstanding RSUs.

(3)

This column represents amounts earned with respect to dividend equivalent rights under RSU awards that vested in 2020. The value of the dividend equivalent rights was not reflected in the Stock Awards column for the year in which the related RSUs were awarded.

 

 
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How You Can Communicate With Us

The Board of Directors knows that the caliber of its deliberations depends on the caliber of the information it obtains. It therefore values input from a wide variety of sources and constituents and has established a variety of means to enable this input. These include:

 

   

Direct engagements with shareholders,

 

   

Information that comes from Company reporting or “hotlines” that are posted on our external website at portlandgeneral.com/help/connect,

 

   

Information that comes from reports submitted to our EthicsPoint website,

 

   

Information that comes via the internal and external audit processes to the Audit and Risk Committee, and

 

   

Emails sent to our dedicated Board email address (board@pgn.com).

The Board and the Audit and Risk Committee also have approved a more official process for handling communications to the Board and its committees. Shareholders and other interested parties may submit written communications to the Board (including the Chair), a Board committee, or the non-management directors as a group. Communications may include the reporting of concerns related to governance, corporate conduct, business ethics, financial practices, legal issues and accounting or audit matters. Communications should be in writing and addressed to the Board, or any individual director or group or committee of directors by either name or title, and should be sent in care of:

Portland General Electric Company

Attention: Corporate Secretary

121 SW Salmon Street, 1WTC1301

Portland, Oregon 97204

board@pgn.com

All appropriate communications received from shareholders and other interested parties will be forwarded to the Board, or the specified director, board committee or group of directors, as appropriate.

A full description of our process for handling communications with the Board is published on our website at investors.portlandgeneral.com/corporate-governance and is available in print to shareholders, without charge, upon request to Portland General Electric Company at its principal executive offices at 121 SW Salmon Street, 1WTC1301, Portland, Oregon 97204, Attention: Corporate Secretary.

 

   

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    2021    

 

   

    

 

 

Compensation and Human Resources

Committee Report

The Compensation and Human Resources Committee has reviewed and discussed with management the following Compensation Discussion and Analysis and has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

MEMBERS OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE

Kirby Dyess (Chair)

John Ballantine

Rodney Brown

Mark Ganz

Marie Oh Huber

Kathryn Jackson

James Torgerson

 

 
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Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our executive compensation philosophy, our 2020 executive compensation program and our compensation decisions for the following current and former executive officers named in our Summary Compensation Table.

 

2020 Named Executive Officers

Maria Pope

   President and Chief Executive Officer

James Lobdell*

   Former Senior Vice President, Finance, Chief Financial Officer and Treasurer

Lisa Kaner

   Vice President, General Counsel and Corporate Compliance Officer

John Kochavatr

   Vice President, Information Technology and Chief Information Officer

Larry Bekkedahl

   Vice President, Grid Architecture Integration & System Operations

* Mr. Lobdell retired from the Company effective December 31, 2020. James Ajello, whose biographical information appears on page 2 of this proxy statement, assumed the role of Senior Vice President, Finance, Chief Financial Officer and Treasurer effective January 1, 2021.

 

Compensation Discussion and Analysis Table of Contents

Executive Summary

     32  

Compensation Guiding Principles

     32  

2020 Compensation Program Design

     32  

2020 Executive Compensation Decisions

     33  

Highlights of Our Compensation Practices

     34  

2020 Executive Compensation

     36  

Compensation Elements

     36  

Base Salaries

     36  

Annual Cash Incentive Awards

     37  

Long-Term Incentive Awards

     41  

Benefits

     45  

Off-Cycle Compensation

     45  

How We Set Executive Pay

     46  

Compensation Decision-Making Roles

     46  

Use of Compensation Market Data

     46  

Consideration of Say on Pay Vote

     47  

Other Compensation Policies and Practices

     48  

Use of Compensation Consultants

     48  

Annual Compensation Risk Assessment

     48  

Hedging Policy

     49  

Stock Ownership Policy

     49  

Equity Grant Practices

     49  

Incentive Compensation Clawback and Cancellation Policy

     49  
 

 

   

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Executive Summary

 

 

2020 Compensation Highlights

 

•  No annual cash incentive award for CEO, former CFO and one other senior executive

 

•  35% payout on 2018 PSU awards vesting in 2020, reflecting poor 2020 financial performance

 

•  Payout on operating and strategic metrics for some executives and non-officer employees

 

COMPENSATION GUIDING PRINCIPLES

The goals of our executive compensation program are to attract and retain highly qualified executives and provide them with incentives to advance the interests of our stakeholders: shareholders, customers, employees and the communities we serve. In deciding 2020 named executive officer compensation, the Compensation Committee followed the guiding principles that have historically governed its pay decisions:

Reasonable, Competitive Pay

 

   

To attract and retain talented leaders, executive pay must be competitive.

 

   

The competitiveness of our executive pay should be measured relative to the pay practices of companies that reflect the market for executive talent in which we compete.

 

   

Other considerations, including Company performance, individual performance and pay equity, should also play a role in executive compensation decisions.

Performance-Based Pay, Aligned With our Stakeholders’ Interests

 

   

A significant portion of our executives’ pay should be “at risk” and based on Company performance relative to financial, operational and strategic goals that advance the interests of our stakeholders.

 

   

To ensure alignment with our shareholders, incentive compensation should emphasize equity-based awards.

Balanced, Risk-Calibrated Pay

 

   

Incentive awards should align executive pay with performance over both the short term and the long term.

 

   

Compensation programs should be designed to ensure that they do not incentivize imprudent risk-taking.

2020 COMPENSATION PROGRAM DESIGN

In line with our compensation guiding principles outlined above, the Compensation Committee structured a significant proportion of our named executives’ 2020 compensation in the form of short-term and long-term awards based on financial and operational performance, as well as the achievement of our strategic imperatives. The table below shows the target direct compensation of our named executive officers for 2020.

 

Name

   Base Salary
($)
   Target ACI
($)
   Target Long-Term
Equity
($)
   Off-Cycle
Equity Award
($)
   Total
($)

Maria Pope

       900,000        945,000        2,250,000               4,095,000

James Lobdell

       517,500        310,500        621,000               1,449,000

Lisa Kaner

       419,900        251,940        419,900               1,091,740

John Kochavatr

       357,000        178,500        249,900        100,000        885,400

Larry Bekkedahl*

       387,250        232,350        253,575               873,175

* Mr. Bekkedahl’s base salary and target annual cash incentive award reflect a salary increase effective October 19, 2020 due to his assumption of additional responsibilities.

75% of the named executive officers’ long-term equity opportunity was awarded in the form of restricted stock units with performance-based vesting conditions (PSUs) and 25% took the form of restricted stock units with time-based vesting conditions (RSUs) that vest three years from the grant date.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

The following tables summarize the metrics we adopted in our annual cash incentive (ACI) and long-term equity incentive (LTI) award programs.

2020 ACI PROGRAM

 

Metric

   Metric Weight*

Financial Performance (EPS)1

       40 %

Operating Performance

       30 %

Customer Satisfaction

    

Electric Service Power Quality

 

Generation Plant Availability

    

Strategic Imperatives

       30 %

Retain and Grow Customers

    

Integrated Grid Initiative

    

Legislative and Regulatory Outcomes

    

Financial Health

 

2020 LTI PROGRAM

 

Metric

Metric Weight % of Target Shares

ROE as % of Allowed ROE

  33%   0 to 167 %

EPS Growth

  33%   0 to 167 %

Clean Energy

  33%   0 to 167 %

Subtotal

  0 to 167 %

Relative TSR

  Multiply Subtotal by   80% to 120

* 70% of target EPS was required for payouts under the program, subject to exercise of Compensation Committee’s discretion to adjust award results.

2020 EXECUTIVE COMPENSATION DECISIONS

Annual cash incentive award payouts reward non-officer employees and some executives for operational performance and strategic advancements.

Due to our poor financial performance in 2020, results for our financial performance metrics were below the threshold required for payouts under the program (70% of the EPS target of $2.57 per share). However, our incentive plan design allows our Compensation Committee to adjust incentive award performance results to exclude the impact of unusual, nonrecurring events. The Compensation Committee believes that the exercise of discretion is an important tool to ensure that compensation outcomes advance the goals of our program in circumstances where extraordinary events beyond management’s control impact Company performance. For 2020, our Compensation Committee decided to exclude the impact of unrecovered expenses related to the COVID-19 pandemic on our financial results (an impact of $0.16) in determining payouts under our 2020 ACI Program and our 2018-2020 PSU awards. As adjusted, financial performance results under our 2020 ACI Program were above the minimum level required to permit payouts under the program, but below the minimum level required to pay out on financial metrics. As a result, the 2020 ACI Program paid out on operational and strategic metrics only, resulting in awards equal to 89% of target awards for most 2020 ACI Program participants. For more information on 2020 ACI Program results, see the discussion on pages 39 to 40.

