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Compensation and Benefit Plans
12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Compensation and Benefit Plans

Note 9.Compensation and Benefit Plans

Employee Savings Plan

The 401(k) defined contribution savings plan is designed to supplement employees' retirement income. The employer contributions were as follows:

Edison

International

    

SCE

(in millions)

    

Years ended December 31, 

2022

$

103

$

101

2021

 

97

 

96

2020

 

93

 

92

Pension Plans and Postretirement Benefits Other Than Pensions

Pension Plans

Noncontributory defined benefit pension plans (some with cash balance features) cover most employees meeting minimum service requirements. Employees hired by the participating companies on or after December 31, 2017 are no longer eligible to participate in the pension plan. In lieu of that, an additional non-contributory employer contribution is deposited into the Edison 401(k) Savings Plan. SCE recognizes pension expense for its nonexecutive plan as calculated by the actuarial method used for ratemaking. The expected contributions (all by the employer) for Edison International and SCE are approximately $35 million and $8 million, respectively, for the year ending December 31, 2023. Annual contributions made by SCE to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms.

The funded position of Edison International's pension is sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's pension are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, a regulatory asset is recorded equal to the unfunded status and a regulatory liability is recorded equal to the funded status. See Note 11 for further information.

Information on pension plan assets and benefit obligations for continuing and discontinued operations is shown below.

Edison International

SCE

 

Years ended December 31, 

(in millions)

    

2022

    

2021

    

2022

    

2021

Change in projected benefit obligation

 

  

 

  

 

  

 

  

Projected benefit obligation at beginning of year

$

4,171

$

4,476

$

3,694

$

3,984

Service cost

 

120

 

130

 

115

 

126

Interest cost

 

111

 

103

 

97

 

92

Actuarial gain

 

(589)

 

(245)

 

(503)

 

(246)

Benefits paid

 

(289)

 

(293)

 

(244)

 

(262)

Projected benefit obligation at end of year

$

3,524

$

4,171

$

3,159

$

3,694

Change in plan assets

 

  

 

  

 

  

 

  

Fair value of plan assets at beginning of year

$

4,296

$

4,171

$

4,061

$

3,940

Actual return on plan assets

 

(575)

 

368

 

(544)

 

348

Employer contributions

 

30

 

50

 

2

 

35

Benefits paid

 

(289)

 

(293)

 

(244)

 

(262)

Fair value of plan assets at end of year

 

3,462

 

4,296

 

3,275

 

4,061

Funded status at end of year

$

(62)

$

125

$

116

$

367

Amounts recognized in the consolidated balance sheets consist of 1:

 

  

 

  

 

  

 

  

Long-term assets

$

139

$

384

$

128

$

384

Current liabilities

 

(26)

 

(26)

 

(2)

 

(2)

Long-term liabilities

 

(175)

 

(233)

 

(10)

 

(15)

$

(62)

$

125

$

116

$

367

Amounts recognized in accumulated other comprehensive loss consist of:

 

  

 

  

 

  

 

  

Net loss1

$

17

 

74

 

8

 

12

Amounts recognized as a regulatory liability

(139)

 

(395)

 

(139)

 

(395)

Accumulated benefit obligation at end of year

$

3,401

$

3,947

$

3,049

$

3,491

Pension plans with plan assets in excess of an accumulated benefit obligation:

 

  

 

  

 

  

 

  

Projected benefit obligation

 

3,524

 

4,171

 

3,159

 

3,694

Accumulated benefit obligation

 

3,401

 

3,947

 

3,049

 

3,491

Fair value of plan assets

 

3,462

 

4,296

 

3,275

 

4,061

Weighted average assumptions used to determine obligations at end of year:

 

 

  

 

 

  

Discount rate

 

5.36

%  

 

2.75

%  

 

5.36

%  

 

2.75

%

Rate of compensation increase

 

4.00

%  

 

4.00

%  

 

4.00

%  

 

4.00

%

1The SCE liability excludes a long-term payable due to Edison International Parent of $93 million and $132 million at December 31, 2022 and 2021, respectively, related to certain SCE postretirement benefit obligations transferred to Edison International Parent. SCE's accumulated other comprehensive loss of $8 million and $12 million at December 31, 2022 and 2021, excludes net losses of $3 million and $32 million related to these benefits, respectively.

