DEF 14A 1 eix3661521-def14a.htm DEFINITIVE PROXY STATEMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a Party other than the Registrant      

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Edison International

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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LETTER TO SHAREHOLDERS

                                                                                                    

March 13, 2020

DEAR SHAREHOLDER:

On behalf of the Board of Directors, we are pleased to invite you to attend the Edison International and Southern California Edison Company Annual Meeting of Shareholders. The Annual Meeting will be held on Thursday, April 23, 2020, at 9:00 a.m., Pacific Time, at the SCE Energy Education Center, 6090 N. Irwindale Avenue, Irwindale, California 91702. Please note this is a new location for the 2020 Annual Meeting. The Proxy Statement contains important information about the business to be conducted at the Annual Meeting and the Board’s role in our corporate governance and executive compensation. We encourage you to read the Proxy Statement and vote your shares promptly, whether or not you plan to attend the Annual Meeting.

CLEAN ENERGY STRATEGY

The Proxy Statement includes an overview of the Company’s clean energy strategy and commitment to sustainability; in particular, the alignment of the Company’s strategy with California’s ambitious goals to combat climate change. In November 2019, the Company published “Pathway 2045,” a data-driven analysis of the steps California must take to meet its 2045 goals to clean our electricity grid and reach carbon neutrality. The paper concludes that decarbonization is achieved through powering 100% of retail sales with carbon-free electricity, electrifying transportation and buildings, and using low-carbon fuels for technologies that are not viable for electrification. We believe the Company’s clean energy strategy places us in a unique position to help California achieve carbon neutrality by 2045 through economywide electrification, and is consistent with limiting global warming to 1.5 degrees Celsius.

WILDFIRE RISK MITIGATION

In 2019, the Company worked closely with California’s leaders to support comprehensive wildfire legislation culminating in the passage of Assembly Bill 1054, which holds utilities accountable for mitigating wildfire risks and improves the regulatory framework for prudent wildfire operations and cost recovery. AB 1054 creates a statewide wildfire insurance fund while reasonably limiting liability for utilities acting prudently. Under AB 1054, SCE is required to submit a wildfire mitigation plan (“WMP”) to the California Public Utilities Commission annually for review and approval. Beginning in 2020, each WMP is required to cover a three-year period. SCE’s 2019 WMP outlined strategies, programs and activities to proactively mitigate the threat of ignitions caused by the electric system that could lead to wildfires.

The Company made significant investments to meet or exceed nearly all of our goals in the 2019 WMP, including measures to further harden SCE’s infrastructure intended to significantly reduce potential fire ignitions, bolster SCE’s situational awareness capabilities to more fully assess and respond to potential wildfire conditions, and enhance SCE’s operational practices to strengthen fire safety measures and system resiliency. SCE’s 2020-2022 WMP, recently filed with the California Public Utilities Commission, builds on the progress made on our 2019 WMP and lessons learned. Additional information related to our wildfire mitigation efforts, including the Board’s role in the oversight of wildfire risk, is included in the Proxy Statement.

2244 Walnut Grove Avenue
Rosemead, California 91770

WILLIAM P. SULLIVAN
Independent Chair
PEDRO J. PIZARRO
President and Chief Executive Officer


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2019 FINANCIAL PERFORMANCE

We are pleased to report that Edison International’s stock price increased approximately 33% in 2019 and the Board increased the annual dividend for the 16th consecutive year. The Company also reported strong core earnings (defined on page 40 of the Proxy Statement) of $4.70 per share for 2019, an increase from $4.15 per share a year ago. The increase was primarily due to the adoption of the 2018 General Rate Case final decision in 2019, higher Federal Energy Regulatory Commission revenue due to the settlement of SCE’s 2018 Formula Rate proceeding and rate base growth, and the timing of regulatory deferral and cost recovery of incremental wildfire insurance expenses. These increases were partially offset by higher wildfire mitigation costs not deferred as regulatory assets and the increase in shares outstanding primarily related to our equity offering in July 2019. In addition, the passage of AB 1054 resulted in the stabilization of our credit ratings. The Company raised $2.4 billion from equity issuances in 2019, which we used to fund a portion of SCE’s contribution to the wildfire insurance fund and support the increase in SCE’s CPUC-approved equity layer to 52%. The Board continues to actively monitor the Company’s financial performance and key risk management as we implement our clean energy strategy and address the impact of climate change and wildfires on our business. Additional information related to the Company’s financial performance is included in the Annual Report.

BOARD COMPOSITION AND OVERSIGHT

Shareholders will vote on whether to re-elect each of our directors. Since last year’s Annual Meeting, we elected Carey Smith to the Board, who brings strategic planning, operations and safety experience from her leadership roles at Parsons Corporation. She joins an independent, engaged and diverse Board that we believe has the appropriate mix of qualifications and experience to oversee the Company’s clean energy strategy, business and risks. The Proxy Statement highlights the Board’s qualifications and oversight in important areas such as safety, strategy, risk, wildfire, cybersecurity, environmental, social and governance (“ESG”), and compensation issues.

ACCOUNTABILITY TO STAKEHOLDERS

One of the Board’s primary functions is to represent the interests of the Company and its shareholders with a focus on long-term value, considering the interests of its stakeholders. As a regulated, investor-owned utility, the interests of our customers, employees, suppliers and communities are critical to the Company’s success and ability to provide sustainable, long-term value to shareholders. The Board’s accountability to our stakeholders is reflected in the discussion of the Board’s oversight of ESG and other issues in the Proxy Statement.

WILLIAM P. SULLIVAN
Independent Chair

PEDRO J. PIZARRO
President and Chief Executive Officer


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NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS

                                                                                                    

ITEMS TO BE VOTED ON

   By Edison
International
(“EIX”)
Shareholders
   By Southern
California
Edison Company
(“SCE”) Shareholders
   Board
Recommendation
1 ELECTION OF DIRECTORS 11 Nominees 12 Nominees
Jeanne Beliveau-Dunn FOR
Michael C. Camuñez FOR
Vanessa C. L. Chang FOR
James T. Morris FOR
Timothy T. O’Toole FOR
Kevin M. Payne FOR
Pedro J. Pizarro FOR
Carey A. Smith FOR
Linda G. Stuntz FOR
William P. Sullivan FOR
Peter J. Taylor FOR
Keith Trent FOR
2 RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
3 ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION FOR
4 SHAREHOLDER PROPOSAL REGARDING A SHAREHOLDER VOTE ON BYLAW AMENDMENTS AGAINST

EIX and SCE shareholders may also vote on any other matters properly brought before the meeting.

Dated: March 13, 2020
For the Boards of Directors,

Alisa Do
Vice President and Corporate Secretary
Edison International
Southern California Edison Company

MEETING INFORMATION*

DATE
Thursday, April 23, 2020

TIME
9:00 a.m., Pacific Time

LOCATION
SCE Energy Education Center
6090 N. Irwindale Ave.
Irwindale, California 91702

RECORD DATE

Only shareholders at the close of business on February 25, 2020 are entitled to receive notice of and to vote at the Annual Meeting.

SOLICITATION OF PROXIES

The EIX and SCE Boards of Directors are soliciting proxies from you for use at the Annual Meeting, or at any adjournment or postponement of the meeting. Proxies allow designated individuals to vote on your behalf at the Annual Meeting.

VOTING YOUR SHARES

Vote your proxy via the Internet, by telephone, or by signing, dating and returning the Proxy Card if you received materials by mail. The deadline to vote by Internet or telephone is April 22, or April 21 for shares held in the Edison 401(k) Savings Plan.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 23,2020:

The Proxy Statement and Annual Report are available at www.edison.com/annualmeeting. Directions to the Annual Meeting and information on how to vote your proxy are included in the Proxy Statement.



* The safety of our employees, customers, communities and shareholders is our first priority. As part of our precautions regarding the coronavirus or COVID-19, the Company is planning for the possibility that the Annual Meeting could be postponed or moved to another location. At this time, we expect the Annual Meeting to occur as planned and will take necessary precautions to protect the health and safety of those who attend. If we change the Annual Meeting date, time or location, we will announce the decision to do so in advance and post details on our website at www.edison.com/annualmeeting.

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TABLE OF CONTENTS

                                                                                                    

LETTER TO SHAREHOLDERS        i
NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS iii
OUR CLEAN ENERGY STRATEGY 1
Our Vision and Strategy 1
Our Safety Journey 1
Our Wildfire Mitigation 1
Our Commitment to Sustainability 2
ITEM 1: ELECTION OF DIRECTORS 4
Our Board of Directors 5
Experience, Skills and Attributes on the Board 6
Director Biographical Information 7
OUR CORPORATE GOVERNANCE 15
Key Governance Practices 15
Governance Structure and Processes 16
Board Committees 20
Key Areas of Board and Committee Oversight 23
DIRECTOR COMPENSATION 27
OUR STOCK OWNERSHIP 30
ITEM 2: RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 32
Independent Auditor Fees 33
Audit Committee Report 34
ITEM 3: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION 35
COMPENSATION DISCUSSION AND ANALYSIS 36
Compensation Summary 36
What We Pay and Why: Elements of Total Direct Compensation 41
How We Make Compensation Decisions 50
Post-Employment and Other Benefits 53
Other Compensation Policies and Guidelines 54
Compensation Committee Report 55
Compensation Committee Interlocks and Insider Participation 55
EXECUTIVE COMPENSATION 56
Summary Compensation Tables 56
Grants of Plan-Based Awards 60
Outstanding Equity Awards at Fiscal Year-End 63
Option Exercises and Stock Vested 67
Pension Benefits 68
Non-Qualified Deferred Compensation 72
Potential Payments Upon Termination or Change in Control 75
CEO Pay-Ratio Disclosure 80
ITEM 4: SHAREHOLDER PROPOSAL REGARDING A SHAREHOLDER VOTE ON BYLAW AMENDMENTS 81
To Be Voted On By EIX Shareholders Only
Proposal 4 — Let Shareholders Vote on Bylaw Amendments 81
EIX Board Recommendation “Against” Item 4 82
MEETING AND VOTING INFORMATION 84
TERMS USED IN THIS PROXY STATEMENT 89

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OUR CLEAN ENERGY STRATEGY

                                                                                                    

OUR VISION AND STRATEGY

Our vision is to lead the transformation of the electric power industry, focusing on opportunities in clean energy, efficient electrification, grid of the future and customer choice. EIX is advancing this vision by growing our business toward a clean energy future while adapting our infrastructure and operations to a new climate reality, striving for best-in-class operations, and providing superior value to our customers and shareholders. EIX’s primary operating business is SCE, a rate-regulated electric utility that supplies electric energy to approximately 15 million people in a 50,000 square-mile area within Central, Coastal and Southern California. Together, the Company is focused on the following strategic priorities:

     
Growing our business toward a clean energy future
Adapting our infrastructure and operations to a new climate reality
Striving for best-in-class operations
Providing superior value to our customers and shareholders
     
Addressing wildfire risk
Cleaning the power system
Helping customers make cleaner energy choices
Strengthening and modernizing the grid
Achieving operational and service excellence

Our vision and strategy are intended to provide a foundation for long-term sustainable growth and value for our shareholders and other stakeholders. The Board’s role in the oversight of our strategy is described below under “Our Corporate Governance – Key Areas of Board and Committee Oversight.”

OUR SAFETY JOURNEY

Safety is the first of our core values. We are committed to creating and maintaining a safe environment for our employees, contractors, customers and the public. Over the past several years, we have increased the Company’s focus on safety oversight and accountability by developing a culture of safety ownership among our employees and contractors that empowers them to control their own safety, support their team members’ safety, and contribute to a safe work environment. We are also committed to upholding the highest levels of public safety. Expanding our wildfire mitigation, response, and recovery efforts by improving the resiliency and security of our grid has been a key focus area. In addition, we remain focused on our preparation for, and response to, other types of disasters and emergencies that can impact public safety and our operations.

The Board believes the safety of employees, contractors, customers and the public is essential to the Company’s values and success. The Board’s role in the oversight of safety is described below under “Our Corporate Governance – Key Areas of Board and Committee Oversight.”

OUR WILDFIRE MITIGATION

As discussed above in our Letter to Shareholders, the Company worked closely with California’s leaders to enact comprehensive wildfire legislation, Assembly Bill 1054, which requires SCE to submit a wildfire mitigation plan (“WMP”) to the California Public Utilities Commission annually for review and approval. Beginning in 2020, each WMP is required to cover a three-year period. The Company’s WMP includes strategies, programs and activities to mitigate the risk of utility infrastructure igniting catastrophic wildfires and address the challenges in high fire risk areas, which represent about 27% of the area we serve. The Company met or exceeded nearly all of our goals in the 2019 WMP.

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OUR CLEAN ENERGY STRATEGY

The Company is dedicated to keeping our communities safe and making our system stronger against the increasing threat of extreme conditions driven by climate change. We have made capital investments of approximately $750 million in grid hardening with covered conductor and current limiting fuses, enhanced operational practices to effectively address the findings of our accelerated inspections and remove hazard trees, and improved situational awareness by installing high definition cameras and micro weather stations throughout high fire risk areas. The 2020 WMP builds on this work to strengthen the resiliency of our infrastructure and continue to enhance our operational practices with additional technologies and risk-based modeling to reduce the risk of wildfires. This includes improvements to the implementation of Public Safety Power Shutoffs during severe weather events and under high fire potential conditions. SCE is engaged with our customers and communities, especially during these conditions, to support resiliency and closely coordinates with local emergency response agencies. Our Board has and will continue to provide active oversight of wildfire issues and overall wildfire risk mitigation, with a specific focus for the Board’s Safety and Operations Committee.

OUR COMMITMENT TO SUSTAINABILITY

Sustainability is integral to our vision to lead the transformation of the electric power industry toward a clean energy future. Sustainability is also core to our strategy, which is aligned with California’s ambitious, economywide goals to combat climate change. From how we manage our operations and engage with stakeholders to how we provide safe, reliable, affordable and clean power — we are committed to sustainability because the Company’s success is tied to the strength and health of the communities we operate in and serve. We believe the Company has a responsibility to make a positive impact on society. As a result, we are implementing our clean energy strategy to address broader societal challenges, such as climate change and wildfires. Our commitment to sustainability is reflected in the Company’s environmental, social and governance (“ESG”) priorities and practices.

OUR PRIORITY ESG TOPICS

In an effort to identify ESG topics that are fundamental to our long-term success, the Company completed an ESG priority assessment in line with best practice in early 2018. The assessment, which included internal and external stakeholder perspectives, identified 19 priority topics, listed below. Many of the topics relate to our strategy and core operations, and the results complement the Company’s ongoing strategic planning efforts.

Transition to a Clean Energy Future     Customers, Communities and Employees     Operations and Governance
Climate change and greenhouse gas (“GHG”) emissions
Grid modernization and innovation
Local air quality
Renewable energy and distributed energy resources
Service and product innovation
Transportation electrification
Business model
Safety and health
Affordability and access
Community development
Customer relations
Diversity and inclusion
Employee engagement and workforce development
Cyber and physical safety
Environmental footprint
Governance, transparency and compliance
Infrastructure reliability and resilience
Public policy engagement
Water use and management

The Board’s role in overseeing these priorities is described below under “Our Corporate Governance – Key Areas of Board and Committee Oversight – ESG Oversight.”

OUR CLIMATE CHANGE OBJECTIVES

At the core of our strategy is a strong partnership with the state of California and other stakeholders to help California achieve its ambitious, science-based climate change goals. As a result, the Company’s climate change objectives are aligned with California’s policies to combat climate change and limit global warming to 1.5 degrees Celsius. In 2017, the Company underscored this commitment to fighting climate change by signing on to the “We Are Still In” campaign in support of the Paris Climate Agreement.

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OUR CLEAN ENERGY STRATEGY

SCE has state-mandated objectives to deliver 100% carbon-free power by 2045, which is one of the most aggressive targets in the U.S. utility industry. As a regulated utility with operations entirely within the state of California, SCE operates under the following, state-mandated renewable and carbon-free retail sales targets for delivered power:

By 2020 – 33% of power from Renewables Portfolio Standard (“RPS”)-eligible resources
By 2030 – 60% of power from RPS-eligible resources
By 2045 – 100% carbon-free power

SCE has already met its 2020 requirements and currently delivers approximately 48% carbon-free power to its customers. Approximately 73% of this carbon-free electricity, or 35% of SCE’s total delivered power, comes from RPS-eligible resources. SCE has reduced GHG emissions from the power it delivers by 42% since 2005 and anticipates emissions will continue to decline in accordance with state law through 2045.

Beyond delivered power, the Company believes it has a responsibility to enable the state to achieve its broader, economywide GHG emissions reduction goals through electrification:

By 2030 – 40% reduction in GHG emissions from 1990 levels
By 2045 – Carbon neutrality
By 2050 – 80% reduction in GHG emissions from 1990 levels

The Company’s analysis and that of others has shown an electric-led path to be the most cost-effective way to meet these goals. Over the past three years, the Company has published two thought leadership pieces with in-depth analysis of the cross-sector collaboration that we believe is needed to reach the state’s climate goals: the “Clean Power and Electrification Pathway: Realizing California’s Environmental Goals” (2017) and “Pathway to 2045” (2019). As the only investor-owned electric utility in California without a natural gas distribution business, SCE is in a unique position to lead and advance these objectives. SCE is investing in broad electrification of the transportation sector while modernizing its grid to support new electric end-uses through ongoing capital investments. SCE also partners with a variety of cross-sector coalitions to advance electrification in California and nationally.

OUR INCLUSIVE CULTURE

The Company’s workforce is made up of a broad array of cultures, ethnicities, genders, sexual orientations, generations and life experiences that reflect the communities we serve. An inclusive environment leverages the strengths that diversity brings. The Company’s commitment to strengthen our culture have been advanced through a focus on gender diversity and a culture of greater inclusion. EIX joined over 100 other organizations that signed the Paradigm for Parity, a public commitment to achieve gender parity in senior roles by 2030. In 2018, the Company signed the CEO Action for Diversity & Inclusion, the largest CEO-driven business commitment to advance diversity and inclusion within the workplace. In 2019, SCE earned a 100% rating and the designation of being a “Best Place to Work for LGBTQ Equality” by the Human Rights Campaign Foundation’s Corporate Equality Index. We also earned a spot on the Forbes Best Employers for Diversity 2020 list. Both awards are further acknowledgement of the Company’s ongoing commitment to diversity and inclusion.

OUR ESG DISCLOSURES

The Company publishes an annual sustainability report that reflects our sustainability strategy, performance and related metrics. Our 2018 report reflects the work we are doing to lead the transformation of our industry toward a clean energy future and to operate our business with excellence by focusing on customers, communities, and employees. The current report is available on our website at www.edison.com/corpgov. We expect to publish our 2019 report by June 2020.

The Company was also an early adopter of the disclosure template developed by the Edison Electric Institute (“EEI”) in collaboration with member companies and investors. The Company has disclosed data using the EEI template annually, including GHG emissions and delivered power portfolio, since the template’s 2017 pilot.

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ITEM 1: ELECTION OF DIRECTORS

The following directors have been nominated for election to the Board, each to hold office until the next Annual Meeting:
Jeanne Beliveau-Dunn
Michael C. Camuñez
Vanessa C.L. Chang
James T. Morris
Timothy T. O’Toole
Kevin M. Payne (SCE Board only)
Pedro J. Pizarro
Carey A. Smith
Linda G. Stuntz
William P. Sullivan
Peter J. Taylor
Keith Trent
The director nominees of EIX and SCE are the same, except that Mr. Payne is a nominee for the SCE Board only.
Ms. Smith joined the Board in October 2019 and is being nominated for election by the shareholders for the first time.
Information about each nominee’s experience, qualifications, attributions and skills is presented below.

THE BOARD RECOMMENDS YOU VOTE “FOR” THE EIX AND SCE DIRECTOR NOMINEES, AS APPLICABLE.


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ITEM 1: ELECTION OF DIRECTORS

OUR BOARD OF DIRECTORS

Our directors reflect the diversity of ethnicity, gender, skills, backgrounds and qualifications valued by our Board. The range of tenure on our Board brings a variety of perspectives to strategic, financial and operational deliberations.

Director
Since
Industry
Experience
Diversity Committee
Membership

Other
Public
Boards

Mandatory
Retirement
Name Age A&F CEP NCG S&O
Jeanne Beliveau-Dunn
Independent
60 2019 Technology White/
Female
2 2032
Michael C. Camuñez
Independent
51 2017 Law/
Government
Hispanic/
Male/LGBTQ
1* 2042
Vanessa C. L. Chang
Independent
67 2007 Accounting/
Real Estate
Asian/
Female
3* 2025
James T. Morris
Independent
60 2016 Insurance White/
Male
1 2032
Timothy T. O’Toole
Independent
64 2017 Transportation White/
Male
0 2028
Kevin M. Payne
SCE CEO
SCE Board Only
59 2016 Electric
Utilities
White/
Male
0
Pedro J. Pizarro
EIX CEO
54 2014** Electric
Utilities
Hispanic/
Male
0
Carey A. Smith
Independent
56 2019 Technology/
Engineering
White/
Female
0 2036
Linda G. Stuntz
Independent
65 2014 Law/Utility
Regulation
White/
Female
1 2027
William P. Sullivan
EIX Chair
Independent
70 2015 Information
Technology/
Biotechnology
White/
Male
1 2022
Peter J. Taylor
Independent
61 2011 Finance African
American/
Male
1* 2031
Keith Trent
Independent
60 2018 Electric
Utilities
White/
Male
1 2032
 
Key to Committees
A&F Audit and Finance Committee Member
CEP Compensation and Executive Personnel Committee Chair
NCG Nominating/Corporate Governance Committee F Financial Expert
S&O Safety and Operations Committee
* Includes service on the board of a fund complex registered as an investment company under SEC rules
** Mr. Pizarro has been a director of SCE since 2014 and a director of EIX since 2016

EIX BOARD CHARACTERISTICS

Independence Diversity Age Tenure

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ITEM 1: ELECTION OF DIRECTORS

EXPERIENCE, SKILLS AND ATTRIBUTES ON THE BOARD

The Board believes our directors have the appropriate diversity of experience, skills and attributes to effectively oversee the Company’s operations, risks and long-term strategy. The Governance Committee reviews each director’s qualifications when considering whether to nominate directors for election or re-election to the Board. Listed below are important areas of experience, skills and attributes represented on the Board.