In making this adjustment, our Compensation Committee took into account the extraordinary nature of the COVID-19 pandemic; the impressive performance of our employees in responding to the challenges of 2020, including outstanding support provided to customers, a smooth transition to remote work without a negative impact on productivity, and the achievement of significant operational savings; solid operating metric results; and meaningful progress made relative to our strategic goals. The committee also considered the potential negative impacts on employee morale and retention from eliminating awards company-wide as a result of the circumstances that led to the energy trading losses. Finally, the Committee considered that the design of our ACI Program—specifically, the inclusion of a minimum financial threshold for any payout—is not a standard practice among our peer group or industry. Notably, no ACI Program participants received a payout on financial performance metrics.

 

   

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Compensation outcomes for our senior executives reflect our Board’s commitment to senior executive accountability for poor financial performance.

While we believe it is important to reward strong operational performance and strategic progress, holding senior executives responsible for poor financial performance is essential to rebuilding the trust of our stakeholders and creating a high-performance organization.

 

   

No annual cash incentive award payouts for our CEO, former CFO and one other executive. Our Compensation Committee decided not to exercise the upward discretion discussed above regarding awards under our 2020 ACI Program with respect to three members of our senior management team, including our CEO and former CFO, given their leadership roles and the importance of our pay-for-performance philosophy and alignment with our stakeholders. Regardless of their strong individual contributions, we believe that senior executives at the top of the leadership team should experience the consequences of unacceptable Company financial performance.

 

   

LTI award payouts significantly impacted by 2020 financial performance. The Company’s energy trading losses affect performance results under LTI awards for all three years, based on the following award metrics:

 

2018 LTI Awards    Relative TSR and ROE as a percentage of allowed ROE (each weighted 50%)
2019 and 2020 LTI Awards    ROE as a percentage of allowed ROE, EPS growth (each weighted 33%); relative TSR (overall payout modifier)

After adjustment for unrecovered expenses related to the COVID-19 pandemic, payouts on 2018 PSU awards were 35% of target awards, as described in greater detail on page 44.

Our executive compensation programs operated effectively as designed.

We believe our 2020 executive compensation outcomes demonstrate the successful operation of our incentive award programs. These programs provided the Board and the Compensation Committee the tools needed to achieve the objectives of our executive compensation program—paying for operational performance and strategic progress where appropriate, while ensuring a “no excuses” accountability for poor financial performance at the highest levels of the Company. In addition, the Compensation Committee considered and determined that our Incentive Compensation Clawback and Cancellation Policy, described on pages 49 to 50 below, was not applicable to the circumstances that gave rise to our energy trading losses in 2020.

HIGHLIGHTS OF OUR COMPENSATION PRACTICES

What we do

 

 

LOGO    Significant pay at risk. In 2020, awards with no guaranteed payouts constituted 55% to 78% of our named executive officers’ target direct compensation (base salary plus annual cash incentive award and equity awards).
LOGO    Balanced mix of incentive awards, aligned with our strategy. Payouts under our incentive awards are based on a balanced mix of short-term and long-term Company performance relative to operational, financial and strategic goals.
LOGO    Reasonable stock award program. Our three-year average burn rate (the total number of equity award shares granted over a three-year period divided by the weighted average of the shares outstanding) was 0.23% for 2018 through 2020.
LOGO    Meaningful stock ownership guidelines. Our stock ownership guidelines are three times base salary for our CEO, and one times base salary for our other executive officers.
LOGO

 

   Clawback of incentive pay. The Company is authorized to cancel, reduce or seek reimbursement of an executive officer’s incentive compensation if there is a material restatement of our financial results or if the officer engages in egregious misconduct that results in actual or potential significant reputational or financial harm to the Company.
LOGO

 

   Double-trigger change in control protections. Following a change in control, our executives are entitled to accelerated vesting of long-term incentive awards and enhanced cash severance payments only if their employment is terminated within two years following the change in control.
LOGO    Reasonable use of compensation market data. We evaluate our executive pay by reference to the median of a group of comparable companies that reflect the market for executive talent in which we compete.
LOGO

 

   Reasonable severance arrangements. The maximum amount payable under our severance plan is one year’s base salary absent a change in control, and one year’s base salary plus the target value of the executive’s annual cash incentive award in the case of a termination following a change in control.

 

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

What we don’t do

 

 

LOGO

   No hedging or pledging of Company stock. Our Insider Trading Policy prohibits directors, officers and employees from entering into hedging or pledging transactions or short sales of Company stock.

LOGO

   No SERP benefits for current executives. None of the Company’s current executives participates in a supplemental executive retirement program.

LOGO

   No excise tax gross-ups upon change in control. We do not provide tax gross-ups related to a change in control.

LOGO

   No fixed term employment agreements with executives. We employ all of our executives at will.

LOGO

   No dividends or dividend equivalents earned on unvested shares. Our long-term incentive awards provide dividend equivalent rights only on shares that vest.

LOGO

   No excessive perquisites. We do not provide our executives with significant perquisites.

 

   

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2020 Executive Compensation

COMPENSATION ELEMENTS

The following table describes the principal elements of our 2020 compensation program.

 

Compensation

Element

   Form   Performance Metrics    Purpose

Base Salaries

   Cash   n/a   

Provide a market-competitive level of fixed income that reflects each officer’s experience, skills and performance

Annual Cash

Incentive Awards

   Cash  

40% EPS

 

30% Operations:

 

–  Customer Satisfaction

 

–  Generation Plant Availability

 

–  Electric Service Power Quality

 

30% Strategic Imperatives

 

–  Customer Retention and Growth

 

–  Integrated Grid Initiative

 

–  Public Support and Policy

 

–  Financial Health

  

Incentivize the achievement of relatively short-term financial, operating and strategic goals

Long-Term Equity-Based Incentive Awards

   75% PSUs  

ROE/Allowed ROE

 

EPS Growth

 

Clean Energy

 

TSR (used as a multiplier)

  

Align executives’ interests with the long-term interests of the Company and its stakeholders

   25% RSUs   n/a   

Align executives’ interests with shareholders’ interest in stock price appreciation

Benefits

   Retirement,
severance and health
and welfare benefits
  n/a   

Provide a competitive benefits package that promotes retention and contributes to financial security and personal well-being

BASE SALARIES

 

   

The independent members of our Board approved our CEO’s 2020 base salary after receiving a recommendation from the Compensation Committee. The Compensation Committee considered the recommendations of our CEO and market data before setting the 2020 salaries of our other executive officers.

 

   

Base salary recommendations are based on a variety of considerations, including market competitiveness, individual performance and qualifications, internal pay equity and retention risk.

 

   

The table below shows the base salaries of our named executive officers for 2019 and 2020.

 

     

2019 Salary*

($)

  

2020 Salary*

($)

   Annual Increase

Maria Pope

       850,000        900,000        6 %

James Lobdell

       500,000        517,500        4 %

Lisa Kaner

       380,000        419,900        11 %

John Kochavatr

       340,000        357,000        5 %

Larry Bekkedahl

       350,000        387,250        11 %

* 2019 salaries were effective March 11, 2019. 2020 salaries were effective March 9, 2020, except in the case of Mr. Bekkedahl, whose base salary was increased effective October 19, 2020 following his assumption of additional responsibilities.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

ANNUAL CASH INCENTIVE AWARDS

OVERVIEW

 

   

PGE executives are eligible to earn annual cash incentive awards under our Annual Cash Incentive Plan (ACI Plan), based on the achievement of goals that are established each year by the Compensation Committee.

 

   

For 2020, we retained key quantitative financial and operating performance metrics from our 2019 ACI Award Program: EPS, Customer Satisfaction, Generation Plant Availability and Electric Service Power Quality. We also included four strategic imperative goals: Customer Retention and Growth; Integrated Grid Initiatives; Public Support and Policy; and Financial Health. This fourth strategic goal was introduced in April 2020 in the wake of the COVID-19 pandemic, reflecting the need to ensure adequate access to capital to execute on our business plans.

 

   

The formula for calculating awards under our 2020 ACI Program is shown below:

 

                                              
             

AWARD      EARNED     

  =  

TARGET    AWARD   

  X          

FINANCIAL PERFORMANCE % X 40%

 

    

OPERATING PERFORMANCE %

X 30%

 

    

STRATEGIC IMPERATIVE PERFORMANCE %

x 30%

      
                                              

 

   

Under the formula above, award payouts are determined by multiplying each officer’s target award by a “performance percentage” based on the achievement of financial, operating and strategic imperative goals during the year.

 

   

No payouts are earned under the program if the financial performance is less than 70% of target, absent the exercise of the Compensation Committee’s discretion as permitted under the ACI Plan.