For Edison International and SCE, respectively, the 2022 actuarial gains are primarily related to $1.0 billion and $929 million in gains from an increase in the discount rate (from 2.75% as of December 31, 2021 to 5.36% as of December 31, 2022), partially offset by $456 million and $430 million in losses from economic assumption and experience. For Edison International and SCE, respectively, the 2021 actuarial gains are primarily related to $159 million and $149 million in gains from an increase in discount rate (from 2.38% as of December 31, 2020 to 2.75% as of December 31, 2021), $69 million and $83 million in gains from valuation and experience.

Net periodic pension expense components are:

Edison International

SCE

Years ended December 31, 

(in millions)

2022

    

2021

    

2020

    

2022

    

2021

    

2020

Service cost

$

120

$

130

$

121

$

118

$

127

$

119

Non-service cost (benefit)

 

 

  

 

  

 

 

  

 

  

Interest cost

 

111

 

103

 

124

 

101

 

95

 

114

Expected return on plan assets

 

(227)

 

(222)

 

(215)

 

(215)

 

(211)

 

(203)

Settlement costs

 

4

 

 

 

4

 

 

Amortization of prior service cost

 

 

1

 

2

 

 

1

 

1

Amortization of net loss

 

5

 

11

 

10

 

2

 

7

 

7

Regulatory adjustment

 

6

 

25

 

16

 

6

 

25

 

16

Total non-service benefit1

 

(101)

 

(82)

 

(63)

 

(102)

 

(83)

 

(65)

Total expense recognized

$

19

$

48

$

58

$

16

$

44

$

54

1Included in "Other income" on Edison International's and SCE's consolidated income statements. For further details, see Note 16.

Other changes in pension plan assets and benefit obligations recognized in other comprehensive income:

Edison International

SCE

Years ended December 31, 

(in millions)

    

2022

    

2021

    

2020

    

2022

    

2021

    

2020

Net (gain) loss

$

(45)

$

(10)

$

11

$

(24)

$

(5)

$

9

Settlement charges

 

(4)

 

 

 

(4)

 

 

Amortization of net loss

 

(8)

 

(11)

 

(10)

 

(5)

 

(7)

 

(7)

Total (gain) loss recognized in other comprehensive income

 

(57)

 

(21)

 

1

 

(33)

 

(12)

 

2

Total recognized in expense and other comprehensive income

$

(38)

$

27

$

59

$

(17)

$

32

$

56

In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income for the portion of SCE's postretirement benefit plans that are recoverable in utility rates.

Edison International and SCE used the following weighted average assumptions to determine pension expense:

Years ended December 31, 

 

    

2022

    

2021

    

2020

 

Discount rate

 

2.75

%  

2.38

%  

3.11

%

Rate of compensation increase

 

4.00

%  

4.00

%  

4.10

%

Expected long-term return on plan assets

 

5.50

%  

5.50

%  

6.00

%

Interest crediting rate for cash balance account

Starting rate

3.12

%  

3.03

%  

3.61

%

Ultimate rate

4.50

%  

4.50

%  

5.00

%

Year ultimate rate is reached

2026

2025

2025

The following benefit payments, which reflect service rendered and expected future service, are expected to be paid:

Edison

(in millions)

International

    

SCE

2023

$

310

$

269

2024

 

314

 

274

2025

 

313

 

276

2026

 

321

 

282

2027

 

308

 

276

2028 – 2032

 

1,428

 

1,291

Postretirement Benefits Other Than Pensions ("PBOP(s)")

Employees hired prior to December 31, 2017 who are retiring at or after age 55 with at least 10 years of service may be eligible for postretirement healthcare benefits. Eligibility for a company contribution toward the cost of these benefits in retirement depends on a number of factors, including the employee's years of service, age, hire date, and retirement date. Employees hired on or after December 31, 2017 are no longer eligible for retiree healthcare benefits. In lieu of those benefits, Edison International will provide a health reimbursement account of $200 per month available only after meeting certain age and service year requirements. Under the terms of the Edison International Welfare Benefit Plan ("PBOP Plan"), each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of PBOP Plan benefits with respect to its employees and former employees that exceed the participants' share of contributions. A participating employer may terminate the PBOP Plan benefits with respect to its employees and former employees, as may SCE (as PBOP Plan sponsor), and, accordingly, the participants' PBOP Plan benefits are not vested benefits.

