| | | Customer Service
Weight: 20% | | | | This metric measures against CPUC standards and three internal performance indicators for all California districts, Hawaii, New Mexico, and Washington, including key measurements for telephone responsiveness, service responsiveness, billing accuracy and timeliness, and general levels of customer complaints. CPUC customer service standards are found in the CPUC’s General Order 103-A.
An additional target was initially included in the performance metric, to decrease shut off for non-payment activities by 1% each year starting in 2020. Due to the coronavirus pandemic, the state prohibited shut-offs and we eliminated that target because it was no longer achievable and outside of management’s control.
The Customer Service metric is evaluated each quarter for 10 measurements in 20 California service areas, Hawaii, New Mexico, and Washington for an annual target of 863 – 848 and a maximum annual metric measurement of 920. | | | | | Performance Level* | | | Criteria | | | Goal
Achieved | | | | | Maximum | | | 99.1% of maximum annual metric | | | | | 200%200% | | | | | Target | | | 92.1.% of maximum annual metric | | | | | 100%100% | | | | | Threshold | | | 90.0% of maximum annual metric | | | 50% | | | 50% | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. | | |
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
4658 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement
►| | | Utility Plant Investment
Weight: 20% | | | | The annual Board-approved capital expenditures budget is the target for this metric. Investment in utility plant, property, and equipment is a driver of stockholder return and a key component of providing reliable, high-quality water service to customers. This metric is updated each year to reflect the annual approved capital program and budget for the Group and its subsidiaries, and is tied to regulatory approvals. For 2021, the annual Board-approved capital expenditure budget and target performance level was set at $295 million. | | | | | Performance Level* | | | 2021
(In Millions) | | | Goal
Achieved | | | | | Maximum | | | $315 | | | 200% | | | | | Target | | | $295 | | | 100% | | | | | Threshold | | | $265 | | | 25% | | | | | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. | | |
| | | Earnings Per Share (EPS)
Weight: 20%
Utility Plant Investment: The annual Board-approved capital expenditures budget is the target for this metric. Investment in utility plant, property, and equipment is a driver of stockholder return and a key component of providing reliable, high-quality water service to customers. This metric is updated each year to reflect the annual approved capital program and budget for the Group and its subsidiaries and is tied to regulatory approvals. For 2020, the annual Board-approved capital expenditure budget and target performance level was set at $275 million.
| | Performance Level* | | | 2020
(In Millions) | | | Goal
Achieved | | | | Maximum | | | | $ | 325 | | | | | | 200% | | | | | Target | | | | $ | 275 | | | | | | 100% | | | | | Threshold | | | | $ | 245 | | | | | | 25% | | |
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
►
Earnings per Share (EPS): This metric measures the annual budget-to-actual performance of the Company. Specifically, this measure compares the actual diluted earnings per share to the forecasted diluted earnings per share for the calendar year. The forecasted diluted earnings per share is adopted during the budget process by the Board of Directors each year at its January meeting. By adhering to budgets, management is able to demonstrate to the Board, stockholders and customers that the Company is effective at managing controllable costs and has the ability to efficiently execute its business plan.
| | | | This metric measures the annual budget-to-actual performance of the Company. Specifically, this measure compares the actual diluted earnings per share to the forecasted diluted earnings per share for the calendar year. The forecasted diluted earnings per share is adopted during the budget process by the Board of Directors each year at its January meeting. By adhering to budgets, management is able to demonstrate to the Board, stockholders and customers that the Company is effective at managing controllable costs and has the ability to efficiently execute its business plan. | | | | | Performance Level* | | | EPS Variance
fromFrom Budget | | | Goal
Achieved | | | | | Maximum | | | Over 10% | | | | | 200%200% | | | | | Target | | | −2.5% to 2.5% | | | | | 100%100% | | | | | Threshold | | | −7.6% to −10% | | | 25% | | | 25% | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. | | |
*CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 59
Multiple tiers apply between the threshold and target level and between the target and maximum level.
►
Emergency Preparedness and Safety: This metric is measured annually and is comprised of five safety program components. These five components include Community Emergency Operations Center (EOC) training, full attendance at Cal Water mandated safety training for all employees (minimum of five training topics annually), Total Case Incident Rate (TCIR) which represents the average number of work-related injuries incurred by 100 workers during a one-year period as measured against California companies, the number of preventable vehicle accidents, and the number of unannounced site safety audit and immediate onsite reviews. The five safety components are weighted as follows:
►
EOC Training measure – 20%
►
Training attendance rate measure – 20%
►
TCIR measure – 20%
►
Preventable vehicle accident measure – 20%
►| | | Emergency Preparedness and Safety
Weight: 20% | | | | This metric is measured annually and is comprised of five safety program components. These five components include Community Emergency Operations Center (EOC) training, full attendance at Cal Water mandated safety training for all employees (minimum of five training topics annually), Total Case Incident Rate (TCIR), which represents the average number of work-related injuries incurred by 100 workers during a one-year period as measured against California companies, the number of preventable vehicle accidents, and the number of unannounced site safety audit and immediate onsite reviews. The five safety components are weighted as follows: •
Community EOC Training measure – 20% •
Training attendance rate measure – 20% •
TCIR measure – 20% •
Preventable vehicle accident measure – 20% •
Unannounced site safety audit and immediate onsite review – 20% CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 47
Focused on improving the management of these safety programs, our officers have set this metric to improve performance from current conditions towards industry averages, where applicable, and performance expectations. Community EOC Training | | | | Performance Level* | | | Community EOC Training Performance Target | | | Goal
Achieved | | | | | Maximum | | | Conduct 12 community EOC trainings | | | | | 200%200% | | | | | Target | | | Conduct 10 community EOC trainings | | | | | 100% | | | | Threshold | | | Conduct eight community EOC trainings | | | | | 25%100% | | |
| | Threshold | | | Conduct six community EOC trainings | | | 50% | | | | | *
An additional tier applies between the target and maximum level. Training Attendance | | | | Performance Level* | | | Training Rate Measure Performance Target | | | Goal
Achieved | | | | | Maximum | | | 100% of applicable employees | | | | | 200%200% | | | | | Target | | | 85% of applicable employees | | | | | 100%100% | | | | | Threshold | | | 70% of applicable employees | | | | | 25%25% | | |
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
| | Performance Level* | | | TCIR Measure Performance Target | | | Numeric
Equivalent | | | Goal
Achieved | | | | Maximum | | | 25% improvement over 2019 achieved results | | | | | 2.78 | | | | | | 200% | | | | | Target | | | 5% improvement over 2019 results | | | | | 3.52 | | | | | | 100% | | | | | Threshold | | | 90% of 2019 achieved results | | | | | 4.07 | | | | | | 25% | | |
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
| | Performance Level* | | | Preventable Vehicle Accident Measure
Performance Target | | | Numeric
Equivalent | | | Goal
Achieved | | | | Maximum | | | 20% improvement over 2019 achieved results | | | | | 34 | | | | | | 200% | | | | | Target | | | Maintain 2019 achieved results | | | | | 42 | | | | | | 100% | | | | | Threshold | | | 85% of 2019 achieved results | | | | | 48 | | | | | | 25% | | |
| | | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. | Performance Level* | | | Unannounced Site Safety Audits and Immediate
Onsite Review Measure Performance Target | | | Goal
Achieved | | | Maximum | | | 144 audits | | | | | 200% | | | | Target | | | 72 audits | | | | | 100% | | | | Threshold | | | 18 audits | | | | | 25% | | |
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
4860 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement
| | | | | | | TCIR | | | | | Performance Level* | | | Performance Target | | | Numeric
Equivalent | | | Goal
Achieved | | | | | Maximum | | | 25% improvement over 2021 target results | | | 3.06 | | | 200% | | | | | Target | | | 2020 achieved TCIR, excluding OSHA reportable COVID-19 incidents, plus up to eight OSHA reportable COVID-19 incidents in 2021 | | | 4.08 | | | 100% | | | | | Threshold | | | 85% of 2021 target results | | | 4.69 | | | 25% | | | | | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. Preventable Vehicle Accident | | | | | Performance Level* | | | Performance Target | | | Numeric Equivalent | | | Goal
Achieved | | | | | Maximum | | | 20% improvement over 2020 achieved results | | | 26 | | | 200% | | | | | Target | | | Maintain 2020 achieved results | | | 34 | | | 100% | | | | | Threshold | | | 85% of 2020 achieved results | | | 40 | | | 25% | | | | | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. Unannounced Site Safety Audit and Immediate Onsite Review | | | | | Performance Level* | | | Performance Target | | | Goal
Achieved | | | | | Maximum | | | 250 Audits | | | 200% | | | | | Target | | | 170 Audits | | | 100% | | | | | Threshold | | | 110 Audits | | | 25% | | | | | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. | | |
CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 61
Summary of 2021 Short-Term Performance Goal Achievements for 2020 The following charts set forth the performance goals used for short-term incentive-based compensation for 2020, and the achievement of each metric as certified by the committee for 2020. | | Performance Metric | | | Minimum Threshold
Performance | | | Target Performance | | | Maximum
Performance | | | Achieved Results | | | | Water Quality
Weight: 20% | | | Up to one primary (all states), up to four secondary (California only), up to eight procedural violations (California only) | | | No primary (all states), up to two secondary (California only), up to four procedural violations (California only) | | | No primary (all states), no secondary (California only), no procedural violations (California only) | | | 200%150% – No primary, no secondary, orone procedural violationsviolation | | | | Customer Service
Weight: 20% | | | 90.0% of the maximum annual metric | | | 92.1% of the maximum annual metric | | | 99.1% of the maximum annual metric | | | 175%200% – Achieved 98.7%99.5% of the maximum annual metric | | | | Utility Plant
Weight: 20% | | | $245265 million in company-funded capital expenditures | | | $275295 million in company-funded capital expenditures | | | $325315 million in company-funded capital expenditures | | | 150%25% – $298.7$293.2 million in capital expenditures, of which $294$275 million was company-funded | | | | Earnings perPer Share (EPS)
Weight: 20% | | | Negative 10% EPS variance from budget | | | +/- 2.5% EPS variance from budget | | | Positive10% EPS variance from budget | | | 200%150% – Positive 21%6.5% EPS variance from budget | | | | Safety
Weight: 20% | | | ►•
Conduct six community EOC trainings | | | •
Conduct eight community EOC trainings | | | ►•
Conduct 12 community EOC trainings | | | 145% – Overall safety •
200% – Conducted 12 community EOC trainings | | | | •
70% of applicable employees trained | | | ►•
90%85% of 2019applicable employees trained
| | | •
100% of applicable employees trained | | | •
175% – 96% of applicable employees trained | | | | •
85% of 2021 target results | | | •
2020 achieved TCIR, excluding OSHA reportable COVID-19 incidents, plus up to eight OSHA reportable COVID-19 incidents in 2021 | | | •
25% improvement over 2021 target results | | | •
150% – 4% improvement over 2020 TCIR results | | | | ►•
85% of 2019 preventable vehicle accident2020 achieved results | | | ►•
18Maintain 2020 achieved results for preventable vehicle accidents
| | | •
20% improvement over 2020 achieved results | | | •
0% – achieved 65% of 2020 achieved results | | | | •
110 unannounced site safety audits and immediate onsite reviews | | | ►•
Conduct 10 community EOC trainings,
►
85% of applicable employees trained
►
5% improvement over 2019 achieved TCIR results,
►
Maintain 2019 preventable vehicle accident achieved results,
►
72170 unannounced site safety audits and immediate onsite reviews
| | | ►•
Conduct 12 community EOC trainings
►
100% of applicable employees trained
►
25% improvement over 2019 achieved TCIR results
►
20% improvement over 2019 preventable vehicle accident achieved results
►
144250 unannounced site safety audits and immediate onsite reviews
| | | ►•
150%
►
Conducted eight community EOC trainings
►
96% of applicable employees trained
►
11% improvement over 2019 TCIR results,
►
19% improvement over 2019 preventable vehicle accident achieved results
►
188200% – 364 unannounced site safety audits and immediate onsite reviews
| |
62 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 49
(1)
Company-funded capital expenditures were $294$275 million. The Group’s 20202021 achieved capital expenditures was $298.7$293.2 million as reported in item 7 of the Group’s Form 10 K10-K for the year ended December 31, 20202021 as filed with the SEC. Excluding developer fundeddeveloper-funded expenditures of $18.9$18.2 million and including an increase in accounts payable accrual of $14.2$2.8 million for capital project spend, the Group spent $294$275 million on company-funded capital expenditures for the 20202021 performance period. The table below summarizes the total performance-based short-term incentive compensation earned by our officers for the fiscal year ended December 31, 2020.2021. | | Name | | | 2020
Short-Term
Incentive
Award
($)(1) | | | | Martin A. Kropelnicki | | | | $ | 1,787,704 | | | | | Thomas F. Smegal | | | | | 249,795 | | | | | Paul G. Townsley | | | | | 220,238 | | | | | Robert J. Kuta | | | | | 189,000 | | | | | Lynne P. McGhee | | | | | 181,388 | | |
| Name | | | 2021
Short-Term
Incentive
Award
($)(1) | | | Martin A. Kropelnicki | | | | $ | 1,206,000 | | | | Thomas F. Smegal | | | | | 172,136 | | | | Paul G. Townsley | | | | | 151,795 | | | | Robert J. Kuta | | | | | 130,248 | | | | Lynne P. McGhee | | | | | 125,022 | | |
(1)
The short-term incentive compensation is paid out annually following certification of the prior year’s results by the Committee. 2020 Long-term2021 Long-Term Performance and Time-Based Equity Compensation
The purpose of our long-term equity incentive compensation is to better align executive compensation with the interests of both stockholders and customers, to create incentives for officer recruiting and retention, to encourage long-term performance by our officers, and to promote stock ownership. Risk is taken into account in determining the aggregate amount of incentive compensation and performance criteria, including assessment of risk management and risk mitigation. As with target short-term incentive compensation, the Committee reviewed the competitive range of long-term equity compensation and total direct compensation for similar positions within the competitive market in making decisions regarding long-term equity compensation awards for 2020. However, the2021. The Committee also believes that, in the interest of strengthening and rewarding teamwork and collaboration within the officer team, the annual equity incentive awards granted to each of our officers (other than our President & CEO) should be based on the same objectives and methodology. The Committee recommended awarding our President & CEO a greater value of equity awards in 2020 than our other officers because of his substantially greater level of responsibility and ability to influence Group’s operational results. 50 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 63
Based on the methodology described above, for 2020,2021, the Committee set the total value for the long-term incentive (LTI) equity compensation awards at $920,000 for our President & CEO, $160,000 for the Group’s vice presidents, and $95,000 for all other officers, assuming a target level of performance. All equity awards for officers were granted 47% (40% for our President & CEO) in the form of time-based RSAs vesting over three years and 53% (60% for our President & CEO) in the form of performance-based RSUs with a three-year performance period and the opportunity to earn up to 200% of the target performance-based RSU award based on achievement with respect to Committee-approved objectives.as follows: | | President & CEO Target LTI Total Value: $920,000 •
Performance-Based RSUs: 60% •
Time-Based RSAs: 40% | | | | | | Group’s Vice Presidents Target LTI Total Value: $160,000 •
Performance-Based RSUs: 53% •
Time-Based RSAs: 47% | | | | | | All Other Executives Target LTI Total Value: $95,000 •
Performance-Based RSUs: 53% •
Time-Based RSAs: 47% | |
The performance-based RSUs awarded to our officers provide for a three-year performance period with vesting based solely upon the achievement of objective performance criteria. For the performance metrics applicable to the 20202021 performance-based RSUs,RSU award, the Committee approved a three-year performance metric and will certify the level of achievement at the end of the three-year performance period. The number of shares awarded at the end of the three-year performance period is based on the extent the performance criteria is met over such time and subject to the officer’s continued employment through such date.