 

   

In determining performance results, the Compensation Committee has discretion to exclude the impact of unusual, non-recurring events that occur during the year.

 

   

Each of the performance percentages can range from 0% to 200%, with financial performance weighted 40%, operating performance weighted 30% and strategic imperatives weighted 30%. This results in a maximum ACI award opportunity equal to 200% of the target award.

 

   

Vesting of an award generally requires continued employment until the date that payment is made under the award, but if an officer’s employment is terminated before that date due to retirement, death, or disability, the officer is entitled to a portion of the award, pro-rated based on the number of days served during the award year.

2020 ACI PROGRAM TARGET AWARDS

Target awards for the named executive officers were established by multiplying their base salary paid in 2020 by an award multiple established by the Compensation Committee. The target awards of each of our named executive officers were close to the market median for their positions. (See page 46 for a discussion of how we evaluated the market-competitiveness of our executives’ compensation.)

 

Name

Target Award
($)*
Target Award as % of 2020
Base Salary* Paid

Maria Pope

  969,231   105 %

James Lobdell

  324,796   60 %

Lisa Kaner

  252,229   60 %

John Kochavatr

  183,404   50 %

Larry Bekkedahl

  226,898   60 %

* Includes the value of paid time off taken during the year.

 

   

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2020 ACI PROGRAM METRICS

The table below summarizes the performance metrics used for our named executive officers’ 2020 ACI awards.

 

     Metric    Measurement        Why We Use this Metric    
LOGO   EPS    Measured by the Company’s net income for the year divided by average shares outstanding during the year.   

EPS is a driver of shareholder value creation in the regulated utility industry.

LOGO   Customer
Satisfaction
  

Average of the Company’s residential, general business and key customer satisfaction scores on three independent utility industry surveys, where satisfaction is defined as a rating of 9 or higher on a 10-point scale

 

These ratings are weighted according to the Company’s annual revenues from each customer group. Customer satisfaction goals are updated annually based on estimated ratings needed to achieve 50th, 65th and 90th percentile rankings of the surveyed companies.

  

Customer satisfaction is a measure of our ability to run our business in a way that meets the needs of our customers.

  Generation Plant
Availability
  

Amount of time that a generating plant is able to produce electricity during the year (determined by subtracting from total hours in the period all maintenance outage hours, planned outage hours and forced outage hours), divided by the number of hours in the year. To set the maximum, target and threshold performance levels for this goal, we established individual plant goals, which were then weighted to produce overall performance targets.

 

  

Our ability to achieve our financial objectives and serve our customers depends in part on our generation plants’ delivery of reliable and affordable power.

  Electric Service
Power Quality
   Measured SAIDI (a standard industry measure for outage duration), which is equal to the total number of minutes an average customer experiences service interruption during the year   

 

Delivering reliable electric service is our Company’s core business. Outage frequency and outage duration are fundamental measures of service reliability that our customers care about.

LOGO   Customer
Retention and
Growth
  

Measured by progress in the following areas:

•  Customer digital solutions

•  Transportation electrification

•  New clean products

•  Retain and grow customer load

  

Our Company operates in an increasingly competitive business environment and we need to continue to earn the right to serve our customers.

  Integrated Grid
Initiatives
  

Measured by progress in the following areas:

•  Field area network

•  Advanced distribution management systems

•  Construction of Integrated Operating Center

•  Distribution automation

•  Energy storage deployment

•  PGE Smart Grid Test Bed pilot project

•  Demand response, flexible load

  

Building an integrated grid promotes reliability and enables the visible and interoperable connection of customer technologies, a key component of our decarbonization and electrification strategies.

  Public Support
and Policy
  

Measured by policy and regulatory outcomes in the following areas:

•  Retain and grow customers

•  Secure reliability and resource adequacy fairness

•  Secure decarbonization authority and work to modernize the utility model

  

Achieving our strategic plans requires a policy framework that supports system reliability and fair allocation of costs to all customers

  Financial Health   

Measured by the Company’s ability to maintain the following financial liquidity and capacity metrics:

•  FFO/Total Debt>13%

•  Total Debt/EBITDA<4.5x

•  FFO/Interest Expense>3.0x

•  Available Credit Line Capacities plus cash > $650 million

  

Ensuring adequate financial liquidity and access to capital markets in the wake of the COVID-19 pandemic is necessary to continue executing on our business plans.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

The table above reflects adjustments to the 2020 ACI Program strategic goals that were adopted in April 2020 in the wake of the COVID-19 pandemic. To ensure that the Company prioritized its activities appropriately in the radically changed circumstances in which the Company found itself, the Compensation Committee approved the addition of new financial health metrics, as well as adjustments to the Customer Retention and Growth and Integrated Grid Initiative metrics to reflect the need for reductions in operating and capital budgets and changes in the priorities of commercial and public policy partners.

2020 ACI PROGRAM GOAL WEIGHTINGS

The weightings assigned to the 2020 ACI Program goals for each of the named executive officers are shown below.

 

LOGO

ADJUSTED 2020 ACI PROGRAM PERFORMANCE RESULTS

In February 2021, our Compensation Committee met to review the following performance results for the awards:

Financial Performance. Our 2020 EPS was $1.72. After adjusting for the impact of unrecovered expenses related to the COVID-19 pandemic, EPS was $1.88, or 73% of target. Adjusted EPS was below the level required for a payout on this metric.

Operating Performance. Operating performance resulted in a performance percentage of 131% for the named executive officers. Generation Plant Availability was near maximum levels. Performance with respect to SAIDI was just under target. Customer satisfaction came in just above target.

Progress on Strategic Imperatives. Results for our strategic imperative goals were close to or above target, resulting in an overall performance percentage of 166%. Below are highlights of our progress toward our 2020 strategic goals:

Customer Retention and Growth

 

   

We launched a new website with a new payment platform that enables seamless customer payments and will deliver meaningful cost savings. One of our goals in introducing the new website was to ensure better resiliency in the event of a large-scale outage or crisis. We had an opportunity to test the new platform in September, when we successfully handled 300 times the normal traffic during the historic Oregon wildfires.

 

   

We introduced PGE Marketplace, an e-commerce platform for customers. In 30 days, PGE Marketplace enabled the sale of approximately 1,200 smart thermostats resulting in roughly 700 new enrollments in PGE’s demand response program.

 

   

We gained OPUC approval of new transportation electrification customer programs, helping pave the way for the expansion of electric vehicles in our service territory.

 

   

Our overall customer base grew by 1.4% compared with 2019 and our total load increased 0.4% year-over-year.

Integrated Grid Initiative

 

   

We stayed on track for the 2021 completion of our new Integrated Operations Center (IOC), which will centralize some of our critical operations in a single secure, reliable and resilient facility.

 

   

We remained on schedule and within budget for implementation of a new automated distribution management system, which will comprise operational technology systems capable of remotely monitoring and controlling all elements within our distribution system.

 

   

We continued the rollout of our wireless field area network and distribution automation devices, which will enable the connection of sensors and control devices throughout our distribution system to the IOC. The integrated system will allow us to identify and isolate faults and restore service remotely over the field area network.

Public Support and Policy

 

   

We advocated for OPUC approval of the expansion of our Green Future Impact Program, with final approval expected in the first half of 2021. The Green Future Impact Program enables businesses, cities and counties to source up to 100% of their electricity from a new regional wind or solar facility that their participation in the program makes possible.

 

   

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    2021    

 

   

    

 

 

Financial Health

 

   

We achieved all of the 2020 financial health metrics established under the program.

The table below shows the performance metrics and results for the 2020 ACI Program.

 

     Performance Levels         

Metrics

  

Threshold

50% Payout

  

Target

100% Payout

   Maximum
200% Payout
   Actual   Calculated
Performance %

Financial Goal

                          0.00%

EPS

       $2.18        $2.57        $2.96        $1.88(1)    

Operating Goals

                          131.32%

Generation Plant Availability

       86.94%        90.19%        92.62%        92.42%    

Customer Satisfaction

       55.00%        62.00%        68.00%        62.20%    

Electric Service Power Quality

                       

SAIDI

       129.00        99.00        79.00        99.69    

Strategic Imperatives(2)

                      2.66       166.25%

Customer Retention & Growth

       “1” rating        “2” rating        “3” rating        3.33    

Integrated Grid Initiative

       “1” rating        “2” rating        “3” rating        2.49    

Public Support and Policy

       “1” rating        “2” rating        “3” rating        1.83    

Financial Health

       “1” rating        “2” rating        “3” rating        3.00          

 

(1)

After adjusting for impact of unrecovered COVID-19-related expenses. The unadjusted result was $1.72 per diluted share.