DIVERSITY
Individuals with different skills, backgrounds, gender, ethnicity and sexual orientation.
SAFETY AND OPERATIONS
Experience in the oversight of safety and operational practices through work experience or public company board service (e.g., service on a safety or operations committee).
STRATEGIC PLANNING AND CAPITAL MARKETS
Experience with corporate strategies and long-term business plans, restructuring or repositioning businesses, mergers and acquisitions, and/or raising debt and equity capital.
RISK MANAGEMENT
Experience identifying, assessing and controlling financial or business risks through work experience or public company board service (e.g., service on an audit or risk committee).
LEGAL, REGULATORY AND PUBLIC POLICY
Experience in legal or regulatory affairs or advancing public policy interests through work experience.
CYBERSECURITY
Experience related to the protection of grid operations, technology and data from attack through work experience or public company board service.
TECHNOLOGY AND INNOVATION
Leadership and oversight experience in technological trends, digital platforms and/or efficiency improvements through technology.
ENGINEERING AND SCIENCE
Education and/or work experience in engineering or science fields.
WORKFORCE/TALENT MANAGEMENT
Experience in planning, building and retaining a talented workforce that meets an organization’s needs. May be acquired through service on a public company compensation committee.
ENVIRONMENTAL AND SUSTAINABILITY
Experience in overseeing, operating or advising on environmental, climate and/or sustainability practices.
UTILITY INDUSTRY
Experience in the utility industry as an executive of, or outside advisor to, a utility.
FINANCIAL EXPERTISE
Experience in accounting and financial matters, including financial statements and operating results. May be acquired through service on a public company audit committee.
CORPORATE GOVERNANCE
Experience governing a public company board and protecting shareholder and other stakeholder interests. May be acquired through service on a public company governance committee.
PUBLIC COMPANY CEO
Experience from serving as a public company CEO.
SCE/CALIFORNIA UTILITY CUSTOMER
Current or former resident of California with an understanding of the California regulatory landscape and its impact on SCE business and retail customers.

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ITEM 1: ELECTION OF DIRECTORS

DIRECTOR BIOGRAPHICAL INFORMATION

A biography of each director describing his or her age as of this Proxy Statement, current Board committee service, business experience during the past five years and other relevant business experience is presented below. The biography includes the experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director. While each nominee’s entire range of experience and skills is important, particular experience that contributes to the diversity and effectiveness of the Board is identified below.

     
JEANNE BELIVEAU-DUNN

PROFESSIONAL HIGHLIGHTS
Ms. Beliveau-Dunn has been the chief executive officer and president of Claridad LLC, a digital and internet of things consulting company, since 2018. From 2007 to 2018, she was a vice president and general manager of Cisco systems, a global technology company. Ms. Beliveau-Dunn spent 22 years during significant growth at Cisco and managed the products and services business and operations. Additionally, she had the responsibility to build and operate centers of excellence, learning and knowledge, and innovation practices for scale. Prior to Cisco, Ms. Beliveau-Dunn ran business operations at Micronics computers and the secure systems product lines for Wang Laboratories.

QUALIFICATIONS AND ATTRIBUTES
Ms. Beliveau-Dunn has more than 30 years of experience as a technology executive and a transformational leader with experience in building and managing large scale infrastructure, cybersecurity, compute, cloud, networking, services and marketing operations, personnel management, and employee and leadership development. During her career, she built effective networking, digital and security solutions, including strategies for internet of things in smart cities and industrial and energy markets. Her experience managing a large workforce, building network operations and security teams, and building infrastructure and efficiency through technology and process is valuable to the Board’s and Safety and Operations Committee’s oversight of cyber threats facing the Company. She is also experienced in ESG matters, compensation, financial review, acquisitions, and risk and resiliency management, and is a National Association of Corporate Directors fellow. As a California resident, Ms. Beliveau-Dunn also provides the perspective of a utility customer impacted by California’s wildfires and regulatory environment.

OTHER BOARD SERVICE
Ms. Beliveau-Dunn is a director of Columbus McKinnon, an independent movement company in the industrial sector, and Xylem, Inc., a water technology company.

EDUCATION
Ms. Beliveau-Dunn is a graduate of the University of Massachusetts, Massachusetts Institute of Technology’s executive leadership program, and Harvard University’s accelerated master’s in business administration program for executives.

AGE
60

DIRECTOR SINCE
2019

BOARD COMMITTEES
Audit and Finance
Safety and Operations
OTHER PUBLIC COMPANY BOARDS
Columbus McKinnon
Xylem, Inc.

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ITEM 1: ELECTION OF DIRECTORS

     
MICHAEL C. CAMUÑEZ

PROFESSIONAL HIGHLIGHTS
Mr. Camuñez has been the president and chief executive officer of Monarch Global Strategies, a binational strategic advisory firm to companies doing business in emerging economies, with an emphasis on Mexico, since 2013. He previously served as the U.S. assistant secretary of commerce at the International Trade Administration of the U.S. Department of Commerce, where he managed a global portfolio to help lead the U.S. government’s efforts to open new markets for U.S. goods and services. Mr. Camuñez also served as special counsel to the President in the Office of the White House Counsel and as special assistant to the President, where he helped manage senior appointments to President Obama’s cabinet. He is a former equity partner of O’Melveny & Myers LLP and Manatt, Phelps & Phillips LLP in Southern California and served as a senior policy advisor during the Clinton Administration.

QUALIFICATIONS AND ATTRIBUTES
Mr. Camuñez brings a broad government, legal, public policy, and public affairs background relevant to the Company’s business and strategy. He has deep experience advising boards and companies in regulated industries on corporate strategy, compliance, government relations, and business development. A nationally recognized Latino civic and business leader in California, Mr. Camuñez is deeply connected to the diverse communities served by SCE. His philanthropic work with organizations like the Packard Foundation has enabled him to focus on strategies related to climate change and conservation in California and globally, which complements the Company’s strategic mission. As a California resident, Mr. Camuñez also provides the perspective of a utility customer impacted by California’s wildfires and regulatory environment.

OTHER BOARD SERVICE
Mr. Camuñez is a director of four funds in the American Funds family of mutual funds, which are advised by the Capital Group and its subsidiaries. He is also a trustee of Stanford University and of the David and Lucile Packard Foundation. Mr. Camuñez is a director of several nonprofit organizations, including the Pacific Council on International Policy, the Center for Law and Social Policy and the U.S.-Mexico Business Association.

EDUCATION
Mr. Camuñez is a graduate of Harvard University and received his law degree with distinction from Stanford Law School.

AGE
51

DIRECTOR SINCE
2017

BOARD COMMITTEES
Audit and Finance
Governance
OTHER PUBLIC COMPANY BOARDS
American Funds Family

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ITEM 1: ELECTION OF DIRECTORS

     
VANESSA C.L. CHANG

PROFESSIONAL HIGHLIGHTS
Ms. Chang served as a director of EL & EL Investments, a private real estate investment business, from 1999 to 2018. She previously served as chief executive officer and president of ResolveItNow.com, an online dispute resolution service for high-volume, low-value claims, and senior vice president of Secured Capital Corporation, a real estate investment bank focused on origination and subsequent sales of commercial mortgage-backed securities. Prior to that, Ms. Chang had a 21-year career at the accounting firm KPMG Peat Marwick LLP, which included serving as the West Coast partner in charge of Corporate Finance.

QUALIFICATIONS AND ATTRIBUTES
Ms. Chang has extensive experience in accounting and financial reporting, executive compensation, capital markets, and corporate governance matters acquired during her career and service on other public and private company boards. In addition to her board service, she actively monitors governance trends through her participation in the National Association of Corporate Directors, Women Corporate Directors and Women in Governance. Ms. Chang has developed considerable knowledge of the Company’s business, corporate history and governance during her 13 years of service on the Board. Her experience and commitment to independent oversight as a director enhance our Board’s effectiveness, and her leadership as Chair of the Compensation Committee and as a member of the Governance Committee continue to provide value to the Board.

OTHER BOARD SERVICE
Ms. Chang is a director of Sykes Enterprises, Inc. and Transocean Ltd., and is a director or trustee of 17 funds advised by the Capital Group and its subsidiaries, of which nine are members of the American Funds family and eight are members of Capital Group’s Private Client Services.

EDUCATION
Ms. Chang is a graduate of the University of British Columbia and is an inactive Certified Public Accountant.

AGE
67

DIRECTOR SINCE
2007

BOARD COMMITTEES
Compensation (Chair)
Governance
OTHER PUBLIC COMPANY BOARDS
American Funds Family
Sykes Enterprises, Incorporated
Transocean Ltd.

     
JAMES T. MORRIS

PROFESSIONAL HIGHLIGHTS
Mr. Morris is the chairman, president and chief executive officer of Pacific Life Insurance Company, and of its parent companies Pacific Mutual Holding Company and Pacific LifeCorp. He has served as chief executive officer since 2007 and chairman since 2008, and served as president from 2007 to 2012 and again beginning in 2016. Mr. Morris has served in a variety of management positions since joining Pacific Life in 1982, including chief operating officer, executive vice president and chief insurance officer, and senior vice president, individual insurance.

QUALIFICATIONS AND ATTRIBUTES
Mr. Morris has significant business and chief executive leadership experience in a highly regulated industry and provides expertise on insurance issues that impact the Company. He brings strategic planning, risk management, workforce management and financial analysis experience from over 35 years of service at Pacific Life, which is particularly valuable to the Audit and Finance and Compensation Committees. Mr. Morris also provides the perspective of a Southern California resident and executive of a Fortune 500 business headquartered and doing business in the local markets served by SCE.

OTHER BOARD SERVICE
Mr. Morris is chairman of the board and a trustee of the Pacific Select Fund and the Pacific Funds Series Trust, members of the same mutual fund complex. He is a director and former chair of the American Council of Life Insurers, the nation’s principal life insurance company trade association, and previously served on the Life Insurance Marketing Research Association’s Strategic Marketing Issues Committee. Mr. Morris also serves as a director of the Children’s Hospital of Orange County and is chairman of the Pacific Life Foundation.

EDUCATION
Mr. Morris is a graduate of the University of California at Los Angeles.

AGE
60

DIRECTOR SINCE
2016

BOARD COMMITTEES
Audit and Finance
Compensation
OTHER PUBLIC COMPANY BOARDS
Pacific Life Mutual Fund Complex

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ITEM 1: ELECTION OF DIRECTORS

     
TIMOTHY T. O’TOOLE

PROFESSIONAL HIGHLIGHTS
Mr. O’Toole served as the chief executive officer of First Group plc, a transportation company that provides rail and bus services in the United Kingdom and North America, from 2010 to 2018. He previously served as managing director of the London Underground, where he led the response to the 2005 terrorist bombing attacks for which he was awarded the honor of a Commander of the Most Excellent Order of the British Empire (CBE) from the Queen. Prior to his time at the London Underground, Mr. O’Toole served in various senior management roles during his 20 years of service at Consolidated Rail Corporation, including as president and chief executive officer.

QUALIFICATIONS AND ATTRIBUTES
Mr. O’Toole provides public company chief executive leadership experience in a regulated, capital intensive industry. His operational experience in safety, risk management and crisis management are particularly relevant to the oversight of our business and strategy and his leadership role as Chair of the Safety and Operations Committee. Mr. O’Toole brings extensive safety experience and has been recognized as a safety leader in both the United States and internationally. He has decades of direct management experience of a large workforce in industries where worker and public safety are critical. Mr. O’Toole’s perspective as a chief executive and public company director provides value to the Compensation Committee.

OTHER BOARD SERVICE
Mr. O’Toole is a director of the National Safety Council and previously served as a director of First Group plc and CSX Corporation.

EDUCATION
Mr. O’Toole is a graduate of La Salle University and received his law degree from the University of Pittsburgh.

AGE
64

DIRECTOR SINCE
2017

BOARD COMMITTEES
Compensation
Safety and Operations (Chair)
OTHER PUBLIC COMPANY BOARDS
None

     
KEVIN M. PAYNE

PROFESSIONAL HIGHLIGHTS
Mr. Payne has been the CEO of SCE since 2016, and President since 2019. Prior to his current role, he held various leadership positions at SCE, including Senior Vice President of Customer Service for SCE from 2014 to 2016, Vice President of Engineering and Technical Services from 2011 to 2014, Vice President of Client Services Planning and Controls, Vice President of Information Technology and Business Integration, and Vice President of Enterprise Resource Planning. Prior to that he was a Director in the Renewable and Alternative Power and Major Customer Technical Support departments. Mr. Payne began his career with SCE in 1986 in the Engineering and Construction department managing power plant retrofit and other engineering projects.

QUALIFICATIONS AND ATTRIBUTES
Mr. Payne provides the SCE Board with in-depth knowledge of the Company’s business, experienced leadership, and an engineering background. He also brings senior executive, safety and operations, workforce management and strategic planning experience developed during his 33 years of service with SCE. Mr. Payne’s perspective as the leader of SCE’s clean energy strategy, safety culture and operational excellence efforts, and commitment to diversity and inclusion, are particularly valuable to the SCE Board.

OTHER BOARD SERVICE
Mr. Payne is a member of the management committee of the Edison Foundation Institute for Electric Innovation, which focuses on advancing the adoption and application of new technologies to strengthen and transform the power grid.

EDUCATION
Mr. Payne has a degree in mechanical engineering from the University of California, Berkeley, and is a registered professional engineer.

AGE
59

SCE DIRECTOR SINCE
2016

BOARD COMMITTEES
None
OTHER PUBLIC COMPANY BOARDS
None

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ITEM 1: ELECTION OF DIRECTORS

     
PEDRO J. PIZARRO

PROFESSIONAL HIGHLIGHTS
Mr. Pizarro has been the President and CEO of EIX since 2016. Prior to that, he served as President of SCE from 2014 to 2016. From 2011 to 2014, Mr. Pizarro served as President of EME, an indirect subsidiary of EIX that filed for bankruptcy in 2012 and emerged through a sale of its principal assets in 2014. He has held a wide range of other executive positions at the EIX companies since joining in 1999, including Executive Vice President responsible for SCE’s transmission and distribution system, power procurement and generation. Mr. Pizarro also previously served as Vice President and Senior Vice President of Power Procurement, and Vice President of Strategy and Business Development. Prior to his work at the EIX companies, Mr. Pizarro was a senior engagement manager with McKinsey & Company, providing management consulting services to energy, technology, engineering services, and banking clients.

QUALIFICATIONS AND ATTRIBUTES
Mr. Pizarro provides in-depth knowledge of the Company’s business, experienced industry leadership, safety and operations, workforce management, cybersecurity, business resiliency and strategic planning experience and background. His leadership and experience dealing with difficult challenges during the EME bankruptcy add value to the Board. Mr. Pizarro also brings the experience and perspective of a director of several electric industry associations.

OTHER BOARD SERVICE
Mr. Pizarro is a director of the Edison Electric Institute, where he also serves on the executive committee and as co-chair of the CEO task force on transportation electrification. He is also a director of the Electric Power Research Institute (“EPRI”) and will become chair of EPRI effective April 2020. Mr. Pizarro serves on the U.S. Secretary of Energy Advisory Board and is a member of the Electricity Subsector Coordinating Council, which coordinates with the federal government and electric power sector to prepare for, and respond to, national-level disasters and physical and cybersecurity threats to critical infrastructure. He is a member of the External Advisory Committee of the Massachusetts Institute of Technology’s Future of Storage study to consider key storage technologies for electricity systems that rely on variable renewable energy resources. Mr. Pizarro also serves as a member of the Board of Governors of Argonne National Laboratory and the Board of Trustees of the California Institute of Technology.

EDUCATION
Mr. Pizarro is a graduate of Harvard University and earned a Ph.D. in chemistry from the California Institute of Technology.

AGE
54

EIX DIRECTOR SINCE
2016

SCE DIRECTOR SINCE
2014

BOARD COMMITTEES
None
OTHER PUBLIC COMPANY BOARDS
None

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ITEM 1: ELECTION OF DIRECTORS

     
CAREY A. SMITH

PROFESSIONAL HIGHLIGHTS
Ms. Smith serves as president and chief operating officer of Parsons Corporation, a disruptive technology provider for global defense, intelligence and critical infrastructure markets. She has served as president since November 2019 and as chief operating officer since 2018. From 2016 to 2018, Ms. Smith served as president of Parsons’ Federal Solutions business. Before joining Parsons, she served in progressive leadership roles at Honeywell International Inc. from 2011 to 2016, including president of the Defense and Space business unit, vice president of Honeywell Aerospace Customer and Product Support, and president of Honeywell Technology Solutions, Inc. Prior to joining Honeywell, Ms. Smith served in several leadership roles at Lockheed Martin Corporation from 1985 to 2011.

QUALIFICATIONS AND ATTRIBUTES
Ms. Smith is responsible for strategy, growth and execution at Parsons, which was headquartered in Southern California until 2019 and continues to have key programs throughout the state. Her strategic planning role and understanding of the impact of California’s regulatory landscape on SCE’s business customers contribute to the Board’s effective oversight of key issues confronting the electric utility industry. Ms. Smith’s operational experience in safety-intensive environments provides an important perspective to the Board and its Safety and Operations Committee. She brings a strong background in cybersecurity through her aerospace and defense industry experience and is a certified cybersecurity governance professional by the National Association of Corporate Directors.

OTHER BOARD SERVICE
Ms. Smith is a director and vice chair of the Professional Services Council and previously served as a director of NN, Inc.

EDUCATION
Ms. Smith holds a bachelor’s degree in electrical engineering from Ohio Northern University and a master’s degree in electrical engineering from Syracuse University. In 2018, she received an honorary doctorate degree from Ohio Northern University for her contributions to the university and the field of engineering.

AGE
56

DIRECTOR SINCE
2019

BOARD COMMITTEES
Compensation
Safety and Operations
OTHER PUBLIC COMPANY BOARDS
None

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ITEM 1: ELECTION OF DIRECTORS

     
LINDA G. STUNTZ

PROFESSIONAL HIGHLIGHTS
Ms. Stuntz served as a partner of the law firm of Stuntz, Davis & Staffier, P.C. from 1995 to 2018, where she specialized in energy and environmental regulation. She previously served as Deputy Secretary of, and held senior positions in, the U.S. Department of Energy. Ms. Stuntz also previously served as associate minority counsel and minority counsel to the Energy and Commerce Committee of the U.S. House of Representatives. She served on the U.S. Secretary of Energy Advisory Board during 2015 and 2016.

QUALIFICATIONS AND ATTRIBUTES
Ms. Stuntz’s utility and environmental law and public policy experience is particularly relevant to the Company’s business. During her time at the U.S. Department of Energy, she held positions that focused on issues related to global climate change and energy-related measures to minimize GHG emissions, key issues that impact the Company in California. Ms. Stuntz’s corporate governance experience from her service on other public company boards and as a member of our Governance Committee since 2014 informs her leadership as Committee Chair. She brings safety experience from her private industry work with utilities and energy companies, as a director of public companies in industries that have significant safety concerns for workers and the public, and as a member of our Safety and Operations Committee since 2014.

OTHER BOARD SERVICE
Ms. Stuntz is a director of Royal Dutch Shell plc and previously served as a director of Raytheon Company, Schlumberger, Ltd. and American Electric Power Company. She is a Senior Advisor at the Center for Strategic and International Studies and the chair of the External Advisory Committee of the Massachusetts Institute of Technology’s Future of Storage study to consider key storage technologies for electricity systems that rely on variable renewable energy resources.

EDUCATION
Ms. Stuntz is a graduate of Wittenberg University and received her law degree from Harvard University.

AGE
65

DIRECTOR SINCE
2014

BOARD COMMITTEES
Governance (Chair)
Safety and Operations
OTHER PUBLIC COMPANY BOARDS
Royal Dutch Shell plc

     
WILLIAM P. SULLIVAN

PROFESSIONAL HIGHLIGHTS
Mr. Sullivan served as chief executive officer of Agilent Technologies, a global provider of scientific instruments, software, services and consumables in life sciences, diagnostics and applied chemical markets, from 2005 to 2015. Prior to that, he served as executive vice president and chief operating officer of Agilent and senior vice president and general manager of Agilent’s Semiconductor Products Group.

QUALIFICATIONS AND ATTRIBUTES
Mr. Sullivan brings the perspective of a president and chief executive officer of a large public company, which is particularly valuable as Chair of the EIX Board. He provides significant operational experience, including leadership of successful company transformation, and experience managing the risks and operations of a public company with a large workforce. This experience in the technology sector is important to the Board in the changing electric industry. Mr. Sullivan’s leadership as a chief executive and experience on other public company boards is valuable to the Compensation and Governance Committees. As a California resident with extensive professional experience in the state, Mr. Sullivan also provides the perspective of a utility customer impacted by California’s wildfires and regulatory environment.

OTHER BOARD SERVICE
Mr. Sullivan is the chair of the board of Maxim Integrated and previously served as a director of Agilent Technologies, Avnet, Inc. and URS Corporation.

EDUCATION
Mr. Sullivan is a graduate of the University of California, Davis.