The following section provides a more detailed look at each revised performance metric for the performance period 2021 – 2023, along with the maximum, target, and threshold levels for each and the benefits derived by our customers: ►
Return on Equity: This metric measures return on equity (ROE) as shown in the public financial statements of California Water Service Group. It is defined as net income divided by average common stockholders’ equity for the three-year performance period. The final three-year achievement will be certified at the end of the three-year performance period. Stockholders expect the Company to earn its authorized return on equity for its regulated business. For this reason, the metric uses the authorized ROE as the target for 100% performance achievement. The rationale for tiers above and below the authorized ROE is to account for regulatory mechanisms and lag.
customers.
| | | Return on Equity
Weight: 40% | | | | This metric measures return on equity (ROE) as shown in the public financial statements of California Water Service Group. It is defined as net income divided by average common stockholders’ equity for the three-year performance period. The final three-year achievement will be certified at the end of the three-year performance period. Stockholders expect the Company to earn its authorized return on equity for its regulated business. For this reason, the metric uses the authorized ROE as the target for 100% performance achievement. The rationale for tiers above and below the authorized ROE is to account for regulatory mechanisms and lag. | | | | | Performance Level* | | | Annual Return on Common Stockholders’ Equity | | | Goal
Achieved | | | | | Maximum | | | Target plus 50 basis points | | | | | 200%200% | | | | | Target | | | California authorized ROE | | | | | 100%100% | | | | | Threshold | | | Target minus 200 basis points | | | 20% | | | 20% | *
An additional tier applies between the target and maximum level. | | |
*
An additional tier applies between the target and maximum level.
►| | | Growth in Stockholders’ Equity
Weight: 40%
Growth in Stockholders’ Equity: This metric measures growth in stockholders’ equity by the accumulation of two factors over the performance period, growth in total stockholders’ equity and actual dividends paid in the calendar year. These growth values can be objectively validated using the Company’s audited annual financial statements. The metric, in a stock-price neutral way, measures the growth in stockholders’ equity created by the Company over the performance period. Investors in water utilities are interested in value creation along with dividend growth.
| | | | This metric measures growth in stockholders’ equity by the accumulation of two factors over the performance period growth in total stockholders’ equity and actual dividends paid in the calendar year. These growth values can be objectively validated using the Company’s audited annual financial statements. The metric, in a stock-price neutral way, measures the growth in stockholders’ equity created by the Company over the performance period. Investors in water utilities are interested in value creation along with dividend growth. | | | | | Performance Level* | | | Accumulation of Stockholder Value Over the Performance Period | | | Goal
Achieved | | | | | Maximum | | | $450520 million | | | | | 200%200% | | | | | Target | | | $350420 million | | | | | 100%100% | | | | | Threshold | | | $275345 million | | | 25% | | | 25% | *
Multiple tiers apply between the threshold and target level, and between the target and maximum level. | | |
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
64 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 51
►| | | Affordability and Rate Design
Weight: 20%
Environmental Leadership: An increasing number of investors and other stakeholders prioritize the Company’s Environmental, Social, and Governance (ESG) reporting and performance. Management has adopted corporate objectives in 2020 to improve reporting, study climate change impacts to water supply, and manage supply and conservation holistically. Improving ESG disclosures will be a multi-year effort.
| | | | The Company has been engaged in affordability efforts for over two decades. It is essential that the Company remain focused on affordability for economically disadvantaged customers, while also taking prudent steps to protect shareholders from increased financial risk associated with affordability. In particular, the loss of the Cal Water’s decoupling mechanism as a result of OIR 17-06-024, effective 2023, could pose increased business risk if not adequately mitigated. In its general rate case filing, to be filed with the Commission in July 2021, the Cal Water intends to pursue a program which seeks to rebalance three variables: affordability, conservation, and revenue stability. In particular, the Cal Water will propose a rate design to include a base amount of water at a significant discount (addressing affordability), increasing the rate steps for higher volume users (addressing conservation), increasing the portion of the monthly bill included in the fixed service charge, and implementing a Monterey-WRAM (addressing revenue stability). If adopted by the CPUC and executed properly, this new rate design should enable Cal Water to meet CPUC affordability goals for economically disadvantaged customers, increase its conservation signals to customers, and reduce volatility of revenues as compared to current rate design in a non-decoupled environment. | | | | | Performance Level* | | | Performance Target | | | Goal
Achieved | | | | | Maximum | | | Annual framework-compliant reportingBy 2023, implementation of material ESG data,
completionrate design which increases the total percent of water supply risk assessment from climate changecompany-wide annual revenue requirement collected through a customer’s fixed monthly service charge, and
signing agreements or beginning construction on with three water
supply diversification projects by 2022 reduces the typical Customer Assistance Program customer bill in 15 service areas as compared to the rate design approved in the 2018 rate case | | | | | 200%200% | | | | | Target | | | Annual framework-compliant reportingBy 2023, implementation of material ESG data, completionrate design which increases the total percent of water supply risk assessment from climate changecompany-wide annual revenue requirement collected through a customer’s fixed monthly service charge, and reduces the typical Customer Assistance Program customer bill in five service areas as compared to the rate design approved in the 2018 rate case | | | | | 100%100% | | | | | Threshold | | | Annual framework-compliant reportingBy 2023, implementation of material ESG datarate design which increases the total percent of company-wide annual revenue requirement collected though a customer’s fixed monthly service charge | | | 50% | | | 50% | *
An additional tier applies between the target and maximum level. | | |
*CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 65
An additional tier applies between the target and maximum level.
20182019 Long-Term Performance-Based Equity Compensation Achievement
(Performance Period 2019 — 2021) In 2018,2019, we granted performance-based equity in the form of RSUs to our officers for the three-year performance period ending on December 31, 2020.2021. The component weighting is 20%40% for each of the five performancetwo financial measures and 20% for the regional call centers implementation metric. The payouts are summarized below: | | Performance Metric | | | Annual Threshold
Performance | | | Annual Target
Performance | | | Annual Maximum
Performance | | | | Water Quality | | | Up to one primary, up to four secondary, up to eight procedural violations | | | No primary, up to two secondary, up to four procedural violations | | | No primary, no secondary, no procedural violations | | | Customer Service | | | 92.5% of maximum annual metric | | | 95.5% of maximum annual metric | | | 99.5% of maximum annual metric | | | Utility Plant | | | $195 million in 2018, $240 million in 2019, $245 in million in 2020 | | | $210 million in 2018, $255 million in 2019, $275 million in 2020 | | | $230 million in 2018, $275 million in 2019, $325 million in 2020 | | | Return on Equity
Weight: 40% | | | 7.20% in 2018, 2019, 2020, and 20202021 | | | CPUC authorized ROE: 9.20% in 2018, 2019, 2020, and 20202021 | | | 9.70% in 2018, 2019, 2020, and 20202021 | | | | SafetyGrowth in Stockholders’ Equity
Weight: 40% | | | 10% improvement in TCIR, in preventable accidents measures over 2017 results, and 65% applicable employees trained$225 million | | | 25% improvement in TCIR, in preventable accidents measures over 2017 results, and 80% of applicable employees trained$300 million | | | 40% improvement in TCIR, in preventable accidents measures over 2017 results,$400 million | | | | Regional Call Centers Implementation
Weight: 20% | | | Implementation of four regional call centers by year-end 2021 | | | Implementation of four regional call centers by year-end 2021, introduction of online chat as a new service channel, and 100%reduction of applicable employees trainedanswering service expense by 25% | | | Implementation of four regional call centers by year-end 2021, introduction of online chat as a new service channel, extention of service hours from 8 am to 8 pm, and reduction of answering service expense by 75% | |
52 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
Certified results for each perspective year of the three year performance are as follows:
The table below summarizes the total performance-based equity compensation earned by our officers for the three-year performance period ended December 31, 2020.2021. | | Name | | | 2018 Performance
Stock Earned
($)(1) | | | | Martin A. Kropelnicki | | | | $ | 579,065 | | | | | Thomas F. Smegal | | | | | 151,095 | | | | | Paul G. Townsley | | | | | 151,095 | | | | | Robert J. Kuta | | | | | 151,095 | | | | | Lynne P. McGhee | | | | | 151,095 | | |
| Name | | | 2019 Performance
Stock Earned
($)(1) | | | Martin A. Kropelnicki | | | | $ | 519,521 | | | | Thomas F. Smegal | | | | | 135,553 | | | | Paul G. Townsley | | | | | 135,553 | | | | Robert J. Kuta | | | | | 135,553 | | | | Lynne P. McGhee | | | | | 135,553 | | |
(1)
The shares for the 20182019 performance stock award, which is comprised of the years 2018, 2019, 2020, and 2020,2021, were awarded following the end of the three-year performance period on March 5, 2021.4, 2022. 2021 Performance Based66 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
2022 Long-Term Incentive Compensation There was no increase to the target value of the performance-based equity compensation awards for 20212022 under the annual long-term incentive program or to the short-term incentive-based compensation awards. For the CEO, the equity awards vest over three years, respectively, with 60%64% subject to the achievement of long-term performance-based metrics and 40%36% subject to time-based vesting and continued employment. For all other officers, the equity awards vest over three years, respectively, with 53%55% subject to the achievement of long-term performance-based metrics and 47%45% subject to time-based vesting and continued employment. On March 2, 2021,1, 2022, the following awards were granted for the 2021 through 20232022-2024 performance period: ►•
President & CEO – 6,4286,270 shares of RSAs and 9,64211,109 RSUs ►•
Group’s Vice Presidents – 1,3111,278 shares of RSAs and 1,4851,619 RSUs ►•
Other officers – 787767 shares of RSAs and 874938 RSUs All RSUs are subject to performance-based vesting. CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 53
The following charts illustrate target variable incentive pay as a percentage of compensation for 2020 and 2021:2022: 5 Other Compensation Programs Basic and Supplemental Pension Plan Benefits (SERP) In addition to the tax qualifiedtax-qualified defined benefit plan that covers all permanent employees, supplemental retirement benefits are provided to our officers under the SERP. The SERP is designed primarily to compensate for limitations imposed by the Internal Revenue Code (Code) on allocations and benefits that may be paid to officers under the Group’s tax qualifiedtax-qualified plan. Because the Code restricts benefits under the tax qualifiedtax-qualified plan, our officers otherwise would not be eligible to receive the retirement benefits that are proportional to the benefits received by our employees. The benefits under the SERP are obtained by applying similar benefit provisions of the Pension Plan to all compensation included under the Pension Plan, without regard to these limits, reduced by benefits actually accrued under the Pension Plan. The SERP is structured as such that benefits are paid to our officers on a “pay as you go” basis. The SERP is an unfunded, unsecured obligation of the Group and is designed to assist in attracting and retaining key officers while providing a competitive, total compensation program. The annual expenses of the pension and SERP have allowable costs recovered in rates through the regulatory process in California and other states. We believe that pension benefits are an important recruitment and retention tool for our employees and isare consistent with practice among most of our peers. CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 67
No pension benefits will be paid to any participant until after retirement. Any pension amounts listed in this Proxy Statement are the year-over-year, non-cash, changes in the actuarial present value of the accrued pension liability and do not represent actual cash compensation paid. During 2020, the SERP was amended, increasing the plan’s unreduced retirement age from 60 to 65. Deferred Compensation Plan The Group maintains a deferred compensation plan for its directors, officers, and eligible employees. The plan is intended to promote retention by providing eligible employees, including the officers, with a long-term savings opportunity on an income tax-deferred basis. This plan is voluntary and funded by the individuals who elect to participate in the program. There are no company or company-matching contributions. 401(k) Plan All employees satisfying the eligibility requirements are entitled to participate in our 401(k) plan and receive matching contributions from the Group. Pursuant to the plan, all employees, including officers, are entitled to contribute up to the statutory limit set by the Internal Revenue Service (IRS) and the Group matches 75% for each dollar contributed up to eight percent8% for a maximum company-matching contribution of six percent6% of employee’s eligible earnings. 54 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
Limited Perquisites and Other NEO Benefits As part of the Group’s automobile policy, officers have the use of a company-owned vehicle, including excess liability insurance. The Committee believes the use of a company-owned vehicle allows our officers to work more efficiently because many of the geographic areas served by the Group are most effectively reached by automobile as opposed to other forms of transportation, such as air travel. Any personal mileage incurred by our officers is taxed as additional compensation in accordance with IRS regulations and paid for by the officers. The Group offers its officers a supplemental medical plan providing proactive health protection services, including executive physicals and emergency travel assistance. Additionally, the Group also has a relocation program assisting employees required to move on behalf of the Group to remain as productive as possible during the relocation transition. Employees who receive relocation assistance are required to sign a repayment agreement. Other than these benefits, the Committee’s general philosophy is not to provide perquisites and other personal benefits of substantial value to the officers. 6 Executive Compensation Policies and Practices CEO Pay Overview Martin A. Kropelnicki, our CEO since September 1, 2013, made significant contributions managing our 20202021 performance. Based on our annual performance objectives for 2020,2021, the Committee granted Mr. Kropelnicki an equity incentive award of $920,000 for 2020,2021, consisting of $368,000 in the form of time-based RSAs vesting over three years, and $552,000 in the form of performance-based RSUs with a three-year performance period. Mr. Kropelnicki also has the opportunity to earn up to 200% of the target performance-based RSU award based on achievement with respect to Committee approved objectives. With a 20202021 base salary of $1,021,545$901,872 and $1,787,704$1,206,000 annual performance-based short-term incentive compensation (representing a payout of 175%134% of target and reflecting superior performance during the year as described in more detail below), Mr. Kropelnicki’s total direct compensation was $3,777,821$3,096,554 (comprised of salary, earned annual performance-based short-term incentive compensation bonus, grant date fair value of long-term performance-based restricted stock units, and grant date fair value of time-based restricted stock awards). Mr. Kropelnicki is a participant in the tax-qualified defined benefit plan that covers all permanent employees as well as the non-qualified supplemental retirement benefit plan provided to our officers under the SERP. The primary difference between Mr. Kropelnicki’s total direct compensation and the amount reported in the 20202021 Summary Compensation Table later in this Proxy Statement is the decreasechange in the actuarial estimate of his future potential pension benefits. The change in pension value represents the present value of future retirement benefits and does not represent any cash payment to or from Mr. Kropelnicki. Changes in pension value historically have been impacted significantly by a completely external factorfactors unrelated to Mr. Kropelnicki’s compensation.compensation, such as discount rate, age at retirement, changes in mortality tables, and vesting status. The discount 68 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