(2)

Based on a qualitative assessment of progress on the specific projects identified for each Strategic Imperative. Performance results for each project were rated by the Compensation Committee on a 0 to 3 scale. These results were averaged, with each project weighted equally, to yield an overall score between 0 and 3 for each Strategic Imperative. Scores for the Strategic Imperatives were then averaged to yield an overall performance percentage for the Strategic Imperatives. A minimum rating of “1” was required to earn a 15% payout and a score of “3” would have yielded a payout of 200%.

In light of these performance results, the Compensation Committee approved payouts for most ACI Program participants that were 89% of their target awards. However, as discussed on page 34, the committee did not exercise upward discretion to approve payouts for three of our 2020 executive officers, including Ms. Pope and Mr. Lobdell.

The table below shows the ACI award payouts for our 2020 named executive officers.

NAMED EXECUTIVE OFFICER ANNUAL INCENTIVE AWARD PAYOUTS

 

Name

Financial
Performance %*
Operating
Performance %
Strategic
Imperative
Performance %
Award
Payout
($)
Award
Payout
(% of Target)

Maria Pope

  0.00 %   131.32 %   166.25 %     0.00 %

James Lobdell

  0.00 %   131.32 %   166.25 %     0.00 %

Lisa Kaner

  0.00 %   131.32 %   166.25 %   225,165   89.27 %

John Kochavatr

  0.00 %   131.32 %   166.25 %   163,725   89.27 %

Larry Bekkedahl

  0.00 %   131.32 %   166.25 %   202,552   89.27 %

*Financial performance results were adjusted to exclude the impact of unrecovered COVID-19 related expenses but were still below the level required for a payout on the financial metric.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

LONG-TERM INCENTIVE AWARDS

OVERVIEW

 

   

We grant equity-based long-term incentive (LTI) awards to our executives and other key employees pursuant to our Stock Incentive Plan.

 

   

In 2020 we allocated 75% of our officers’ total LTI award opportunities to restricted stock units with performance-based vesting conditions (PSUs) and 25% to restricted stock units with time-based vesting conditions (RSUs).

 

 

  Our 2020 LTI Award
  program is consistent
  with our
  compensation
  guiding principles

 

   Compensation Guiding Principle      PSUs      RSUs        
   Retention     

    

   

   Incentives to achieve specific Company objectives     

    
   Alignment with shareholders     

    

   

   Market-competitive pay     

    

   

                 

CALCULATION OF TOTAL LTI AWARD OPPORTUNITY

The aggregate number of PSUs and RSUs we granted to our executive officers was the product of their 2020 base salary and an award multiple, divided by the closing price of the Company’s common stock on the grant date:

 

   

    # of PSUs and         RSUs Granted    

 

    =     

2020 Base Salary x Award Multiple

Grant Date Closing Common Stock Price

 

The table below shows the award multiples we used to calculate the awards for the named executive officers and the estimated value of the awards.

 

Name

     Award Multiple       

Target RSU
Value*

($)

      

Target PSU
Value*

($)

      

Total Target LTI Value*

($)

 

Maria Pope

       2.50          562,500          1,687,500          2,250,000  

James Lobdell

       1.20          155,250          465,750          621,000  

Lisa Kaner

       1.00          104,975          314,925          419,900  

John Kochavatr

       0.70          62,475          187,425          249,900  

Larry Bekkedahl

       0.70          63,394          190,181          253,575  

*Assumes that the Company will perform at target levels over the PSU performance period. Values are based on the closing price of the Company’s common stock on the grant date. See “Grants of Plan-Based Awards” on page 53 for additional details.

 

   

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    2021    

 

   

    

 

 

2020 PSU AWARDS

Our 2020 PSU Award Program incorporates the following financial, strategic and market-based performance measures.

 

Metric

   Measurement    Why We Use this Metric

Return on Equity

  

The average of each of three consecutive years’ Accounting ROE as a percentage of Allowed ROE.

•  “Accounting ROE” is defined as annual net income, as shown on the Company’s income statement, divided by the average of the current year’s and prior year’s shareholders’ equity, as shown on the balance sheet.

•  “Allowed ROE” is the return on equity that the OPUC permits the Company to include in the rates it charges its customers.

  

 

Reflects how successful the Company is at generating a return on dollars invested by its shareholders. Because the Company’s return on its investment can fluctuate based on OPUC rate case orders, we believe the appropriate measure of our ability to generate earnings on shareholder investments is Accounting ROE as a percentage of Allowed ROE.

EPS Growth

   3-year average of the Company’s EPS growth rate, where EPS growth for a given fiscal year is defined as the percentage change in EPS over the previous fiscal year.   

 

Provides a direct measure of the rate at which the Company has increased its profitability. EPS is a driver of shareholder value creation in the regulated electric utility industry.

Clean Energy

  

 

Average megawatts of forecast energy from carbon-free resources, Oregon Renewable Portfolios Standard-qualifying resources, and low-carbon emitting (i.e. ³ 95% carbon-free) systems of resources added to the Company’s energy supply portfolio during the performance period.

  

 

Creates incentive to reduce carbon potential in the Company’s energy supply portfolio in support of Oregon’s greenhouse gas emission reduction goals.

Relative TSR

  

 

TSR over the 3-year performance period relative to the TSR achieved by a comparison group of companies over the same period.

•  The comparison group consists of companies on the Edison Electric Institute regulated index on December 31, 2020, excluding those that have completed or announced a merger, acquisition, business combination, “going private” transaction or liquidation. Companies that are in bankruptcy will be assigned a negative one TSR.

•  TSR measures the change in a company’s stock price for a given period, plus its dividends (or other earnings paid to investors) over the same period, as a percentage of the stock price at the beginning of the period.

•  To calculate the value of stock at the beginning and end of the period, we use the average daily closing price for the 20-trading day period ending on the measurement date.

•  Relative TSR is determined by ranking PGE and the comparison group companies from highest to lowest according to TSR. The percentile performance of PGE relative to the comparison group companies is determined based on this ranking.

  

TSR is a direct measure of value creation for shareholders.

 

Use of relative rather than absolute TSR helps ensure that payouts reflect the Company’s relative performance rather than general market conditions.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

2020 PSU AWARD METRICS AND PAYOUT CALCULATION

In the first quarter of 2023, the Compensation Committee will determine the performance results for the 2020 PSU awards in accordance with the metrics and formula described in the table below, subject to any adjustments approved by the committee pursuant to its authority under the Stock Incentive Plan.

 

Payout Metric(1)

   Threshold
(50% Payout)
   Target
(100% Payout)
  

Maximum

(167% Payout)

   Metric
Weighting
   Percentage of
Target Shares
Earned

Return on Equity

   75%
of Allowed ROE
   90%
of Allowed ROE
   100%
of Allowed ROE
   33%    0% to 55.67%

EPS Growth

   4.0%    5.0%    6.0%    33%    0% to 55.67%

Clean Energy

   70
(MWa)
   120
(MWa)
   145
(MWa)
   33%    0% to 55.67%
            Payout %
Subtotal
   0% to 167%

Payout Multiplier

Metric(2)

   (80% multiplier)    (100%
multiplier)
   (120% multiplier)          

Relative TSR

  

£ 25th Percentile

of EEI
Regulated
Index

  

50th Percentile

of EEI
Regulated
Index

  

³ 75th Percentile

of EEI
Regulated Index

   Payout
Multiplier
   80% to 120%
     Total Percentage of Target PSU Award Earned    0 to 200%

 

(1)

Calculation of Payout Percentage Subtotal. At the end of the performance period, performance results are interpolated between threshold, target and maximum payout levels to determine payout percentages for each goal based on the schedule above. Results below threshold for any goal result in zero payouts for that goal. These results are weighted equally and added to determine a payout percentage subtotal.

(2)

Application of Payout Multiplier Based on Relative TSR Results: Performance results for Relative TSR are interpolated between threshold, target and maximum levels to determine a multiplier between 80% and 120%, which is applied to the payout percentage subtotal to determine a total percentage of the target award earned. For our 2021 PSU awards, a group of 12 peer companies will be utilized as the comparator group for the Relative TSR metric, instead of the EEI Regulated Index.

OTHER TERMS OF THE 2020 PSU AWARDS

Dividend Equivalent Rights. Under the 2020 PSU Awards, each named executive officer will receive a number of dividend equivalent rights (DERs) equal to the number of vested PSUs. A DER represents the right to receive an amount equal to dividends paid on the number of shares of common stock equal to the number of the vested PSUs, which dividends have a record date between the date of the grant and the end of the performance period. DERs will be settled in shares of common stock after the related PSUs vest. The number of shares payable on the DERs will be calculated using the fair market value of PGE common stock as of the date the Compensation Committee determines the number of vested PSUs.