AGE
70

DIRECTOR SINCE
2015
EIX Board Chair

BOARD COMMITTEES
Compensation
Governance
OTHER PUBLIC COMPANY BOARDS
Maxim Integrated

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ITEM 1: ELECTION OF DIRECTORS

     
PETER J. TAYLOR

PROFESSIONAL HIGHLIGHTS
Mr. Taylor has been the president of ECMC Foundation, a nonprofit corporation dedicated to educational attainment for low-income students, since 2014. From 2009 to 2014, he served as executive vice president and chief financial officer for the University of California system, where he oversaw all aspects of financial management at the ten campuses and the five academic medical centers. Prior to that, most of Mr. Taylor’s professional career was in investment banking, with nearly 16 years in municipal finance banking for Lehman Brothers and Barclays Capital.

QUALIFICATIONS AND ATTRIBUTES
Mr. Taylor provides finance and public policy experience, which is particularly relevant to the Company’s infrastructure investment strategy and highly regulated business. He also brings capital markets experience from his investment banking career. At the University of California, Mr. Taylor had direct responsibility for risk management, accounting and financial reporting, which is valuable as a financial expert and Chair of the Audit and Finance Committee. He also brings safety experience from his years as a senior executive of the University of California, which launched the “Be Smart About Safety” campaign across all campuses during his tenure, and in his oversight role as a member of the Board of Trustees of the California State University. As a California resident with extensive professional experience in the state, Mr. Taylor also understands the perspective of utility customers impacted by California’s wildfires and regulatory environment.

OTHER BOARD SERVICE
Mr. Taylor is a trustee of several funds in the Western Asset Fund Family and is a member of the Board of Trustees of California State University system, where he chairs the Educational Policy Committee after two years as chair of the Finance Committee. He is also a director of Pacific Mutual Holding Company, the Ralph M. Parsons Foundation and the Kaiser Family Foundation.

EDUCATION
Mr. Taylor is a graduate of the University of California Los Angeles and holds a master’s degree in public policy analysis from Claremont Graduate University.

AGE
61

DIRECTOR SINCE
2011

BOARD COMMITTEES
Audit and Finance (Chair)
Safety and Operations
OTHER PUBLIC COMPANY BOARDS
Western Asset Fund Family

     
KEITH TRENT

PROFESSIONAL HIGHLIGHTS
Mr. Trent has 14 years of experience as a utility executive, general counsel and internal legal counsel. From 2009 to 2015, he held a variety of senior executive positions with Duke Energy Corporation, with responsibility for long-term grid strategy, regulated utilities, electric transmission, regulated fossil-fuel and hydro generation, health, safety and environment, fuel and system optimization, central engineering and services, and commercial businesses operating in domestic and international retail and wholesale competitive markets. Prior to that, Mr. Trent held a variety of positions at Duke with responsibility for corporate strategy, government relations, corporate communications, technology initiatives, legal, internal audit and compliance (as general counsel), and major litigation and government investigations (as lead litigator). He also practiced law for 15 years before joining Duke.

QUALIFICATIONS AND ATTRIBUTES
Mr. Trent provides extensive utility operations, strategic planning, legal and safety experience as an executive of one of the largest electric power companies in the U.S., where he had direct management responsibility for the health and safety of a large workforce. His utility operational experience in, and perspective on, regulation, risk management, safety and cybersecurity are particularly relevant to our business and the regulatory framework in which we operate. This experience is particularly valuable to the Audit and Finance and Safety and Operations Committees, and supports his role as the Board’s liaison to the Company’s cybersecurity oversight group (see page 25).

OTHER BOARD SERVICE
Mr. Trent is a director of Capital Power Corporation and TRC Companies, Inc., which was a public company until 2017. He serves as the Chair of the Health, Safety and Environmental Committee of Capital Power Corporation.

EDUCATION
Mr. Trent is a graduate of Southern Methodist University and received his law degree from the University of Texas School of Law.

AGE
60

DIRECTOR SINCE
2018

BOARD COMMITTEES
Audit and Finance
Safety and Operations
OTHER PUBLIC COMPANY BOARDS
Capital Power Corporation

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OUR CORPORATE GOVERNANCE

                                                                                                    

KEY GOVERNANCE PRACTICES

We believe the Company has established corporate governance standards and practices that create long-term value for our shareholders and other stakeholders. As discussed below, our key corporate governance policies and practices include:

Independent EIX Board Chair
Independent Board Committees
Regular Independent Director Executive Sessions
Director Orientation and Continuing Education Programs
Annual Board and Committee Evaluations
Annual CEO Succession Planning
Director Retirement at Age 72
Annual Election of Directors
Majority Voting for Directors in Uncontested Elections
10% of Shareholders May Call Special Meetings
Shareholders May Act by Written Consent
Annual Advisory Vote on Executive Compensation
Proxy Access Bylaws with Standard Terms
Oversight of Safety, Strategy, Risk and ESG Practices

SHAREHOLDER ENGAGEMENT

We engage with our major institutional shareholders regarding strategy and financial and operational performance throughout the course of the year. We also engage with these shareholders on corporate governance, executive compensation and ESG issues at least annually. In 2019 and 2020, we had a cross-functional team from corporate governance, investor relations, executive compensation and sustainability participate in meetings and calls with holders of approximately 40% of EIX Common Stock. The EIX CEO, CFO and Board Chair also participated in certain meetings. The nature of these engagements centered around the Company’s strategy, wildfire response and ESG efforts and disclosure. The shareholders we engaged with offered constructive feedback on opportunities to enhance our ESG practices and disclosure, which was subsequently communicated to the Governance Committee. Feedback on compensation matters was shared with the Compensation Committee.

CORPORATE GOVERNANCE DOCUMENTS

Shareholders and other interested parties may find the following information regarding our corporate governance, including the procedures for communicating with the Board, on our website at www.edison.com/corpgov:

Articles of Incorporation and Bylaws
Corporate Governance Guidelines
Board Committee Composition and Charters
Ethics and Compliance Code for Directors
Employee Code of Conduct
Supplier Code of Conduct
Sustainability Report
Incentive Compensation Clawback Policy
Political Contribution Policy and Expenditures
Procedures for Communicating with the Board

Similar information about SCE’s corporate governance is available at www.sce.com/corpgov.

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OUR CORPORATE GOVERNANCE

GOVERNANCE STRUCTURE AND PROCESSES

BOARD LEADERSHIP STRUCTURE

Mr. Sullivan has served as the independent Chair of the EIX Board since 2016. The EIX Board believes having separate Chair and CEO positions is the most appropriate leadership structure for EIX at this time, allowing Mr. Pizarro to focus on the day-to-day management of the business and on executing our strategic priorities, while allowing Mr. Sullivan to focus on leading the Board, facilitating the Board’s independent oversight of management, and providing advice and counsel to Mr. Pizarro. As independent Chair, Mr. Sullivan’s duties include:

Chair the Board meetings and Annual Meetings;

With the CEO, create the agenda for the Board meetings;
With the Governance Committee, oversee the annual evaluations of the Board;
Be the principal liaison in synthesizing and communicating to the CEO key issues from the executive sessions of the independent directors;
With the Compensation Committee Chair, conduct the annual CEO performance review after review with the independent directors; and
Attend Committee meetings as desired.

The SCE Bylaws provide that the CEO of SCE has the duties of the Chair unless a separate Chair of the SCE Board is appointed. Since 2016, Mr. Payne has served as SCE CEO and has had the duties of the Chair of the SCE Board. The SCE Board has determined that the current leadership structure is appropriate for SCE as a subsidiary of EIX.

DIRECTOR INDEPENDENCE

Our Corporate Governance Guidelines require that the Board be comprised of at least a majority of independent directors and that the Audit, Compensation, and Governance Committees be comprised entirely of independent directors. The Company uses the NYSE listing standards to determine independence. Directors serving on the Audit and Compensation Committees must meet additional independence criteria prescribed by the NYSE listing standards and the charters of those Committees.

The Board has determined that the relationships described in Section B of Exhibit A-1 to our Corporate Governance Guidelines, which are on our website at www.edison.com/corpgov, are not material for purposes of determining directors’ independence to serve on the Board. The Board does not consider such relationships in making independence determinations.

For relationships not prohibited by NYSE rules and not covered under the categories of immaterial relationships in our Guidelines, the determination of whether a relationship is material or not, and therefore whether a director is independent or not, is made in good faith by the directors. The director whose relationship is under consideration abstains from the vote regarding his or her independence.

The Board has determined that all directors other than Messrs. Pizarro and Payne are independent.

The Board reviews the independence of our directors at least annually, and periodically as needed. On a monthly basis, the Company also monitors director relationships and transactions that might disqualify them as independent. In February 2020, prior to recommending director nominees for election, the Board confirmed that the independent directors had no relationships or transactions that disqualified them as independent.

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OUR CORPORATE GOVERNANCE

DIRECTOR NOMINATION PROCESS

The Governance Committee, comprised solely of independent directors under NYSE rules and our Corporate Governance Guidelines, recommends director candidates to the Board.

The Committee will consider candidates recommended by shareholders if they are submitted in writing to the Corporate Secretary and include all of the information required by Article II, Section 4 of our Bylaws plus a written description with any supporting materials of:

Any direct or indirect business relationships or transactions within the last three years between EIX and its subsidiaries and senior management, on the one hand, and the candidate and his or her affiliates and immediate family members, on the other hand; and
The qualifications, qualities, and skills of the candidate that the shareholder deems appropriate to submit to the Committee to assist in its consideration of the candidate.

In 2019, the Committee retained a director search firm to identify director candidates, coordinate the interview process and conduct reference and background checks. Ms. Smith, who is a first-time nominee for election by the shareholders at the Annual Meeting, was recommended by the Committee’s director search firm.

The Committee uses the same process to evaluate a candidate regardless of the source of the recommendation. If, based on an evaluation of the candidate’s qualifications, qualities and skills, the Committee determines to continue its consideration of a candidate, Committee members interview the candidate. The Committee conducts any further research on the candidate it deems appropriate. The Committee then determines whether to recommend that the candidate be nominated as a director. The Board considers the recommendation and determines whether to nominate the candidate for election.

BOARD QUALIFICATIONS AND DIVERSITY

For the Governance Committee to recommend a director nominee, the candidate must at a minimum possess the qualifications, qualities and skills in our Corporate Governance Guidelines, including:

A reputation for integrity, honesty and adherence to high ethical standards;
Experience in a generally recognized position of leadership; and
The demonstrated business acumen, experience and ability to exercise sound judgment in matters that relate to the current and long-term objectives of the Company.

The Committee also considers other factors and information, including the Board’s need for additional members, the candidate’s potential for increasing the Board’s range of experience, skills and diversity, the candidate’s independence, and skills and experience relevant to our business strategy.

Our Corporate Governance Guidelines include the Board’s policy that director nominees should reflect diversity of skills, backgrounds, gender and ethnicity. The Committee considers the diversity of candidates when recommending nominees for election and, prior to nominating Ms. Smith for election to the Board, instructed its director search firm to identify candidates reflecting ethnic and gender diversity. The Committee evaluates its effectiveness in achieving diversity on the Board through its annual review of Board composition, which identifies ethnicity, gender and industry experience prior to recommending nominees for election.

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OUR CORPORATE GOVERNANCE

In nominating candidates for re-election to the Board, the Committee also considers the nature and time invested in a director’s service on other boards, the director’s Board, Board committee and annual meeting attendance, and the vote received at the prior annual meeting. The Corporate Governance Guidelines limit a director’s service on other boards to three other public company boards; however, a director who is an executive officer of a public company is limited to two public company boards, including the Company’s Board and his or her employer’s board.

Our Corporate Governance Guidelines provide that directors should not be nominated for re-election to the Board after reaching age 72 unless there is good cause to extend a director’s Board service after reaching age 72.

DIRECTOR ORIENTATION AND CONTINUING EDUCATION

New directors receive information about the Company’s business, strategy and management team to familiarize them with the Company before their first Board meeting. The Company also arranges a series of in-person orientation meetings between each new director and senior leaders of our organizational units to help new directors understand the operations of each organizational unit as it relates to their specific Board and committee duties.

We provide continuing education to directors at least annually on specific topics that relate to the Company’s strategic priorities. These sessions are led by management and often include presentations by external experts and site visits to our facilities. Directors may also attend external education programs and are reimbursed by the Company for the cost of those programs.

BOARD AND COMMITTEE EVALUATION PROCESS

The Governance Committee oversees the annual evaluation of the Board and Board committees, and periodically reviews the effectiveness of the process. In 2018, the Committee used a third-party facilitator to conduct the Board’s evaluation by interviewing each director and reporting on the results to the Board. In 2019, the Committee retained the same third-party facilitator to assist with the preparation and analysis of Board and Board committee surveys designed to build on the 2018 interviews. The surveys elicited feedback in the following areas:

Board composition and effectiveness
Allocation of responsibilities
Materials and meetings
Specific areas of oversight
Director orientation
Board/management relations
Board and committee leadership effectiveness

The facilitator reported the results to the Board at the October meeting, noting directors provided thoughtful, constructive responses. The facilitator and the Board met in executive session to discuss areas of strength and opportunities for improvement.

PROXY ACCESS FOR DIRECTOR ELECTIONS

In 2015, the EIX Board adopted proxy access for director elections at annual meetings. The EIX Bylaws provide that the Company will include in its Proxy Statement up to two nominees (or nominees for up to 20% of the EIX Board, whichever is greater) submitted by a shareholder or group of up to 20 shareholders owning at least 3% of EIX common stock continuously for at least three years, if the shareholder group and nominee satisfy the requirements in Article II, Section 13 of the EIX Bylaws, which are available at www.edison.com/corpgov. The EIX Board made this decision after careful consideration of feedback received from our engagement with shareholders regarding proxy access.

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OUR CORPORATE GOVERNANCE

CEO SUCCESSION PLANNING

The Board believes CEO succession planning is one of its most important responsibilities. Our Corporate Governance Guidelines provide that the Board will annually review and evaluate succession planning and management development for the Company’s senior officers, including the CEO.

At least annually, the Board meets in executive session with the EIX CEO to discuss talent and succession planning. The discussion includes CEO succession in the ordinary course, CEO succession if an emergency occurs, and succession for other key senior management positions. The frequency of the Board’s CEO succession planning discussions depends in part on the period of time until the CEO’s expected retirement.

In the succession planning process, internal CEO succession candidates are identified and evaluated based on criteria considered predictive of success at the CEO level, given the Company’s business strategy. The Board uses a common talent assessment format for each individual. The assessment includes a development plan for each individual that is then reviewed by the Compensation Committee. The Board also considers external CEO succession candidates from time to time and may retain an executive search firm to help identify and assess potential candidates.

Our Corporate Governance Guidelines provide that the Board will have opportunities to become acquainted with the senior officers of the Company and others who may have the potential to handle significant management positions. This occurs through presentations to the Board and Board committees, director education sessions, other business interactions, and social events intended for this purpose.

DIRECTOR STOCK OWNERSHIP GUIDELINES

Within five years from their initial election to the Board, directors must own an aggregate number of shares of EIX Common Stock or derivative securities convertible into EIX Common Stock, excluding stock options, having a value equivalent to five times the annual Board retainer. All deferred stock units held by a director count toward this ownership requirement. All directors comply with this stock ownership requirement.

DIRECTOR MEETING ATTENDANCE

The Board met 10 times in 2019 and held six executive sessions of the independent directors. The average director attendance for all Board and Board committee meetings was 96% and each director attended at least 89% of all meetings he or she was eligible to attend.

Director nominees are expected to attend Annual Meetings. All EIX and SCE director nominees attended the 2019 Annual Meeting except Mr. Taylor, who was on jury duty.

POLICY ON SHAREHOLDER RIGHTS PLANS

The EIX Board has a policy to seek prior shareholder approval of the adoption of any shareholder rights plan unless, due to time constraints or other reasons consistent with the EIX Board’s fiduciary duties, a committee consisting solely of independent directors determines that it would be in the best interests of EIX shareholders to adopt the plan prior to shareholder approval. Any rights plan adopted by the EIX Board without prior shareholder approval will automatically terminate one year after adoption of the plan unless the plan is approved by EIX shareholders prior to such termination.

APPLICABILITY OF STOCK EXCHANGE RULES TO SCE

EIX is subject to NYSE rules and SCE is subject to NYSE MKT LLC rules, which exempt SCE from designated corporate governance rules for Board and Board committee composition, including director independence, the director nominations process, and the process to determine executive compensation.

SCE is exempt from these rules because (i) it is a “controlled company” with over 50% of the voting power held by its parent company, EIX, and (ii) it has listed only preferred stock on the exchange. However, SCE closely follows the EIX corporate governance practices required under the NYSE rules.

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OUR CORPORATE GOVERNANCE

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Governance Committee reviews at least annually, and periodically as needed, any transaction in the prior calendar year or any proposed transaction between the EIX companies and a related person in which the amount involved exceeds $120,000 and the related person has a material interest. A related person is a director, a director nominee, an executive officer, or a greater than 5% beneficial owner of any class of voting securities of EIX or SCE, and their immediate family members. This policy is stated in writing in the Committee’s charter.

The Committee’s regular procedure is to obtain from management annually, and periodically as needed, a list of the transactions with related persons described above, and to review these transactions at a meeting held before recommending director nominations to the Board. The list is based on information from questionnaires completed by our directors, director nominees, and executive officers, together with information obtained from our accounts payable and receivable records, and is reviewed by legal counsel. The Committee’s procedure is evidenced in the minutes and records for the Committee meeting at which the review occurred.

There are no transactions between the Company and a related person required to be reported under applicable SEC rules.

BOARD COMMITTEES

The current membership and key responsibilities of the Board’s four standing committees are described below. The duties and powers of the Committees are further described in their charters. The Board occasionally creates special Board committees to focus on certain topics.

Director       Audit and
Finance Committee
      Compensation
Committee
      Governance
Committee
      Safety and
Operations Committee
Jeanne Beliveau-Dunn
Michael Camuñez
Vanessa C.L. Chang
James T. Morris
Timothy T. O’Toole
Carey A. Smith
Linda G. Stuntz
William P. Sullivan
Peter J. Taylor
Keith Trent
# Meetings in 2019 7 4 10 5

   Member
Chair
F Financial Expert

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OUR CORPORATE GOVERNANCE

AUDIT AND
FINANCE
COMMITTEE
     
The Audit and Finance Committee is composed of five independent directors. The Committee’s key responsibilities include the following:

Appoint, determine compensation for and oversee the Company’s independent registered public accounting firm (the “Independent Auditor”), taking into consideration:
the qualifications, performance and independence of the Independent Auditor;
the scope and plans for the annual audit; and
the scope and extent of all audit and non-audit services to be performed by the Independent Auditor.
Review the Company’s financial statements and financial reporting processes, including internal controls over financial reporting.
Oversee the Company’s internal audit function, including the General Auditor’s performance, the internal audit plan, budget, resources and staffing.
Oversee the Company’s ethics and compliance program, including the Chief Ethics and Compliance Officer’s performance, helpline calls and investigations, and the employee code of conduct.
Discuss the Company’s policies and guidelines with respect to risk assessment and management, major financial risk exposures, and the steps taken to monitor and control these risks.
Establish and maintain procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters.
Review the Company’s political contribution policies and expenditures and approve individual contributions that exceed $1 million.
Review and monitor capital spending and investments in subsidiaries compared to the annual budget approved by the Board, and reviews post-completion reports from management on major capital projects.
Annually review the financing plans, capital spending and trust investments of the Company.
Authorize financing, redemption and repurchase transactions related to EIX and SCE debt securities and SCE preferred and preference stock.

The Audit and Finance Committee’s role in risk oversight is described below under “Key Areas of Oversight – Risk Oversight.”

COMPENSATION
COMMITTEE
     
The Compensation Committee is composed of five independent directors. The Committee’s key responsibilities include the following:

Review the performance and set the compensation of designated elected officers, including the executive officers.
Review director compensation for consideration and action by the Board.
Approve the design of executive compensation programs, plans and arrangements.
Approve stock ownership guidelines for officers and recommends director stock ownership guidelines to the Board.
Review and assess whether any risks arising from compensation policies and practices are reasonably likely to have a material adverse effect on the Company.

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OUR CORPORATE GOVERNANCE

GOVERNANCE
COMMITTEE
     
The Governance Committee is composed of four independent directors. The Committee’s key responsibilities include the following:

Identify and recommend director candidates.
Periodically review Board size and composition.
Make recommendations to the Board regarding Board committee and committee chair assignments and the EIX independent Board Chair appointment.
Review related party transactions.
Periodically review and recommend updates to the Corporate Governance Guidelines and Board committee charters.
Review ESG trends and ensure oversight of relevant ESG issues by the Board and Board committees.
Advise the Board with respect to corporate governance matters.
Oversee the annual evaluation of the Board and Board committees.
Review the orientation program for new directors and continuing education activities for all directors.

SAFETY AND
OPERATIONS
COMMITTEE
     
The Safety and Operations Committee is composed of six independent directors with relevant safety experience. The Committee’s key responsibilities include the following:

Review and monitor the Company’s safety programs, policies and practices relating to:
The Company’s safety performance, culture, goals and risks;
Significant safety-related incidents involving employees, contractors or members of the public; and
The measures and resources to prevent, mitigate or respond to safety-related incidents.
Monitor the Company’s safety and operational and service excellence performance metrics.
Review and monitor the Company’s operations, significant developments, resources, risks and risk mitigation plans relating to:
Reliability, affordability and customer service;
Wildfires;
Cyber and physical security;
Business resiliency and emergency response;
Information technology; and
Decommissioning of the San Onofre Nuclear Generating Station.