rate, used to value the pension benefits useused for financial statement reporting purposes, is itself driven in large part by the overall interest rate environment and can cause substantial volatility in the change in pension value. For example, over the last 10 years, Mr. Kropelnicki’s change in pension value has ranged from less than $100,000 (in 2013) to more than $10 million (in 2019) to $0 (in 2020). No pension benefit will be paid to Mr. Kropelnicki until after his retirement from the Group. Changes in actuarial assumptions for the pension costs are included in customer rates through a rate recovery mechanism. The net present value of the pension benefit ultimately received by Mr. Kropelnicki will change based on a number of factors, including changes in interest rates, changes in mortality tables, Mr. Kropelnicki’s current age, years of service, and age at retirement. Stock Ownership Requirements Officers and members of our Board are required to own shares of Group’s stock to further align their interests with those of our stockholders. The requirements were adopted to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 55
officers. Each non-employee director and officer must directly own Group stock having a market or intrinsic value (i.e., paper gain for vested, unexercised stock options), whichever is higher, equal to: | | Title | | | | Equity | | | | | | President & CEO | | | | 3X annual base salary | | | | | Group Vice Presidents | | | | 1.5X annual base salary | | | | | Other Officers | | | | 1X annual base salary | | | | | Non-Employee Directors | | | | 5X annual base retainer | | |
Officers must retain 50% of the net after-tax shares from equity awards until the relevant ownership requirement is achieved. Non-employee directors are required to achieve the relevant ownership threshold within five years following adoption of the requirements or five years after commencing service, whichever is later. For officers, the Committee reviews compliance with these requirements annually. The Nominating/Corporate Governance Committee reviews compliance with these requirements for non-employee directors annually. All non-employee directors and officers are in compliance with this requirement. The following table summarizes which equity holdings are included in the stock ownership requirements. | | What is Included | | | What is Not Included | | | | Shares owned personally Holdings in our 401(k) plan Holdings acquired through our employee stock purchase program (ESPP) | | | Unvested equity awards, including RSAs and RSUs Vested, unexercised stock options | |
Transactions Involving Stock – Anti-hedging and No Pledging Policy The Board adopted an insider trading policy in 2012, which prohibits our directors and officers from engaging in hedging transactions (such as swaps, puts and calls, collars, and similar financial instruments) that would eliminate or limit the risks and rewards of share ownership. In addition, our directors and officers may not at any time engage in any short selling, buy or sell options, puts or calls, whether exchange-traded or otherwise, or engage in any other transaction in derivative securities that reflects speculation about the price of our stock or that may place their financial interests ahead of the financial interests of the Group. Executive Compensation Recovery – Our Clawback Policy The Board also adopted an executive compensation recovery, or “clawback,” policy in 2012, which requires the reimbursement of excess incentive-based compensation provided to our officers in the event of certain restatements of the Group’s financial statements. The policy allows the Group to claw back incentive-based compensation from officers CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 69
who were actually involved in the fraud or misconduct that triggered the accounting restatement to the extent the compensation was in excess of what would have been paid under the accounting restatement. This policy is applicable to all incentive-based compensation paid after implementation of the policy, and it covers the three-year period preceding the date on which the Group is required to prepare the accounting restatement. Tax and Section 162(m) Implications Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for certain “covered employees,” which term includes all of our named executive officers. While we consider the deductibility of awards as one factor in determining officer compensation, we also look at other factors in making decisions and we retain the flexibility to award compensation that we determine to be consistent with the goals of our officer compensation program even if the awards are not deductible by us for tax purposes. 5670 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement
Summary Compensation Table The table below summarizes the total compensation paid or earned by our President & CEO, CFO, and the three most highly compensated officerofficers of the Group for the fiscal years ended December 31, 2021, 2020, 2019, and 2018.2019. | | Name and
Principal Position
(a) | | Year
(b) | | Salary
($)
(c) | | Stock
Awards
($)(1)
(e) | | Non-equity
Incentive Plan
Compensation
($)(2) | | Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings ($)(3)(4)
(h) | | All Other
Compensation
($)(5)
(i) | | Total
($)
(j) | | Total
Excluding
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings(6) | | Name and
Principal Position
(a) | | Year
(b) | | Salary
($)
(c) | | Stock
Awards
($)(1)
(e) | | Non-Equity
Incentive Plan
Compensation
($)(2) | | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings ($)(3)
(h) | | All Other
Compensation
($)(4)(i) | | Total
($)
(j) | | Total
Excluding
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(5) | | | | Martin A. Kropelnicki
President & CEO | | | | | 2020 | | | | $ | 1,059,246 | | | | $ | 880,653 | | | | $ | 1,787,704 | | | | $ | 0 | | | | $ | 49,253 | | | | $ | 3,776,856 | | | | $ | 3,776,856 | | | Martin A. Kropelnicki
President & CEO | | | | | 2021 | | | | $ | 901,872 | | | | $ | 988,682 | | | | | 1,206,000 | | | | $ | 575,989 | | | | | 45,544 | | | | $ | 3,718,087 | | | | $ | 3,142,098 | | | | | | | 2019 | | | | | 985,775 | | | | | 590,006 | | | | | 1,347,255 | | | | | 10,339,051 | | | | | 43,358 | | | | | 13,305,445 | | | | | 2,966,394 | | | | | | 2020 | | | | | 1,059,246 | | | | | 880,653 | | | | | 1,787,704 | | | | | 0 | | | | | 49,253 | | | | | 3,776,856 | | | | | 3,776,856 | | | | | | | 2018 | | | | | 946,716 | | | | | 551,478 | | | | | 1,245,400 | | | | | 3,114,609 | | | | | 45,120 | | | | | 5,913,608 | | | | | 2,798,999 | | | | | | 2019 | | | | | 985,775 | | | | | 590,006 | | | | | 1,347,255 | | | | | 10,339,051 | | | | | 43,358 | | | | | 13,305,445 | | | | | 2,966,394 | | | | | Thomas F. Smegal III
Vice President,
Chief Financial Officer | | | | | 2020 | | | | $ | 493,256 | | | | $ | 153,202 | | | | $ | 249,795 | | | | $ | 0 | | | | $ | 40,218 | | | | $ | 936,471 | | | | $ | 936,471 | | | Thomas F. Smegal III
Vice President,
Chief Financial Officer | | | | | 2021 | | | | $ | 429,032 | | | | $ | 198,497 | | | | | 172,136 | | | | $ | 348,593 | | | | | 42,276 | | | | $ | 1,190,534 | | | | $ | 841,941 | | | | | | | 2019 | | | | | 456,860 | | | | | 153,946 | | | | | 187,346 | | | | | 2,103,003 | | | | | 50,445 | | | | | 2,951,600 | | | | | 848,597 | | | | | | 2020 | | | | | 493,256 | | | | | 153,202 | | | | | 249,795 | | | | | 0 | | | | | 40,218 | | | | | 936,471 | | | | | 936,471 | | | | | | | 2018 | | | | | 428,053 | | | | | 143,884 | | | | | 143,650 | | | | | 56,669 | | | | | 48,519 | | | | | 844,410 | | | | | 787,741 | | | | | | 2019 | | | | | 456,860 | | | | | 153,946 | | | | | 187,346 | | | | | 2,103,003 | | | | | 50,445 | | | | | 2,951,600 | | | | | 848,597 | | | | | Paul G. Townsley
Vice President, Rates &
Regulatory Matters | | | | | 2020 | | | | $ | 434,981 | | | | $ | 153,202 | | | | $ | 220,238 | | | | $ | 295,871 | | | | $ | 37,096 | | | | $ | 1,141,388 | | | | $ | 845,517 | | | Paul G. Townsley
Vice President,
Corporate Development | | | | | 2021 | | | | $ | 378,245 | | | | $ | 192,777 | | | | | 151,795 | | | | $ | 745,224 | | | | | 40,350 | | | | $ | 1,508,391 | | | | $ | 763,167 | | | | | | | 2019 | | | | | 404,425 | | | | | 153,946 | | | | | 165,848 | | | | | 974,213 | | | | | 37,997 | | | | | 1,736,429 | | | | | 762,216 | | | | | | 2020 | | | | | 434,981 | | | | | 153,202 | | | | | 220,238 | | | | | 295,871 | | | | | 37,096 | | | | | 1,141,388 | | | | | 845,517 | | | | | | | 2018 | | | | | 386,163 | | | | | 143,884 | | | | | 127,075 | | | | | 368,199 | | | | | 38,495 | | | | | 1,068,052 | | | | | 699,853 | | | | | | 2019 | | | | | 404,425 | | | | | 153,946 | | | | | 165,848 | | | | | 974,213 | | | | | 37,997 | | | | | 1,736,429 | | | | | 762,216 | | | | | Robert J. Kuta
Vice President,
Engineering | | | | | 2020 | | | | $ | 373,276 | | | | $ | 153,202 | | | | $ | 189,000 | | | | $ | 53,125 | | | | $ | 41,425 | | | | $ | 810,028 | | | | $ | 756,903 | | | Robert J. Kuta
Vice President,
Engineering | | | | | 2021 | | | | $ | 324,508 | | | | $ | 186,898 | | | | | 130,248 | | | | $ | 446,476 | | | | | 47,709 | | | | $ | 1,135,840 | | | | $ | 689,363 | | | | | | | 2019 | | | | | 346,934 | | | | | 153,946 | | | | | 142,301 | | | | | 774,941 | | | | | 46,208 | | | | | 1,464,331 | | | | | 689,390 | | | | | | 2020 | | | | | 373,276 | | | | | 153,202 | | | | | 189,000 | | | | | 53,125 | | | | | 41,425 | | | | | 810,028 | | | | | 756,903 | | | | | | | 2018 | | | | | 324,856 | | | | | 143,884 | | | | | 108,550 | | | | | 290,457 | | | | | 46,237 | | | | | 923,537 | | | | | 633,080 | | | | | | 2019 | | | | | 346,934 | | | | | 153,946 | | | | | 142,301 | | | | | 774,941 | | | | | 46,208 | | | | | 1,464,331 | | | | | 689,390 | | | | | Lynne P. McGhee
Vice President,
General Counsel | | | | | 2020 | | | | $ | 357,598 | | | | $ | 153,202 | | | | $ | 181,388 | | | | $ | 0 | | | | $ | 26,126 | | | | $ | 718,314 | | | | $ | 718,314 | | | Lynne P. McGhee
Vice President,
General Counsel | | | | | 2021 | | | | $ | 311,531 | | | | $ | 185,402 | | | | | 125,022 | | | | $ | 338,697 | | | | | 23,604 | | | | $ | 984,256 | | | | $ | 645,559 | | | | | | | 2019 | | | | | 319,036 | | | | | 153,946 | | | | | 130,835 | | | | | 1,510,569 | | | | | 28,625 | | | | | 2,143,011 | | | | | 632,442 | | | | | | 2020 | | | | | 357,598 | | | | | 153,202 | | | | | 181,388 | | | | | 0 | | | | | 26,126 | | | | | 718,314 | | | | | 718,314 | | | | | | | 2018 | | | | | 306,967 | | | | | 143,884 | | | | | 98,800 | | | | | 206,348 | | | | | 30,547 | | | | | 792,721 | | | | | 586,373 | | | | | | 2019 | | | | | 319,036 | | | | | 153,946 | | | | | 130,835 | | | | | 1,510,569 | | | | | 28,625 | | | | | 2,143,011 | | | | | 632,442 | | |
(1)
Amounts reflect the full grant date fair value of RSAs and performance-based RSUs granted in the years shown, calculated in accordance with FASB Accounting Standards Codification (ASC) Topic 718, disregarding estimates for forfeitures and assuming target performance. Assumptions used in the calculation of these amounts are included in footnote 13 of Group’s annual report on Form 10-K, filed with the SEC on February 25, 2021. For time-based restricted RSAs and performance-based RSUs, the grant date fair value was determined using the closing share price of the Company’s common stock on the date of grant. The RSUs reported were calculated assuming 100% achievement of target of the respective pre-established performance metrics. The amounts reported are as follows: | | | | RSA Grant Date
Fair Value | | RSU Grant Date
Fair Value at
Target Achievement | | RSU Grant Date
Fair Value at
Maximum Achievement | | | RSA Grant Date
Fair Value | | RSU Grant Date
Fair Value at
Target Achievement | | RSU Grant Date
Fair Value at
Maximum Achievement | | | | Mr. Kropelnicki | | | $ | 352,261 | | | | $ | 528,392 | | | | $ | 1,056,784 | | | | | | Mr. Smegal | | | $ | 71,820 | | | | $ | 81,382 | | | | $ | 162,764 | | | | | | Mr. Townsley | | | $ | 71,820 | | | | $ | 81,382 | | | | $ | 162,764 | | | | | | Mr. Kuta | | | $ | 71,820 | | | | $ | 81,382 | | | | $ | 162,764 | | | | | | Ms. McGhee | | | $ | 71,820 | | | | $ | 81,382 | | | | $ | 162,764 | | | | | Mr. Kropelnicki | | | | $ | 468,400 | | | | $ | 520,282 | | | | $ | 1,040,564 | | | | Mr. Smegal | | | | $ | 118,366 | | | | $ | 80,131 | | | | $ | 160,262 | | | | Mr. Townsley | | | | $ | 112,646 | | | | $ | 80,131 | | | | $ | 160,262 | | | | Mr. Kuta | | | | $ | 106,767 | | | | $ | 80,131 | | | | $ | 160,262 | | | | Ms. McGhee | | | | $ | 105,271 | | | | $ | 80,131 | | | | $ | 160,262 | | |
(2)
Amounts in this column reflect the amount paid to each officer pursuant to the performance-based short-term incentive compensation program for the applicable year. (3)
Amounts in this column are the year-over-year, non-cash, changes in the actuarial present value of the accrued pension liability and do not represent actual cash compensation paid to any of the Named Executive Officers. Pension values are included in customer rates through a rate recovery mechanism and may fluctuate significantly from year-to-year depending on a number of factors including changes in the discount rate and other assumptions, changes in compensation, years of service, and vesting. Other than assuming retirement at the unreduced retirement age, all assumptions are consistent with those used in the Group’s financial statements and include amounts which the officers may not be entitled to receive due to vesting requirements consistent with the plans. In 2020, the Company amended the SERP, increasing the plan’s unreduced retirement age from 60 to 65; previously unreduced benefits were available at age 60. This plan change more than offset the present value of benefits earned during the year; the net effect of assumption changes was less significant in 2020 than these other changes. For further information, see the “CEO Pay Overview,” “Basic and Supplemental Pension Plan Benefits,” and “Pension Benefits for Fiscal Year Ended 2020”2021” sections of this Proxy Statement. Earnings on the non-qualified deferred compensation plan are noted on the Non-qualified Deferred Compensation Table for those officers participating in the plan. Earnings have been excluded from this table since earnings were not at above market or at preferential rates. (4)
Amounts for 2020 for each of Messrs. Kropelnicki and Smegal III and Ms. McGhee are presented in the table as $0 in accordance with SEC rules because such amounts consist of the negative change in present value during 2020 due to increasing the supplemental executive retirement plan’s unreduced retirement age from 60 to 65 and changes in the underlying assumptions including discount rates, inflation, and mortality. The negative change in present value for 2020 are as follows: Mr. Martin A. Kropelnicki, $(2,979,848); Mr. Thomas F. Smegal III, $(1,218,578); and Ms. Lynne P. McGhee, $(718,203).