Service Requirement. Under our PSU awards in 2020 and prior years, vesting of the PSUs and their related DERs generally requires that the award recipient continue to be employed by the Company during the performance period. However, if the officer’s employment is terminated due to retirement, death, or disability before the end of the three-year performance period, a ratable portion of the award will vest at the end of the performance period based on actual performance. See the discussion of this issue on page 57 in the section below entitled “Termination and Change in Control Benefits.” Under the terms of our 2020 PSU awards, recipients who terminate employment without cause and who satisfy the “Rule of 75” are eligible for vesting of their PSU awards based on performance results, without regard to their termination before the end of the performance period. An individual satisfies the Rule of 75 if, on the date of his or her termination of employment, (i) the individual is at least age 55 and has no less than five years of service with the Company or its affiliates, and (ii) the individual’s age plus years of service equals at least 75.

 

   

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    2021    

 

   

    

 

 

2020 RSU AWARDS

Each of our executive officers was awarded RSUs representing 25% of their total LTI award opportunity. The RSU awards also include dividend equivalent rights on the same terms as the PSUs (see the description above). Vesting of the RSUs and their related DERs generally requires that the award recipient continue to be employed by the Company during the three-year vesting period. However, if the officer’s employment is terminated due to retirement, death, or disability before the normal vesting date, a pro rata portion of the RSUs will vest. RSUs granted in 2020 also vest in accordance with the Rule of 75, which is described above. See the discussion of the RSUs on page 57 in the section below entitled “Termination and Change in Control Benefits.”

2018 PSU AWARD PAYOUT

For our 2018 PSU awards, our Compensation Committee decided to exclude the impact of unrecovered expenses related to the COVID-19 pandemic on our financial results (an impact of $0.16) in determining performance relative to our ROE goal. The payout under the PSU awards granted to our executive officers in 2018 was 35% of target, based on the following performance results, as adjusted:

 

Metric

 

Threshold

(50% Payout)

 

Target

(100% Payout)

 

Maximum

(150% Payout for ROE;

200% Payout for TSR)

  Metric
Weight
  Actual*   Percentage of
Target Award
Earned

ROE as a % of Allowed ROE

  75%   90%   100%   50%   80.77%   34.62%

Relative TSR

  30th
Percentile
EEI Regulated Index
  50th
Percentile
EEI Regulated
Index
  90th Percentile
EEI Regulated Index
  50%   12th
Percentile
  00.00%
                Total   34.62%

* Reflects adjustment for unrecovered COVID-19 expenses. The unadjusted ROE result was 78.91%.

These results yielded the award values set forth in the table below:

 

  Number of PSUs Vested(1)

Award Payout Value(2)

($)

Maria Pope

  14,379 $ 614,990

James Lobdell

  5,126 $ 219,239

Lisa Kaner

  3,171 $ 135,624

John Kochavatr

  2,214 $ 94,693

Larry Bekkedahl

  2,085 $ 89,175

 

(1)

Includes dividend equivalent rights settled in shares per the terms of the awards.

(2)

Based on a $42.77 share price, which was the closing stock price of the Company’s common stock on December 31, 2020, the vesting date for the awards.

The terms of our 2018 PSU awards are described more fully in the Company’s 2019 proxy statement under the heading “2018 Grants of Plan-Based Awards.”

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

Benefits

RETIREMENT BENEFITS

 

   

401(k) Plan. All of our employees are eligible to participate in the Company’s 401(k) Plan.

 

   

Pension Plan. Two of our named executive officers (Ms. Pope and Mr. Lobdell) participate in the Portland General Electric Company Pension Plan (Pension Plan). The plan was closed to new participants before our other named executive officers joined the Company. See page 55 of this proxy statement for a description of the basic benefit available to non-union employees under the plan.

 

   

Deferred Compensation Benefits. Executives and other key employees are eligible to participate in our 2005 Management Deferred Compensation Plan, which permits participants to defer the payment of income as well as the value of up to 80 hours of paid time off. Participants also earn interest on their account balances. See page 56 for details.

SEVERANCE BENEFITS

 

   

Severance Pay. Executives who are involuntarily terminated without cause are eligible to receive severance pay. Absent a change in control, the maximum amount payable is 52 weeks of base salary. Executives who are terminated within 2 years following a change in control are eligible for enhanced severance benefits (52 weeks of base salary plus target ACI award).

 

   

Outplacement Assistance. Employees who are eligible for severance pay may also be eligible for up to 12 months of outplacement assistance.

 

   

Double Trigger Vesting of PSUs in Case of Change in Control. If an executive is terminated without cause within two years following a change in control, the vesting of the officer’s outstanding PSU awards is accelerated. See page 60 for details. Beginning in 2020, our executives’ RSU awards also provide for double trigger vesting in the event of a change in control.

HEALTH AND WELFARE BENEFITS

 

   

Medical/Dental/Vision. Our executives are eligible to participate in our broad-based medical, dental and vision insurance programs. Non-union medical insurance is limited to high deductible health plans. For employees enrolled in our high deductible health plans, the Company also makes annual contributions to a health savings account.

 

   

Wellness Program. All employees are eligible to participate in the Company’s wellness program, which offers a variety of benefits, including mental health benefits, financial counseling and the opportunity to earn Company health savings account contributions.

OFF-CYCLE COMPENSATION

On July 29, 2020, the independent directors, acting as a committee, granted Mr. Kochavatr an award of performance-based restricted stock units in recognition of the expansion of his role to include responsibility for the Company’s Simplification and Transformation Initiative, which aims to reshape operational processes and customer digital experiences through the rationalization of groups and systems to drive customer value. Success for the initiative is measured by the reduction of customer minutes interrupted, cost reductions through operational efficiencies, and the introduction of new customer features and digital experiences. The award has a grant-date value of $100,000 and vests over a two-year period. At the conclusion of each performance period ending on July 30, 2021 and July 29, 2022, half of the restricted stock units awarded will vest, provided the Compensation Committee determines that the Company has made satisfactory progress toward the performance goals.

 

   

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    2021    

 

   

    

 

 

How We Set Executive Pay

COMPENSATION DECISION-MAKING ROLES

The Compensation Committee is primarily responsible for developing and overseeing the Company’s executive compensation program. The committee is aided in this work by FW Cook, the committee’s independent compensation consultant, the other independent members of the Board, who act as a committee of the Board in determining our CEO’s pay, and the Company’s management, which provides input about Company business plans and performance. In developing its input and recommendations, our management team regularly consults with its own compensation consultant, Willis Towers Watson.

 

Compensation Committee

   Independent Directors    Management    Independent Consultant

•  Reviews the performance of the executive officers annually

 

•  Establishes base salaries, annual cash incentive awards and equity awards for all of the executive officers other than the CEO, unless approved by the independent directors, acting as a committee

 

•  Recommends a base salary, annual cash incentive awards and equity awards for the CEO

  

•  Discusses CEO performance and considers recommendation of Compensation Committee regarding CEO pay

 

•  Approves base salary, annual cash incentive award and equity awards for the CEO

  

•  Makes recommendations on compensation plan design

 

•  Provides input on individual performance of the executive officers

 

•  Provides information about Company performance relative to incentive plan goals

 

•  Seeks advice of its own compensation consultant in formulating input and recommendations to the Compensation Committee

 

  

•  Advises the Compensation Committee on compensation plan design

 

•  Advises the Compensation Committee on appropriate compensation levels and compensation and governance trends

 

•  Performs annual compensation risk assessment for consideration by the Compensation Committee

USE OF COMPENSATION MARKET DATA

We consider compensation market comparisons to ensure the competitiveness of our executives’ pay. For our 2020 executive compensation program, we evaluated pay by reference to the 50th percentile of the relevant market, as well as a variety of other factors, including experience, qualifications, performance, and considerations of internal equity.

To determine the relevant market reference point, we rely on benchmarking surveys, as well as publicly available information regarding the pay practices of a group of utility industry peer companies selected by our Compensation Committee each year. Although the benchmarking data on which we rely is generally based on utility industry surveys, we use general industry survey data as appropriate to reflect the realities of the competitive marketplace for the Company’s talent needs. The table below shows the most relevant benchmarking survey data for each of our 2020 named executive officers:

 

Named Executive Officer

  Utility
Industry(1)
General
Industry(2)

Maria Pope

CEO

James Lobdell

SVP, Finance, CFO & Treasurer

Lisa Kaner

VP, General Counsel & Corporate Compliance Officer

John Kochavatr

VP, Information Technology and Chief Information Officer

Larry Bekkedahl

VP, Grid Architecture Integration System and Operations

 

(1)

Data sources included Willis Towers Watson 2019 Energy Services Executive Compensation Survey – U.S.

(2)

Data source included the Willis Towers Watson 2019 General Industry Executive Compensation Survey – U.S.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

To select our utility industry peer group for our 2020 compensation decisions, we looked for companies that represented the best match with PGE based on the following criteria:

 

   

Vertically Integrated Utility. Our peer companies should be vertically integrated utilities, with a business mix focused on either regulated electric operations or a balance of regulated electric and regulated gas operations.