The expected contributions (substantially all of which are expected to be made by SCE) for PBOP benefits are $8 million for the year ended December 31, 2023. Annual contributions related to SCE employees made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans.

SCE has three voluntary employees' beneficiary association trusts ("VEBA Trusts") that can only be used to pay for retiree health care benefits of SCE and its subsidiaries. Once funded into the VEBA Trusts, neither SCE nor Edison International can subsequently recover remaining amounts in the VEBA Trusts. Participants of the PBOP Plan do not have a beneficial interest in the VEBA Trusts. The VEBA Trust assets are sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's other postretirement benefits are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, the funded status is offset by a regulatory liability.

Information on PBOP Plan assets and benefit obligations is shown below:

Edison International

SCE

 

Years ended December 31, 

 

(in millions)

    

2022

    

2021

    

2022

    

2021

 

Change in benefit obligation

 

  

 

  

 

  

 

  

Benefit obligation at beginning of year

$

1,904

$

2,073

$

1,895

$

2,064

Service cost

 

34

 

40

 

34

 

40

Interest cost

 

56

 

52

 

55

 

52

Actuarial gain

 

(598)

 

(190)

 

(596)

 

(190)

Plan participants' contributions

 

29

 

29

 

29

 

29

Benefits paid

 

(94)

 

(100)

 

(94)

 

(100)

Benefit obligation at end of year

$

1,331

$

1,904

$

1,323

$

1,895

Change in plan assets

 

  

 

  

 

  

 

  

Fair value of plan assets at beginning of year

$

2,772

$

2,717

$

2,772

$

2,717

Actual return on assets

 

(527)

 

119

 

(527)

 

119

Employer contributions

 

7

 

7

 

7

 

7

Plan participants' contributions

 

29

 

29

 

29

 

29

Benefits paid

 

(94)

 

(100)

 

(94)

 

(100)

Fair value of plan assets at end of year

 

2,187

 

2,772

 

2,187

 

2,772

Funded status at end of year

$

856

$

868

$

864

$

877

Amounts recognized in the consolidated balance sheets consist of:

 

  

 

  

 

 

  

Long-term assets

$

871

$

885

$

871

$

885

Current liabilities

 

(8)

 

(8)

 

(7)

 

(8)

Long-term liabilities

 

(7)

 

(9)

 

 

$

856

$

868

$

864

$

877

Amounts recognized in accumulated other comprehensive loss consist of:

 

  

 

  

 

  

 

  

Net (gain)/loss

$

(2)

$

1

$

$

Amounts recognized as a regulatory liability

 

(867)

 

(886)

 

(867)

 

(886)

Weighted average assumptions used to determine obligations at end of year:

 

  

 

  

 

  

 

  

Discount rate

 

5.43

%  

 

2.95

%  

 

5.43

%  

 

2.95

%

Assumed health care cost trend rates:

 

 

 

 

  

Rate assumed for following year

 

6.75

%  

 

6.25

%  

 

6.75

%  

 

6.25

%

Ultimate rate

 

5.00

%  

 

5.00

%  

 

5.00

%  

 

5.00

%

Year ultimate rate reached

 

2029

 

2029

 

2029

 

2029

For Edison International and SCE, the 2022 actuarial gains are primarily related to $546 million and $543 million in gains from an increase in the discount rate (from 2.95% as of December 31, 2021 to 5.43% as of December 31, 2022), respectively. For both Edison International and SCE, the 2021 actuarial gains are primarily related to $113 million in gains from valuation and experience and $83 million in gains from an increase in the discount rate (from 2.67% as of December 31, 2020 to 2.95% as of December 31, 2021).