(5)
All other compensation for 20202021 is comprised of 401(k) matching contributions made by the Group on behalf of the officer, the personal use of company-provided vehicles and associated insurance, supplemental medical reimbursement plan, and relocation benefits. The value of the 401(k) matching contributions made by the Group on behalf of the named executives was $17,100$17,400 for all five listed executives. The reported value attributable to personal use of company-provided cars are as follows: Mr. Kropelnicki, $13,027;$8,705; Mr. Smegal, $3,992;$5,436; Mr. Townsley, $870;$3,510; and Mr. Kuta, $5,199; and Ms. McGhee, $2,942.$10,869. The recorded cost for the supplemental medical plan was $17,880$18,240 for all named executive officers, except Ms. McGhee who was $6,084.$6,204. (6)(5)
To show how year-over-year changes in pension value impact total compensation, as determined under SEC rules, we have included this column to show total compensation without pension value changes. The amounts reported in this column differ substantially from, and are not a substitute for, the amounts reported in the “Total” column. CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 5771
Grants of Plan-Based Awards for Fiscal Year Ended 20202021 The table below sets forth certain information with respect to awards granted during the fiscal year ended December 31, 2020,2021, to each of our NEOs. | | | | | | | | | Estimated Payouts Under
Non-Equity Incentive Plan
Awards ($)(1) | | Estimated Payouts Under
Equity Incentive Plan
Awards(2) | | | All
Other
Stock
Awards:
Number
of
Shares of
Stock or
Units (#)
(i) | | Grant
Date
Fair Value
of
Stock and
Options
Awards
($)
(l) | | | | | | | | | Estimated Payouts Under
Non-Equity Incentive Plan
Awards ($)(1) | | Estimated Payouts Under
Equity Incentive Plan
Awards(2) | | | All
Other
Stock
Awards:
Number
of
Shares of
Stock or
Units (#)
(i) | | Grant
Date
Fair Value
of
Stock and
Options
Awards
($)
(l) | | | | Name
(a) | | Grant Date
(b) | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | Name
(a) | | Grant Date
(b) | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | | Martin A. Kropelnicki(3) | | | | 3/3/2020 | | | | $ | 0 | | | | $ | 1,021,545 | | | | $ | 2,043,090 | | | | | 0 | | | | | 10,278 | | | | | 20,556 | | | | | 6,852 | | | | $ | 880,653 | | | Martin A. Kropelnicki(3) | | | | | 1/4/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,274 | | | | $ | 121,545 | | | | | Thomas F. Smegal III(3) | | | | 3/3/2020 | | | | | 0 | | | | | 137,340 | | | | | 274,680 | | | | | 0 | | | | | 1,583 | | | | | 3,166 | | | | | 1,397 | | | | | 153,202 | | | | | | | | | | $ | 324,00 | | | | $ | 900,000 | | | | $ | 1,800,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Paul G. Townsley(3) | | | | 3/3/2020 | | | | | 0 | | | | | 125,850 | | | | | 251,700 | | | | | 0 | | | | | 1,583 | | | | | 3,166 | | | | | 1,397 | | | | | 153,202 | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,428 | | | | $ | 346,855 | | | | | Robert J. Kuta(3) | | | | 3/3/2020 | | | | | 0 | | | | | 108,000 | | | | | 216,000 | | | | | 0 | | | | | 1,583 | | | | | 3,166 | | | | | 1,397 | | | | | 153,202 | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | 2,670 | | | | | 9,642 | | | | | 19,284 | | | | | | | | | $ | 520,282 | | | | | Lynne P. McGhee(3) | | | | 3/3/2020 | | | | | 0 | | | | | 103,660 | | | | | 207,300 | | | | | 0 | | | | | 1,583 | | | | | 3,166 | | | | | 1,397 | | | | | 153,202 | | | Thomas F. Smegal III(3) | | | | | 1/4/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 891 | | | | | 47,624 | | | | | | | | | | | | | | 46,246 | | | | | 128,460 | | | | | 256,920 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,311 | | | | | 70,742 | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | 416 | | | | | 1,485 | | | | | 2,970 | | | | | | | | | | 80,131 | | | | Paul G. Townsley(3) | | | | | 1/4/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 784 | | | | | 41,905 | | | | | | | | | | | | | | 40,781 | | | | | 113,280 | | | | | 226,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,311 | | | | | 70,742 | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | 416 | | | | | 1,485 | | | | | 2,970 | | | | | | | | | | 80,131 | | | | Robert J. Kuta(3) | | | | | 1/4/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 674 | | | | | 36,025 | | | | | | | | | | | | | | 34,922 | | | | | 97,200 | | | | | 194,400 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,311 | | | | | 70,742 | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | 416 | | | | | 1,485 | | | | | 2,970 | | | | | | | | | | 80,131 | | | | Lynne P. McGhee(3) | | | | | 1/4/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 646 | | | | | 34,529 | | | | | | | | | | | | | | 33,588 | | | | | 93,300 | | | | | 186,600 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,311 | | | | | 70,742 | | | | | | | 3/2/2021 | | | | | | | | | | | | | | | | | | | | 416 | | | | | 1,485 | | | | | 2,970 | | | | | | | | | | 80,131 | | |
(1)
The threshold, target, and maximum values reported are for the performance-based short-term incentive compensation program. (2)
The threshold, target, and maximum units reported are for the full RSU award for the 2020 20222021-2023 performance period. (3)
The RSAs granted to the officers on March 3, 2020, pursuantJanuary 4, 2021, vest 100% on January 4, 2022, and the RSAs granted to the Incentive Planofficers on March 2, 2021, vest over three years, with one-third of the RSAs vesting on the first anniversary of the grant date and the remaining RSAs vesting in equal quarterly installments thereafter. The performance-based RSUs reported reflect the grant date fair value of the 20202021 portion of the award as performance goals are set for each year of the performance period. 72 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
Outstanding Equity Awards at Fiscal Year Ended 20202021 | | | | Stock Awards | | Equity Incentive Plan Awards | | | | Stock Awards | | Equity Incentive Plan Awards | | | | | Name
(a) | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
(g) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
(h) | | Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#) | | Market
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(1) | | Name
(a) | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
(g) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
(h) | | Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#) | | Market
Value of
Unearned
Shares,
Units, or
Other
Rights That
Have Not
Vested
($)(1) | | | | | Martin A. Kropelnicki | | | | | 625(2) | | | | | 33,769 | | | | | 7,489(2) | | | | | 404,631 | | | Martin A. Kropelnicki | | | | | 466(2) | | | | $ | 33,487 | | | | | 5,584(2) | | | | $ | 401,266 | | | | | | | | 2,328(3) | | | | | 125,782 | | | | | 5,584(3) | | | | | 301,704 | | | | | | 2,857(3) | | | | | 205,304 | | | | | 10,278(3) | | | | | 738,577 | | | | | | | | 6,852(4) | | | | | 370,214 | | | | | 10,278(4) | | | | | 555,320 | | | | | | 2,274(4) | | | | | 163,410 | | | | | — | | | | | — | | | | | | Thomas F. Smegal III | | | | | 163(2) | | | | | 8,807 | | | | | 1,954(2) | | | | | 105,575 | | | | | | 6,428(5) | | | | | 461,916 | | | | | 9,642(5) | | | | | 692,874 | | | | | | | | 6083) | | | | | 32,850 | | | | | 1,457(3) | | | | | 78,722 | | | Thomas F. Smegal III | | | | | 122(2) | | | | | 8,767 | | | | | 1,457(2) | | | | | 104,700 | | | | | | | | 1,397(4) | | | | | 75,480 | | | | | 1,583(4) | | | | | 85,529 | | | | | | 5833) | | | | | 41,894 | | | | | 1,583(3) | | | | | 113,754 | | | | | | Paul G. Townsley | | | | | 163(2) | | | | | 8,807 | | | | | 1,954(2) | | | | | 105,575 | | | | | | 891(4) | | | | | 64,027 | | | | | — | | | | | — | | | | | | | | 608(3) | | | | | 32,850 | | | | | 1,457(3) | | | | | 78,722 | | | | | | 1,311(5) | | | | | 94,208 | | | | | 1,485(5) | | | | | 106,712 | | | | | | | | 1,397(4) | | | | | 75,480 | | | | | 1,583(4) | | | | | 85,529 | | | Paul G. Townsley | | | | | 122(2) | | | | | 8,767 | | | | | 1,457(2) | | | | | 104,700 | | | | | | Robert J. Kuta | | | | | 163(2) | | | | | 8,807 | | | | | 1,954(2) | | | | | 105,575 | | | | | | 583(3) | | | | | 41,894 | | | | | 1,583(3) | | | | | 113,754 | | | | | | | | 608(3) | | | | | 32,850 | | | | | 1,457(3) | | | | | 78,722 | | | | | | 784(4) | | | | | 56,338 | | | | | — | | | | | — | | | | | | | | 1,397(4) | | | | | 75,480 | | | | | 1,583(4) | | | | | 85,529 | | | | | | 1,311(5) | | | | | 94,208 | | | | | 1,485(5) | | | | | 106,712 | | | | | | Lynne P. McGhee | | | | | 168(2) | | | | | 8,807 | | | | | 1,954(2) | | | | | 105,575 | | | Robert J. Kuta | | | | | 122(2) | | | | | 8,767 | | | | | 1,457(2) | | | | | 104,700 | | | | | | | | 608(3) | | | | | 32,850 | | | | | 1,457(3) | | | | | 78,722 | | | | | | 583(3) | | | | | 41,894 | | | | | 1,583(3) | | | | | 113,754 | | | | | | | | 1,397(4) | | | | | 75,480 | | | | | 1,583(4) | | | | | 85,529 | | | | | | 674(4) | | | | | 48,434 | | | | | — | | | | | — | | | | | | | | | | 1,311(5) | | | | | 94,208 | | | | | 1,485(5) | | | | | 106,712 | | | | | Lynne P. McGhee | | | | | 122(2) | | | | | 8,767 | | | | | 1,457(2) | | | | | 104,700 | | | | | | | | 583(3) | | | | | 41,894 | | | | | 1,583(3) | | | | | 113,754 | | | | | | | | 646(4) | | | | | 46,422 | | | | | — | | | | | — | | | | | | | | | | 1,311(5) | | | | | 94,208 | | | | | 1,485(5) | | | | | 106,712 | | | | |
(1)
The market value of the stock awards represents the product of the closing price for the Group’s common stock on the New York Stock Exchange as of December 31, 2020,2021, which was $54.03,$71.86, and the number of shares underlying each such award. (2)
Awards were granted March 6, 2018, with 33.3% vesting on March 6, 2019, and the remaining 66.7% vesting ratably over 24 months. RSUs are for performance periods 2018, 2019, and 2020 and vest on March 6, 2021.
(3)
Awards were granted on March 5, 2019, with 33.3% vesting on March 5, 2020, and the remaining 66.7% vesting ratably over 24 months. RSUs are for performance periods 2019, 2020, and 2021 and vest on March 5, 2022. (4)(3)
Awards were granted on March 3, 2020, with 33.3% vesting on March 3, 2021, and the remaining 66.7% vesting ratably over 24 months. RSUs are for performance periods 2020, 2021, and 2022 and vest on March 3, 2023. (4)
58 CALIFORNIA WATER SERVICE GROUP | Awards were granted on January 4, 2021, Proxy Statementwith 100% vesting on January 4, 2022.