 

   

Minimal Non-Regulated Business Activities. Non-regulated businesses should not be key drivers of the financial performance and strategy of our peer companies.

 

   

Comparable Size. Our peer companies should be within a reasonable range relative to key financial measures, including revenue, market capitalization, and enterprise value.

 

   

Investment-Grade Credit Ratings. Our peer companies should have credit ratings that allow for financing at a reasonable cost in most market environments.

 

   

Balanced Customer Mix. Our peer companies should have a balanced retail, commercial and industrial mix and service territories not overly reliant on one key customer or industry sector.

 

   

Regulatory Environment. Our peer companies should have a comparable cost of service ratemaking process and allowed return on equity, as well as a history of allowed recovery on regulatory assets, fuel and power costs and legitimate deferred costs.

 

   

Capital Structure. Our peer companies should demonstrate moderate leverage (generally less than 60% debt to total capitalization ratio) and no significant liquidity concerns.

 

   

Growth Opportunities. The growth opportunities of our peer companies should be based primarily on regulated activities.

In the case of Northwest Natural Gas Company, we also considered geographic proximity, to the extent it could result in the company’s serving as a potential competitor for executive talent.

For 2020 the Compensation Committee selected the following companies to serve as our compensation peer group:

 

2020 PEER GROUP

              

ALLETE, Inc.

  El Paso Electric Company*   NiSource, Inc.   Pinnacle West Capital Corporation

Alliant Energy Corporation

  Evergy, Inc.   Northwest Natural Gas Company   PNM Resources, Inc.

Avista Corporation

  Hawaiian Electric   NorthWestern Corporation   Puget Energy, Inc.

Black Hills Corporation

  IDACORP, Inc.   OGE Energy Corp.  

 

*

After our 2020 compensation decisions were made, El Paso Electric Company was acquired by the JPMorgan Chase-tied Infrastructure Investments Fund and no longer forms part of our compensation peer group.

Based on data compiled by Willis Towers Watson at the time of our 2020 peer group review, PGE was positioned near the median of the peer group in terms of revenue and market capitalization:

PGE VS 2020 PEER GROUP

 

 

LOGO    LOGO

Consideration Of Say On Pay Vote

We engage with our investors throughout the year and annually provide shareholders with an opportunity to cast an advisory “Say on Pay” vote on our executive compensation program. At our 2020 Annual Meeting of Shareholders, 98.9% of the votes cast were in favor of our Say on Pay proposal. We believe these results indicated strong support for our 2019 executive compensation program and, while we made modifications to our incentive award programs to improve alignment with our strategic focus and the competitiveness of our pay, we retained the core design of our program for 2021. We will continue to consider the results of annual shareholder advisory votes on executive compensation as well as any feedback we receive from shareholders and other stakeholders during the course of the year.

 

   

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    2021    

 

   

    

 

 

Other Compensation Policies and Practices

USE OF COMPENSATION CONSULTANTS

To assist the Compensation Committee with its compensation decisions, the committee has retained FW Cook as its independent compensation consultant. For 2020, FW Cook’s assignments included the following:

 

   

Review of the Company’s executive compensation program, including compensation philosophy, compensation levels in relation to Company performance, pay opportunities relative to those at comparable companies, short- and long-term mix and metric selection, executive benefits and perquisites, stock ownership levels and wealth potential, and stock ownership guidelines,

 

   

Review of the Company’s director compensation program, including design considerations such as ownership guidelines and vesting terms,

 

   

Reporting on emerging trends, legislative developments and best practices in the area of executive and director compensation,

 

   

Preparation of a comprehensive compensation risk assessment study to evaluate whether the Company’s compensation programs are likely to create material risk for the Company, and

 

   

Attendance at Compensation Committee meetings.

Before engaging FW Cook, the Compensation Committee reviewed the firm’s qualifications, as well as its independence and the potential for conflicts of interest. The committee determined that FW Cook is independent and its services to the committee do not create any conflicts of interest. The committee has the sole authority to approve FW Cook’s compensation, determine the nature and scope of its services, and terminate the engagement. FW Cook does not perform other services for or receive other fees from the Company.

In addition, management has engaged its own compensation consultant, Willis Towers Watson, to assist with a variety of compensation matters, including compensation benchmarking and the development of recommendations on compensation program design.

ANNUAL COMPENSATION RISK ASSESSMENT

In 2020, as in prior years, the Compensation Committee engaged FW Cook to perform a comprehensive risk assessment of our compensation policies and practices. The assessment covered executive and non-executive plan design and oversight as well as other aspects of our compensation practices, as summarized below:

 

Equity Award Program

  

Cash Incentive Programs

   Other Compensation Practices

•  Equity grants

  

•  Pay mix

  

•  Incentive mix

•  Payment timing and adjustments

  

•  Performance metrics

  

•  Succession planning

•  Grant policies

  

•  Performance goals and payout curves

  

•  Severance

•  Stock ownership guidelines and trading policies

  

•  Payment timing and adjustments

  

•  Role of the Board of Directors

The finding of the report was that our programs do not encourage excessive risk taking and are not reasonably likely to have a material adverse effect on the Company. The report noted the following risk-mitigating features of our program, among others:

 

   

Independent Board Oversight. The Compensation Committee oversees incentive pay programs at all levels of the organization. The CEO’s pay is set by all of the independent directors, acting as a group.

 

   

Balanced Pay Elements. Our compensation program includes an appropriate balance in fixed and variable pay, cash and equity, formulas and discretion, and short-term and long-term measurement periods.

 

   

Robust Governance Policies. Policies are in place to mitigate compensation risk such as ownership guidelines, insider-trading prohibitions, and compensation clawbacks.

 

   

Incentive Mix. Incentive awards cover multiple overlapping time frames, ranging from one-to-three years, dampening the impact of stock price and financial performance volatility in rewards. Multiple financial goals prevent an over-emphasis on any single metric.

 

 
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COMPENSATION DISCUSSION AND ANALYSIS

 

   

Risk-Adjusted Incentive Targets. Incentive award targets encourage improvements but not at levels that would encourage imprudent risk-taking.

HEDGING POLICY

Under our Insider Trading Policy, all of our officers, employees and directors are prohibited from trading in options, warrants, puts and calls, or similar instruments on Company securities, or selling Company securities “short.” In addition, employees and directors may not purchase any financial instrument, or enter into any transaction, that is designed to hedge or offset a decrease in the market value of Company stock (including prepaid variable forward contracts, equity swaps, collars or exchange funds). Directors and employees are also prohibited from purchasing Company securities on margin or pledging or otherwise encumbering Company securities.

STOCK OWNERSHIP POLICY

The Company has adopted a stock ownership and holding policy for our executive officers. The primary objectives of the policy are to create financial incentives that align the interests of executive officers with strong operating and financial performance of the Company and encourage executive officers to operate the business of the Company with a long-term perspective. Under the policy, our CEO is required to hold Company stock with a value equal to at least three times her annual base salary, while the other executive officers are required to hold Company stock with a value equal to at least one times their annual base salary. The policy does not require executive officers to immediately acquire shares in an amount sufficient to meet the holding requirement. However, until the holding requirement is met, executive officers are subject to certain restrictions on their ability to dispose of shares of Company stock. The CEO is required to retain 100% of her shares until the holding requirement is met. All other executive officers are required to retain an amount of shares equal to 50% of their net after-tax performance-based equity awards until the holding requirement is met. The number of shares required to satisfy the stock ownership requirements is re-calculated annually, based on the closing price of the Company’s common stock on the date of the calculation. The Compensation Committee also reviews each officer’s holdings annually to ensure that appropriate progress toward the ownership goal is being made. All of our officers either meet the stock ownership requirement or are on track to do so as required under the policy. Our stock ownership policy for non-employee directors is described on page 49 of this proxy statement.

EQUITY GRANT PRACTICES

Under the terms of our Stock Incentive Plan, the Compensation Committee is authorized to make grants of equity awards, but may delegate this authority as it deems appropriate. The committee has delegated authority to our CEO to make annual discretionary grants of RSUs with performance-based or time-based vesting conditions to non-executive employees for the purposes of attracting and retaining qualified employees. For 2020, the maximum RSU value that the CEO was authorized to award was $500,000 in the aggregate and $100,000 per award. The Compensation Committee has not delegated the authority to make executive awards.

We expect that we will continue to grant equity awards to the executive officers and other key employees, and to delegate authority to our CEO to make limited discretionary equity awards for attraction and retention purposes. We also expect to continue to make annual grants of restricted stock units with time-based vesting conditions to the Company’s directors.

The committee has not adopted a formal policy governing the timing of equity awards. However, we have generally made awards to officers in the first quarter of the fiscal year, and we expect to continue this practice.