Net periodic PBOP expense components are:

Edison International

SCE

Years ended December 31, 

(in millions)

2022

    

2021

    

2020

    

2022

    

2021

    

2020

Service cost

$

34

$

40

$

38

$

34

$

40

$

37

Non-service cost (benefit)

 

 

  

 

  

 

 

  

 

  

Interest cost

 

56

 

52

 

63

 

55

 

52

 

63

Expected return on plan assets

 

(97)

 

(106)

 

(119)

 

(97)

 

(106)

 

(119)

Amortization of prior service cost

 

(2)

 

(1)

 

(1)

 

(2)

 

(1)

 

(1)

Amortization of net gain

 

(45)

 

(35)

 

(29)

 

(45)

 

(36)

 

(29)

Regulatory adjustment

 

55

 

51

 

49

 

55

 

51

 

49

Total non-service benefit1

 

(33)

 

(39)

 

(37)

 

(34)

 

(40)

 

(37)

Total expense

$

1

$

1

$

1

$

$

$

1Included in "Other income" on Edison International's and SCE's consolidated income statements. For further details, see Note 16.

In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans that are recoverable in utility rates.

Edison International and SCE used the following weighted average assumptions to determine PBOP expense:

Years ended December 31, 

 

    

2022

    

2021

    

2020

 

Discount rate

 

2.95

%  

2.67

%  

3.32

%

Expected long-term return on plan assets

 

3.50

%  

4.00

%  

4.90

%

Assumed health care cost trend rates:

 

 

  

 

  

Current year

 

6.25

%  

6.50

%  

6.50

%

Ultimate rate

 

5.00

%  

5.00

%  

5.00

%

Year ultimate rate reached

 

2029

 

2029

 

2029

The following benefit payments (net of plan participants' contributions) are expected to be paid:

Edison

(in millions)

International

    

SCE

2023

$

78

$

78

2024

 

81

 

80

2025

 

82

 

82

2026

 

84

 

84

2027

 

86

 

85

2028 – 2032

 

450

 

447

Plan Assets

Description of Pension and Postretirement Benefits Other than Pensions Investment Strategies

The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a combination of asset classes and may have active and passive investment strategies within asset classes. Target allocations for 2022 pension plan assets were 19.1% for U.S. equities, 10.9% for non-U.S. equities, 55% for fixed income and 15% for opportunistic and/or alternative investments. Target allocations for 2022 PBOP plan assets (except for Represented VEBA which is 95% for fixed income and 5% for U.S. and non-U.S. equities) are 44% for U.S. and non-U.S. equities, 50% for fixed income and 6% for opportunistic and/or alternative investments. Edison International employs multiple investment management firms. Investment managers within each asset class cover a range of

investment styles and approaches. Risk is managed through diversification among multiple asset classes, managers, styles and securities. Plan asset classes and individual manager performances are measured against targets. Edison International also monitors the stability of its investment managers' organizations.

Allowable investment types under CPUC investment guidelines include:

United States equities: common and preferred stocks of large, medium, and small companies which are predominantly United States-based.
Non-United States equities: equity securities issued by companies domiciled outside the United States and in depository receipts which represent ownership of securities of non-United States companies.
Fixed income: fixed income securities issued or guaranteed by the United States government, non-United States governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below investment grade.
Opportunistic, alternative and other investments: Opportunistic investments in short to intermediate term market opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid. Alternative investments are limited partnerships that invest in non-publicly traded entities. Other investments are diversified among multiple asset classes such as global equity, fixed income currency and commodities markets. Investments are made in liquid or illiquid instruments within and across markets. The investment returns are expected to approximate the plans' expected investment returns.

Asset class portfolio weights are permitted to range within plus or minus 5%. Where approved by the fiduciary investment committee, futures contracts are used for portfolio rebalancing and to reallocate portfolio cash positions. Where authorized, a few of the plans' investment managers employ limited use of derivatives, including futures contracts, options, options on futures and interest rate swaps in place of direct investment in securities to gain efficient exposure to markets. Derivatives are not used to leverage the plans or any portfolios.

Determination of the Expected Long-Term Rate of Return on Assets

The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for plan assets and capital markets return forecasts for asset classes employed. A portion of the PBOP trust asset returns is subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis.

Capital Markets Return Forecasts

SCE's capital markets return forecast methodologies primarily use a combination of historical market data, current market conditions, proprietary forecasting expertise, complex models to develop asset class return forecasts and a building block approach. The forecasts are developed using variables such as real risk-free interest, inflation and asset class specific risk premiums. For equities, the risk premium is based on an assumed average equity risk premium of 5% over cash. The forecasted return on private equity and opportunistic investments are estimated at a 4% premium above public equity, reflecting a premium for higher volatility and lower liquidity. For fixed income, the risk premium is based on a comprehensive modeling of credit spreads.