(5)
Awards were granted on March 2, 2021, with 33.3% vesting on March 2, 2022, and the remaining 66.7% vesting ratably over 24 months. RSUs are for performance periods 2021, 2022, and 2023 and vest on March 2, 2024. Option Exercises and Stock Vested for Fiscal Year Ended 20202021 | | | | | Option Awards | | | Stock Awards | | | | Name
(a) | | | Number of
Shares
Acquired on
Exercise
(#)
(b) | | | Value
Realized on
Exercise
($)
(c) | | | Number of
Shares
Acquired on
Vesting
(#)
(d) | | | Value
Realized on
Vesting
($)
(e) | | | | Martin A. Kropelnicki | | | | | — | | | | | | — | | | | | | 18,171 | | | | | | 886,593 | | | | | Thomas F. Smegal III | | | | | — | | | | | | — | | | | | | 4,741 | | | | | | 231,321 | | | | | Paul G. Townsley | | | | | — | | | | | | — | | | | | | 4,741 | | | | | | 231,321 | | | | | Robert J. Kuta | | | | | — | | | | | | — | | | | | | 4,741 | | | | | | 231,321 | | | | | Lynne P. McGhee | | | | | — | | | | | | — | | | | | | 4,741 | | | | | | 231,321 | | |
| Name (a) | | | Number of
Shares
Acquired on
Exercise
(#)
(b) | | | Value
Realized on
Exercise
($)
(c) | | | Number of
Shares
Acquired on
Vesting
(#)
(d) | | | Value
Realized on
Vesting
($)
(e) | | | Martin A. Kropelnicki | | | | | — | | | | | | — | | | | | | 17,416 | | | | | $ | 951,727 | | | | Thomas F. Smegal III | | | | | — | | | | | | — | | | | | | 4,316 | | | | | | 235,296 | | | | Paul G. Townsley | | | | | — | | | | | | — | | | | | | 4,316 | | | | | | 235,296 | | | | Robert J. Kuta | | | | | — | | | | | | — | | | | | | 4,316 | | | | | | 235,296 | | | | Lynne P. McGhee | | | | | — | | | | | | — | | | | | | 4,316 | | | | | | 235,296 | | |
CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 73
Pension Benefits for Fiscal Year Ended 20202021 The table below shows the present value of accumulated benefits payable to each NEO, including the number of years of service credited to each officer under the California Water Service Pension Plan (“Pension Plan”) and the SERP, each of which is described elsewhere in this Proxy Statement. | | Name
(a) | | Plan
Name (b) | | Number of
Years
Credited
Service
(#)(1)
(c) | | Present
Value of
Accumulated
Benefit
($)(2)
(d) | | Name
(a) | | Plan
Name (b) | | Number of
Years
Credited
Service
(#)(1)
(c) | | Present
Value of
Accumulated
Benefit
($)(2)
(d) | | | | Martin A. Kropelnicki
President & CEO | | | California Water Service Pension Plan | | | | 14.80 | | | | $ | 1,346,028 | | | Martin A. Kropelnicki(3) | | | California Water Service Pension Plan | | | | 15.80 | | | | $ | 1,466,379 | | | | | Supplemental Executive Retirement Plan | | | | 14.80 | | | | | 20,795,585 | | | | Supplemental Executive Retirement Plan | | | | 15.00 | | | | | 21,251,223 | | | | | Thomas F. Smegal III(3)
Vice President, Chief Financial
Officer and Treasurer | | | California Water Service Pension Plan | | | | 23.67 | | | | | 1,806,299 | | | Thomas F. Smegal III(3) | | | California Water Service Pension Plan | | | | 24.67 | | | | | 1,940,206 | | | | | Supplemental Executive Retirement Plan | | | | 15.00 | | | | | 4,096,393 | | | | Supplemental Executive Retirement Plan | | | | 15.00 | | | | | 4,311,080 | | | | | Paul G. Townsley
Vice President, Rates and
Regulatory Matters | | | California Water Service Pension Plan | | | | 7.83 | | | | | 676,659 | | | Paul G. Townsley | | | California Water Service Pension Plan | | | | 8.83 | | | | | 836,633 | | | | | Supplemental Executive Retirement Plan | | | | 7.83 | | | | | 2,717,982 | | | | Supplemental Executive Retirement Plan | | | | 8.83 | | | | | 3,303,231 | | | | | Robert J. Kuta
Vice President, Engineering | | | California Water Service Pension Plan | | | | 5.71 | | | | | 574,886 | | | Robert J. Kuta | | | California Water Service Pension Plan | | | | 6.71 | | | | | 689,323 | | | | | Supplemental Executive Retirement Plan | | | | 5.71 | | | | | 1,254,387 | | | | Supplemental Executive Retirement Plan | | | | 6.71 | | | | | 1,586,425 | | | | | Lynne P. McGhee(3)
Vice President, General Counsel | | | California Water Service Pension Plan | | | | 17.56 | | | | | 1,545,382 | | | Lynne P. McGhee(3) | | | California Water Service Pension Plan | | | | 18.56 | | | | | 1,682,675 | | | | | Supplemental Executive Retirement Plan | | | | 15.00 | | | | | 3,044,372 | | | | Supplemental Executive Retirement Plan | | | | 15.00 | | | | | 3,245,775 | | |
(1)
Assumptions used in the calculation of the present value are included in footnote 12 of Group’s annual report on Form 10-K, filed with the SEC on February 25, 2021.24, 2022. (2)
Includes amounts the NEOs may not currently be entitled to receive because such amounts are not vested. Pension values may fluctuate significantly from year-to-year depending on a number of factors including changes in the discount rate, changes in mortality rates, changes in compensation, years of service, and vesting. (3)
The maximum number of years of credited service under the SERP is 15 years. Mr. Kropelnicki, Mr. Smegal, and Ms. McGhee have both attained the maximum of 15 years of credited service. The benefits under the SERP are obtained by applying similar benefit provisions of the Pension Plan, a tax-qualified plan, to all compensation included under the Pension Plan, without regard to these limits, reduced by benefits actually accrued under the Pension Plan. Under the SERP, all eligible officers are vested after five years of service as an officer and are eligible for the full benefit after 15 years of service and at age 65. SERP participants are eligible for early retirement starting at age 55 and would receive a reduced benefit of their monthly SERP benefit upon early retirement between the ages of 55 and 65, and further adjusted if service credited is less than 15 years. Under the Pension Plan, all eligible employees, including officers, are fully vested after 35 years of service. The SERP is structured such that benefits are paid to officers on a “pay as you go” basis. None of our officers received any payments under the Pension Plan or SERP during 2020.2021. CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 59
The combined maximum benefit payout under the SERP and Pension Plan achievable by an officer is 60% of the average, eligible compensation paid over the previous 36 months prior to retirement, or three highest consecutive years, whichever is higher, excluding any equity compensation. For additional description of the SERP and Pension Plan, see “Basic and Supplemental Pension Plan Benefits (SERP)” on page 5467 in this Proxy Statement. 74 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
Non-Qualified Deferred Compensation for Fiscal Year Ended 20202021 | | Name
(a) | | | Executive
Contributions in
Last FY
($)(1)
(b) | | | Aggregate
Earnings in
Last FY
($)(1)
(d) | | | Aggregate
Withdrawals/
Distributions
($)
(e) | | | Aggregate
Balance at
Last FY
($)(2)
(f) | | | | Martin A. Kropelnicki | | | | $ | 238,770 | | | | | $ | 402,009 | | | | | $ | — | | | | | $ | 2,449,046 | | | | | Thomas F. Smegal III | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Paul G. Townsley | | | | | 40,152 | | | | | | 42,411 | | | | | | — | | | | | | 391,628 | | | | | Robert J. Kuta | | | | | — | | | | | | 1,539 | | | | | | — | | | | | | 14,698 | | | | | Lynne P. McGhee | | | | | — | | | | | | 3,880 | | | | | | — | | | | | | 30,528 | | |
Name
(a) | | | Executive
Contributions in
Last FY
($)(1)
(b) | | | Aggregate
Earnings in
Last FY
($)(1)
(d) | | | Aggregate
Withdrawals/
Distributions
($)
(e) | | | Aggregate
Balance at
Last FY
($)(2)
(f) | | | Martin A. Kropelnicki | | | | $ | 150,600 | | | | | $ | 602,498 | | | | | $ | — | | | | | $ | 3,260,314 | | | | Thomas F. Smegal III | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Paul G. Townsley | | | | | 55,000 | | | | | | 44,490 | | | | | | — | | | | | | 491,118 | | | | Robert J. Kuta | | | | | — | | | | | | 1,480 | | | | | | — | | | | | | 16,178 | | | | Lynne P. McGhee | | | | | — | | | | | | 6,187 | | | | | | — | | | | | | 36,716 | | |
(1)
All of the amounts reported under “Executive Contributions in Last FY” are included in the Summary Compensation Table for 2020.2021. None of the amounts reported under “Aggregate Earnings in Last FY” are included in the Summary Compensation Table for 2020.2021. (2)
The amounts reported under “Aggregate Balance at Last FY” that are included in the Summary Compensation Table in years prior to 20202021 are as follows: Mr. Kropelnicki, $1,340,141;$1,578,911; Mr. Townsley, $249,037;$304,037; Mr. Kuta, $11,282, Ms. McGhee, $12,500. The Deferred Compensation Plan provides specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development, and future business success of the Group. The Deferred Compensation Plan permits the Group’s officers and eligible employees to defer up to 50% of their base salary. In addition, officers can defer up to 100% of their short-term incentive compensation. The Group does not make any contributions to the Deferred Compensation Plan. The Deferred Compensation Plan’s investment options are similar, but not identical, to the Group’s tax-qualified 401(k) plan and are funded by a Rabbi trust created for the funding of such benefits. Benefits under the Deferred Compensation Plan are payable by the Group upon separation from service with the Group, either in lump sum at separation, in monthly installments over five years following separation, or in lump sum or installments commencing five years following separation. Severance Arrangements None of our officers are party to an individual employment agreement. Additionally, our officers are not provided with single-trigger change-in-control benefits. Consistent with the Group’s compensation philosophy, the Committee believes the interests of stockholders are best served if the interests of senior management are aligned with those of our stockholders. To this end, the Group provides change-in-control severance benefits to our officers under the Group’s Executive Severance Plan to reduce any reluctance of our officers to pursue or support potential change-in-control transactions that would be beneficial to our stockholders. The Group adopted the plan in 1998, and its purpose is to promote the continued employment and dedication of our officers without distraction in the face of a potential change-in-control transaction. The Group’s Executive Severance Plan is described in further detail below. Executive Severance Plan The Group adopted the Executive Severance Plan on December 16, 1998. The Executive Severance Plan provides that if within 24 months following a change-in-control of the Group, the officer’s employment is terminated by the Group for any reason other than good cause or by the officer for good reason, the Group will make a cash payment to the officer in an amount equal to three times the officer’s base 60 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
salary on the date of the change-in-control or on the date the officer’s employment terminates, whichever is greater. The payments would be paid in three equal annual installments, commencing on the first of the month following the month in which the officer’s employment terminated, and payable thereafter on the anniversary of the initial payment date. Each officer will also receive a gross-up payment if the officer is required to pay an excise tax under section 4999 of the Internal Revenue Code. This provision for a tax gross-up has been a part of the Executive Severance Plan since its inception in 1998 and has not been modified since then. Each officer’s entitlement to the severance payment is conditioned upon execution of a release agreement. Additionally, the officer forfeits the right to receive the severance payment if he or she violates the non-solicitation and confidentiality provisions of the Executive Severance Plan. CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 75
For purposes of the Executive Severance Plan, the term “change-in-control” means the occurrence of (i) any merger or consolidation of the Group in which the Group is not the surviving organization, a majority of the capital stock of which is not owned by the stockholders of the Group immediately prior to such merger or consolidation; (ii) a transfer of all or substantially all of the assets of the Group; (iii) any other corporate reorganization in which there is a change in ownership of the outstanding shares of the Group, wherein thirty percent (30%) or more of the outstanding shares of the Group are transferred to any person; (iv) the acquisition by or transfer to a person (including all affiliates or associates of such person) of beneficial ownership of capital stock of the Group, if after such acquisition or transfer such person (and their affiliates or associates) is entitled to exercise thirty percent (30%) or more of the outstanding voting power of all capital stock of the Group entitled to vote in elections of directors; or (v) the election to the Board of Directors of the Group of candidates who were not recommended for election by the Board of Directors of the Group in office immediately prior to the election, if such candidates constitute a majority of those elected in that particular election. For purposes of the Executive Severance Plan, “good cause” exists if (i) the applicable officer engages in acts or omissions that result in substantial harm to the business or property of the Group, and that constitute dishonesty, intentional breach of fiduciary obligation, or intentional wrongdoing; or (ii) the applicable officer is convicted of a criminal violation involving fraud or dishonesty. For purposes of the Executive Severance Plan, “good reason” exists if, without the applicable officer’s consent, (i) there is a significant change in the nature or the scope of the applicable officer’s authority, or in his or her overall working environment; (ii) the applicable officer is assigned duties materially inconsistent with his or her present duties, responsibilities, and status; (iii) there is a reduction in the applicable officer’s rate of base salary or bonus; or (iv) the Group changes by 100 miles or more the principal location in which the applicable officer is required to perform services. Had a change-in-control occurred during fiscal year 20202021 and had their employment been terminated on December 31, 2020,2021, either without good cause or by the officer for good reason, the NEOs would have been eligible to receive the payments set forth in the table below. In addition to the Executive Severance Plan, each officer is covered by the Group’s general severance policy. Under the severance policy, each non-union employee of the Group whose employment is terminated without cause is entitled to severance pay of either one week’s pay after completing two years of service or two weeks’ pay after completing five or more years of service, provided at least two weeks’ notice is given. In addition, all officers are entitled to a payout of six weeks of vacation time upon any termination of employment, to be paid in a lump sum at termination. Each officer’s entitlement to the severance payment is conditional upon execution of a release agreement. Additionally, the officer forfeits the right to receive the severance payment if he or she violates the non-solicitation and confidentiality provisions of the Executive Severance Plan. Potential Payments uponUpon Termination or Change-in-Control The information below describes certain compensation that would have become payable under existing plans and contractual arrangements assuming a termination of employment or a change-in-control and termination of employment had occurred on December 31, 2020,2021, given the officer’s compensation and service levels as of such date. In addition to the benefits described below, upon any termination of employment, each of the officers would also be entitled to the benefits as described in the table of CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 61
Pension Benefits for Fiscal Year 20202021 and the amount shown in the column labeled “Aggregate Balance at Last FY” of the table of Non-qualified Deferred Compensation for Fiscal Year 20202021 above. | | Name | | | Change-in-Control
and Termination
of Employment
Severance Amount
($) | | | Termination of
Employment
without a
Change-in-Control
Severance Amount
($) | | | | Martin A. Kropelnicki | | | | $ | 3,064,635 | | | | | $ | 157,161 | | | | | Thomas F. Smegal III | | | | | 1,427,400 | | | | | | 73,200 | | | | | Paul G. Townsley | | | | | 1,258,500 | | | | | | 64,538 | | | | | Robert J. Kuta | | | | | 1,080,000 | | | | | | 48,462 | | | | | Lynne P. McGhee | | | | | 1,036,500 | | | | | | 53,154 | | |
| Name | | | Change-in-Control
and Termination
of Employment
Severance Amount
($) | | | Termination of
Employment
without a
Change-in-Control
Severance Amount