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OUR CORPORATE GOVERNANCE

KEY AREAS OF BOARD AND COMMITTEE OVERSIGHT

SAFETY OVERSIGHT

The Board believes the safety of employees, contractors, customers and the public is essential to the Company’s values and success. As part of its oversight function, the Board engages directly with management on safety topics, including wildfire mitigation. The Board also has a Safety and Operations Committee which maintains joint responsibility with the Board for safety oversight at the Company. As discussed above, the Safety and Operations Committee is responsible for oversight of the Company’s safety performance, culture, goals, risks and significant safety-related incidents involving employees, contractors or members of the public.

The Safety and Operations Committee receives regular safety reports from management that include performance metrics, reporting on serious incidents, and actions to improve employee, contractor, customer and public safety. The Chair of the Committee then reports to the Board at its next meeting. In 2019, specific focus was been given to oversight of the development and implementation of SCE’s Grid Safety and Resiliency Program and its Wildfire Mitigation Plans. Other significant focus areas in the past two years have included worker and public safety, SCE’s safety culture, safe decommissioning of the San Onofre Nuclear Generating Station, the safety and security of SCE’s grid assets including cybersecurity, safety metrics and benchmarking, and response plans for earthquakes and natural disasters.

In addition, as discussed in the Compensation Discussion and Analysis below, the Compensation Committee has made safety a foundational goal that can negatively impact annual incentive compensation of our executives.

STRATEGY OVERSIGHT

The Board is regularly engaged in providing management with strategic direction, including but not limited to opportunities in clean energy, efficient electrification, strengthening and modernizing the electric grid, and customer choice. The Board’s oversight and review of Company strategy occurs through annual in-depth strategy meetings, annual education sessions on strategic topics with external experts, regular updates at Board meetings, and discussion of emerging issues affecting strategy. Directors with particular expertise in a strategic area also advise management on strategy outside of Board meetings. In 2019, the Board education sessions on strategic topics focused on operational practices related to wildfire mitigation and transportation electrification.

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OUR CORPORATE GOVERNANCE

RISK OVERSIGHT

Our Corporate Governance Guidelines provide that one of the Board’s primary functions is to review the Company’s enterprise risk management process and monitor strategic and emerging risks. The Board monitors key risks through reports and discussions regarding key risk areas at Board meetings. The Board also focuses on specific strategic and emerging risks in periodic strategy reviews. The Board annually reviews corporate goals and approves capital budgets. Board committees have responsibility for risk oversight in specific areas as follows:

AUDIT AND FINANCE COMMITTEE

Oversee the Company’s policies and guidelines with respect to risk assessment and management, major financial and other key risk exposures, and the steps taken to monitor and control these risks.
Receive regular reports on litigation, internal audits and compliance, as well as “deep dive” reports on specific risk topics.
Annually review and approve the internal audit plan.
Receive semi-annual reports of the Company’s political contributions.
Oversee risks in the Company’s capital investments, allocation and spending.
Regularly monitor the level of capital spending relative to approved capital budgets and approve significant capital spending variances and projects not included in approved capital budgets.
GOVERNANCE COMMITTEE

Identify director candidates with skills and experience valuable in oversight of the Company’s key enterprise risks.
Advise the Board regarding Board size and composition, Board committee composition and responsibilities, selection of the independent Chair of the EIX Board, the Board and Committee self-evaluation process, and other corporate governance practices that help position the Board to effectively carry out its risk oversight responsibility.
Review and monitor ESG trends and ensure oversight of relevant ESG issues by the Board and Board committees.
COMPENSATION COMMITTEE

Assess and monitor risks in the Company’s compensation program.
The Committee’s risk assessment process and factors considered in assessing risk are discussed under “How We Make Compensation Decisions - Risk Considerations” in the Compensation Discussion and Analysis below.
SAFETY AND OPERATIONS COMMITTEE

Review and monitor the Company’s safety programs, policies and practices relating to the Company’s safety culture, goals, risks and significant incidents.
Monitor the Company’s safety and operational and service excellence performance metrics.
Review and monitor the Company’s operations, significant developments, resources, risks and risk mitigation plans, including mitigation related to internal audits.
Receive “deep dive” reports on wildfire mitigation and other key topics related to its responsibilities.

The Board believes its leadership structure supports the Board’s risk oversight function. Independent directors chair the Board committees responsible for risk oversight, and the independent Chair of the EIX Board and Committee chairs facilitate communication between management and directors.

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OUR CORPORATE GOVERNANCE

CYBERSECURITY OVERSIGHT

The Company has identified cybersecurity as a key enterprise risk. Cybersecurity risks are included in the key risk reports to the Audit and Finance Committee discussed above. In addition, the Board has assigned primary responsibility for cybersecurity oversight to the Safety and Operations Committee, which receives regular cybersecurity updates from SCE’s Chief Information Officer that focus on cybersecurity threats, defenses, and data analytics that impact the Company’s most critical assets. The Board also receives an annual report on cybersecurity from SCE’s Chief Information Officer and an independent cybersecurity consultant that includes an assessment of the Company’s program and organization.

The Company has established a cybersecurity oversight group comprised of a multidisciplinary senior management team to provide governance and strategic direction for the identification, protection and detection of cybersecurity risks to the Company. Director Trent serves as the Board liaison to the oversight group and regularly attends meetings. Other Board members are invited to attend meetings and typically attend at least one meeting annually.

ESG OVERSIGHT

The Company’s ESG practices impact all of our stakeholders – shareholders, customers, employees, suppliers, and the communities we operate in and serve. With SCE being a regulated, investor-owned utility, the interests of our customers, employees, suppliers and communities are critical to the Company’s success and ability to provide sustainable, long-term value to shareholders. In 2019, the Company signed the Business Roundtable’s Statement on the Purpose of a Corporation which reflects our commitment to our stakeholders and the ESG issues that impact them.

The Board oversees safety, climate change and other ESG risks and opportunities as an integral part of its oversight of the Company’s strategy. ESG issues are core to our strategy and, therefore, incorporated into topics reviewed at each Board meeting and the Board’s annual in-depth strategy meeting. The Board regularly monitors risks arising from climate-related events that impact our business, such as wildfires, and provides direction and guidance to management on the mitigation of these risks. The Board oversees the impact of environmental legislation and regulation on the Company’s clean energy strategy and monitors progress on key objectives related to renewable energy, distributed generation, transportation electrification, energy efficiency, and climate change, among other areas. In addition, the Board approves capital budgets that reflect allocation decisions for grid modernization, transportation electrification, energy storage and customer-facing programs. The Board also reviews corporate goals related to safety, reliability, grid modernization, capital spending, and diversity to ensure that they advance the Company’s strategy.

The Board also oversees the Company’s diversity and inclusion initiatives, executive diversity, succession and talent planning, and corporate culture. In 2019, the Board reviewed diversity metrics, cultural initiatives and talent development opportunities. Discussions at the Board level involved a holistic view of the employee experience as well as discussion of both current strengths and opportunities.

Many of our directors participate in leadership and employee resource group (“ERG”) programs to support the Company’s diversity and inclusion initiatives. The Company also supports the Board’s participation in facility tours to better understand our operations and wildfire mitigation activities and engage directly with employees. Directors participated in the following programs and tours in 2019:

Leadership Programs
Leadership Council (senior management)
Edge Program (high-potential leaders)
Women’s Leadership Dinner (executives and other leaders)
ERG Programs
Edison Roundtable (women in the workplace focus)
Joint LEAD and Lighthouse Meeting (Latino and LGBTQ focus)
Networkers Meeting (African American focus)
Facility Tours
Alternate Grid Control Center (system management)
Big Creek Hydroelectric Project (generation, vegetation and forest management)
Distribution Operations Center (system reliability)
Emergency Operations Center (wildfire mitigation)
Reliability Operations Center (predictive analytics)

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OUR CORPORATE GOVERNANCE

The Governance Committee is responsible for reviewing significant ESG trends that may impact the Company and ensuring that the Board and its committees have the appropriate oversight of relevant ESG issues. Board committees comprised entirely of independent directors have responsibility for risk and operational oversight of the specific ESG-related issues outlined below.

AUDIT AND FINANCE COMMITTEE

Key risks related to wildfires and climate change
Key risks related to reliability, safety and public policy
Political and charitable contributions
Employee helpline data and ethics survey results on Company culture
Capital spending

GOVERNANCE COMMITTEE

Board composition and diversity
Significant ESG trends and Board and committee oversight of relevant ESG issues
Shareholder outreach efforts on ESG issues

COMPENSATION COMMITTEE

Incentive compensation plans and goals
Executive talent development

SAFETY AND OPERATIONS COMMITTEE

Safety culture, goals and risks
Employee, contractor and public safety
Electric system reliability
Cyber and physical security
Wildfires

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DIRECTOR COMPENSATION

                                                                                                    

The following table presents information regarding the compensation paid for 2019 to our non-employee directors. The compensation paid to any director who is also an employee of EIX or SCE is presented in the EIX and SCE Summary Compensation Tables and the related explanatory tables.

DIRECTOR COMPENSATION TABLE – FISCAL YEAR 2019

Name Fees Earned or
Paid in Cash
($)
Stock
Awards
(1)(2)
($)
Option
Awards(3)
($)
Non-Equity
Incentive Plan
Compensation
($)
Change in Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(4)
($)

All Other
Compensation(5)
($)

Total
($)
Jeanne M. Beliveau-Dunn     122,500     152,540                     275,040
Michael C. Camuñez 122,500 152,528 10,000 285,028
Vanessa C.L. Chang 142,500 152,528 20,698 10,000 325,726
James T. Morris 122,500 152,528 4,566 2,500 282,094
Timothy T. O’Toole 133,750 152,528 2,909 10,000 299,187
Carey A. Smith 30,625 38,189 49 68,863
Linda G. Stuntz 137,500 152,528 2,451 10,000 302,479
William P. Sullivan 197,500 227,553 10,000 435,053
Ellen O. Tauscher(6) 68,750 152,528 15 221,293
Peter J. Taylor 142,500 152,528 10,000 305,028
Keith Trent 122,500 152,528 238 6,500 281,766
Brett White(6) 61,250 7,919 69,169
(1)

The amounts reported for stock awards reflect the aggregate grant date fair value of those awards computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate the amounts reported, see Note 9 (Compensation and Benefit Plans) to the Consolidated Financial Statements included as part of the Company’s 2019 Annual Report.

(2)

Each non-employee director, other than Messrs. Sullivan and White and Mses. Beliveau-Dunn and Smith, was granted a total of 2,399 shares of EIX Common Stock or fully-vested deferred stock units on April 25, 2019, and each share or unit had a value of $63.58 on the grant date. Mr. White was not eligible for a grant because of his resignation from the Board. Mr. Sullivan was granted 2,399 fully-vested deferred stock units in connection with his re-election to the Board and 1,180 fully-vested deferred stock units in connection with his re-appointment as Chair of the EIX Board, for a total grant of 3,579 units on April 25, 2019. Each deferred stock unit granted to Mr. Sullivan had a value of $63.58 on the grant date. Ms. Beliveau-Dunn was granted 2,547 fully-vested deferred stock units on February 28, 2019 in connection with her initial election to the Board, and each unit had a value of $59.89 on the grant date. Ms. Smith was granted 529 fully-vested deferred stock units on October 24, 2019 in connection with her initial election to the Board, and each unit had a value of $72.19 on the grant date. None of the non-employee directors had unvested stock units as of December 31, 2019.

(3)

We have not granted stock options to our non-employee directors since 2009. None of the non-employee directors had EIX stock options outstanding as of December 31, 2019.

(4)

Amounts reported consist of interest on deferred compensation account balances considered under SEC rules to be at above-market rates.

(5)

EIX has a matching gift program that provides dollar-for-dollar matching gifts of at least $25 up to a prescribed maximum amount per calendar year for the Company’s employees and EIX and SCE directors. Most tax-exempt public charities under section 501(c)(3) of the Internal Revenue Code and U.S. governmental subdivisions as provided by section 170(c)(1) of the Internal Revenue Code are eligible for matching gifts; exceptions include political organizations, organizations that discriminate, and religious and fraternal organizations that serve only their membership. The amounts in this column reflect matching gifts made by EIX pursuant to this program for 2019 gifts by directors. EIX matches each director’s aggregate contributions up to $10,000 per calendar year to eligible organizations. Under the Director Matching Gift Program, matching amounts for non-cash gifts are determined based on the value of the gift on the date given by the director. For purposes of determining the date on which a gift of publicly-traded stock is given, the date is based on the date stock ownership transfers to the organization.

(6)

Ms. Tauscher passed away on April 29, 2019. Mr. White retired from the Board on April 25, 2019.


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DIRECTOR COMPENSATION

ANNUAL RETAINER

Compensation for non-employee directors during 2019 included an annual retainer and an annual equity award. Directors were offered the opportunity to receive all of their compensation on a deferred basis under the EIX Director Deferred Compensation Plan. The following table sets forth the cash compensation paid to directors in 2019:

Type of Fee
Board Retainer Per Quarter       $ 30,625
Additional Board Retainer Per Quarter to:
Audit and Finance Committee Chair $ 5,000
Compensation Committee Chair $ 5,000
Other Committee Chairs $ 3,750
Chair of the EIX Board $ 18,750

All directors are also reimbursed for out-of-pocket expenses for serving as directors and are eligible to participate in the Director Matching Gift Program described in footnote (5) to the Director Compensation Table above. Directors are not paid meeting fees.

ANNUAL EQUITY AWARDS

Upon re-election to the Board on April 25, 2019, non-employee directors were granted an annual equity award of EIX Common Stock or deferred stock units with an aggregate grant date value of $152,500.

Upon his re-appointment as Chair of the EIX Board on April 25, 2019, Mr. Sullivan was granted a supplemental annual equity award of EIX Common Stock or deferred stock units with an aggregate grant date value of $75,000.

If the grant date of an award for an initial election to the Board or initial appointment as Chair of the EIX Board occurs after the date of EIX’s Annual Meeting for that year, then the grant date value of the award is prorated by multiplying it by the following percentage: 75% if the grant date is in the second quarter of the year; 50% if the grant date is in the third quarter of the year; 25% if the grant date is in the fourth quarter of the year. Ms. Smith received a prorated initial election award on October 24, 2019 with a grant date value equal to 25% of $152,500. If the grant date of an award for an initial election to the Board occurs before the date of EIX’s Annual Meeting, then the director receives an annual equity award upon election in the amount of $152,500, but is not eligible to receive an additional annual equity award upon reelection at the Annual Meeting. Accordingly, Ms. Beliveau-Dunn received an initial election award on February 28, 2019 with a grant date value of $152,500 and did not receive an additional equity award for her re-election at the 2019 Annual Meeting.

The number of shares or units granted is determined by dividing the grant date value of the equity award by the closing price of EIX Common Stock on the grant date and rounding up to the next whole share. Each award is fully vested when granted.

The annual equity award for an initial election to the Board is made in the form of deferred stock units. For re-election awards and the additional equity award for appointment or re-appointment as Chair of the EIX Board, directors have the opportunity to elect in advance to receive such awards entirely in EIX Common Stock, entirely in deferred stock units, or in any combination of the two. A deferred stock unit is a contractual right to receive one share of EIX Common Stock. Deferred stock units are credited to the director’s account under the EIX Director Deferred Compensation Plan described below. Deferred stock units cannot be voted or sold. They accrue dividend equivalents on the ex-dividend date, if and when dividends are declared on EIX Common Stock. The accrued dividend equivalents are converted to additional deferred stock units.

Each director’s equity award in 2019 was granted under the EIX 2007 Performance Incentive Plan. Directors serving on both Company Boards receive only one award per year for election to the Boards.

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DIRECTOR COMPENSATION

EIX DIRECTOR DEFERRED COMPENSATION PLAN

Non-employee directors are eligible to defer up to 100% of their retainers and meeting fees (if any). Any portion of a director’s annual equity award that he or she elects to receive as deferred stock units is automatically deferred. Amounts deferred (other than deferred stock units) accrue interest until paid to the director at a rate equal to the average monthly Moody’s Corporate Bond Yield for Baa Public Utility Bonds over a 60-month period ending September 1 of the prior year.

Any amounts deferred (including deferred stock units) may be deferred until a specified date no later than the date the director turns age 75, or may become payable in connection with the director’s retirement, death, disability or other separation from service. Directors have sub-accounts for each annual deferral for which the following forms of payment may be elected:

Single lump-sum;
Two to fifteen annual installments; or
Monthly installments for 60, 120, or 180 months.

Payments triggered by retirement, death, disability or other separation from service may begin upon the applicable triggering event or a specified number of months and/or years following the applicable triggering event. However, payments may not begin later than the director’s 75th birthday unless the director is still on the Board. Payments are subject to certain administrative earliest payment date rules, and may be delayed or accelerated if permitted or required under Section 409A of the Internal Revenue Code. All amounts payable are treated as obligations of EIX.

DETERMINATION OF DIRECTOR COMPENSATION

The Board makes all decisions regarding director compensation. These decisions are normally made after receiving recommendations from the Compensation Committee. The Compensation Committee makes its recommendations after receiving input from its independent compensation consultant and management. The Compensation Committee retained Pay Governance LLC (“Pay Governance”) to evaluate and make recommendations regarding director compensation for 2019. Pay Governance’s assistance included helping the Compensation Committee identify industry trends and norms for director compensation, reviewing and identifying peer group companies, and evaluating director compensation data for these companies. Management’s input focuses on legal, compliance, and administrative issues.

In August 2019, Pay Governance identified (i) the Company’s equity-based portion of non-employee director compensation and (ii) the retainer for the Chair of the Audit and Finance Committee as below marketplace standards. However, in light of the impact of wildfires on communities within SCE’s service territory, the Compensation Committee recommended to the Board that director compensation not be increased, and the Board agreed.

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OUR STOCK OWNERSHIP

                                                                                                    

DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS

The following table shows the number of shares of EIX Common Stock beneficially owned as of March 2, 2020 by each of our directors, director nominees, officers and former officers named in the EIX and SCE Summary Compensation Tables (“NEOs”), and our current directors and executive officers as a group. None of the persons in the table beneficially owns any other equity securities of the Company or its subsidiaries. The table includes shares that the individual has a right to acquire through May 15, 2020.

Name of Beneficial Owner Category Deferred
Stock
Units
(1)
Stock
Options
Common
Stock
Shares(2)
Total Shares
Beneficially
Owned(3)
Percent
of Class(4)
Jeanne Beliveau-Dunn       Director/Nominee       2,639                   2,639       *
Michael C. Camuñez Director/Nominee 6,114 6,114 *
Vanessa C.L. Chang Director/Nominee 7,325 5,295 12,620 *
James T. Morris Director/Nominee 1,387 1,681 3,068 *
Timothy T. O’Toole Director/Nominee 5,689 5,000 10,689 *
Kevin M. Payne SCE Director/Nominee
EIX/SCE NEO
180,586 11,848 192,434 *
Pedro J. Pizarro Director/Nominee
EIX NEO
844,929 62,351 907,280 *
Carey A. Smith Director/Nominee 534 534 *
Linda G. Stuntz Director/Nominee 5,677 5,677 *
William P. Sullivan Director/Nominee 6,984 6,672 13,656 *
Peter J. Taylor Director/Nominee 13,047 13,047 *
Keith Trent Director/Nominee 575 2,399 2,974 *
Maria Rigatti EIX NEO 200,726 20,229 220,955 *
Adam S. Umanoff EIX NEO 251,246 11,931 263,177 *
J. Andrew Murphy EIX NEO 103,332 3,013 106,345 *
William M. Petmecky, III SCE NEO 55,314 3,460 58,774 *
Philip R. Herrington SCE NEO 41,651 1,485 43,136 *
Russell C. Swartz SCE NEO 123,558 27,321 150,879 *
Steven D. Powell SCE NEO 41,465 2,803 44,268 *
Ronald O. Nichols(5) SCE NEO 61,008 6,190 67,198 *
Caroline Choi SCE NEO 99,756 5,125 104,881 *
EIX Directors and Executive Officers as a Group (18 individuals) 31,247 1,790,390 160,106 1,981,743 *
SCE Directors and Executive Officers as a Group (20 individuals) 31,247 1,412,130 157,549 1,600,926 *
(1)

In accordance with SEC rules, the reported number consists only of deferred stock units that could be settled in shares of EIX Common Stock within 60 days at the director’s discretion under the payment elections previously made by the director under the EIX Director Deferred Compensation Plan (for example, a director who elected settlement of deferred stock units upon retirement could retire). However, all deferred stock units held by a director count toward the stock ownership requirement for directors.
In addition to the deferred stock units reported in this table, Messrs. Morris and Taylor hold 5,547 and 8,903 fully-vested deferred stock units, and Mses. Chang and Stuntz hold 29,300 and 8,870 fully-vested deferred stock units, respectively. These additional deferred stock units will also be settled in shares of EIX Common Stock, but in accordance with SEC rules are not included in the table because they cannot be settled in shares of EIX Common Stock within 60 days at the director’s discretion.


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OUR STOCK OWNERSHIP

(2) Except as follows, each individual has sole voting and investment power. Shared voting and sole investment power: Mr. Payne 3,534; Ms. Rigatti 5,553; Mr. Umanoff 3,168; Mr. Nichols 3,178; all EIX directors and executive officers as a group 12,235; and all SCE directors and executive officers as a group 3,626. Shared voting and shared investment power: Ms. Chang 113; Mr. Nichols 295; all EIX directors and executive officers as a group 200; and all SCE directors and executive officers as a group 113.
(3) Includes shares listed in the three columns to the left.
(4) Each individual beneficially owns less than 1% of the shares of EIX Common Stock.
(5) Mr. Nichols’ shares are reported as of June 6, 2019, the date of his death.