Fair Value of Plan Assets

The PBOP Plan and the Southern California Edison Company Retirement Plan Trust assets include investments in equity securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. Equity securities, U.S. treasury securities, mutual and money market funds are classified as Level 1 as fair value is determined by observable,

unadjusted quoted market prices in active or highly liquid and transparent markets. The fair value of the underlying investments in equity mutual funds are based on stock-exchange prices. The fair value of the underlying investments in fixed-income mutual funds and other fixed income securities including municipal bonds are based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. Foreign exchange and interest rate contracts are classified as Level 2 because the values are based on observable prices but are not traded on an exchange. Futures contracts trade on an exchange and therefore are classified as Level 1. No investment is classified as Level 3 as of December 31, 2022 and 2021. Common/collective funds and partnerships are measured at fair value using the net asset value per share ("NAV") and have not been classified in the fair value hierarchy. Other investment entities are valued similarly to common/collective funds and are therefore classified as NAV. The Level 1 registered investment companies are either mutual or money market funds. The remaining funds in this category are readily redeemable and classified as NAV and are discussed further at note 8 to the pension plan trust investments table below.

Edison International reviews the process/procedures of both the pricing services and the trustee to gain an understanding of the inputs/assumptions and valuation techniques used to price each asset type/class. The trustee and Edison International's validation procedures for pension and PBOP equity and fixed income securities are the same as the nuclear decommissioning trusts. For further discussion, see Note 4. The values of Level 1 mutual and money market funds are publicly quoted. The trustees obtain the values of common/collective and other investment funds from the fund managers. The values of partnerships are based on partnership valuation statements updated for cash flows. SCE's investment managers corroborate the trustee fair values.

Pension Plan

The following table sets forth the investments for Edison International and SCE that were accounted for at fair value as of December 31, 2022 and December 31, 2021, respectively, by asset class and level within the fair value hierarchy:

    

December 31, 2022

(in millions)

    

Level 1

    

Level 2

    

NAV1

    

Total

U.S. government and agency securities2

$

281

$

293

$

$

574

Corporate stocks3

 

227

3

 

 

230

Corporate bonds4

 

 

973

 

 

973

Common/collective funds5

 

 

 

658

 

658

Partnerships/joint ventures6

 

 

 

613

 

613

Other investment entities7

 

 

 

63

 

63

Registered investment companies8

 

206

 

 

159

 

365

Interest-bearing cash

 

14

 

 

 

14

Other

 

 

48

 

7

 

55

Total

$

728

$

1,317

$

1,500

$

3,545

Receivables and payables, net

 

 

  

 

  

 

(83)

Combined net plan assets available for benefits

 

 

  

 

  

 

3,462

SCE's share of net plan assets

 

  

 

  

$

3,275

    

December 31, 2021

(in millions)

    

Level 1

    

Level 2

    

NAV1

    

Total

U.S. government and agency securities2

$

217

$

918

$

$

1,135

Corporate stocks3

 

466

 

4

 

 

470

Corporate bonds4

 

 

815

 

 

815

Common/collective funds5

 

 

 

964

 

964

Partnerships/joint ventures6

 

 

 

688

 

688

Other investment entities7

 

 

 

110

 

110

Registered investment companies8

 

57

 

 

31

 

88

Interest-bearing cash

 

8

 

 

 

8

Other

 

 

45

 

 

45

Total

$

748

$

1,782

$

1,793

$

4,323

Receivables and payables, net

 

 

  

 

  

 

(27)

Combined net plan assets available for benefits

 

 

  

 

  

 

4,296

SCE's share of net plan assets

 

  

 

  