($) | | | Martin A. Kropelnicki | | | | $ | 2,700,000 | | | | | $ | 138,462 | | | | Thomas F. Smegal III | | | | | 1,284,600 | | | | | | 65,877 | | | | Paul G. Townsley | | | | | 1,132,650 | | | | | | 58,085 | | | | Robert J. Kuta | | | | | 972,000 | | | | | | 43,615 | | | | Lynne P. McGhee | | | | | 932,850 | | | | | | 47,838 | | |
202076 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
2021 CEO Pay Ratio | | Measurement | | | Under SEC Rules | | | Excluding Change in
Present Value of
Pension Benefits | | | | CEO Compensation | | | | $ | 3,777,821 | | | | | $ | 3,777,821 | | | | | Median Employee Compensation | | | | $ | 114,592 | | | | | $ | 105,634 | | | | | Ratio | | | | | 1:33 | | | | | | 1:36 | | |
In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median associate. In calculating this ratio, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Our reported pay ratio may not be comparable to that reported by other companies due to differences in industries, scope of operations, business models and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their respective pay ratios. The pay ratio reported below is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records, and the methodology as described. For these purposes, we identified the median compensated employee by first including full-time, part-time, seasonal, and temporary employees, excluding the President & CEO, for a total of 1,1841,183 employees in the median compensation pool. We used actual salary and compensation paid in 2020,2021, as reflected in our payroll records, excluding equity awards and bonus payments as these are not broadly distributed, to determine the median employee. We then calculated the median employee’s total compensation in accordance with SEC rules to determine the pay ratio. We did not annualize the compensation for any employee who did not work for the entire year. We identified our employee population as of December 31, 20202021 based on our payroll records. The 20202021 annual total compensation of the median compensated of all our employees who were employed on December 31, 2020,2021, other than our President & CEO, was $114,592,$140,847 inclusive of $8,958$32,922 of estimated non-cash present value pension changes. Mr. Kropelnicki’s 20202021 annual total compensation was $3,777,821,$3,718,087, of which there$575,989 was nothe estimated change in present value of pension benefits. The ratio of these amounts was 1-to-33.1-to-26. Actual pension benefits earned are contingent upon a number of factors, including years of service, age at retirement, expected life mortality tables, interest rates, and service levelservice-level vesting requirements. Excluding the estimated change in present value of the actuarially projected pension benefits for both Mr. Kropelnicki and our median compensated employee, 20202021 annual compensation of $3,777,821was $3,142,098 and $105,634,$107,925, respectively, resulting in a pay ratio of 1-to-36.1-to-29. | Measurement | | | Under SEC Rules | | | Excluding Change in
Present Value of
Pension Benefits | | | CEO Compensation | | | | $ | 3,718,087 | | | | | $ | 3,142,098 | | | | Median Employee Compensation | | | | $ | 140,847 | | | | | $ | 107,925 | | | | Ratio | | | | | 1:26 | | | | | | 1:29 | | |
62 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 77
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The Organization and Compensation Committee of the Group’s Board of Directors has submitted the following report for inclusion in this Proxy Statement: The Organization and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Organization and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Group’s annual report on Form 10-K for the fiscal year ended December 31, 2020,2021, for filing with the SEC.Securities and Exchange Commission. The foregoing report is provided by the following directors, who constitute the Organization and Compensation Committee: ORGANIZATION AND COMPENSATION COMMITTEE Thomas M. Krummel, M.D., Committee Chair
Terry P. Bayer
Scott L. Morris
Lester A. Snow ORGANIZATION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The following directors were members of the Organization and Compensation Committee during the 20202021 fiscal year: Thomas M. Krummel, M.D., Committee Chair, Terry P. Bayer, Scott L. Morris, and Lester A. Snow. No member of the Organization and Compensation Committee was an officer or employee of the Group or any of its subsidiaries during 2020,2021, nor was any such member previously an officer of the Group or any of its subsidiaries. No member of the Organization and Compensation Committee had any material interest in a transaction of the Group or a business relationship with, in each case that would require disclosure under “Procedures for Approval of Related Person Transactions”, included elsewhere in this Proxy Statement. None of the officers of the Group have served on the Board of Directors or on the Compensation Committee of any other entity, any of whose officers served either on the Board of Directors or on the Organization and Compensation Committee of the Group. PROCEDURES FOR APPROVAL OF RELATED PERSON TRANSACTIONS It is our policy that all employees and Directors must avoid any activity that is in conflict with, or has the appearance of conflicting with, the Group’s business interests. This policy is included in the Code of Business Conduct and Ethics for Directors and the Business Code of Conduct for Employees. Transactions involving related persons are reviewed on a case-by-case basis and approved as appropriate. The Board’s Nominating/Corporate Governance Committee is responsible for review, approval, or ratification of “related person transactions” involving the Group or its subsidiaries and related persons, as defined in SEC rules. Under SEC rules, a related person is a director, executive officer, nominee for director, or a greater than 5% stockholder of the Group since the beginning of the previous fiscal year. Potential related person transactions are brought to the attention of management and the Board in a number of ways. Each of our directors and executive officers is instructed and periodically reminded to inform the Corporate Secretary of any potential related person transactions. In addition, each director and officer completes a questionnaire on an annual basis designed to elicit information about any potential related person transactions. Since the beginning of 2020,2021, there were no related person transactions under the relevant standards. 78 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 63
PROPOSAL NO. 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
| | PROPOSAL 2 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | | | | Our Board of Directors unanimously recommends that you vote “FOR” this proposal. | |
We are asking our stockholders to approve, on a non-binding, advisory basis, under Section 14A of the Exchange Act, the compensation of our NEOs as disclosed in this proxy statement. We have held a similar stockholder vote every year since 2014. As described in the CD&A, our executive compensation program is designed with an emphasis on performance and is intended to closely align the interests of our NEOs with the interests of our stockholders and customers. We regularly review our executive compensation program to ensurewith the goal that compensation is closely tied to aspects of our company’s performance that our NEOs can impact and that are likely to have an impact on stockholder value. Our compensation program is also designed to balance long-term performance with shorter-term performance and to mitigate any risk that an officer would be incentivized to pursue good results with respect to a single performance measure, company segment, or area of responsibility to the detriment of our company as a whole. In the CD&A, we also discuss why we believe the compensation of our NEOs for fiscal 20202021 was appropriately aligned with our company’s performance during fiscal 2020.2021. The CD&A also describes feedback we received regarding our executive compensation program during our stockholder outreach efforts, and is intended to provide additional clarity and transparency regarding the rationale for, and philosophy behind, our executive compensation program and practices. We urge you to carefully read the CD&A, the compensation tables, and the related narrative discussion in this proxy statement when deciding how to vote on this proposal. The vote on this proposal is advisory, which means the vote will not be binding on us, the Organization and Compensation Committee, or the Board. However, we value our stockholders’ opinions, and we will consider the results of the vote on this proposal when making future decisions regarding executive compensation and when establishing our NEOs’ compensation opportunities. The Group is asking stockholders to support the named executive officer compensation as described in this Proxy Statement. The Organization and Compensation Committee and the Board believesbelieve the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving the Group’s goals and the compensation of the Group’s named executive officers reported in this Proxy Statement has supported and contributed to the Group’s success. Accordingly, the Group asks stockholders to vote “FOR” the following resolution at the 20212022 Annual Meeting:
“RESOLVED, that the stockholders of California Water Service Group approve, on an advisory basis, the compensation paid to California Water Service Group’s named executive officers, as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.” This advisory resolution, commonly referred to as a “Say-on-Pay” resolution, is not binding upon the Group, the Organization and Compensation Committee, or the Board. However, the Board and the Organization and Compensation Committee, which is responsible for designing and administering the Group’s executive compensation programs, value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers. After consideration of the vote of stockholders at the 2017 Annual Meeting of Stockholders and other factors, the Board decided to hold advisory votes on the approval of executive compensation annually until the next advisory vote on frequency occurs. Unless the Board modifies its policy on the frequency of future advisory votes, the advisory vote to approve 20212022 executive compensation will be held at the 2022 Annual Meeting. 64 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
Vote Required
Approval of Proposal No. 2 requires the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the2023 Annual Meeting.
Recommendation of the Board Our Board of Directors unanimously recommends that you vote “FOR”“FOR” this proposal. CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 6579
REPORT OF THE AUDIT COMMITTEE The Audit Committee oversees the Group’s financial reporting process on behalf of the Board of Directors. The Audit Committee’s purpose and responsibilities are set forth in the Audit Committee charter. The current charter is available on the Group’s website at http://www.calwatergroup.com.www.calwatergroup.com. The Audit Committee consists of four members, each of whom meet the New York Stock Exchange standards for independence and the Sarbanes-Oxley Act independence standards for Audit Committee membership, and three of the Audit Committee’s four members meet the requirements of an Audit Committee financial expert. During 2020,2021, the Audit Committee met fivefour times. The Group’s management has primary responsibility for preparing the Group’s financial statements and the overall reporting process, including the Group’s system of internal controls. Deloitte & Touche LLP, the Group’s independent registered public accounting firm, audited the financial statements prepared by the Group and expressed their opinion that the financial statements fairly present the Group’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Deloitte & Touche LLP also determined that the Group maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020.2021. In connection with the December 31, 20202021 financial statements, the Audit Committee: (1)
Reviewed and discussed the audited financial statements with management and Deloitte & Touche LLP; (2)
Discussed with Deloitte & Touche LLP the matters required to be discussed under applicable rules of the Public Company Accounting Oversight Board;Board and the Securities and Exchange Commission; (3)
Received from Deloitte & Touche LLP the written disclosures and the letter required by applicable rules of the Public Company Accounting Oversight Board regarding the firm’s communications with the Audit Committee concerning independence, and also discussed with Deloitte & Touche LLP the firm’s independence, and considered whether the firm’s provision of non-audit services and the fees and costs billed for those services are compatible with Deloitte & Touche LLP’s independence; and (4)
Met privately with Deloitte & Touche LLP and the Group’s internal auditor, each of whom has unrestricted access to the Audit Committee, without management present, and discussed their evaluations of the Group’s internal controls and overall quality of the Group’s financial reporting and accounting principles used in preparation of the financial statements. The Committee also met privately with the Group’s President & CEO, the CFO, the Controller, and the General Counsel to discuss the same issues.matters. Based upon these reviews and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the annual report on Form 10-K for the fiscal year ended December 31, 2021 to be filed with the Securities and Exchange Commission. AUDIT COMMITTEE Gregory E. Aliff, Committee Chair
Terry P. Bayer
Richard P. Magnuson
Patricia K. Wagner 6680 CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement
RELATIONSHIP WITH THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the Group’s independent registered public accounting firm. The Audit Committee evaluates the selection of the independent registered accounting firm each year. In addition, the Audit Committee considers the independence of the independent registered public accounting firm each year and periodically considers whether there should be a regular rotation of the independent registered public auditing firm. The Audit Committee also is involved in considering the selection of Deloitte & Touche LLP’s lead engagement partner when rotation is required. Deloitte & Touche LLP has served as the Group’s independent auditor since fiscal 2008. After careful consideration of a number of factors, including the length of time the firm has served in this role, the firm’s past performance, and an assessment of the firm’s qualifications and resources, the Audit Committee has selected Deloitte & Touche LLP to serve as the Group’s independent registered public accounting firm for the year ending December 31, 2021.2022. The Committee’s selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm is being submitted for ratification by vote of the stockholders at this Annual Meeting. The following table summarizes the audit fees relatebilled and expected to services providedbe billed by Deloitte & Touche LLP, the Group’s independent registered public accounting firm, for the indicated fiscal years 2019 and 2020.the fees billed by Deloitte & Touche LLP for all other services rendered during the indicated fiscal years. | | Category of Services | | | 2019 | | | 2020 | | | | Audit Fees(1) | | | | $ | 1,601,200 | | | | | $ | 1,845,126 | | | | | Audit-Related Fees(2) | | | | | 411,610 | | | | | | 121,835 | | | | | Tax Fees | | | | | 0 | | | | | | 0 | | | | | All Other Fees(3) | | | | | 60,050 | | | | | | 0 | | | | | Total | | | | $ | 2,072,860 | | | | | $ | 1,966,961 | | |
| Category of Services | | | 2020 | | | 2021 | | | Audit Fees(1) | | | | $ | 1,845,126 | | | | | $ | 1,810,744 | | | | Audit-Related Fees(2) | | | | | 121,835 | | | | | | 90,708 | | | | Tax Fees | | | | | 0 | | | | | | 0 | | | | All Other Fees | | | | | 0 | | | | | | 0 | | | | Total | | | | $ | 1,966,961 | | | | | $ | 1,901,452 | | |
(1)
The audit services includedAudit fees relate to audits of the Group’s annual financial statements, for the years ended December 31, 2019 and 2020, and quarterly reviews of the Group’s interim financial statements. Also included are fees related tostatements and the audit of the effectiveness of internal control over financial reporting.
(2)
AuditAudit-related fees related fees for the year ended December 31, 2020 included accounting due diligence services for Group’s business development efforts andto comfort letter fees associated with Group’s at-the-market equity program.
(3)
The services comprising the fees disclosed under “All Other Fees” included non-tax advisory and consulting supply chain strategy services.
Fees reported in the above table are those billed or expected to be billed for audit services related to that fiscal year and for other services rendered during that fiscal year.