INCENTIVE COMPENSATION CLAWBACK AND CANCELLATION POLICY

We first adopted an incentive compensation clawback policy in 2017. We amended and restated the policy in 2019 as applied to incentive compensation approved, awarded or granted on or after February 13, 2019, and again as applied to incentive compensation approved, awarded, or granted effective on or after February 17, 2021. The current policy applies to incentive compensation (including all equity awards) earned by or awarded to current or former executive officers, as well as non-officer participants in our ACI or LTI award programs (Covered Persons). Under the current policy, in the case of a material restatement of the Company’s financial results, the independent directors, acting as a group, will review all incentive compensation earned by or awarded to Covered Persons during the three-year period preceding the date as of which the Company is required to prepare such restatement, on the basis of performance during fiscal periods affected by the restatement. If, in the judgment of the independent directors, such incentive compensation would have been lower if it had been based on the restated financial statements, the independent directors may seek recoupment of all or any portion of such incentive compensation in excess of the amount that would have been earned or awarded

 

   

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based on the restated financial statements and/or authorize the reduction or cancellation of unpaid or unvested incentive compensation. In addition, if the independent directors determine that a current or former Covered Person has engaged in egregious misconduct that results in actual or potential significant reputational or financial harm to the Company, the independent directors may seek recoupment of all or a portion of any incentive compensation earned by or awarded to such individual during the one-year period preceding the date on which the Company discovers such conduct and/or authorize the reduction or cancellation of unpaid or unvested incentive compensation. In determining the amount of compensation to cancel or recover under the policy, the independent directors may take into account any considerations they deem appropriate, including events that led to a financial restatement, the conduct of the individual, the impact of the misconduct, the cost of the recovery process and the likelihood of successful recovery under governing law.

 

 
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Executive Compensation Tables

Summary Compensation Table

The table below shows the compensation earned by the Company’s named executive officers during the years ended December 31, 2018, 2019 and 2020. Only 2020 compensation is shown for Mr. Bekkedahl, as that was the year he first met the criteria for being a named executive officer, as defined in the proxy rules promulgated by the SEC.

 

Name and Principal

Position

   Year   

Salary

$(1)

  

Bonus

$(2)

  

Stock
Awards

$(3)

  

Non-Equity
Incentive Plan
Compensation

$(4)

  

Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings

$(5)

  

All Other
Compensation

$(6)

   Totals
$

Maria Pope

President and CEO

   2020    971,710       2,249,979       167,195    121,248    3,510,132
   2019    876,077       2,124,935    861,406    134,472    69,058    4,065,948
   2018    789,183       1,499,987    853,078    10,032    63,782    3,216,062

James Lobdell

Senior Vice President,
Finance, CFO and Treasurer

   2020    544,227       620,898       280,452    180,348    1,625,925
   2019    507,892       599,952    304,661    263,703    67,440    1,743,648
   2018    459,184       534,677    303,606       61,222    1,358,689

Lisa Kaner

Vice President, General
Counsel and Corporate
Compliance Officer

   2020    412,469    225,165    419,847          76,568    1,134,050
   2019    377,596       379,957    196,421       36,615    990,589
   2018    363,461       430,743    207,773       29,250    1,031,227

John Kochavatr

Vice President, Chief
Information Officer

   2020    377,601    163,725    349,815          72,879    964,020
   2019    353,762       237,996    175,887       100,134    867,779
   2018    300,442    200,000    430,973    148,231       263,438    1,343,084

Larry Bekkedahl

Vice President, Grid
Architecture Integration &
System Operations

   2020    390,800    202,552    253,494          92,829    939,675

 

(1)

Amounts in the Salary column include base salary earned and, where applicable, the value of paid time off deferred under the 2005 MDCP.

(2)

Amounts shown in the Bonus column for 2020 represent the value of payouts under the 2020 ACI Program. The amount shown in the Bonus column for Mr. Kochavatr in 2018 relates to a cash signing bonus received in connection with the commencement of employment.

(3)

Amounts shown in the Stock Awards column represent the aggregate grant date fair value of PSU and RSU awards, computed in accordance with FASB ASC Topic 718, Compensation Stock Compensation, excluding the effect of estimated forfeitures related to service-based vesting. The grant date fair values reported above will likely vary from the actual amount realized by the named executive officer based on a number of factors, including the number of RSUs and PSUs that ultimately vest and the closing market price of our common stock on the vesting date. For RSUs, we calculate grant date fair value by multiplying the number of shares underlying the award by the NYSE closing price per share of our common stock on the grant date. For PSUs, we calculate grant date fair value by assuming the satisfaction of performance-based goals at the “target” level for all metrics other than TSR and multiplying the corresponding number of shares earned by the NYSE closing price per share of our common stock on the grant date. For the TSR portion of the PSUs, fair value is determined using a Monte Carlo simulation. See Note 14 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020 for additional details regarding the assumptions made in the valuations reflected in this column.

 

   

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If the maximum number of shares issuable under the PSUs had been used to calculate the grant date fair value of the PSUs, the value of the PSUs and the aggregate grant-date fair value of all stock awards for 2020 would have been as follows:

 

Name

Maximum

2020 PSU Value

($)

Maximum Total
2020 Stock Award
Value ($)

Maria Pope

  3,374,999   3,937,479

James Lobdell

  931,409   1,086,603

Lisa Kaner

  629,801   734,748

John Kochavatr

  374,783   537,206

Larry Bekkedahl

  380,271   443,630

 

(4)

Amounts in the Non-Equity Incentive Plan Compensation column represent cash incentive awards earned under the Company’s Annual Cash Incentive Plan. The terms of the 2020 awards are discussed on page 37 in the section entitled “Annual Cash Incentive Awards.”

(5)

Amounts in this column include the increase in the actuarial present value of the named executive officers’ accumulated benefits under the Pension Plan.

(6)

The amounts in the All Other Compensation table for 2020 are described in the table below.

 

Name

Dividend
Equivalent
Rights

($)(a)

401(k)
Contributions

($)(b)

Contributions
to 2005
MDCP

($)(c)

HSA
Contributions

($)(d)

PTO balance
payout

($)(e)

Long-Term
Disability
Insurance

($)(f)

Other

($)(g)

Total
($)

Maria Pope

  48,418   23,275     1,250   41,491   6,814     121,248

James Lobdell

  56,031   22,477   3,200   1,850   91,924   4,410   456   180,348

Lisa A. Kaner

  25,185   34,060     1,250   12,528   3,545     76,568

John M. Kochavatr

  8,856   30,646   550   1,250   28,230   3,042   305   72,879

Larry Bekkedahl

  18,538   32,086   794   1,250   36,725   3,128   308   92,829

 

  (a)

Represents the value of dividend equivalent rights earned under restricted stock unit awards, which is not included in the Stock Awards column in the Summary Compensation Table.

  (b)

Represents Company contributions to the named executive officers’ accounts under the 401(k) Plan.

  (c)

Represents Company contributions to the named executive officers’ accounts under the 2005 MDCP. See page 56 under the heading “Non-Qualified Deferred Compensation” for a discussion of the terms of the 2005 MDCP.

  (d)

Represents Company contributions to named executive officers’ individual health savings accounts.

  (e)

Represents a one-time paid time off (PTO) balance payout due to change in the Company PTO policy.

  (f)

Represents Company contributions for long-term disability insurance.

  (g)

Includes the value of ID theft protection, wellness plan incentive rewards and miscellaneous tax gross-ups.

 

 
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EXECUTIVE COMPENSATION TABLES

 

Grants of Plan-Based Awards

The following table summarizes grants of plan-based awards made to the named executive officers in 2020.

 

                                                                                                                                                                                                              
          Estimated Possible Payouts Under
Non-Equity Incentive Plan
Awards(1)
   Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
       

Grant Date
Fair Value

($)(4)

Name

   Grant
Date
   Threshold
($)
  

Target

($)

   Maximum
($)
  

Threshold

(Number of

Shares)

  

Target

(Number of

Shares)

   Max
(Number
of
Shares)
   All Other
Stock
Awards
(Number
of Units)(3)

Maria Pope

   2/12/2020    484,615    969,231    1,938,461               
   2/12/2020             13,837    27,673    55,346       1,687,500
   2/12/2020                      9,224    562,480

James Lobdell

   2/12/2020    162,398    324,796    649,592               
   2/12/2020             3,819    7,637    15,274       465,704
   2/12/2020                      2,545    155,194

Lisa Kaner

   2/12/2020    126,115    252,229    504,459               
   2/12/2020             2,582    5,164    10,328       314,901
   2/12/2020                      1,721    104,947

John Kochavatr

   2/12/2020    91,702    183,404    366,808               
   2/12/2020             1,537    3,073    6,146       187,392
   2/12/2020                      1,024    62,444
   7/29/2020                      2,279    99,980

Larry Bekkedahl

   2/12/2020    113,449    226,898    453,796               
   2/12/2020             1,559    3,118    6,236       190,136
   2/12/2020                      1,039    63,358

 

(1)

These columns show the range of potential payouts for cash incentive awards granted in 2020 under our ACI Plan. The amounts shown in the Threshold column reflect payouts at threshold performance, which are 50% of target awards. The amounts in the Target column reflect payouts at target performance, which are 100% of the target awards. The amounts shown in the Maximum column reflect maximum payouts, which are 200% of the target awards. See the section of the Compensation Discussion and Analysis entitled “Annual Cash Incentive Awards” beginning on page 37 for a description of the awards.