$

4,061

1These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits.
2Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
3 Corporate stocks are diversified. At December 31, 2022 and 2021, respectively, performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes (36% and 44%) and Morgan Stanley Capital International (MSCI) index (64% and 56%).
4 Corporate bonds are diversified. At December 31, 2022 and 2021, respectively, this category includes $67 million and $61 million for collateralized mortgage obligations and other asset backed securities.
5The common/collective assets are invested in equity index funds that seek to track performance of the Standard and Poor's 500 Index (41% at both December 31, 2022 and 2021). 10% are invested on Russell 1000 indexes at December 31, 2021. In addition, at December 31, 2022 and 2021, respectively, 46% and 38% of the assets in this category are in index funds which seek to track performance in the MSCI All Country World Index ex-US and 11% and 9% of this category are in non-index U.S. equity fund, which is actively managed.
6At December 31, 2022 and 2021, respectively, 76% and 62% are invested in private equity funds with investment strategies that include branded consumer products and clean technology companies, 18% and 17% are invested in ABS including distressed mortgages and commercial and residential loans, 2% and 3% are invested in a broad range of financial assets in all global markets. 15% are invested in publicly traded fixed income securities at December 31, 2021.
7At December 31, 2022, 64% are invested in domestic mortgage backed securities and 36% in high yield debt securities, respectively. At December 31, 2021, 71% are invested in emerging market equity securities and 20% in domestic mortgage backed securities, respectively.
8At December 31, 2022, 56% are invested in Level 1 corporate bond fund, 21% in fixed income fund used for cash management and 22% in US equity fund, respectively. At December 31, 2021, 63% were invested in Level 1 registered investment companies that primarily consisted of a global equity mutual fund which seeks to outperform the MSCI World Total Return Index and 35% on fixed income fund used for cash management.

At December 31, 2022 and 2021, respectively, approximately 61% and 62% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States.

Postretirement Benefits Other than Pensions

The following table sets forth the VEBA Trust assets for Edison International and SCE that were accounted for at fair value as of December 31, 2022 and December 31, 2021, respectively, by asset class and level within the fair value hierarchy:

    

December 31, 2022

(in millions)

    

Level 1

    

Level 2

    

NAV1

    

Total

U.S. government and agency securities2

$

222

$

304

$

$

526

Corporate stocks3

 

103

 

2

 

 

105

Corporate notes and bonds4

 

 

860

 

 

860

Common/collective funds5

 

 

 

413

 

413

Partnerships6

 

 

 

119

 

119

Registered investment companies7

 

55

 

 

 

55

Interest bearing cash

 

 

56

 

 

56

Other8

 

 

59

 

 

59

Total

$

380

$

1,281

$

532

$

2,193

Receivables and payables, net

 

 

  

 

  

 

(6)

Combined net plan assets available for benefits

 

 

  

 

  

 

2,187

SCE's share of net plan assets

 

  

 

  

$

2,187

    

December 31, 2021

(in millions)

    

Level 1

    

Level 2

    

NAV1

    

Total

U.S. government and agency securities2

$

813

$

10

$

$

823

Corporate stocks3

 

145

 

3

 

 

148

Corporate notes and bonds4

 

 

997

 

 

997

Common/collective funds5

 

 

 

544

 

544

Partnerships6

 

 

 

107

 

107

Registered investment companies7

 

44

 

 

 

44

Interest bearing cash

 

 

51

 

 

51

Other8

 

 

59

 

 

59

Total

$

1,002

$

1,120

$

651

$

2,773

Receivables and payables, net

 

  

 

  

 

  

 

(1)

Combined net plan assets available for benefits

 

  

 

  

 

  

$

2,772

SCE's share of net plan assets

 

  

 

  

$

2,772

1These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits.
2 Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.
3Corporate stock performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes (73%) and the MSCI All Country World Index (27%) for both 2022 and 2021.
4 Corporate notes and bonds are diversified and include approximately $150 million for commercial collateralized mortgage obligations and other asset backed securities at both December 31, 2022 and 2021.
5 At December 31, 2022 and 2021, respectively, 53% and 65% of the common/collective assets are invested in index funds which seek to track performance in the MSCI All Country World Index Investable Market Index. 27% and 25% are invested in a non-index U.S. equity fund which is actively managed. The remaining assets in this category are primarily invested in fixed income fund and emerging market fund.
6 At December 31, 2022 and 2021, respectively, 63% and 54% of the partnerships are invested in private equity and venture capital funds. Investment strategies for these funds include branded consumer products, clean and information technology and healthcare. Of the remaining partnerships category, 31% and 35% are invested in asset backed securities including distressed mortgages, distressed companies and commercial and residential loans and debt and equity of banks, 6% and 11% are invested in a broad range of financial assets in all global markets.
7 At December 31, 2022 and 2021, respectively, registered investment companies were primarily invested in a money market fund (75% and 61%) and exchange rate trade funds which seek to track performance of MSCI Emerging Market Index, Russell 2000 Index and international small cap equities (25% and 39%)
8 Other includes $53 million and $44 million of municipal securities at December 31, 2022 and 2021, respectively.