The Audit Committee is responsible for overseeing audit fee negotiations associated with the retention of Deloitte & Touche LLP for the audit of the Group. Additionally, it is the policy of the Audit Committee, as set forth in its charter, to approve in advance all audit and permissible non-audit services to be provided by the independent registered public accounting firm, as well as related fees. Under applicable law, the Audit Committee may delegate preapproval authority to one or more of its members, and any fees preapproved in this manner must be reported to the Audit Committee at its next regularly scheduled meeting. All of the fees reported in the table above were pre-approved in accordance with these procedures. CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 6781
PROPOSAL NO. 3 – RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021
| | PROPOSAL 3 — RATIFICATION OF SELECTION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2022 | | | | Our Board of Directors unanimously recommends that you vote “FOR” this proposal. | |
After consideration, and as a matter of good corporate governance, the Board is requesting stockholder ratification of Deloitte & Touche LLP as the independent registered public accounting firm, to audit the Group’s books, records, and accounts for the year ending December 31, 2021.2022. The members of the Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP to serve as the Group’s independent registered public accounting firm is in the best interests of the Group and its stockholders. Following the recommendation of the Audit Committee, the Board recommends a vote “FOR” the adoption of this proposal. Representatives of Deloitte & Touche LLP are expected to be present at the meeting to answer appropriate questions from stockholders and will have an opportunity to make a statement if they desire to do so. If the stockholders do not ratify this appointment, the Audit Committee will reconsider the selection of the independent registered public accounting firm. Recommendation of the Board Our Board of Directors unanimously recommends that you vote “FOR” this proposal. 82 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
| | PROPOSAL 4 — APPROVAL OF AMENDMENT TO THE GROUP’S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK | | | | Our Board of Directors unanimously recommends that you vote “FOR” this proposal. | |
We are asking stockholders to approve an amendment to the Group’s Certificate of Incorporation to increase the authorized number of common shares, par value $0.01 per share (the “Common Stock”), from 68,000,000 to 136,000,000(1) shares (the “Proposed Certificate Amendment”). Specifically, the Proposed Certificate Amendment, which our Board of Directors has approved and declared advisable, would amend Article FOURTH as follows: “FOURTH: The aggregate number of shares of all classes of stock which the corporation shall have authority to issue shall be 68,241,000136,241,000, of which 68,000,000136,000,000 shares shall be common shares, par value $0.01 per share, and 241,000 shares shall be preferred shares. The par value of the preferred shares shall be $0.01 per share. The preferred shares may be issued from time to time in one or more series as noted above, the number of shares constituting each such series to be determined by the board of directors of the corporation pursuant to the authority contained in this certificate. The preferred shares may, at the election of the board of directors, be issued in fractional shares if required in connection with any stock split or otherwise. All of said 68,000,000136,000,000 common shares shall be of one and the same series, namely common shares with par value of $0.01 per share.” Under the Proposed Certificate Amendment, the authorized number of shares of preferred stock, of which none are currently outstanding, would remain unchanged. Purposes of the Proposed Amendment As of March 29, 2022, the Record Date, our Common Stock share utilization was as follows: | | | | Number of Shares of
Common Stock | | | Authorized for issuance | | | | | 68,000,000 | | | | Issued and outstanding | | | | | 53,768,871 | | | | Reserved for issuance | | | | | | | | •
Outstanding equity awards under our equity incentive plans | | | | | 1,472,500 | | | •
Available for future grants under our equity incentive plans | | | | | 527,500 | | | •
Outstanding under our Employee Stock Purchase Plan | | | | | 122,132 | | | •
Available for future issuance under our Employee Stock Purchase Plan | | | | | 1,377,868 | | | | Total share usage (issued and outstanding + reserved for issuance) | | | | | 55,674,239 | | | | Total share usage as a percentage of authorized | | | 81.87% | |
As a result, only approximately 12,325,761 shares of our Common Stock (or 18.13% of the total authorized) remain available for future issuance. Our Board of Directors believes that the availability of additional authorized shares of Common Stock is needed to provide us with additional flexibility to issue Common Stock for a variety of general corporate purposes as the Board of Directors may determine to be desirable. This includes, but is not limited to, using Common Stock as consideration for acquisitions, mergers, business combinations or other corporate transactions, raising equity capital, including any future at-the-market equity programs, adopting additional employee benefit plans or reserving additional shares for issuance under existing plans and implementing stock splits or stock dividends. Unless our stockholders approve the Proposed Certificate Amendment, we may not have sufficient unissued and unreserved authorized shares to engage in similar transactions in the future. Having additional authorized Common Stock available for future use will allow us to issue additional shares of Common Stock without the expense and delay of arranging a special meeting of stockholders. We may seek a further increase in authorized shares from time to time in the future as considered appropriate by our Board of Directors. CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 83
Effect of Increasing the Number of Shares of Authorized Common Stock The Proposed Certificate Amendment would not change the number of shares of Common Stock outstanding, nor will it have any immediate dilutive effect. However, the issuance of additional shares of Common Stock authorized by the Proposed Certificate Amendment may occur at times or under circumstances as to have a dilutive effect on earnings per share, book value per share or the percentage voting or ownership interest of the present holders of our Common Stock, none of whom have preemptive rights under the Certificate of Incorporation to subscribe for additional securities that we may issue. The Proposed Certificate Amendment has been prompted by business and financial considerations. The Board of Directors currently is not aware of any attempt by a third-party to accumulate shares of Common Stock or take control of the Group by means of a merger, tender offer or solicitation in opposition to management or the Board of Directors. Moreover, we currently have no plans to issue newly authorized shares of Common Stock to discourage third parties from attempting to take over the Group. However, the Proposed Certificate Amendment could, under certain circumstances, have an anti-takeover effect or delay or prevent a change in control of the Group by providing the Group the capability to engage in actions that would be dilutive to a potential acquiror, to pursue alternative transactions, or to otherwise increase the potential cost to acquire control of the Group. Thus, while we currently have no intent to use the additional authorized shares as an anti-takeover device, the Proposed Certificate Amendment may have the effect of discouraging future unsolicited takeover attempts. Once the Proposed Certificate Amendment is approved, no further action by the stockholders would be necessary prior to the issuance of additional shares of Common Stock unless required by law or New York Stock Exchange rules. Each of the newly authorized shares of Common Stock will have the same rights and privileges as currently authorized shares of Common Stock. Adoption of the Proposed Certificate Amendment will not affect the rights of the holders of currently outstanding Common Stock, nor will it change the par value of the Common Stock. A complete copy of the Group’s current Certificate of Incorporation is available as an exhibit to our 2021 Annual Report on Form 10-K (http://ir.calwatergroup.com). Effectiveness and Vote Required RatificationThe Proposed Certificate Amendment is binding. If the Proposed Certificate Amendment is approved, it will become effective upon filing of the selectionCertificate Amendment to our Certificate of Incorporation with the independent registered public accounting firmSecretary of State for 2021 requires the State of Delaware.
The affirmative vote of a majority of the outstanding shares present in person or represented by proxyof Common Stock will be required to approve this proposal. Abstentions and entitled tobroker non-votes, if any, will have the same effect as a vote atagainst the Annual Meeting.proposal. Recommendation of the Board Our Board of Directors unanimously recommends that you vote “FOR”“FOR” this proposal. OTHER MATTERSINFORMATION Stock Ownership of Management and Certain Beneficial Owners Non-Employee Director and Executive Stock Ownership Guidelines The Board of Directors requires non-employee directors to maintain a certain amount of stock ownership consistent with our stock ownership requirements. The requirements were adopted to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and executive officers. A more complete description of the stock ownership requirements appears in the “Compensation Discussion and Analysis” section of this Proxy Statement. 84 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
The following table shows the common stock ownership of our directors and executives as of March 29, 2022. All directors and executives have sole voting and investment power over their shares (or share such powers with their spouses). | Name | | | Common Stock
Beneficially
Owned(*) | | Gregory E. Aliff, Director | | | | | 15,138 | | | Terry P. Bayer, Director | | | | | 16,257 | | | Shannon C. Dean, Executive Officer | | | | | 16,844 | | | Shelly M. Esque, Director | | | | | 7,875 | | | David B. Healey, Executive Officer | | | | | 16,546 | | | Sophie M. James, Executive Officer for California Subsidiary | | | | | 1,503 | | | Kenneth G. Jenkins, Executive Officer for California Subsidiary | | | | | 767 | | | Martin A. Kropelnicki, Director and Executive Officer | | | | | 106,775 | | | Thomas M. Krummel, M.D., Director | | | | | 30,634 | | | Robert J. Kuta, Executive Officer | | | | | 13,572 | | | Michael B. Luu, Executive Officer | | | | | 18,658 | | | Richard P. Magnuson, Director | | | | | 59,733 | | | Yvonne A. Maldonado, M.D., Director | | | | | 2,671 | | | Michael S. Mares, Jr., Executive Officer | | | | | 5,302 | | | Lynne P. McGhee , Executive Officer | | | | | 26,746 | | | Greg A. Milleman , Executive Officer | | | | | 5,067 | | | Scott L. Morris, Director | | | | | 5,248 | | | Michelle R. Mortensen, Executive Officer | | | | | 9,383 | | | Peter C. Nelson, Director and Retired Executive Officer | | | | | 19,640 | | | Elissa Y. Ouyang , Executive Officer | | | | | 7,709 | | | Todd K. Peters, Executive Officer for California Subsidiary | | | | | 3,139 | | | Carol M. Pottenger, Director | | | | | 9,219 | | | Thomas F. Smegal III, Executive Officer | | | | | 45,108 | | | Lester A. Snow, Director | | | | | 20,874 | | | Paul G. Townsley, Executive Officer | | | | | 28,361 | | | Ronald D. Webb , Executive Officer | | | | | 21,810 | | | Patricia K. Wagner, Director | | | | | 5,245 | | | | All directors and executives as a group | | | | | 519,824 | | |
*
To our knowledge, as of March 29, 2022, all directors and executives together beneficially owned an aggregate of approximately 1.0% of outstanding common shares. No one director or executive beneficially owns more than 1.0% of outstanding common shares. Ownership of Largest Stockholders As of December 31, 2021, our records and other information available from outside sources indicated that the following stockholders were the beneficial owner of more than 5% percent of the outstanding shares of our common stock. The information below is as reported in filings made by third parties with the SEC. Based solely on the review of our stockholder records and public filings made by the third parties with the SEC, we are not aware of any other beneficial owners of more than 5% percent of the common stock. CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 85
| Beneficial Owner | | | Number of Shares of
Common Stock | | | Percent of Class | | BlackRock, Inc.(1)
55 East 52nd Street
New York, NY 10055 | | | | | 9,468,858 | | | | | | 18.0% | | | The Vanguard Group, Inc.(2)
100 Vanguard Blvd.
Malvern, PA 19355 | | | | | 6,242,029 | | | | | | 11.87% | | | State Street Corporation(3)
1 Lincoln Street
Boston, MA 02111 | | | | | 3,995,363 | | | | | | 7.59% | | |
(1)
BlackRock, Inc. has sole voting power over 9,119,676 shares and sole investment power over 9,468,858 shares, and no shared voting power or shared investment power as of December 31, 2021, as disclosed on Schedule 13G/A filed with the SEC on January 27, 2022. (2)
The Vanguard Group, Inc. has sole voting power over 0 shares; sole investment power over 6,130,102 shares; shared voting power over 73,533 shares; and shared investment power over 111,927 shares as of December 31, 2021, as disclosed on Schedule 13G/A filed with the SEC on February 9, 2022. (3)
State Street Corporation (“State Street”) has shared voting power over 3,823,147 shares, shared investment power over all 3,995,363 shares, and no sole voting power or sole investment power over any shares as of December 31, 2021, as disclosed on Schedule 13G/A filed with the SEC on February 10, 2022. Adjournment Notice of adjournment need not be given if the date, time, and place thereof are announced at the Annual Meeting at which the adjournment is taken. However, if the adjournment is for more than 30 days, or if a new record date is fixed for the adjourned Annual Meeting, a notice of the adjourned Annual Meeting will be given to each stockholder entitled to vote at the Annual Meeting. At adjourned annual meetings, any business may be transacted that might have been transacted at the original Annual Meeting. Cost of Proxy Solicitation The Group is soliciting proxies on behalf of the Board and will bear the entire cost of preparing, assembling, printing, and mailing this Proxy Statement, the proxies, and any additional materials whichthat may be furnished by the Board to stockholders. The solicitation of proxies will be made by the use of the U.S. Postal Service and also may be made by telephone, or personally, by directors, officers, and regular employees of the Group, who will receive no extra compensation for such services. Morrow Sodali, LLC, 470 West Avenue, Stamford, CT 06902 was hired to assist in the distribution of proxy materials and solicitation of votes for a $9,000an $11,000 fee, plus distribution expenses. The Group will reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders. Electronic Availability of Proxy Statement and Annual Report As permitted by Securities and Exchange Commission rules, we are making this proxy statement and our annual report available to stockholders electronically via the Internet on the Company’s website at http://ir.calwatergroup.com. On April 13, 2022, we began mailing to our stockholders a notice containing instructions on how to access this proxy statement and our annual report and how to vote online. If you received that notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained on the notice or set forth in the following paragraph. You can elect to receive future Proxy Materials by email, which will save us the cost of producing and mailing documents to you by enrolling at www.ProxyVote.com. If you choose to receive future Proxy Materials by email, you will receive an email with instructions containing a link to the website where those materials are available and where you can vote. Other Matters The Board is not aware of any other matters to come before the Annual Meeting. If any other matters should be brought before the Annual Meeting or any adjournment or postponement thereof, upon 68 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
which a vote properly may be taken, the proxy holders will vote in their discretion unless otherwise provided in the proxies. 86 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
The report of the Organization and Compensation Committee, and the report of the Audit Committee, are not to be considered as incorporated by reference into any other filings that the Group makes with the SEC under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. These portions of this Proxy Statement are not a part of any of those filings unless otherwise stated in those filings. Code of Ethics
The Group has adopted written codes of ethics for all directors, officers, and employees. The codes are posted on the Group’s website at http://www.calwatergroup.com. The codes are also available in written form upon request to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508.