OTHER SHAREHOLDERS

The following are the only shareholders known to beneficially own more than 5% of any class of EIX or SCE voting securities as of December 31, 2019:

Title of Class of Stock       Name and Address of
Beneficial Owner
      Amount and
Nature of
Beneficial
Ownership
      Percent
of Class
EIX Common Stock The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
29,907,017(1) 8.3%
EIX Common Stock BlackRock Inc.
55 East 52nd Street
New York, NY 10055
29,562,305(2) 8.2%
EIX Common Stock State Street Corporation
One Lincoln Street
Boston, MA 02111
27,126,233(3) 7.6%
EIX Common Stock T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
24,980,713(4) 6.9%
EIX Common Stock Capital International Investors
11100 Santa Monica Blvd.
Los Angeles, CA 90025
22,525,268(5) 6.3%
SCE Common Stock Edison International
2244 Walnut Grove Avenue
Rosemead, CA 91770
434,888,104(6) 100%
(1) This information is based on a Schedule 13G filed with the SEC on February 12, 2020. The Vanguard Group reports it has sole voting power over 626,733 shares, shared voting power over 173,530 shares, sole investment power over 29,235,937 shares, and shared investment power over 671,080 shares.
(2) This information is based on a Schedule 13G filed with the SEC on February 5, 2020. BlackRock Inc. reports it has sole voting power over 25,976,614 shares and sole investment power over all shares.
(3) This information is based on a Schedule 13G filed with the SEC on February 14, 2020. Acting in various fiduciary capacities, State Street reports it has shared voting power over 24,230,455 shares and shared investment power over 27,110,949 shares. This includes approximately 6,800,121 shares, or 1.9% of the class, held by State Street as the 401(k) Plan Trustee. 401(k) Plan shares are voted in accordance with instructions given by participants, whether vested or not. 401(k) Plan shares for which instructions are not received will be voted by the 401(k) Plan trustee in the same proportion to the 401(k) Plan shares voted by other 401(k) Plan Shareholders, unless contrary to ERISA.
(4) This information is based on a Schedule 13G filed with the SEC on February 14, 2020. T. Rowe Price Associates reports it has sole voting power over 11,303,190 shares and sole investment power over 24,941,955 shares.
(5) This information is based on a Schedule 13G filed with the SEC on February 14, 2020. Capital International Investors reports it has sole voting power over 22,215,334 shares and sole investment power over all shares.
(6) EIX became the holder of all issued and outstanding shares of SCE Common Stock on July 1, 1988, when it became the holding company of SCE. EIX continues to have sole voting and investment power over these shares.

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ITEM 2: RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit and Finance Committee considers several factors when determining the annual selection of the Independent Auditor.
The Audit and Finance Committee and the Board believe it is in the best interests of the Company and its investors to reappoint PricewaterhouseCoopers LLP (“PwC”) as the Company’s Independent Auditor for calendar year 2020.
Item 2 requests that shareholders ratify the Audit and Finance Committee’s selection of PwC as the Company’s Independent Auditor.

THE BOARD RECOMMENDS YOU VOTE “FOR” ITEM 2.

The Audit and Finance Committee is directly responsible for the appointment, compensation, retention and oversight of the Independent Auditor retained to audit the Company’s financial statements. The Committee has selected PwC as the Company’s Independent Auditor for calendar year 2020. The Company is asking shareholders to ratify this appointment.

PwC is an international accounting firm which provides leadership in public utility accounting matters. Representatives of PwC are expected to attend the Annual Meeting to respond to appropriate questions and to make a statement if they wish.

PwC has been retained as the Company’s Independent Auditor continuously since 2002. The Committee has adopted restrictions on hiring certain persons formerly associated with PwC into an accounting or financial reporting oversight role to help ensure PwC’s continuing independence.

At least annually, the Committee meets in executive session without PwC present to evaluate the quality of PwC’s audit services and their performance, including PwC’s industry knowledge from an accounting and tax perspective, PwC’s continued independence and professional skepticism, the Committee’s discussions with management about PwC’s performance, and information available from Public Company Accounting Oversight Board (“PCAOB”) inspection reports.

The Committee annually considers whether the Independent Auditor firm should be reappointed for another year. The lead engagement partner is required to rotate off the Company’s audit every five years. The Committee is involved in the selection of the lead engagement partner. In connection with the mandated rotation of PwC’s lead engagement partner effective beginning with PwC’s audit of the Company’s 2021 financial statements, the Company interviewed candidates who met professional, industry and personal criteria, and selected finalists. The Committee Chair participated in interviews with the finalists and selected the lead engagement partner, in consultation with the Committee.

The Committee considered several factors when determining whether to reappoint PwC as the Company’s Independent Auditor, including:

The length of time PwC has been engaged;
PwC’s knowledge of the Company and its personnel, processes, accounting systems and risk profile;
The quality of the Committee’s ongoing discussions with PwC, their independence and professional skepticism;
An assessment of the professional qualifications, utility industry experience and past performance of PwC, its lead engagement partner, and other members of the core engagement team;
PwC’s use of technology and data analytics in its audits; and
Other accounting firms with comparable professional qualifications and utility industry expertise.

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ITEM 2: RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Committee and the Board believe that the continued retention of PwC to serve as the Company’s Independent Auditor is in the best interests of the Company and its investors.

The Company is not required to submit this appointment to a shareholder vote. Ratification would be advisory only. However, if the shareholders of either EIX or SCE do not ratify the appointment, the Committee will investigate the reasons for rejection by the shareholders and will reconsider the appointment.

INDEPENDENT AUDITOR FEES

The following table sets forth the aggregate fees billed by PwC to EIX (consolidated total including EIX and its subsidiaries) and SCE, respectively, for the fiscal years ended December 31, 2019 and December 31, 2018:

      EIX and
Subsidiaries ($000)
SCE ($000)
Type of Fee 2019       2018       2019       2018
Audit Fees(1) $ 6,329 $ 6,128 $ 5,329   $ 5,413
Audit-Related Fees(2) 785 571 785   564
Tax Fees(3) 411   606 366   417
All Other Fees(4) 238   158 238 158
TOTAL $ 7,763   $ 7,463 $ 6,718 $ 6,552
(1) These represent fees for professional services provided in connection with the audit of the Company’s annual financial statements and internal controls over financial reporting, and reviews of the Company’s quarterly financial statements.
(2) These represent fees for assurance and related services related to the performance of the audit or review of the financial statements and not reported under “Audit Fees” above.
(3) These represent fees for tax-related compliance and other tax-related services to support compliance with federal and state tax reporting and payment requirements, including tax return review and review of tax laws, regulations or cases.
(4) These represent fees for miscellaneous services.

The Audit and Finance Committee annually approves all proposed audit fees in executive session without PwC present, considering several factors, including a breakdown of the services to be provided, proposed staffing and hourly rates, and changes in the Company and industry from the prior year. The audit fees are the culmination of a process which included a comparison of the prior year’s proposed fees to actual fees incurred and fee proposals for known and anticipated 2019 services in the audit, audit-related, tax and other categories. The Committee’s deliberations consider balancing the design of an audit scope that will achieve a high-quality audit with driving efficiencies from both the Company and PwC while compensating PwC fairly.

The Committee is required to pre-approve all audit and permitted non-audit services performed by PwC to ensure these services will not impair the firm’s independence.

The Committee has delegated to the Committee Chair the authority to pre-approve services between Committee meetings, provided that any pre-approval decisions are presented to the Committee at its next meeting. PwC must assure that all audit and non-audit services provided to the Company have been approved by the Committee.

During the fiscal year ended December 31, 2019, all services performed by PwC were pre-approved by the Committee, irrespective of whether the services required pre-approval under the Exchange Act.

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ITEM 2: RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

AUDIT COMMITTEE REPORT

The Audit and Finance Committee is composed of the five independent directors listed below and operates under a charter adopted by the Board, which is posted on our website at www.edison.com/corpgov.

The Board has determined that each Committee member is independent and financially literate, and that at least one member has accounting or other related financial management expertise, as such qualifications are defined by NYSE rules, our Corporate Governance Guidelines, and/or the Committee charter. The Board has also determined that directors Morris, Taylor and Trent each qualify as an “audit committee financial expert” as defined by SEC rules.

Management is responsible for the Company’s internal controls and the financial reporting process, including the integrity and objectivity of the financial statements. The Independent Auditor performs an independent audit of the Company’s financial statements under the standards of the PCAOB and issues a report on the financial statements. The Audit and Finance Committee monitors and oversees these processes. The Committee members are not accountants or auditors by profession and therefore have relied on certain representations from management and the Independent Auditor in carrying out their responsibilities.

In discharging our oversight responsibilities in connection with the December 31, 2019 financial statements, the Committee:

Reviewed and discussed the audited financial statements with the Company’s management and the Independent Auditor;
Discussed various matters with the Independent Auditor, including matters required by the PCAOB’s standard “Communications with Audit Committees;” and
Received the written disclosures and Independent Auditor letter confirming its independence from the Company, and discussed such independence with the Independent Auditor.

Based upon these reviews and discussions, the Audit and Finance Committee recommended to the Board that the audited financial statements be included in the Company’s 2019 Annual Report to be filed with the SEC.

Peter J. Taylor (Chair) Jeanne Beliveau-Dunn Michael C. Camuñez James T. Morris Keith Trent

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ITEM 3: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

The Company’s executive compensation program is described under “Compensation Discussion and Analysis” below.
The Compensation Committee and the Board believe the Company’s executive compensation structure is competitive, aligns compensation with shareholder value and serves shareholders well.
Item 3 requests that shareholders approve the compensation paid to the Company’s named executive officers.

THE BOARD RECOMMENDS YOU VOTE “FOR” ITEM 3.

The advisory vote to approve the Company’s executive compensation, commonly known as “Say-on-Pay,” gives shareholders the opportunity to endorse or not endorse the compensation of our named executive officers. This advisory vote is required by SEC rules to be provided at least once every three years. However, our shareholders have voted in favor of holding the advisory vote every year, and the Board determined that it would be held annually. The Company’s Say-on-Pay proposal received support from over 90% of the votes cast in each of the last nine years.

Our executive compensation program is described under “Compensation Discussion and Analysis” below. We encourage you to read it carefully. Our executive compensation program is reviewed and approved by the Compensation Committee. The Compensation Committee and the Board believe our executive compensation structure is competitive, aligns compensation with shareholder value and serves shareholders well.

EIX and SCE request shareholder approval of the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement under the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables.

The Company values constructive dialogue with shareholders on compensation and other important governance matters. Because your vote is advisory, it will not be binding on the Compensation Committee, the Board or the Company and will not be construed as overruling a decision by the Compensation Committee, the Board or the Company. However, the Compensation Committee will consider the outcome of the vote and any constructive feedback from shareholders when making future executive compensation decisions. See “Compensation Summary – Shareholder Communication and Compensation Program for 2020.”

It is expected that the next Say-on-Pay vote will occur at the 2021 Annual Meeting.

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COMPENSATION DISCUSSION AND ANALYSIS

                                                                                                    

This Compensation Discussion and Analysis (“CD&A”) describes the principles of our executive compensation program, how we applied those principles in compensating our named executive officers (“NEOs”) for 2019, and how we use our compensation program to drive performance. We also discuss the roles and responsibilities of our Compensation Committee (the “Committee”) in determining executive compensation. The CD&A is organized as follows:

1               2               3               4              5           
Compensation Summary What We Pay and Why: Elements of Total Direct Compensation How We Make Compensation Decisions Post-Employment and Other Benefits Other Compensation Policies and Guidelines

The CD&A contains information relevant to your decision regarding the advisory vote to approve our executive compensation (Item 3 on your Proxy Card). When voting on Item 3, EIX shareholders will vote on EIX executive compensation, while SCE shareholders will vote on SCE executive compensation.

1   COMPENSATION SUMMARY

Certain key information about our executive compensation program is highlighted in this Compensation Summary.

EXECUTIVE COMPENSATION PRACTICES

Our executive compensation program is designed with the objective of strongly linking pay with performance. The table below highlights our current compensation practices for NEOs, including practices we believe drive performance and are aligned with good governance principles, and practices we have not implemented because we do not believe they would serve our shareholders’ or other stakeholders’ long-term interests.

WHAT WE DO       WHAT WE DON’T DO
We tie pay to performance by making the majority of compensation “at risk” and linking it to stakeholders’ interests
We target a competitive range around the market median for base salary and annual and long-term incentives
We compare executive compensation to a peer group defined by a recognized market index
We use a balanced system of absolute and relative metrics in our annual and long-term incentive programs
We have double-trigger change in control provisions for equity award vesting
We regularly seek shareholder feedback on our executive compensation program and we share the feedback with the Committee
We maintain rigorous stock ownership guidelines that impose sales restrictions on officers
We maintain an incentive compensation clawback policy
Our Committee’s compensation consultant is independent and does not provide any other services to the Company
We do not have any employment contracts
We do not provide excise tax gross-ups on change in control payments
We do not have individually-negotiated change in control agreements
We do not provide perquisites
We do not provide personal use of any corporate aircraft
We do not reprice or allow the cash buyout of stock options with exercise prices below the current market value of EIX Common Stock
We do not permit pledging of Company securities by directors or executive officers
We do not permit short sales, trading in derivatives or hedging of Company securities by directors or employees

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COMPENSATION DISCUSSION AND ANALYSIS

EIX NEOs FOR 2019
EIX NEOs are identified below. EIX shareholders will vote on EIX executive compensation.

PEDRO J. PIZARRO
EIX President and Chief Executive Officer (“CEO”)

MARIA RIGATTI
EIX Executive Vice President (“EVP”) and Chief Financial Officer (“CFO”)

KEVIN M. PAYNE
SCE CEO; also SCE President effective June 7, 2019

ADAM S. UMANOFF
EIX EVP and General Counsel

J. ANDREW MURPHY
EIX Senior Vice President (“SVP”)

SCE NEOs FOR 2019
SCE NEOs are identified below. SCE shareholders will vote on SCE executive compensation.

KEVIN M. PAYNE
SCE CEO; also SCE President effective June 7, 2019

WILLIAM M. PETMECKY, III
SCE SVP and CFO

PHILIP R. HERRINGTON
SCE SVP

RUSSELL C. SWARTZ
SCE SVP and General Counsel

STEVEN D. POWELL
SCE EVP effective September 2, 2019; SCE SVP through September 1, 2019

 

RONALD O. NICHOLS
SCE President through June 6, 2019

CAROLINE CHOI
SCE SVP; also EIX SVP effective February 4, 2019

ELEMENTS AND OBJECTIVES OF TOTAL DIRECT COMPENSATION

Element Form

Key Objective

% of EIX CEO
2019 Target
Total Direct
Compensation*

BASE SALARY       Fixed Pay: Cash      

Establish a pay foundation to attract and retain qualified executives

     

ANNUAL INCENTIVE AWARDS Variable Pay: Cash

Focus executives’ attention on specific financial, strategic and operating objectives of the Company that we believe will increase long-term shareholder value and benefit customers

LONG-TERM INCENTIVE AWARDS Variable Pay: Equity

Directly align executive pay with long-term value provided to shareholders, and benefit customers by enhancing executives’ focus on the Company’s long-term goals


50% stock options
25% performance shares
25% restricted stock units
Link compensation to stock price increase
Reward relative shareholder return compared to peers and earnings per share compared to pre-established targets
Encourage retention and ownership, with value tied to absolute shareholder return
* In this CD&A, the term “target total direct compensation” means the sum of the NEO’s salary, target annual incentive award, and grant date fair value of long-term incentive awards for the particular year.

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COMPENSATION DISCUSSION AND ANALYSIS

CEO PAY COMPARISON: EIX VS. PEER GROUP

The following chart shows EIX CEO total direct compensation for each of the last five years as reported in the EIX Summary Compensation Table, compared to the median total direct compensation for the chief executive officers of the companies in the Philadelphia Utility Index peer group for such year.(1) “Total direct compensation” or “TDC” means the sum of base salary, the actual annual incentive award paid for the year and the grant date fair value of long-term incentive awards (columns (c), (e), (f) and (g) of the Summary Compensation Table) for the NEO for the year.

Theodore F. Craver, Jr. served as EIX CEO for all of 2015 and the chart shows his TDC for that year. Mr. Pizarro succeeded Mr. Craver as EIX CEO on September 30, 2016 and the chart shows his full-year TDC for 2016 through 2019. (The 2019 Peer Median TDC in the chart is the same as the 2018 Peer Median TDC, since peer group data for 2019 was generally unavailable in time to include in this Proxy Statement.)

Mr. Pizarro’s full-year 2016 TDC was significantly below the peer group median for chief executive officers. His compensation before the September 30, 2016 effective date of his election as EIX CEO was targeted at the market median for his prior positions (SCE President through May 31, 2016 and EIX President from June 1 through September 29, 2016). In addition, the Committee set his annualized compensation after the effective date of his election as EIX CEO significantly below the peer group median for chief executive officers, with an opportunity for increases in subsequent years as the Committee evaluated his performance as EIX CEO. The Committee increased Mr. Pizarro’s TDC in 2017, but not to the level of the peer group median.

For 2018, the Committee increased Mr. Pizarro’s target TDC to bring it closer to the peer median. However, Mr. Pizarro’s actual TDC was significantly below the peer median because he did not receive an annual incentive award for 2018. In light of the impact of wildfires on communities within SCE’s service territory, the Committee decided, in consultation with management and with its full support and agreement, that no annual incentive award would be paid for 2018 to Messrs. Pizarro, Payne, Umanoff, and Nichols, and Ms. Rigatti. This Committee action was not a reflection on the performance of the Company or the five NEOs.

For 2019, the Committee increased Mr. Pizarro’s target TDC to be approximately at the peer median. Mr. Pizarro’s annual incentive award payout for 2019 (and therefore his actual TDC) was slightly above target largely due to core earnings and wildfire resiliency efforts that exceeded target levels, as discussed in “Annual Incentive Awards” below.

EIX CEO VS. PEER GROUP MEDIAN TOTAL DIRECT COMPENSATION (TDC)

 

(1) See page 51 for the companies in the Philadelphia Utility Index in 2019. See previous Proxy Statements for the companies in the Philadelphia Utility Index in previous years.

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COMPENSATION DISCUSSION AND ANALYSIS

ALIGNMENT OF EIX CEO PAY WITH PERFORMANCE

The Company utilizes annual and long-term incentive awards to align executive pay with performance. The awards provide significant upside and downside potential and help focus executives’ attention on our financial, strategic and operating objectives, and shareholder returns.

The following chart shows the strong alignment over the past five years between the EIX CEO’s total direct compensation (presented on the same basis as in the EIX CEO vs. Peer Group Median TDC chart above) and our indexed total shareholder return (“TSR”),(2) which represents the value of an initial investment of $100 in EIX common stock at the beginning of the five-year period, and assumes that dividends are reinvested on the ex-dividend date.

EIX CEO TDC VS. INDEXED TSR, 2015-2019

As the chart above shows, EIX’s TSR was approximately 35% for the five-year period from 2015 to 2019.

TSR increased significantly from 2015 to 2016 and decreased in 2017 and 2018. As discussed above in “CEO Pay Comparison: EIX vs. Peer Group,” Mr. Pizarro’s 2016 TDC was relatively low because it was comprised of his compensation as a Company President from January 1 through September 29, 2016 and his initial compensation as EIX CEO from September 30 through December 31, 2016. His 2017 TDC was higher than his 2016 TDC, but still below the peer group median for chief executive officers. His TDC then decreased in 2018 because, as discussed above, he did not receive an annual incentive award for 2018. The largest increase in TSR occurred in 2019. That is also the year the EIX CEO’s TDC was at its peak, partly to due to an above-target annual incentive award payout.

The discussion above focuses on annual incentive awards because they are the only portion of total direct compensation, as reported in the Summary Compensation Table, that reflects the realized value of the CEO’s variable compensation. For long-term incentive awards, the Summary Compensation Table reports only the grant date fair value of the awards granted during the applicable year. The difference between the grant date fair value and the actual value realized at payout can be significant and is due to Company performance, including changes in stock price.

The impact of Company performance on realized value is most clear in performance share payouts. The following chart shows, for the three most-recently completed performance periods, the difference between the grant date fair value of performance shares granted to the EIX CEO (as reported in the Summary Compensation Table) and the actual value realized at payout (determined by multiplying (i) the number of shares paid pursuant to the award by (ii) the closing price of EIX Common Stock on the date the Committee certified performance for the applicable performance period).

(2) In this Proxy Statement, for all purposes other than performance share payouts, TSR is calculated using the difference between (i) the closing stock price for the relevant stock on the last NYSE trading day preceding the first day of the relevant period and (ii) the closing stock price for the relevant stock on the last trading day of the relevant period, and assumes all dividends during the period are reinvested on the ex-dividend date. A different methodology is used to determine performance share payouts: TSR is calculated using the difference between (i) the average closing stock price for the stock for the 20 trading days ending with the last NYSE trading day preceding the first day of the performance period and (ii) the average closing stock price for the stock for the 20 trading days ending with the last trading day of the performance period, and assumes all dividends are reinvested on the ex-dividend date (see “Long-Term Incentive Awards” below). Under both methodologies, EIX’s TSR for the 2017-2019 performance period was last among the companies comprising the Philadelphia Utility Index on December 31, 2019. As a result, the TSR performance shares granted by EIX for that performance period did not pay out and were forfeited in their entirety.

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COMPENSATION DISCUSSION AND ANALYSIS

EIX CEO PERFORMANCE SHARES – GRANT DATE FAIR VALUE VS. REALIZED VALUE

The realized value at payout for 2015, 2016 and 2017 performance share awards averaged 63% of the respective grant date fair values. Two metrics are used to determine performance share payouts—relative TSR and core earnings(3) per share (”EPS”) compared to target—with each metric weighted 50%. The metrics are explained in “Long-Term Incentive Awards” below.