At December 31, 2022 and 2021, respectively, approximately 70% and 68% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States.

Stock-Based Compensation

Edison International maintains a shareholder-approved incentive plan (the "2007 Performance Incentive Plan") that includes stock-based compensation. The maximum number of shares of Edison International's common stock authorized to be issued or transferred pursuant to awards under the 2007 Performance Incentive Plan, as amended, is approximately 71 million shares. As of December 31, 2022, Edison International had approximately 16 million shares remaining available for new award grants under its stock-based compensation plans.

The following table summarizes total expense and tax benefits associated with stock-based compensation:

Edison International

SCE

Years ended December 31, 

(in millions)

    

2022

    

2021

    

2020

    

2022

    

2021

    

2020

Stock-based compensation expense1:

 

  

 

  

 

  

 

 

  

 

  

Stock options

$

13

$

16

$

15

$

7

$

8

$

7

Performance shares

 

13

 

9

 

5

 

6

 

4

 

2

Restricted stock units

 

14

 

12

 

8

 

9

 

8

 

4

Other

 

2

 

2

 

1

 

 

 

Total stock-based compensation expense

$

42

$

39

$

29

$

22

$

20

$

13

Income tax benefits related to stock-based compensation expense

$

9

$

4

$

4

$

5

$

3

$

3

1Reflected in "Operation and maintenance" on Edison International's and SCE's consolidated statements of income.

Stock Options

Under the 2007 Performance Incentive Plan, Edison International has granted stock options at exercise prices equal to the closing price at the grant date. Edison International may grant stock options and other awards related to, or with a value derived from, its common stock to directors and certain employees. Options generally expire 10 years after the grant date and vest over a period of three or four years of continuous service in equal annual increments, except for awards granted to retirement-eligible participants, which vest on an accelerated basis.

The fair value for each option granted was determined as of the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires various assumptions noted in the following table:

Years ended December 31, 

    

2022

    

2021

    

2020

Expected terms (in years)

 

5.0

 

5.4

 

5.2

Risk-free interest rate

 

1.6% - 4.1%

1.1% - 1.3%

0.4% - 0.6%

Expected dividend yield

 

4.0% - 5.0%

4.1% - 4.8%

4.2% - 5.0%

Weighted average expected dividend yield

 

4.0%

4.5%

4.7%

Expected volatility

 

27.8% - 28.6%

26.9% - 27.1%

24.9% - 26.9%

Weighted average volatility

 

27.8%

26.9%

25.0%

The expected term represents the period of time for which the options are expected to be outstanding and is primarily based on historical exercise and post-vesting cancellation experience and stock price history. The risk-free interest rate for periods within the contractual life of the option is based on a zero-coupon U.S. Treasury STRIPS (separate trading of registered interest and principal of securities) whose maturity corresponds to the option's expected term on the measurement date. Expected volatility is based on the historical volatility of Edison International's common stock for the length of the option's expected term for 2022. The volatility period used was 60 months, 64 months and 63 months at December 31, 2022, 2021 and 2020, respectively.

The following is a summary of the status of Edison International's stock options:

Weighted Average

    

    

    

Remaining

    

Aggregate

Exercise

Contractual

Intrinsic Value

Shares

Price

 

Term (years)

 

(in millions)

Edison International:

 

  

 

  

 

  

 

  

Outstanding at December 31, 2021

 

12,354,826

$

62.78

 

  

 

  

Granted

 

909,504

 

63.67

 

  

 

  

Forfeited or expired

 

(223,836)

 

64.89

 

  

 

  

Exercised1

 

(1,156,938)

 

54.16

 

  

 

  

Outstanding at December 31, 2022

 

11,883,556

 

63.64

 

5.43

 

  

Vested and expected to vest at December 31, 2022

 

11,538,210

 

63.73

 

5.35

$

30

Exercisable at December 31, 2022

 

8,074,165

$

64.94

 

4.31

$

17

SCE:

 

  

 

  

 

  

 

  

Outstanding at December 31, 2021

 

6,180,154

$

62.03

 

  

 