(2)

These columns show the estimated range of potential payouts for awards of PSUs granted in 2020 under our Stock Incentive Plan. The amounts shown in the Threshold column reflect the minimum number of PSUs that could vest, which is 50% of the target amount shown in the Target column. The number of PSUs shown in the Maximum column is equal to 200% of the target amount. See the section of the Compensation Discussion and Analysis entitled “Long-Term Incentive Awards” beginning on page 41 for a description of the awards.

(3)

This column shows the number of RSUs granted to the named executive officers in 2020.

(4)

The grant date fair values for the PSUs assume performance at target levels. The additional RSU awarded to John Kochavatr on July 29, 2020 is based on a stock price of $43.87 (the closing price of the Company’s common stock on the grant date).

 

   

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Outstanding Equity Awards at December 31, 2020

The following table summarizes the unvested equity-based awards held by our named executive officers at December 31, 2020.

 

Name

Grant Date Number of
Units of Stock That
Have Not Vested

Market Value

of Units of Stock

That Have Not
Vested(1)

($)

Equity Incentive
Plan Awards:
Number of

Unearned Units
That Have Not
Vested

($)

Equity Incentive

Plan Awards:

Market Value of

Unearned Units

That Have Not

Vested(1)

($)

Maria Pope

02/13/2019(2) 32,759 1,401,102
02/13/2019(3) 10,919 467,006
02/12/2020(4) 27,673 1,183,574
02/12/2020(5) 9,224 394,510

James Lobdell

02/13/2019(2) 9,249 395,580
02/12/2020(4) 7,637 326,634

Lisa Kaner

02/13/2019(2) 5,858 250,547
02/13/2019(3) 1,952 83,487
02/12/2020(4) 5,164 220,864
02/12/2020(5) 1,721 73,607

John Kochavatr

02/13/2019(2) 3,669 156,923
02/13/2019(3) 1,223 52,308
02/12/2020(4) 3,073 131,432
02/12/2020(5) 1,024 43,796
07/29/2020(6) 2,279 97,473

Larry Bekkedahl

02/13/2019(2) 3,561 152,304
02/13/2019(3) 1,187 50,768
02/12/2020(4) 3,118 133,357
02/12/2020(5) 1,039 44,438

 

(1)

Market value is based on the NYSE closing price of our common stock on December 31, 2020, which was $42.77.

(2)

Amounts in these rows relate to awards of PSUs with a three-year performance period ending December 31, 2021 granted under the 2019 LTI Award Program. Pursuant to SEC rules, the PSUs are represented at the target amount of shares that may be earned under the awards. The actual number of shares that will vest under the PSUs (if any) will be determined based on the Company’s performance relative to the metrics for the awards (ROE as a percentage of allowed ROE, EPS growth, energy supply decarbonization and relative TSR), subject to the approval of the Compensation Committee. The amount shown does not represent our estimate of the actual achievement to date under the awards.

(3)

Amounts in these rows relate to the award of RSUs with a vesting date of February 13, 2022.

(4)

Amounts in these rows relate to awards of PSUs with a three-year performance period ending December 31, 2022 granted under the 2020 LTI Award Program. Pursuant to SEC rules, the PSUs are represented at the target amount of shares that may be earned under the awards. The actual number of shares that will vest under the PSUs (if any) will be determined based on the Company’s performance relative to the metrics for the awards (ROE as a percentage of allowed ROE, EPS growth, clean energy and relative TSR), subject to the approval of the Compensation Committee. The amount shown does not represent our estimate of the actual achievement to date under the awards.

(5)

Amounts in these rows relate to the award of RSUs with a vesting date of February 12, 2023.

(6)

Amount in this row relates to an award of RSUs to Mr. Kochavatr in recognition of the expansion of his role, granted on July 29, 2020. The amount shown will vest over a two-year period, half on July 30, 2021 and the remaining half on July 30, 2022, provided the Compensation Committee determines satisfactory progress described in the Off-Cycle Compensation section on page 45.

 

 
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EXECUTIVE COMPENSATION TABLES

 

Stock Units Vested

The following table shows, for each of the named executive officers, the number and aggregate value of restricted stock units and related dividend equivalent rights that vested during 2020.

 

Name

Number of Shares
Acquired on
Vesting of
Restricted Stock
Units(1)

Value Realized on
Vesting

($)(2)

Maria Pope

  12,083   736,821

James Lobdell

  16,156   900,407

Lisa Kaner

  6,301   384,235

John Kochavatr

  2,544   156,456

Larry Bekkedahl

  4,632   282,459

 

(1)

The amounts shown in this column constitute the aggregate number of PSUs and/or RSUs, together with related dividend equivalent rights, that vested in 2019. The amounts shown include shares that were withheld for applicable taxes. See page 43 under the heading “Service Requirement” and page 44 under the heading “2020 RSU Awards” for a discussion of the vesting conditions of the PSUs and RSUs, respectively.

(2)

Pursuant to SEC rules, the “value realized” on the vesting of PSUs and related dividend equivalents is equal to the number of shares that vested multiplied by the NYSE closing price of the Company’s common stock on the vesting date.

Pension Benefits

The following table shows the actuarial present value of Ms. Pope’s and Mr. Lobdell’s accumulated benefit under the Pension Plan as of December 31, 2020. The Pension Plan was closed to new participants before Ms. Kaner, Mr. Kochavatr and Mr. Bekkedahl joined the Company.

 

Name

Plan Name

Number of Years

Credited Service

Present Value of

Accumulated Benefit

($)

Maria Pope

  Pension Plan   12.00   666,533

James Lobdell

  Pension Plan   36.22   1,938,862

Lisa Kaner

  Pension Plan    

John Kochavatr

  Pension Plan    

Larry Bekkedahl

  Pension Plan    

Participants in the Pension Plan earn benefits under the plan during each year of employment. Employees are vested in plan benefits after 5 years of service. Normal retirement age under the plan is 65. Early retirement income is available to participants after age 55, but benefits are reduced for each year prior to the normal retirement date.

For non-union plan participants, the basic monthly pension benefit is based on Final Average Earnings (“FAE”), defined as the highest consecutive 60 months of earnings (base pay paid, excluding reductions due to income deferrals) during the last 120 months of employment.

The basic pension benefit under the plan is calculated as follows:

 

 

       

Monthly     

Benefit     

 

  =    

1.2% of FAE for first 30  

years of service

 

 +    

0.5% of FAE in excess of  

35-Year Average of Social  

Security Taxable Wage  

Base  

 

 +    

0.5% of FAE for each year  

of service over 30 years

 

The normal form of payment for a participant who does not have a spouse is a straight life annuity, which makes periodic payments to the participant until his or her death. The normal form of payment if the participant has a spouse is a contingent annuity, which makes full payments for the life of the participant and thereafter 50% of the full payments until the death of the spouse if he or she survives the participant.

 

   

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Pension Plan calculations are based on assumptions that are reviewed annually with the Company’s actuaries. The benefit calculation shown in the table above assumes retirement at age 65 (or current age if later), a discount rate of 2.64% and mortality assumptions based on the Generational Annuitant Mortality (PRI-2012 with MP2018 projection and 20-year convergence to SSA smoothed long-term rates). These assumptions are the same ones used for financial reporting purposes.

The 1986 MDCP and 2005 MDCP (“MDCP Plans”) provide a benefit to compensate participants for Pension Plan benefits that are lower due to salary deferrals under the MDCP Plans. These deferrals reduce a participant’s Final Average Earnings, on which Pension Plan benefits are based. The present value of the reduction in Pension Plan benefits due to salary deferrals is calculated as a lump sum upon termination of employment and added to the participant’s deferred compensation plan account balance. The aggregate present value of this benefit is reflected in the Pension Benefits table above.

Non-Qualified Deferred Compensation

We offer a select group of management and highly compensated employees an opportunity to defer compensation under the Company’s 2005 Management Deferred Compensation Plan (2005 MDCP). Before January 1, 2005 (the effective date of the 2005 MDCP), eligible employees were able to defer compensation under the Portland General Electric Company Management Deferred Compensation