TSR performance shares granted during 2015, 2016 and 2017 did not pay out and were forfeited in their entirety. This occurred primarily due to the significant impact of wildfires on EIX’s relative TSR beginning December 2017.

As a result, the entire realized value at payout for the 2015, 2016 and 2017 performance share awards was from EPS performance shares. EIX’s strong EPS performance compared to target during the three performance periods resulted in above-target payouts for EPS performance shares granted during 2015, 2016 and 2017.

SHAREHOLDER COMMUNICATION AND COMPENSATION PROGRAM FOR 2020

As discussed under “Shareholder Engagement” above, we regularly reach out to our major institutional shareholders to discuss the Company’s executive compensation, among other issues. Management shares compensation-related feedback with the Compensation Committee, along with proxy advisory firm developments and trends in executive compensation practices.

EIX’s Say-on-Pay proposal received support from approximately 93% of the votes cast in 2019. After considering the shareholder support reflected in the vote results, trends in executive compensation, and the best interests of shareholders, the Committee approved maintaining our executive compensation program with no significant changes for 2020.

(3) Core earnings is defined on a consolidated basis for EIX as earnings attributable to EIX shareholders less non-core items. Non-core items include income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as write downs, asset impairments and other income and expense related to changes in law, outcomes in tax, regulatory or legal proceedings, and exit activities, including sale of certain assets and other activities that are no longer continuing. For a reconciliation of core earnings to net income determined under GAAP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management Overview – Highlights of Operating Results” included as part of the Company’s 2019 Annual Report.

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COMPENSATION DISCUSSION AND ANALYSIS

2   WHAT WE PAY AND WHY: ELEMENTS OF TOTAL DIRECT COMPENSATION

We generally target a competitive range of +/-15% around the market median for each element of total direct compensation offered under our program: base salaries, annual cash incentives, and long-term equity-based incentives. The reasons for the Committee’s decision to target the competitive range around the median level include:

Above-median compensation usually is not needed, and the +15% end of the range provides flexibility when above-median compensation is needed for recruitment and retention purposes and to reward exceptional performers; and
   
In the aggregate, below-median compensation would create retention and recruitment difficulties, but the -15% end of the range provides flexibility for newly-promoted executives or other circumstances where below-median compensation is appropriate for a time.

A significant portion of our executives’ total direct compensation is tied to company performance. The following charts show that incentive compensation represented 87.5% of the 2019 target total direct compensation for the EIX CEO and 72.2% of the 2019 target total direct compensation for EIX’s and SCE’s other NEOs.

EIX CEO PAY MIX OTHER NEO PAY MIX

This pay mix reflects the Committee’s emphasis on strongly linking pay with performance.

BASE SALARY

For 2019, each NEO’s base salary was evaluated according to his or her position and performance. For each position, a market base salary range was determined. The median of the range was the market median level of base salaries for comparable positions. We do not have employment contracts and our NEOs do not have contractual rights to receive fixed base salaries.

In light of the impact of wildfires on communities within SCE’s service territory, the Compensation Committee decided to not increase the base salary rates for EIX NEOs for 2019.(1) As a result, their base salaries were below the 2019 market median.

The Committee increased the annual base salary rates of Messrs. Herrington, Petmecky, and Powell and Ms. Choi for 2019 to bring them to, or closer to, the market median base salary for their respective positions.

(1) Although EIX NEOs’ base salary rates were not increased in 2019, the salary amounts paid to them in 2019 were slightly more than in 2018 because of 2018 base salary rate increases that became effective February 19, 2018.

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COMPENSATION DISCUSSION AND ANALYSIS

ANNUAL INCENTIVE AWARDS

EXECUTIVE INCENTIVE COMPENSATION PLAN

NEOs are eligible for annual incentive awards under the EIX Executive Incentive Compensation Plan for achieving financial, strategic and operational goals that are established at the beginning of each year and are tied to the key elements of our vision and strategy described on page 1.

The 2019 annual incentive award target value for each NEO was set as a percentage of the NEO’s base salary (the “Annual Incentive Target %”).

In light of the impact of wildfires on communities within SCE’s service territory, the Compensation Committee decided to not increase the Annual Incentive Target % for NEOs for 2019, except for SCE NEOs who were promoted during 2019.

The minimum annual incentive award is $0. The maximum award is 200% of target, which the Committee’s independent compensation consultant, Pay Governance, advised is the most prevalent practice among the peer group companies.

The Committee determines annual incentive awards based on corporate and individual performance. The corporate performance factor is based on performance relative to the goals established at the beginning of the year. For each goal category, the Committee assigned a target score and potential score range reflecting the relative weight given that goal category. Specific quantitative targets were set for goals that comprised most of the target score. In February 2020, the Committee determined the score achieved for each goal category, depending on the extent to which the goals were unmet, met or exceeded.

Separate goals were established for EIX and SCE. However, as reflected in the 2019 EIX Corporate Performance Scoring Matrix below, many of EIX’s goals related to SCE’s performance. The EIX corporate performance factor applies to the annual incentive awards for Messrs. Pizarro, Umanoff, and Murphy and Ms. Rigatti, while the SCE corporate performance factor applies to the annual incentive awards for Messrs. Payne, Petmecky, Herrington, Swartz, Powell, and Nichols. Ms. Choi’s annual incentive award was based on a prorated blend of corporate performance factors, with the SCE corporate performance factor applying for the period from January 1, 2019 through February 3, 2019, when she served as SCE’s SVP Regulatory Affairs (and was an executive officer of only SCE), and with the EIX corporate performance factor applying for the period from February 4, 2019 through December 31, 2019, when she served as SVP Corporate Affairs for both companies (but is designated as an executive officer of only EIX).

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COMPENSATION DISCUSSION AND ANALYSIS

2019 EIX CORPORATE PERFORMANCE SCORING MATRIX

Target
Score
for Goal
Category(1)
Key Goals/Performance Contributing to Actual Score Actual
Score
for
Goal(3)
Actual
Score
for Goal
Category
(3)
Goal
Category
        Key Goals/Success Measures(2)     Key Performance(2)    
Foundational Goals
0(4)
No worker fatalities
Goal Not Met: three contractor fatalities
-5(5)
-10(5)
No serious injuries to public from system failure and no significant non-compliance events
Goal Not Met: transformer failure resulted in serious injury to one member of public
-5(5)
Maintain effective controls and cybersecurity measures to prevent and mitigate significant disruption, data breach or system failure
Goal Met
0
Financial Performance
45
Core earnings of $1.527 billion(6)
Goal Exceeded: $1.595 billion(6)
58
58
Wildfire Resiliency
20
Execute SCE Wildfire Mitigation Plan
Goal Exceeded: see SCE matrix below for additional information
15 32
Execute SCE policy goals
Goal Exceeded: see SCE matrix below for additional information
17
Safety
10
Achieve training goal; DART injury rate ≤0.80
Goal Partially Met: trained > 9,900 employees; DART rate of 1.17
6
6
Strategy, Transformation & Growth
15
Execute SCE SONGS goals and Policy, Growth & Innovation goals
Goal Met: see SCE matrix below for additional information
10 13
Execute SCE affordable customer rate goal: non-wildfire O&M cost per customer ≤$367
Goal Met: $363
2
Execute EE goals and minority investment goals
Goal Partially Met: EE goals not met; placed 3 minority investments
1
Diversity, People & Culture
10
Increase diversity of executive and leadership populations
Goal Met: diversity increased 1.6%
6 11
Implement 30 employee X-Change ideas; complete 25 digitalization projects
Goal Met: completed 43 X-Change projects and 27 digitalization projects
5
Total:
100
110(5)
(1) The potential score for each goal category (other than Foundational Goals, which are discussed in footnote (4) below) ranges from zero to twice the target score for the goal category. The potential total score is from zero to 200.
(2) “DART” means Days Away, Restricted, and Transfer. “SONGS” means San Onofre Nuclear Generating Station. “O&M” means operations and maintenance. “EE” means Edison Energy, LLC and its subsidiaries. The Company “X-Change” program empowers front-line employees to identify and implement improvement projects.
(3) Score determinations are generally made in the judgment of the Committee after assessing overall performance against goals.
(4) The Committee established certain safety, compliance and operational goals that it views as “foundational.” Annual incentive awards for 2019 can be reduced or eliminated for all or some plan participants if one or more foundational goals are not met, depending upon severity.
(5) The Committee considered contractor fatalities, serious injuries to the public, and wildfires when evaluating the foundational goals. In order to reinforce the importance of the foundational safety goals, the Committee decided to apply (i) a 5 percentage-point deduction to the corporate performance scoring for all executives due to a transformer failure that seriously burned a member of the public and (ii) an additional 5 percentage-point deduction for all NEOs (and certain other officers) due to three contractor fatalities. After taking these deductions into account, the total corporate performance score for NEOs was 110. The total score was 115 for executives not subject to the additional 5 percentage-point deduction for the three contractor fatalities.
(6)

See footnote 3 on page 40 for information regarding the determination of core earnings. The Committee established the financial performance goal in February 2019. The threshold level of core earnings, below which no annual incentive would have been paid, was set at $1.194 billion. The level at which the financial performance score would be zero and the target and maximum financial performance score levels were set at $1.252 billion, $1.492 billion and $1.732 billion, respectively.

When the Committee established the financial performance goal for 2019, the California Public Utilities Commission (“CPUC”) had not yet issued a proposed or final decision in SCE’s 2018 General Rate Case (“GRC”). The GRC is a significant driver of the Company’s budgeting process and earnings outcome, so the Committee, at its February 2019 meeting, established an adjustment framework it would apply after the final 2018 GRC decision was issued. The 2018 GRC decision was issued in May 2019. At the next Committee meeting, the Committee increased each of the core earnings goal levels by $35 million in accordance with the adjustment framework it established in February 2019. The adjusted threshold, zero score, target and maximum levels are $1.229 billion, $1.287 billion, $1.527 billion and $1.767 billion, respectively.

Linear interpolation between the adjusted target of $1.527 billion and the adjusted maximum score level of $1.767 billion was used to determine the actual financial performance score of 58. This financial performance score was lower than it would have been under the original core earnings goal levels.


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COMPENSATION DISCUSSION AND ANALYSIS

2019 SCE CORPORATE PERFORMANCE SCORING MATRIX

Target
Score
for Goal
Category(1)
Key Goals/Performance Contributing to Actual Score Actual
Score
for
Goal(3)
Actual
Score
for Goal
Category
(3)
Goal
Category
        Key Goals/Success Measures(2)     Key Performance(2)    
Foundational Goals
0(4)
No worker fatalities
Goal Not Met: three contractor fatalities
-5(5)
-10(5)
No serious injuries to public from system failure and no significant non-compliance events
Goal Not Met: transformer failure resulted in serious injury to one member of public
-5(5)
Maintain effective controls and cybersecurity measures to prevent and mitigate significant disruption, data breach or system failure
Goal Met
0
Financial Performance
30
Core earnings of $1.635 billion(6)
Goal Exceeded: $1.702 billion(4)
43
43
Wildfire Resiliency
20
Achieve Wildfire Mitigation Plan targets for hardened infrastructure, enhanced operational practices and expanded situational awareness
Goal Exceeded: installed 372 miles of covered conductors and 8,228 branch line fuses; remediated >50,000 findings from enhanced overhead inspections; installed 90 cameras and 357 weather stations
15 32
Achieve wildfire policy goals
Goal Exceeded: AB 1054 stabilized credit rating and established framework for cost recovery and liability; Wildfire Mitigation Plan approved (10-K, pgs. 5, 9-10, 17)
17
Operational & Service Excellence
10
(safety
goal)(7)
Achieve training goal; DART injury rate ≤0.80
Goal Partially Met: trained 9,900 employees; DART rate of 1.17
6 17
15
(other
goals)(7)
Affordable customer rates: non-wildfire O&M cost per customer ≤$367
Goal Met: $363
4
SONGS: resume safe transfer of spent fuel canisters to dry storage; no level I, II or III NRC violations; obtain Coastal Development Permit for decommissioning; resolve key contractor disputes
Goal Partially Met: safe transfer resumed; no level I, II or III NRC violations; permit obtained, but challenged in court; one dispute tentatively settled (10-K, pgs. 20-21)
3
System reliability: SAIDI for repair outages ≤77 minutes
Goal Partially Met: 89.3 minutes, with wildfire resiliency activities contributing 10-11 minutes more than anticipated
3
Customer satisfaction: Net Score Outage ≥6; Net Score Billing & Payment and Net Score Ease ≥53
Goal Partially Met: All Net Scores below target
1
Policy, Growth & Innovation
15
California legislative and regulatory developments aligned with SCE’s strategy
Goal Exceeded: 2018 GRC and 2020 Cost of Capital decisions in line with business needs; 2021 GRC filed; EV incentives higher in 2019 state budget than in 2018; released Pathway 2045; PCIA changed without significant adverse outcomes (10-K, pgs. 6, 10, 132)
10
16
Efficiently deploy capital budget for customer needs: $4.477 billion combined CPUC and FERC-jurisdictional
Goal Met: $4.756 billion (10-K, pgs. 11-12)
5
Transportation electrification: complete priority review projects by Q2; obtain 60 customer applications and 20 commitments for Charge Ready Transport
Goal Partially Met: construction completed by Q2; obtained 61 applications and 8 commitments (10-K, pg. 20)
1
Customer service: meet re-platform targets
Goal Not Met: project delayed 1 year
0
Diversity, People & Culture
10
Increase diversity of executive and leadership populations
Goal Met: diversity increased 1.6%
4 12
Implement 30 employee X-Change ideas; complete 25 digitalization projects
Goal Met: completed 43 X-Change projects and 27 digitalization projects
4
Diverse Business Enterprise Spend ≥40%
Goal Met: 40.1%
4
Total:
100
110(5)

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COMPENSATION DISCUSSION AND ANALYSIS

(1) The potential score for each goal category (other than Foundational Goals, which are discussed in footnote (4) below) ranges from zero to twice the target score for the goal category. The potential total score is from zero to 200.
(2) The parenthetical “10-K” page references in the “Performance” column refer to pages in the combined Form 10-K filed by EIX and SCE for the fiscal year ended December 31, 2019 (“10-K”). The referenced pages contain additional information about some of the relevant topics, but do not address annual incentive plan goals or the scoring of the performance for purposes of this matrix. “AB 1054” refers to California Assembly Bill 1054, which was signed by the Governor of California in July 2019. “NRC” means Nuclear Regulatory Commission. “SAIDI” means the System Average Interruption Duration Index. “Net Scores” are derived from SCE customers who rate their experience on in the areas of (i) Outage, (ii) Billing and Payment, and (iii) other areas (“Ease”). “EV” means electric vehicle. “PCIA” means Power Charge Indifference Adjustment. “FERC” means the Federal Energy Regulatory Commission. See footnote (2) to the EIX matrix above for additional defined terms.
(3) Score determinations are generally made in the judgment of the Committee after assessing overall performance against goals.
(4) The Committee established certain safety, compliance and operational goals that it views as “foundational.” Annual incentive awards for 2019 can be reduced for all or some plan participants if one or more foundational goals are not met, depending upon severity.
(5) The Committee considered contractor fatalities, serious injuries to the public, and wildfires when evaluating the foundational goals. In order to reinforce the importance of the foundational safety goals, the Committee decided to apply (i) a 5 percentage-point deduction to the corporate performance scoring for all executives due to a transformer failure that seriously burned a member of the public and (ii) an additional 5 percentage-point deduction for all NEOs (and certain other officers) due to three contractor fatalities. After taking these deductions into account, the total corporate performance score for NEOs was 110. The total score was 115 for executives not subject to the additional 5 percentage-point deduction for the three contractor fatalities.
(6) See footnote 3 on page 40 for information regarding the determination of core earnings. The Committee established the financial performance goal in February 2019. The threshold level of core earnings, below which no annual incentive would have been paid, was set at $1.280 billion. The level at which the financial performance score would be zero and the target and maximum financial performance score levels were set at $1.440 billion, $1.600 billion and $1.760 billion, respectively. When the Committee established the financial performance goal for 2019, the CPUC had not yet issued a proposed or final decision in SCE’s 2018 GRC. The GRC is a significant driver of the Company’s budgeting process and earnings outcome, so the Committee, at its February 2019 meeting, established an adjustment framework it would apply after the final 2018 GRC decision was issued. The 2018 GRC decision was issued in May 2019. At the next Committee meeting, the Committee increased each of the core earnings goal levels by $35 million in accordance with the adjustment framework it established in February 2019. The adjusted threshold, zero score, target and maximum levels are $1.315 billion, $1.475 billion, $1.635 billion and $1.795 billion, respectively.
Linear interpolation between the adjusted target of $1.635 billion and the adjusted maximum score level of $1.795 billion was used to determine the actual financial performance score of 43. This financial performance score was lower than it would have been under the original core earnings goal levels.
(7) The target score for the Operational & Service Excellence category was 25. Ten points from that target were allocated to safety.

2019 ANNUAL INCENTIVE AWARDS

Based on 2019 performance, the EIX and SCE corporate performance factors were 110% of target for NEOs. These factors were determined by adding the “Actual Scores” in the corporate performance scoring matrices above. The Committee did not exercise its discretion to increase or decrease the corporate performance factor from the amount determined by application of the scoring matrix.

The Committee determined the annual incentive award for each NEO by multiplying the annual incentive target percentage for the NEO by the corporate performance factor applicable to the NEO and an individual performance factor. The Committee assessed the 2019 performance of Messrs. Pizarro, Payne and Umanoff and Ms. Rigatti as strong or exemplary, but decided to use an individual performance factor of 100% for each of them to align their annual incentive award payouts with the corporate performance factor and focus their attention on leading the organization to achieve overall Company performance. For the other NEOs, individual performance factors were determined by the Committee in its discretion, based on its assessment of each NEO’s overall performance and achievements for the year, and relative impact and contribution to corporate performance compared to executives in similar roles.

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COMPENSATION DISCUSSION AND ANALYSIS

The following table shows the annual incentive awards paid to our NEOs as a percentage of salary and as a multiple of target:

NEOs(1)       Annual
Incentive
Target as
% of
Salary(2)(3)
      Corporate
Performance
Factor
      Individual
Performance
Factor
      Annual
Incentive
Award as
% of Salary(3)
      Annual
Incentive
Award as
Multiple of
Target(3)
Pedro J. Pizarro 125% 110% 100% 138% 1.10x
Maria Rigatti 75% 110% 100% 83% 1.10x
Kevin M. Payne 75% 110% 100% 83% 1.10x
Adam S. Umanoff 75% 110% 100% 83% 1.10x
J. Andrew Murphy 70% 110% 106% 82% 1.17x
William M. Petmecky, III 55% 110% 98% 59% 1.08x
Philip R. Herrington 55% 110% 106% 64% 1.17x
Russell C. Swartz 55% 110% 111% 67% 1.22x
Steven D. Powell 50% 110% 111% 61% 1.22x
Ronald O. Nichols(4) 65% 110% 100% 72% 1.10x
Caroline Choi 59% 110% 106% 69% 1.17x
(1) Target and actual annual incentive awards for all EIX and SCE NEOs are shown in the Grants of Plan-Based Awards tables and the Summary Compensation Tables, respectively.
(2) The amounts shown for Mr. Powell and Ms. Choi are the weighted average Annual Incentive Target % for the respective NEO, with the weighting based on the number of workdays in 2019 that the NEO served in each role for which a different Annual Incentive Target % applied. The 2019 Annual Incentive Target % for Mr. Powell was 40% as SCE SVP from January 1, 2019 to June 2, 2019; it was 50% in his expanded SCE SVP role from June 3, 2019 (when he took on some of Mr. Nichols’ responsibilities) to September 1, 2019; and it was 60% as SCE EVP from September 2, 2019 to December 31, 2019. The 2019 Annual Incentive Target % for Ms. Choi was 50% as SCE SVP Regulatory Affairs from January 1, 2019 to February 3, 2019; it was 60% as EIX and SCE SVP Corporate Affairs from February 4, 2019 to December 31, 2019.
(3) The amounts shown have been rounded to the nearest whole percentage point for purposes of the table.
(4) Mr. Nichols passed away on June 6, 2019. In February 2020, the Committee approved a prorated annual incentive award for Mr. Nichols, based on (i) his 2019 Annual Incentive Target % of 65%, (ii) the corporate performance factor of 110%, (iii) a target individual performance factor of 100% (an individual performance assessment was not conducted), and (iv) the sum that he received for the period from January 1, 2019 to June 6, 2019 from salary and short-term disability benefits in lieu of salary (he participated in a broad-based short-term disability plan on the same nondiscriminatory terms as other full-time employees, and in accordance with SEC guidance, the benefits he received under that plan are not reported in the SCE Summary Compensation Table below). The 2019 annual incentive award compensation reported for Mr. Nichols in the SCE Summary Compensation Table below reflects his actual award.

2020 ANNUAL INCENTIVE GOALS

Safety and wildfire resiliency have always been important to the Company. However, in light of recent events, the Committee has been increasing the weighting of safety and resiliency annual incentive goals in recent years. For 2020, the Committee approved corporate performance scoring matrices for EIX and SCE with 45% weighting for a new combined Safety and Resiliency goal category.(5) The category includes worker and public safety, wildfire resiliency, and cybersecurity goals. As is the case with our 2019 wildfire resiliency goals, the 2020 wildfire resiliency goals measure the Company’s mitigation of wildfire risks consistent with its Wildfire Mitigation Plan. The specific grid hardening and situational awareness measures in the Wildfire Mitigation Plan are based on risk analysis focused on reducing ignitions associated with utility infrastructure.