  

Granted

 

470,852

 

63.51

 

  

 

  

Forfeited or expired

 

(143,235)

 

64.83

 

  

 

  

Exercised1

 

(810,294)

 

53.78

 

  

 

  

Affiliate transfers, net

 

100,155

 

66.09

 

  

 

  

Outstanding at December 31, 2022

 

5,797,632

 

63.31

 

5.45

 

  

Vested and expected to vest at December 31, 2022

 

5,620,440

 

63.40

 

5.38

$

17

Exercisable at December 31, 2022

 

3,849,057

$

64.64

 

4.28

$

9

1Edison International and SCE recognized tax benefits of $5 million and $3 million, respectively, from stock options exercised in 2022.

At December 31, 2022, total unrecognized compensation cost related to stock options and the weighted average period the cost is expected to be recognized are as follows:

    

Edison International

    

SCE

Unrecognized compensation cost, net of expected forfeitures (in millions)

$

12

$

6

Weighted average period (in years)

 

1.8

 

1.8

The following is a summary of supplemental data on stock options:

Edison International

SCE

Years ended December 31, 

(in millions, except per award amounts)

    

2022

    

2021

    

2020

    

2022

    

2021

    

2020

Weighted average grant date fair value per option granted

$

9.92

$

7.26

$

8.18

$

9.92

$

7.30

$

8.16

Fair value of options vested

 

8

 

3

 

2

 

5

 

3

 

2

Value of options exercised

 

17

 

8

 

9

 

12

 

6

 

7

Performance Shares

A target number of contingent performance shares were awarded to executives in 2022, 2021 and 2020 and vest as of December 31, 2024, 2023 and 2022, respectively. The vesting of the grants is dependent upon market and financial performance and service conditions as defined in the grants for each of the years. The number of performance shares earned from each year's grants could range from zero to twice the target number (plus additional units credited as dividend equivalents).

The fair value of market condition performance shares is determined using a Monte Carlo simulation valuation model for the total shareholder return. The fair value of financial performance condition performance shares is determined (i) at

grant as the target number of shares (which Edison International determined to be the probable outcome) valued at the closing price on the grant date of Edison International common stock and (ii) subsequently using Edison International's earnings per share compared to pre-established targets.

The following is a summary of the status of Edison International's nonvested performance shares:

Equity Awards

    

    

Weighted Average

Shares

Fair Value

Edison International:

 

  

 

  

Nonvested at December 31, 2021

 

262,808

$

61.92

Granted

 

265,916

67.88

Forfeited

 

(17,643)

64.68

Vested

 

(108,251)

67.55

Nonvested at December 31, 2022

 

402,830

$

64.22

SCE:

 

  

 

  

Nonvested at December 31, 2021

 

137,807

$

61.50

Granted

 

138,254

67.74

Forfeited

 

(12,565)

65.60

Vested

 

(54,487)

67.37

Affiliate transfers, net

 

1,064

 

59.25

Nonvested at December 31, 2022

 

210,073

$

63.93

Restricted Stock Units

Restricted stock units were awarded to executives in 2022, 2021 and 2020 and vest and become payable on January 2, 2025, January 2, 2024 and January 3, 2023, respectively. Each restricted stock unit awarded includes a dividend equivalent feature and is a contractual right to receive one share of Edison International common stock, if vesting requirements are satisfied. The vesting of Edison International's restricted stock units is dependent upon continuous service through the end of the vesting period, except for awards granted to retirement-eligible participants, which vest on an accelerated basis.

The following is a summary of the status of Edison International's nonvested restricted stock units:

Edison International

SCE

    

    

Weighted Average

    

    

Weighted Average

Grant Date

Grant Date

Shares

 

Fair Value

Shares

 

Fair Value

Nonvested at December 31, 2021

 

546,155

$

59.44

 

344,932

$

58.45

Granted

 

298,558

63.58

218,721

63.58

Forfeited

 

(24,780)

60.42

(19,073)

60.37

Vested

 

(121,751)

62.76

(62,034)

62.91

Affiliate transfers, net

 

 

 

5,789

 

57.64

Nonvested at December 31, 2022

 

698,182

$

60.60

 

488,335

$

60.13

The fair value for each restricted stock unit awarded is determined as the closing price of Edison International common stock on the grant date.