(5) The Committee approved a 30% weighting for the Operational Excellence & Strategic Advancement goal category and included in that category many goals that impact safety, such as goals regarding system reliability and managing the decommissioning of the San Onofre Nuclear Generating Station.

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COMPENSATION DISCUSSION AND ANALYSIS

LONG-TERM INCENTIVE AWARDS

All of our long-term incentives are awarded as equity instruments reflecting, or valued by reference to, EIX Common Stock. They are therefore directly linked to the value provided to EIX shareholders. The equity awards also align executives’ interests with the long-term interests of customers by enhancing executives’ focus on the Company’s long-term goals.

Seventy-five percent (75%) of our long-term equity mix is performance-based: the non-qualified stock options that comprise 50% of each NEO’s long-term incentive award value; and the performance shares that comprise 25% of the award value. We believe stock options are performance-based because NEOs will realize value only if the market value of EIX Common Stock appreciates. Long-term incentive awards are made under the EIX 2007 Performance Incentive Plan.

LONG-TERM INCENTIVE VALUE

On February 27, 2019, the Committee approved 2019 long-term incentive award target values for the NEOs. Each target value was set as a percentage of base salary (the “Long-Term Incentive Target %”). The Committee also approved the methodology for converting those values into the number of stock options, performance shares, and restricted stock units granted to each NEO on the March 5, 2019 grant date. The grant date value of each award is listed in the “Grants of Plan-Based Awards” tables below.

For 2019, the Committee increased the Long-Term Incentive Target % for all EIX and most SCE NEOs in order to tie a larger portion of compensation to long-term Company performance and for retention purposes.

STOCK OPTIONS

Each stock option granted may be exercised to purchase one share of EIX Common Stock at an exercise price equal to the closing price of a share of EIX Common Stock on the grant date. Options vest over a four-year period, subject to continued employment, with one-fourth of each award vesting and becoming exercisable at the beginning of each year. Options have a ten-year term.

The number of options granted to each NEO was determined by dividing the option award value approved by the Committee for that NEO by the grant date value of an option using a Black-Scholes Merton valuation model based on the same assumptions and principles used to determine the grant date fair value of options generally for purposes of EIX’s financial reporting.

PERFORMANCE SHARES

Performance shares reward performance over three years against pre-established relative and absolute metrics. Each performance share awarded is a contractual right to receive one share of EIX Common Stock or its cash equivalent if performance and continued service vesting requirements are satisfied. The actual payout can range from zero to 200% of target performance shares, depending on actual performance against pre-established metrics. The performance share awards provide for reinvested dividend equivalents. For each dividend declared for which the ex-dividend date falls within the performance period and after the date of grant, the NEO will be credited with an additional number of target performance shares having a value equal to the dividend that would have been payable on the target performance shares subject to the award. The performance shares credited as dividend equivalents have the same vesting and other terms and conditions as the original performance shares and are forfeited if the underlying shares are not earned.

A conversion formula is used to determine the number of performance shares awarded to each NEO. For the portion of performance shares subject to the TSR metric discussed below, the award value approved by the Committee is divided by the grant date value of the TSR performance shares using a standard Monte Carlo simulation model based on the same assumptions and principles used to determine the grant date fair value of performance-based awards generally for purposes of EIX’s financial reporting. For the portion of performance shares subject to the earnings per share (“EPS”) metric discussed below, the respective award value is converted into a specific number of EPS performance shares by dividing the award value by the closing price of a share of EIX Common Stock on the grant date.

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COMPENSATION DISCUSSION AND ANALYSIS

Performance shares granted from 2016 through 2018 are payable solely in cash based on the closing price of EIX Common Stock on the date on which the Committee certifies performance for the applicable performance period. Under the Executive Deferred Compensation Plan, NEOs may elect to defer payment of performance shares payable in cash. Performance shares granted in 2019 are payable in EIX Common Stock, a portion of which will be withheld or sold to the extent necessary to satisfy tax withholding or governmental levies.

PERFORMANCE SHARE AWARDS: TSR METRIC

Two metrics are used to measure performance share payouts, with each metric weighted 50%. The first performance metric is based on the percentile ranking of EIX’s TSR for the three-year performance period beginning January 1 in the year of grant compared to the TSR of each company in the Philadelphia Utility Index at the end of the performance period. The following table provides the percentile ranking and corresponding payout levels:

Payout Levels TSR Ranking       Payout
Below Threshold <25th Percentile 0
Threshold 25th Percentile 25% of Target
Target 50th Percentile Target
Maximum ≥75th Percentile 200% of Target

If EIX achieves a TSR ranking between the 25th percentile and the 50th percentile or between the 50th percentile and the 75th percentile, the number of shares paid will be interpolated on a straight-line basis with discrete intervals at every 5th percentile. To determine performance share payouts, TSR is calculated using the difference between (i) the average closing stock price for the stock for the 20 trading days ending with the last NYSE trading day preceding the first day of the performance period and (ii) the average closing stock price for the stock for the 20 trading days ending with the last trading day of the performance period, and assumes all dividends are reinvested on the ex-dividend date.

EIX’s three-year TSR from 2017-2019 ranked last among the comparison group under the methodology used to calculate TSR for performance shares. Since this performance was below the threshold for a payout, there was no payout from the TSR performance shares granted in 2017.

PERFORMANCE SHARE AWARDS: EPS METRIC

The second performance metric is based on EIX’s three-year average annual core earnings(1) per share, measured against target levels. The Committee establishes the EPS target for each calendar year in February of that year.

The performance multiple for a calendar year is based on EIX’s actual EPS performance for that year as a percentage of the EPS target for that year, in accordance with the following table:

Performance Level Actual EPS
as % of Target EPS
      EPS Performance
Multiple
Below Threshold <80% 0
Threshold 80% 0.25x
Target 100% 1.0x
Maximum ≥120% 2.0x

If EIX’s EPS for a year as a percentage of target EPS is between 80% and 100% or between 100% and 120%, the EPS performance multiple is interpolated on a straight-line basis, with discrete intervals at every 4th percentage point. The EPS performance multiples achieved for each calendar year in the three-year performance period are averaged, and the resulting average determines the performance share payout as a multiple of target.

(1) See footnote 3 on page 40 for information regarding the determination of core earnings.

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COMPENSATION DISCUSSION AND ANALYSIS

In February 2020, the Committee certified the following EPS performance multiples for the three calendar years in the performance period for the 2017 grant:

Year       Actual
EPS
(2)
      Target
EPS(3)
      Actual EPS as %
of Target EPS
      EPS
Performance
Multiple
2017 $4.50 $4.14 109% 1.40x
2018 $4.00 $3.89 103% 1.00x
2019 $4.90 $4.69 104% 1.20x
Average of performance multiples (actual payout): 1.20x

Since the average of the EPS performance multiples for 2017, 2018, and 2019 was 1.20x, EPS performance shares granted in 2017 paid out at 120% of target.

(2) The Committee used 325,811,206 shares as the denominator to calculate the actual EPS and target EPS for 2019. That was the number of shares of EIX Common Stock outstanding in February 2019 when the Committee set the target EPS for 2019. The Committee believes that it is appropriate to hold the share count constant for purposes of EPS performance shares so that management decisions regarding share buybacks and issuances are not influenced by the impact on performance share payouts.
(3) In February 2019, the Committee established a target EPS of $4.58 for 2019. At that time, the CPUC had not yet issued a proposed or final decision in SCE’s 2018 GRC. The GRC is a significant driver of the Company’s budgeting process and earnings outcome, so the Committee, at its February 2019 meeting, established an adjustment framework it would apply after the final 2018 GRC decision was issued. The 2018 GRC decision was issued in May 2019. At the next Committee meeting, the Committee increased the target EPS for 2019 by $0.11 in accordance with the adjustment framework it established in February 2019.

RESTRICTED STOCK UNITS

Each restricted stock unit awarded is a contractual right to receive one share of EIX Common Stock after the vesting requirement of three years of continued service is satisfied. The restricted stock units for NEOs provide for reinvested dividend equivalents. For each dividend declared for which the ex-dividend date falls within the vesting period, the NEO will be credited with an additional number of restricted stock units having a value equal to the dividend that would have been payable on the number of restricted stock units subject to the award. The restricted stock units credited as dividend equivalents have the same vesting and other terms and conditions as the original restricted stock units and are forfeited if the underlying units do not vest.

The restricted stock units are paid in EIX Common Stock, a portion of which is withheld or sold to the extent necessary to satisfy tax withholding or governmental levies. The Committee may elect to pay any restricted stock units in cash rather than shares of EIX Common Stock if and to the extent that payment in shares would exceed the applicable share limits of the EIX 2007 Performance Incentive Plan.

The number of restricted stock units granted to each NEO was determined by dividing the award value approved by the Committee for that NEO by the closing price of a share of EIX Common Stock on the grant date. At payout, NEOs realize an increase or decrease in value (compared to the grant date value) commensurate with the increase or decrease in value realized by shareholders from changes in the stock price and dividends over the three-year vesting period.

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COMPENSATION DISCUSSION AND ANALYSIS

3   HOW WE MAKE COMPENSATION DECISIONS

ROLE OF COMPENSATION COMMITTEE AND EXECUTIVE OFFICERS

The Committee is responsible for reviewing and determining the compensation paid to executive officers. The Committee annually reviews all components of compensation for our CEO and other executive officers, including base salary and annual and long-term incentives. The Committee also reviews significant benefits, including retirement and non-qualified deferred compensation plans.

Each February, the Committee sets the base salary and the target and maximum potential annual and long-term incentive award values for the current year for each executive officer. At that time, the Committee also determines annual incentive awards for the prior year and performance share payouts for the prior performance period. Base salary changes are generally effective between mid-February and early March of each year.

For the February Committee meeting, the EIX CEO provides recommendations regarding the compensation of other executive officers. Executive officers other than the EIX CEO participate in developing and reviewing executive compensation recommendations, but do not participate in recommendations regarding their own compensation.

The Committee evaluates the EIX CEO’s performance relative to goals and determines his compensation in executive session without the EIX CEO present. The Committee Chair reports to the Board in an independent director executive session regarding the compensation determination.

Except as otherwise noted, the Committee’s executive officer compensation determinations are subjective and the result of the Committee’s business judgment, which is informed by the experiences of the Committee members and input from the Committee’s independent compensation consultant.

For newly-hired, promoted, or relocated SCE executive officers who are not also EIX executive officers, the Committee authorized the EIX CEO and the EIX Senior Vice President, Human Resources to jointly make certain compensation decisions within limits pre-approved by the Committee. Any such decisions are made after a review by the SCE CEO.

In accordance with AB 1054, SCE’s 2020 compensation structure for executive officers is subject to approval by the Wildfire Safety Division of the CPUC.

TALLY SHEETS

The Committee periodically reviews tally sheets for EIX executive officers. Tally sheets provide the Committee with information about the following components of compensation, including compensation paid over the preceding three calendar years:

Cash compensation (base pay and annual incentives);
Long-term incentive award values (stock options, performance shares and restricted stock units); and
Changes in pension values and non-qualified plan earnings.

The tally sheets also provide the amounts payable in the event of voluntary or involuntary separation from service, death or disability, or a change in control resulting in termination.

The Committee also reviews additional information regarding long-term incentives, including stock program statistics on share usage, analysis of current exercise values of prior option grants, and a summary of current and past performance share results.

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ROLE OF THE COMMITTEE’S INDEPENDENT COMPENSATION CONSULTANT

The Committee retained Pay Governance to assist in evaluating executive officer compensation for 2019; however, the Committee decides our executive officers’ compensation. Pay Governance’s assistance included helping the Committee identify industry trends and norms for executive compensation, reviewing and identifying appropriate peer group companies and pay surveys, and evaluating executive compensation data for these companies.

During 2019, Pay Governance provided the following services:

Provided a presentation on executive compensation trends;
Provided a competitive evaluation of total direct compensation for executives;
Reviewed Committee agendas and supporting materials before each meeting, and raised questions/ issues with management and the Committee Chair, as appropriate;
Provided an analysis of incentive plan design and metrics in the industry;
Reviewed drafts of the CD&A for the Proxy Statement and related compensation tables; and
Provided advice to the Committee on EIX CEO compensation at its February meeting, without prior review by the EIX CEO.

In addition, a Pay Governance representative attended Committee meetings and communicated directly with the Committee as needed. Pay Governance did not perform any services for the Company in 2019 unrelated to the Committee’s responsibilities for our compensation programs, and all interactions by the consultants with management were related to their work for the Committee and conducted in accordance with the directions of the Committee or its Chair.

The Committee retains sole authority to hire its compensation consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement. Pursuant to SEC rules, the Committee assessed and determined that no conflict of interest exists with respect to the engagement of Pay Governance as the Committee’s compensation consultant.

USE OF COMPETITIVE DATA

The Committee generally targets a competitive range of +/-15% around the market median for comparable positions for each element of total direct compensation. For 2019, the Committee used peer group data and data from pay surveys by Willis Towers Watson to determine the “market median.”(1)

The Committee used the companies in the Philadelphia Utility Index in 2019 as the peer group for benchmarking performance and comparing NEO compensation for 2019. The Philadelphia Utility Index has been used by the Committee as the basis for the peer group since 2005. Use of an established market index for peer group purposes is consistent with the way investors evaluate performance across companies within an industry.

2019 PEER GROUP COMPANIES - PHILADELPHIA UTILITY INDEX
AES Corporation
Ameren
American Electric Power
American Water Works
CenterPoint Energy
Consolidated Edison
     
Dominion Energy
DTE Energy
Duke Energy
El Paso Electric (replaced by WEC Energy Group, Inc. during 2019)(2)
      
Entergy
Eversource Energy
Exelon
FirstEnergy
NextEra Energy
     
PG&E Corporation (replaced by Pinnacle West Capital Corporation during 2019)(2)
Public Service Enterprise Group
Southern Company
Xcel Energy

(1) The term “market median” is used in this CD&A to mean the median level of pay, for that particular element of compensation and for comparable positions, based on peer group data and data from pay surveys provided by Willis Towers Watson.
(2) EL Paso Electric and PG&E Corporation were included in the Philadelphia Utility Index at the beginning of 2019 but were replaced in the Index during 2019 by WEC Energy Group, Inc. and Pinnacle West Capital Corporation, respectively. The peer group data used to determine the “market median” for 2019 included El Paso Electric and PG&E Corporation (and not WEC Energy Group, Inc. or Pinnacle West Capital Corporation) since they were in the Philadelphia Utility Index at the beginning of 2019. In contrast, WEC Energy Group, Inc. and Pinnacle West Capital Corporation (and not El Paso Electric or PG&E Corporation) were included in the peer group for determining EIX’s TSR ranking for the performance shares granted in 2017. The performance period for those performance shares ended December 31, 2019 and the terms and conditions of the awards required that the peer group consist of the companies in the Philadelphia Utility Index at the end of the performance period.

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COMPENSATION DISCUSSION AND ANALYSIS

EIX is near the peer group median in revenues and market capitalization. For the four quarters ending September 30, 2019, EIX had revenues of $12.4 billion compared to the peer group median of $11.9 billion (ranking 9th out of the 20 companies in the peer group), based on reported revenues. As of December 31, 2019, EIX’s market capitalization was $27.0 billion compared to the peer group median of $28.3 billion (ranking 12th out of 20). For these purposes, the peer group includes WEC Energy Group, Inc. and Pinnacle West Capital Corporation.

As part of the process of setting 2019 target total direct compensation for NEOs, Pay Governance provided the Committee with benchmarking data from peer group proxy statements. In addition, the Committee received base salary, target annual incentive, and target long-term incentive grant value data from the Willis Towers Watson 2018 Energy Services and the Willis Towers Watson 2018 General Industry pay surveys. The pay survey data included compensation information from utilities, other energy companies, and companies in other industries with comparable revenues, in order to reflect the range of the Company’s competitors for executive talent and provide a robust set of information to make compensation decisions. The pay survey data was presented to the Committee in aggregated form. The Committee does not consider the identities of the individual companies in the survey data to be material for its decision-making process, and the individual companies were not provided to the Committee.

The components of the market data and the relative weighting used to calculate a market median varied for each NEO position, based on the availability of sufficient comparative data for the position, and were reviewed by Pay Governance. Market median levels for 2019 were projected from available data with input from Pay Governance.

The Committee exercises its judgment in setting each executive officer’s compensation levels within the competitive range described above, and may time to time vary from the competitive range, after taking into account the executive officer’s experience, time in position, individual performance, internal equity, retention concerns, or other factors it considers relevant under the circumstances.

RISK CONSIDERATIONS

Our executive compensation policy directs that our total compensation structure should not encourage inappropriate or excessive risk-taking. The Committee takes risk into consideration when reviewing and approving executive compensation.

As specified in its charter, and with the assistance of Pay Governance and Company management, the Committee reviewed the Company’s compensation programs for executives and for employees generally and has concluded these programs do not create risks reasonably likely to have a material adverse effect on the Company.

In concluding that the current executive compensation program does not encourage inappropriate or excessive risk-taking, the Committee noted the following characteristics that limit risk:

Annual incentives are balanced with long-term incentives to lessen the risk that short-term objectives might be pursued to the detriment of long-term value creation;
Goals for annual incentive programs are varied (not focused on just one metric), include safety and compliance goals, and are subject to Committee review and discretion as to the ultimate award payment for executives;
Long-term incentive awards are subject to a multi-year vesting schedule;
The ultimate value of equity grants is not solely dependent on stock price due to the use of relative TSR and EPS for performance shares;
Annual incentive and performance share payouts are capped at 200% of target;
Stock ownership guidelines require Vice Presidents and more senior officers to own Company stock worth one to six times their base salary and prohibit sales of EIX Common Stock acquired from long-term incentive awards if the required ownership level has not been achieved;
All directors and employees, including NEOs, are prohibited from short sales, trading in derivatives and hedging of Company securities;
Executive officers are prohibited from pledging Company securities, as are Vice Presidents and more senior officers who report directly to the EIX or SCE CFO;
The Company has an incentive compensation clawback policy that allows the Committee or the Board to recoup incentive compensation overpayments in the event of a restatement of Company financial statements; and
Executive retirement and deferred compensation benefits are unfunded and thus depend in part on the continued solvency of the Company.

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4   POST-EMPLOYMENT AND OTHER BENEFITS

POST-EMPLOYMENT BENEFITS

The NEOs receive retirement benefits under qualified and non-qualified defined-benefit and defined-contribution retirement plans. The SCE Retirement Plan and the 401(k) Plan are both qualified retirement plans in which the NEOs participate on substantially the same terms as other participating employees.

Due to limitations imposed by ERISA and the Internal Revenue Code, the benefits payable to the NEOs under the SCE Retirement Plan and the 401(k) Plan are limited. The Executive Retirement Plan and the Executive Deferred Compensation Plan provide for our NEOs to receive some of the benefits that would be paid under the qualified plans but for such limitations, and certain additional benefits. The Committee believes these programs help us to attract and retain qualified executives.

For descriptions of the tax-qualified and non-qualified defined benefit pension plans and the Executive Deferred Compensation Plan, see the narrative to the “Pension Benefits” and “Non-Qualified Deferred Compensation” tables, respectively.

The Company also sponsors a disability benefit plan in which the NEOs were eligible to participate in 2019.

SEVERANCE AND CHANGE IN CONTROL BENEFITS

Our policy regarding severance protection for NEOs stems from its importance in retaining and recruiting executives. Executives have attractive opportunities with other companies or are recruited from well-compensated positions in other companies. We believe offering one year’s worth of compensation and benefits if any officer is involuntarily severed without cause provides financial security to offset the risk of leaving another company or foregoing an opportunity with another company. Severance benefits are not offered for resignation for “good reason,” except if a “change in control” occurs (these terms are defined in the Severance Plan).

The current executive compensation plans offer additional benefits if a change in control of EIX occurs. We believe the occurrence, or expected occurrence, of a change-in-control transaction would create uncertainty regarding continued employment for NEOs. This uncertainty would result from the fact that many change-in-control transactions result in significant organizational changes, particularly at the senior executive level.

To encourage the NEOs to remain employed with the Company during a time when their prospects for continued employment following the change in control would be uncertain, and to permit them to remain focused on the Company’s interests, NEOs are provided with enhanced severance benefits if their employment is actually or constructively terminated without cause within a defined period of time around a change in control of EIX. Constructive termination (or a resignation for “good reason”) would include occurrences such as a material diminution in duties or salary, or a substantial relocation.

Given that none of the NEOs has an employment agreement that provides for fixed positions or duties, or for a fixed base salary or annual incentive award, we believe a constructive termination severance trigger is needed to prevent an acquirer from having an incentive to constructively terminate an NEO’s employment to avoid paying any severance benefits. We do not provide excise tax gross-ups on change-in-control severance benefits for any of our executives. We do not believe NEOs should be entitled to receive their cash severance benefits merely because a change-in-control transaction occurs. Therefore, the payment of cash severance benefits is subject to a double-trigger where an actual or constructive termination of employment must also occur before payment.

However, if a change in control occurs where EIX is not the surviving corporation, and following the transaction, outstanding equity awards would not be continued or assumed, then NEOs and other holders of awards under our equity incentive plan would receive immediate vesting of their outstanding equity awards as described under “Potential Payments Upon Termination or Change in Control.

We believe it is appropriate to fully vest equity awards in change-in-control situations where EIX is not the surviving corporation and the equity awards are not assumed, whether or not employment is terminated, because such a transaction ends the NEOs’ ability to realize any further value with respect to the equity awards.

For detailed information on the estimated potential payments and benefits payable to NEOs if they terminate employment, including following a change in control of the Company, see “Potential Payments Upon Termination or Change in Control.”

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PERQUISITES

No perquisites were provided for our NEOs in 2019.

5   OTHER COMPENSATION POLICIES AND GUIDELINES

TAX-DEDUCTIBILITY

Federal income tax law generally prohibits a publicly-held company from deducting compensation paid to a current or former NEO that exceeds $1 million during the tax year. Certain awards granted under the EIX 2007 Performance Incentive Plan before November 2, 2017 that were based upon attaining pre-established performance measures set by the Committee, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility limit. There can be no assurance that any compensation the Committee intended to be deductible will in fact be deductible.

Although the potential deductibility of compensation is one of the factors the Committee generally considers when designing the Company’s executive compensation program, the Committee has the flexibility to take any compensation-related actions it determines are in the best interests of the Company and its shareholders, including awarding compensation that will not be deductible for tax purposes.

STOCK OWNERSHIP GUIDELINES

To underscore the importance of linking executive and shareholder interests, the Company has stock ownership guidelines that require Vice Presidents and more senior officers to own EIX Common Stock or equivalents in an amount ranging from one to six times their annual base salary. The stock ownership guidelines for NEOs who were executive officers on December 31, 2019 are as follows:

Mr. Pizarro – six times salary
Ms. Rigatti and Messrs. Umanoff and Payne – three times salary
Messrs. Murphy, Petmecky, Herrington, Swartz, and Powell, and Ms. Choi – two times salary

The NEOs are expected to achieve their ownership targets within five years from the date they became subject to the guidelines. EIX Common Stock owned outright, shares held in the 401(k) Plan, and vested and unvested restricted stock units which do not depend on performance measures are included in determining compliance with the guidelines. Shares that NEOs may acquire through the exercise or payout of stock options and performance shares are not included in determining compliance until the options or performance shares are exercised, or paid, as the case may be, and the shares are acquired. Based on ownership as of March 5, 2020, all of the NEOs are in compliance with these guidelines.

The guidelines provide that an officer subject to the guidelines may not sell EIX Common Stock acquired pursuant to an EIX long-term incentive award (“Acquired Stock”) if the officer does not meet his or her ownership requirement under the guidelines. An officer whose ownership satisfies the guidelines may not sell Acquired Stock to the extent the sale would cause his or her ownership to fall below the applicable guideline level. These transfer limitations do not apply to transfers to satisfy the exercise price of an EIX stock option or to satisfy tax obligations with respect to an EIX long-term incentive award. Exceptions to the guidelines may be approved on a case-by-case basis.

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HEDGING AND PLEDGING POLICY

Under the Company’s Insider Trading Policy, the following activities related to Covered Securities, including EIX shares,(1) are prohibited for all directors and employees, including NEOs:

Hedging related to Covered Securities. The Insider Trading Policy provides the following examples of hedging transactions: (i) selling security futures contracts related to Covered Securities; (ii) entering into prepaid variable forward contracts, equity swaps, or zero cost collars related to Covered Securities; and (iii) contributing a Company security to an exchange fund in exchange for an interest in the fund.
Trading in derivatives related to Covered Securities.
Purchasing Covered Securities on margin. Any Covered Securities purchased in the open market must be paid for fully at the time of purchase. Cashless exercises are permitted for stock options granted by the Company as compensation under the EIX 2007 Performance Incentive Plan.
Short sales of Covered Securities. Any Covered Securities sold by the director or employee must be owned by or her at the time of sale. Cashless exercises are permitted for stock options granted by the Company as compensation under the EIX 2007 Performance Incentive Plan.

In addition, directors, executive officers, and Vice Presidents and more senior officers who report directly to the EIX or SCE CFO may not pledge Covered Securities as collateral for loans.

CLAWBACK POLICY

The Company maintains an incentive compensation clawback policy that allows the Board or the Committee to recoup incentive compensation if the Company restates its financial statements. The policy applies to cash or equity-based incentive compensation to current and former EIX and SCE NEOs and other executive officers that is paid, granted, vested or accrued in any fiscal year within the three-year period preceding the filing of the restatement. The policy allows recoupment of the difference between the incentive compensation paid, granted, vested or accrued under the original results and the incentive compensation that would have been paid, granted, vested or accrued under the restated results. The policy can be enforced by reducing or cancelling outstanding and future incentive compensation, and by a claim for repayment.

The SEC and NYSE may issue rules requiring public companies to adopt clawback policies to recover incentive compensation overpayments from executive officers under certain conditions involving accounting restatements. If such guidance is issued, the Committee or the Board will review the existing clawback policy and determine whether changes are needed.

COMPENSATION COMMITTEE REPORT

The Compensation Committee is composed of the five independent directors listed below and operates under a charter adopted by the Board, which is posted on our website at www.edison.com/corpgov.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and the discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis section be included in the Company’s 2019 Annual Report and this Proxy Statement.

Vanessa C.L. Chang (Chair) James T. Morris Timothy T. O’Toole Carey A. Smith William P. Sullivan

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Ms. Smith joined the Compensation Committee upon her election to the Board on October 24, 2019. The other Committee members served during all of 2019. Under applicable SEC rules, there were no interlocks or insider participation on the Committee.

(1) The Insider Trading Policy defines “Covered Securities” as all of the securities of EIX and its consolidated subsidiaries, including: common, preferred and preference stocks or other equity securities; debt securities; and derivative, convertible and exchangeable securities related to these securities, whether or not issued by EIX or any of its subsidiaries.

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SUMMARY COMPENSATION TABLES

The following tables present information regarding compensation of the EIX and SCE NEOs for service during 2019, and for 2018 and/or 2017 for individuals who were also NEOs in those years. The tables were prepared in accordance with SEC requirements. The total compensation presented below does not necessarily reflect the actual total compensation received by our NEOs. The amounts under “Stock Awards” and “Option Awards” do not represent the actual amounts paid to or realized by our NEOs for these awards during 2017-2019, but represent the aggregate grant date fair value of awards granted in those years as determined for financial reporting purposes. Likewise, the amounts under “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” do not reflect amounts paid to or realized by our NEOs during 2017-2019.

EIX SUMMARY COMPENSATION TABLE – FISCAL YEARS 2017, 2018 AND 2019

Name and Principal
Position
Year Salary
($)
Bonus
($)
Stock
Awards(1)
($)
Option
Awards(2)
($)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(3)
($)
All Other
Compensation(4)
($)
Total
($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Pedro J. Pizarro
EIX President and
CEO
2019 1,225,000 3,521,960 3,521,875 1,684,375 1,781,692 26,800 11,761,702
2018 1,219,971 3,062,599 3,062,503 2,361,864 70,586 9,777,523
2017 1,172,356 2,672,004 2,671,880 1,469,531 1,654,633 114,516 9,754,920
Maria Rigatti
EIX EVP and CFO
2019 660,000 910,924 910,805 544,500 712,601 16,800 3,755,630
2018 651,954 726,094 726,003 834,008 30,608 2,968,667
2017 591,346 643,586 643,506 470,250 454,620 42,773 2,846,081
Kevin M. Payne
SCE CEO; also SCE
President effective
6/7/2019
2019 605,000 835,046 834,908 499,125 837,445 21,800 3,633,324
2018 597,625 589,951 589,875 1,282,351 28,306 3,088,108
2017 541,346 536,368 536,253 393,525 718,055 44,737 2,770,284
 
Adam S. Umanoff
EIX EVP and
General Counsel
2019 565,000 649,801 649,758 466,125 262,129 16,800 2,609,613
2018 562,989 550,932 550,876 307,941 29,432 2,002,170
2017 550,000 563,161 563,064 431,063 227,315 44,255 2,378,858
J. Andrew Murphy
EIX SVP
2019 475,000 391,922 391,878 387,695 276,562 16,800 1,939,857
2018 471,648 356,319 356,257 317,205 125,023 26,375 1,652,827
2017 450,000 270,119 270,008 329,175 149,938 35,273 1,504,513
(1) Stock awards consist of performance shares and restricted stock units granted under the 2007 Performance Incentive Plan in the year indicated. The performance share and restricted stock unit amounts shown in the EIX Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For performance shares, the value is reported as of the grant date based on the probable outcome of performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion contained in (i) Note 9 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2019 Annual Report and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted.

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The table below shows the maximum value of performance share awards included in the EIX Summary Compensation Table at the grant date assuming that the highest level of performance conditions will be achieved. For the grant date fair value of each award based on the probable outcome of the applicable performance conditions, see the “Grants of Plan-Based Awards” table below. The performance period for the 2017 performance share awards ended on December 31, 2019. EIX’s TSR relative to the comparison group was below the threshold required for payout of the TSR performance shares granted in 2017. The performance periods for the 2018 and 2019 performance shares have not ended.

Name Maximum
Performance Share
Potential as of
Grant Date for 2019
Awards
($)
           Maximum
Performance Share
Potential as of
Grant Date for 2018
Awards
($)
           Maximum
Performance Share
Potential as of
Grant Date for 2017
Awards
($)
Pedro J. Pizarro 3,522,045 3,062,615 2,672,077
Maria Rigatti 910,974 726,110 643,559
Kevin M. Payne 835,092 589,972 536,445
Adam S. Umanoff 649,851 550,954 563,119
        J. Andrew Murphy 391,970 356,346 270,187
(2) Option awards consist of non-qualified stock options granted under the 2007 Performance Incentive Plan in the year indicated. The option amounts shown in the EIX Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion of options contained in (i) Note 9 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2019 Annual Report and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted.
(3) The reported amounts for 2019 include: (i) 2019 interest on deferred compensation account balances considered under SEC rules to be at above-market rates for Mr. Pizarro $29,882; Ms. Rigatti $9,186; Mr. Payne $18,697; Mr. Umanoff $32,545; and Mr. Murphy $1,964; and (ii) the 2019 aggregate change in the actuarial present value of the accumulated benefit under the SCE Retirement Plan and the EIX Executive Retirement Plan for Mr. Pizarro $1,751,810; Ms. Rigatti $703,415; Mr. Payne $818,748; Mr. Umanoff $229,584; and Mr. Murphy $274,598.
(4) Amounts reported for 2019 represent Company contributions to the 401(k) Plan for each NEO other than Messrs. Pizarro and Payne. For Mr. Pizarro, the amount reported for 2019 includes (i) $16,800 for Company contributions to the 401(k) Plan and (ii) $10,000 in charitable matching gifts under the Director Matching Gift Program described in footnote (5) to the Director Compensation Table above. For Mr. Payne, the amount reported for 2019 includes (i) $16,800 for Company contributions to the 401(k) Plan and (ii) $5,000 in charitable matching gifts under the Director Matching Gift Program described in footnote (5) to the Director Compensation Table above.

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SCE SUMMARY COMPENSATION TABLE – FISCAL YEARS 2017, 2018 AND 2019

Name and Principal
Position
Year Salary
($)
Bonus
($)
Stock
Awards(1)
($)
Option
Awards(2)
($)
Non-Equity
Incentive
Plan
Compensation
($)
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(3)
($)
All Other
Compensation(4)
($)
Total
($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Kevin M. Payne
CEO; also President
effective 6/7/19
2019 605,000 835,046 834,908 499,125 837,445 21,800 3,633,324
2018 597,625 589,951 589,875 1,282,351 28,306 3,088,108
2017 541,346 536,368 536,253 393,525 718,055 44,737 2,770,284
William M. Petmecky, III
SVP and CFO
2019 352,155 175,023 174,983 209,588 668,341 16,800 1,596,890
2018 341,430 169,965 169,888 173,282 202,058 21,695 1,078,318
2017 324,808 170,902 170,783 173,151 316,908 16,200 1,172,752
Philip R. Herrington
SVP
2019 367,203 199,637 199,535 236,957 662,216 16,505 1,682,053
2018 350,975 174,246 174,193 197,416 391,980 21,352 1,310,162
Russell C. Swartz
SVP and General Counsel
2019 380,100 188,241 188,151 255,256 303,000 16,800 1,331,548
2018 380,100 171,188 171,052 213,236 73,361 22,816 1,031,753
2017 376,967 171,140 171,051 210,518 105,401 22,275 1,057,352
Steven D. Powell
EVP effective 9/2/19;
SVP through 9/1/19
2019 343,285 184,752 184,603 211,482 381,942 16,800 1,322,864
 
 
Ronald O. Nichols
President though 6/6/19
2019 132,759 349,459 349,318 139,302 199,930 168,718 1,339,486
2018 446,648 281,338 281,252 153,892 24,406 1,187,536
2017 420,673 233,958 233,758 263,543 143,500 41,730 1,337,162
Caroline Choi
SVP
2019 355,462 207,975 207,900 245,351 208,181 16,800 1,241,669
 
(1) Stock awards consist of performance shares and restricted stock units granted under the 2007 Performance Incentive Plan in the year indicated. The performance share and restricted stock unit amounts shown in the SCE Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For performance shares, the value is reported as of the grant date based on the probable outcome of performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion contained in (i) Note 9 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2019 Annual Report and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted.
The table below shows the maximum value of performance share awards included in the SCE Summary Compensation Table at the grant date assuming that the highest level of performance conditions will be achieved. For the grant date fair value of each award based on the probable outcome of the applicable performance conditions, see the “Grants of Plan- Based Awards” table below. The performance period for the 2017 performance share awards ended on December 31, 2019. EIX’s TSR relative to the comparison group was below the threshold required for payout of the TSR performance shares granted in 2017. The performance periods for the 2018 and 2019 performance shares have not ended.

        Name Maximum
Performance Share
Potential as of
Grant Date for 2019
Awards
($)
Maximum
Performance Share
Potential as of
Grant Date for 2018
Awards
($)
Maximum
Performance Share
Potential as of
Grant Date for 2017
Awards
($)
  Kevin M. Payne            835,092            589,972            536,445
  William M. Petmecky, III 175,045 169,989 170,979
  Philip R. Herrington 199,650 174,296
  Russell C. Swartz 188,232 171,220 171,137
  Steven D. Powell 184,787
  Ronald O. Nichols 349,542 281,386 234,063
  Caroline Choi 207,951

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(2) Option awards consist of non-qualified stock options granted under the 2007 Performance Incentive Plan in the year indicated. The option amounts shown in the SCE Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion of options contained in (i) Note 9 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2019 Annual Report and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted.
(3) The reported amounts for 2019 include: (i) 2019 interest on deferred compensation account balances considered under SEC rules to be at above-market rates for Mr. Payne $18,697; Mr. Petmecky $940; Mr. Herrington $3,828; Mr. Swartz $50,274; Mr. Powell $4,018; Mr. Nichols $4,544; and Ms. Choi $8,335; and (ii) the 2019 aggregate change in the actuarial present value of the accumulated benefit under the SCE Retirement Plan and the EIX Executive Retirement Plan for Mr. Payne $818,748; Mr. Petmecky $667,401; Mr. Herrington $658,388; Mr. Swartz $252,726; Mr. Powell $377,924; Mr. Nichols $195,386; and Ms. Choi $199,846.
(4) Amounts reported for 2019 represent Company contributions to the 401(k) Plan for each NEO other than Messrs. Payne and Nichols. For Mr. Payne, the amount reported for 2019 includes (i) $16,800 for Company contributions to the 401(k) Plan and (ii) $5,000 in charitable matching gifts under the Director Matching Gift Program described in footnote (5) to the Director Compensation Table above. For Mr. Nichols, the amount reported for 2019 includes (i) $12,462 for Company contributions to the 401(k) Plan and (ii) $156,256 for payout of accrued and unused vacation.

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GRANTS OF PLAN-BASED AWARDS

The following tables present information regarding the incentive plan awards granted to the EIX and SCE NEOs during 2019 under the EIX 2007 Performance Incentive Plan and the potential 2019 target and maximum amount of performance-based annual incentive awards payable under the EIX Executive Incentive Compensation Plan (“EICP”). See the CD&A above for further information regarding award terms reported in the tables below and for discussions regarding NEO stock ownership guidelines, dividends paid on equity awards, and allocations between short-term and long-term compensation.

EIX GRANTS OF PLAN-BASED AWARDS TABLE – FISCAL YEAR 2019

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

All
Other
Stock
Awards:
Number of
Shares
of Stock
or Units
(#)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

Exercise
or Base
Price of
Option
Awards
($/Sh)

Grant
Date Fair
Value of
Stock
and
Option
Awards(3)
($)
Name Grant
Date
Date of
Committee
Action
Threshold
($)
Target
($)
Maximum
($)
Threshold
Number
of Shares
of Stock
or Units
(#)
Target
Number of
Shares
of Stock
or Units
(#)
Maximum
Number
of Shares
of Stock
or Units
(#)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
Pedro J. Pizarro
Stock Options 3/5/19 2/27/19 402,500 62.50 3,521,875
TSR Performance Shares 3/5/19 2/27/19 2,952 11,808 23,616 880,523
EPS Performance Shares 3/5/19 2/27/19 3,522 14,088 28,176 880,500
Restricted Stock Units 3/5/19 2/27/19 28,175 1,760,938
Annual Incentive 1,531,250 3,062,500
Maria Rigatti
Stock Options 3/5/19 2/27/19 104,092 62.50 910,805
TSR Performance Shares 3/5/19 2/27/19 764 3,054 6,108 227,737
EPS Performance Shares 3/5/19 2/27/19 911 3,644 7,288 227,750
Restricted Stock Units 3/5/19 2/27/19 7,287 455,438
Annual Incentive 495,000 990,000
Kevin M. Payne
Stock Options 3/5/19 2/27/19 95,418 62.50 834,908
TSR Performance Shares 3/5/19 2/27/19 700 2,800 5,600 208,796
EPS Performance Shares 3/5/19 2/27/19 835 3,340 6,680 208,750
Restricted Stock Units 3/5/19 2/27/19 6,680 417,500
Annual Incentive 453,750 907,500
Adam S. Umanoff
Stock Options 3/5/19 2/27/19 74,258 62.50 649,758
TSR Performance Shares 3/5/19 2/27/19 545 2,179 4,358 162,488
EPS Performance Shares 3/5/19 2/27/19 650 2,599 5,198 162,438
Restricted Stock Units 3/5/19 2/27/19 5,198 324,875
Annual Incentive 423,750 847,500
J. Andrew Murphy
Stock Options 3/5/19 2/27/19 44,786 62.50 391,878
TSR Performance Shares 3/5/19 2/27/19 329 1,314 2,628 97,985
EPS Performance Shares 3/5/19 2/27/19 392 1,568 3,136 98,000
Restricted Stock Units 3/5/19 2/27/19 3,135 195,938
Annual Incentive 332,500 665,000
(1) Maximum amounts reported reflect 200% of the applicable annual incentive target under the EICP. For information regarding the description of performance-based conditions under the EICP, see “Annual Incentive Awards” in the CD&A above.

60        2020 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION

(2) Half of each NEO’s 2019 performance share award value was granted in performance shares subject to a TSR vesting metric and the other half of the award value was granted in performance shares subject to an EPS vesting metric. The TSR and EPS components of each NEO’s award are subject to different threshold and other vesting requirements. In order to reflect these differences, the table above reports the TSR and EPS components of each NEO’s 2019 performance share award as separate awards. See “Long-Term Incentive Awards” in the CD&A above and “Potential Payments on Termination or Change in Control” below for information regarding the terms of the awards, the description of performance-based vesting conditions, the criteria for determining the amounts payable, and the consequences of a termination of employment in certain circumstances.
(3) The amounts shown for options, performance shares, and restricted stock units represent the grant date fair value of the awards in 2019 determined in accordance with FASB ASC Topic 718. There is no guarantee that, if and when the awards vest, they will have this value. Assumptions used in the calculation of these amounts are referenced in footnotes (1) and (2) to the EIX Summary Compensation Table.

SCE GRANTS OF PLAN-BASED AWARDS TABLE – FISCAL YEAR 2019

Name   Grant
Date
  Date of
Committee
Action
  Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
(1)
  Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
 
All
Other
Stock
Awards:
Number of
Shares
of Stock
or Units
(#)


 

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
  Exercise
or Base
Price of
Option
Awards
($/Sh)

 

Grant
Date Fair
Value of
Stock
and
Option
Awards(3)
($)
Threshold
($)
  Target
($)
  Maximum
($)
Threshold
Number
of Shares
of Stock
or Units
(#)
  Target
Number of
Shares
of Stock
or Units
(#)
  Maximum
Number
of Shares
of Stock
or Units
(#)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
Kevin M. Payne
Stock Options 3/5/19 2/27/19 95,418 62.50 834,908
TSR Performance Shares 3/5/19 2/27/19 700 2,800 5,600 208,796
EPS Performance Shares 3/5/19 2/27/19 835 3,340 6,680 208,750
Restricted Stock Units 3/5/19 2/27/19 6,680 417,500
Annual Incentive 453,750 907,500
William M. Petmecky, III
Stock Options 3/5/19 2/27/19 19,998 62.50 174,983
TSR Performance Shares 3/5/19 2/27/19 147 587 1,174 43,773
EPS Performance Shares 3/5/19 2/27/19 175 700 1,400 43,750
Restricted Stock Units 3/5/19 2/27/19 1,400 87,500
Annual Incentive 194,423 388,846
Philip R. Herrington
Stock Options 3/5/19 2/27/19 22,804 62.50 199,535
TSR Performance Shares 3/5/19 2/27/19 167 669 1,338 49,887
EPS Performance Shares 3/5/19 2/27/19 200 799 1,598 49,938
Restricted Stock Units 3/5/19 2/27/19 1,597 99,813
Annual Incentive 203,222 406,445
Russell C. Swartz
Stock Options 3/5/19 2/27/19 21,503 62.50 188,151
TSR Performance Shares 3/5/19 2/27/19 158 631 1,262 47,054
EPS Performance Shares 3/5/19 2/27/19 188 753 1,506 47,063
Restricted Stock Units 3/5/19 2/27/19 1,506