Stockholders Sharing an Address The SEC allows the Group to deliver a single proxy statement and annual report to an address shared by two or more of our stockholders. This delivery method, referred to as “householding,” can result in significant cost savings for the Group. In order to take advantage of this opportunity, banks and brokerage firms that hold shares for stockholders who are the beneficial owners, but not the record holders, of the Group’s shares, have delivered only one proxy statement and annual report to multiple stockholders who share an address, unless one or more of the stockholders has provided contrary instructions. For stockholders who are the record holders of the Group’s shares, the Group may follow a similar process absent contrary instructions. The Group will deliver promptly, upon written or oral request, a separate copy of the proxy statement and annual report to a stockholder at a shared address to which a single copy of the documents was delivered. A stockholder who wishes to receive a separate copy of the proxy statement and annual report, now or in the future, may obtain one, without charge, by addressing a request to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508 or calling (408) 367-8200. Stockholders of record sharing an address who are receiving multiple copies of proxy materials and annual reports and wish to receive a single copy of such materials in the future should submit their request by contacting the Group in the same manner. If you are the beneficial owner, but not the record holder, of the Group’s shares and wish to receive only one copy of the proxy statement and annual report in the future, you will need to contact your broker, bank, or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future. Copies of Annual Report on Form 10-K The Group, upon written request, will furnish to record and beneficial holders of its common stock, free of charge, a copy of its Annual Report on Form 10-K (including financial statements and schedules, but without exhibits) for fiscal year 2020.2021. Copies of exhibits to Form 10-K also will be furnished upon request for a payment of a fee of $0.50 per page. All requests should be directed to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508. Electronic copies of the Group’s Form 10-K, including exhibits and this Proxy Statement, will be available on the Group’s website at http://www.calwatergroup.com.www.calwatergroup.com. Disclaimer Regarding Website The information contained on the Group’s website, including the Environmental, Social, and Governance Report, is not to be deemed included or incorporated by reference into this Proxy Statement. CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 6987
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING What am I voting on? ►•
Election of the twelve12 directors named in the Proxy Statement to serve until the 20222023 Annual Meeting; ►•
An advisory vote to approve executive compensation; and ►•
Ratification of the selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm for 2021.2022; and •
Approval of an amendment to the Certificate of Incorporation to increase the authorized common stock. Who may attend the Annual Meeting? Any stockholders of the Group as of the record date may attend. How can I attend the Annual Meeting? This year, we plan to hold the Annual Meeting online through an audio webcast. This format will enable stockholders to attend the meeting and participate from any location, at no cost. You will be able to attend the Annual Meeting online at www.virtualshareholdermeeting.com/CWT2022CWT2021. You will also be able to vote your shares online at the Annual Meeting (see below). If you are the record holder, to participate in the Annual Meeting, you will need the control number included on your proxy card. If your shares are held through a stockbroker or another nominee, and your voting instruction form indicates that you may vote those shares through www.proxyvote.com, then you may participate in the Annual Meeting with the access code indicated on that voting instruction form. Otherwise, stockholders who hold their shares through a stockbroker or another nominee should contact their broker or nominee (preferably at least five days before the Annual Meeting) and obtain a “legal proxy” in order to be able to participate in the Annual Meeting, or voting instruction card (if your shares are held through a stockbroker or another nominee). We encourage you to access the Annual Meeting 15 minutes prior to the start time and allow ample time to log in to the meeting webcast and test your computer audio system. Additional information regarding the rules and procedures for participating in the Annual Meeting will be set forth in our meeting rules of conduct, which stockholders can view during the meeting at the meeting website. How can I ask questions at the Annual Meeting? Stockholders may submit questions live during the Annual Meeting at www.virtualshareholdermeeting.com/CWT2021CWT2022. The Group is committed to transparency. All questions received during the Annual Meeting that comply with the meeting rules of conduct, and the Group’s responses, will be posted to our Investor Relations website at http://ir.calwatergroup.com/ promptly after the Annual Meeting. Personal details may be omitted for data protection purposes. If we receive substantially similar questions, we may group these questions together and provide a single response to avoid repetition. What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the meeting website? The technical support telephone number will be posted on the Virtual Shareholder Meeting login page, www.virtualshareholdermeeting.com/CWT2021CWT2022. If you encounter any difficulties, please call the number and speak to a technical support representative. 70 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
Who is entitled to vote? Stockholders of record on the record date are entitled to vote. The Board has fixed the close of business on March 30, 202129, 2022 as the record date (Record Date) for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. 88 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
How many votes do I get? Each share of common stock is entitled to one vote. What constitutes a quorum? A majority of the outstanding shares – present at the Annual Meeting or represented by persons holding valid proxies – constitutes a quorum. If you submit a valid proxy card, your shares will be considered in determining whether a quorum is present. Without a quorum, no business may be transacted at the Annual Meeting. However, whether or not a quorum exists, a majority of the voting power of those present at the Annual Meeting may adjourn the Annual Meeting to another date, time, and place. At the Record Date, there were 1,9241,889 stockholders of record. There were 50,824,14253,768,871 shares of our common stock outstanding and entitled to vote at the Annual Meeting. How are the directors elected? Our bylaws provide for a majority voting standard for the election of directors in uncontested elections. Under this majority voting standard, each director must be elected by the affirmative vote of a majority of the votes cast with respect to the director. A majority of the votes cast means that the number of votes cast “FOR” a nominee for director exceeds the number of votes cast “AGAINST” that nominee for director. As a result, abstentions will not be counted in determining which nominees receive a majority of votes cast since abstentions do not represent votes cast for or against a nominee. If you hold your shares through a stockbroker (or other nominee), the stockbroker does not have authority to vote your shares in the election of directors without instructions from you. Shares that your stockbroker does not vote (“broker non-votes”) are not considered votes cast for or against a nominee, and they will not be counted in determining which nominees receive a majority of votes cast. In accordance with our director resignation policy, the Nominating/Corporate Governance Committee has established procedures that require an incumbent nominee for director who does not receive the required votes for re-election to tender his or her resignation offer to the Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee will recommend to the Board whether to accept or reject the offer, or whether other action should be taken. The Board will act on the Nominating/Corporate Governance Committee’s recommendation within 90 days after certification of the election results. We will promptly publicly disclose the Board’s decision regarding the resignation offer, including the rationale for rejecting the resignation offer, if applicable. Who are the Board’s nominees?
The nominees are Gregory E. Aliff, Terry P. Bayer, Shelly M. Esque, Martin A. Kropelnicki, Thomas M. Krummel, M.D., Richard P. Magnuson, Yvonne A. Maldonado, M.D., Scott L. Morris, Peter C. Nelson, Carol M. Pottenger, Lester A. Snow, and Patricia K. Wagner. All of the nominees, except for Dr. Maldonado, are current Board members. See “Proposal No. 1 – Election of Directors” for biographical information and qualifications.
CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 71
What are the Board’s voting recommendations?
►
“FOR” each of the nominees to the Board (Proposal No. 1);
►
“FOR” the proposal regarding an advisory vote to approve executive compensation (Proposal No. 2); and
►
“FOR” the ratification of the selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm for 2021 (Proposal No. 3).
How do I vote? If you are a stockholder of record (that is, you hold your shares in your own name), you may vote in advance of the Annual Meeting online, by telephone or, by mail, or you may vote online during the Annual Meeting. Different rules apply if your stockbroker or another nominee holds your shares for you (see below).you. CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 89
| | | | | | | | | | | | | | You may vote online. | | | | You may vote by telephone. | | | | You may vote by mail. | | | | You do this by following the “Vote by Internet” instructions on the proxy card. If you vote online, you do not have to mail in your proxy card. Even if you plan to attend the Annual Meeting online, we recommend that you vote your shares prior to the meeting so that your vote will be counted if you later decide not to attend. | | | | You do this by following the “Vote by Phone” instructions on the proxy card. If you vote by telephone, you do not have to mail in your proxy card. You must have a touch-tone phone to vote by telephone. | | | | You do this by signing the proxy card and mailing it in the enclosed, prepaid, and addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct. If you return a signed card but do not provide voting instructions, your shares will be voted: ►•
For each of the twelve12 named director nominees; ►•
For the advisory vote to approve executive compensation; and ►•
For the ratification of the selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm for 2021.2022: and •
For the approval of the amendment to our Certificate of Incorporation to increase the authorized common stock. | |
What if I change my mind after I return my proxy? You may revoke your proxy and/or change your vote at any time before the polls close at the Annual Meeting. You may do this by: ►•
Signing another proxy with a later date; ►•
Voting online or by telephone (your latest online or telephone proxy is counted); ►•
Voting online during the Annual Meeting; or ►•
Notifying the Corporate Secretary, in writing, that you wish to revoke your previous proxy. We must receive your notice prior to the vote at the Annual Meeting. Will my shares be voted if I do not return my proxy? If you are a stockholder of record, and you do not return your proxy, your shares will not be voted unless you attend the Annual Meeting and vote online during the meeting. 72 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
How do I vote if my shares are held by my stockbroker (or other nominee)? If your shares are held by a stockbroker (or other nominee), you may vote your shares without participating in the Annual Meeting, or online during the Annual Meeting if you choose not to attend. You will receive a voting instruction card with information about how to instruct your stockbroker on how to vote your shares. If you do not provide instructions, then your stockbroker, under certain circumstances, may vote your shares. Specifically, stockbrokers have authority under exchange regulations to vote your uninstructed shares on certain “routine” matters. For “non-routine” matters, no votes will be cast on your behalf if you do not instruct your stockbroker on how to vote. If you wish to change the voting instructions that you gave to your stockbroker, you must ask your stockbroker how to do so. 90 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
If you do not give your stockbroker voting instructions, your stockbroker may either: ►•
Proceed to vote your shares on routine matters and refrain from voting on non-routine matters; or ►•
Leave your shares entirely unvoted.unvoted (and we are aware that some stockbrokers are choosing to leave shares entirely unvoted on routine matters). Shares that your stockbroker does not vote (“broker non-votes”) will count towards the quorum only. We encourage you to provide your voting instructions to your stockbroker. This ensures that your shares will be voted at the Annual Meeting. As to my stockbroker voting, which proposals are considered “routine” or “non-routine”? The ratification of the selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm for 20212022 (Proposal No. 3) isand the approval of an amendment to the Certificate of Incorporation to increase the authorized common stock (Proposal No. 4) are expected to be considered “routine”. matters under applicable rules. A stockbroker may generally vote on routine matters if the stockbroker has not received voting instructions from you with respect to such matters. The election of directors (Proposal No. 1) and the advisory vote to approve executive compensation (Proposal No. 2) are mattersexpected to be considered “non-routine” matters under applicable rules. A stockbroker cannot vote without your instructions on non-routine matters. What is the voting requirement to approve each of the proposals? | | Proposal | | | Vote Required | | | | | | | Proposal No. 1 – Election of twelve12 directors | | | Majority of Votes Cast | | | | | Proposal No. 2 – Advisory vote to approve executive compensation | | | Majority of Shares Present in Person or Represented by Proxy and Entitled to Vote | | | | | Proposal No. 3 – Ratify the selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm for 20212022 | | | Majority of Shares Present in Person or Represented by Proxy and Entitled to Vote | | | | Proposal No. 4 – Approval of an amendment to the Certificate of Incorporation to increase the authorized common stock | | | Majority of Shares Outstanding and Entitled to Vote | |
How are broker non-votes and abstentions treated? Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Only “FOR” and “AGAINST” votes are counted for purposes of determining the votes received in connection with the proposal relating to the election of directors (Proposal No. 1), and therefore broker non-votes and abstentions have no effect on that proposal. Stockbrokers may not vote your shares on Proposal No. 1 without instructions from you. The affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve Proposal No. 2 and Proposal No. 3. Proposal No. 2 is advisory, meaning that it is not binding on the Board, CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement 73
although the Board will consider the outcome of the vote on this proposal. Abstentions have the effect of a vote “AGAINST” Proposal No. 2 and Proposal No. 3. Stockbrokers may vote your shares on Proposal No. 3 (but not on Proposal No. 2) without instructions from you. Shares resulting in broker non-votes, if any, are not entitled to vote and will have no effect on the outcome of these proposals. The affirmative vote of the majority of the shares outstanding and entitled to vote at the Annual Meeting is required to approve Proposal 4. Abstentions and broker non-votes, if any, have the effect of a vote “AGAINST” Proposal 4. Who will count the vote? Representatives of Broadridge Financial Services, Proxy Services, will serve as the inspector of elections and count the votes. CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement 91
What does it mean if I receive more than one proxy card? It means that you have multiple accounts at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to ensure that all your shares are voted. What percentage of stock do the directors and executive officers own?
Together, directors and executive officers own approximately 1.0% of our common stock. See “Stock Ownership of Management and Certain Beneficial Owners” for more details elsewhere in this Proxy Statement.
Who are the largest common stockholders?
As of December 31, 2020, the largest stockholders were:
►
BlackRock, Inc. beneficially owned 8,253,577 shares of common stock, representing 16.6% of our aggregate outstanding stock as of such date;
►
The Vanguard Group, Inc. beneficially owned 5,731,833 shares of common stock, representing 11.50% of our aggregate outstanding stock as of such date; and
►
State Street Corporation, beneficially owned 3,770,555 shares of common stock, representing 7.57% of our aggregate outstanding stock as of such date.
*
To the best of our knowledge, no other stockholders held more than 5% of our common shares as of such date.
Where can I access a list of stockholders? The Group’s list of registered stockholders as of March 30, 2021,29, 2022, the Record Date, will be available for inspection for ten10 days prior to the Annual Meeting, in accordance with applicable law. The list of stockholders will also be available during the Annual Meeting through the meeting website for those stockholders who choose to attend. What is the deadline for submitting stockholder proposals for inclusion in the Group’s proxy materials for next year’s Annual Meeting? Any proposals that stockholders intend to submit for inclusion in next year’s Group proxy materials must be received by the Corporate Secretary of the Group by the close of business (5:00 p.m. Pacific Time) on December 15, 2021.14, 2022. A proposal, together with any supporting statement, may not exceed 500 words and must comply with other requirements of Rule 14a-8 under the Securities Exchange Act of 1934. Please submit the proposal to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508. 74 CALIFORNIA WATER SERVICE GROUP | 2021 Proxy Statement
How can a stockholder propose a nominee for the Board or other business for consideration at a stockholders’ meeting? Stockholders who are entitled to vote at a stockholders’ meeting may propose a nominee for the Board or other business for consideration at a meeting without seeking to have the matter included in the proxy materials for the Annual Meeting pursuant to Rule 14a-8. The bylaws contain the requirements for doing so. The bylaws are posted on the Group’s website at http://www.calwatergroup.com.www.calwatergroup.com. Physical copies of these documents are also available upon request to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, CA 95112-4508. Briefly, a stockholder must give timely prior notice of the matter to the Group. The notice must be received by the Corporate Secretary at the Group’s principal place of business no less than 90 days before and no more than 120 days before the first anniversary of the prior year’s Annual Meeting. For the 20222023 Annual Meeting, to be timely, notice must be received by the Corporate Secretary not later than the close of business (5:00 p.m. Pacific Time) between January 26, 202225, 2023 and February 25, 2022.24, 2023. If we change the date of the Annual Meeting by more than 30 days before or more than 60 days after the date of the previous meeting, notice is due not less than 90 days nor more than 120 days before the Annual Meeting or the 10th day after we publicly announce the holding of the Annual Meeting. If the Group’s Corporate Secretary receives notice of a matter after the applicable deadline, the notice will be considered untimely. In that case, or where notice is timely but the stockholder fails to satisfy the requirements of Rule 14a-4 under the Securities Exchange of 1934, the persons named as proxies may exercise their discretion in voting with respect to the matter when and if it is raised at the Annual Meeting. The bylaws specify what the notice must contain. Stockholders must comply with applicable law with respect to matters submitted in accordance with the bylaws. The bylaws do not affect any stockholder’s right to request inclusion of proposals in the Group’s Proxy Statement under Rule 14a-8. In addition to satisfying the deadlines in the advance notice provisions of our bylaws, stockholders who intend to solicit proxies in support of nominees submitted under these advance notice provisions for the 2023 Annual Meeting must provide the notice required under Rule 14a-19 to the Corporate Secretary not later than the close of business (5:00 p.m. Pacific Time) on March 26, 2023. How can a stockholder or other interested parties contact the independent directors, the director who chairs the Board’s executive sessions, or the full Board? Stockholders or other interested parties may address inquiries to any of the Group’s directors, to the lead director (who chairs the Board’s executive sessions), or to the full Board, by email to stockholdercommunication@calwater.com or by writing to them in care of the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508. All such communications are sent directly to the intended recipient(s). 92 CALIFORNIA WATER SERVICE GROUP | 2022 Proxy Statement
Where and when will I be able to find the results of the voting? Preliminary results will be announced at the Annual Meeting. We will publish the final results in a current report on Form 8-K to be filed with the Securities and Exchange Commission (“SEC”) within four business days of the Annual Meeting. CALIFORNIA WATER SERVICE GROUP | 20212022 Proxy Statement 7593
![[MISSING IMAGE: tm212302d1-pc_califorpg1bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-21-050200/tm212302d1-pc_califorpg1bw.jpg) ![[MISSING IMAGE: tm223371d2-px_01pagebw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-045470/tm223371d2-px_01pagebw.jpg) ignature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateTOSCAN TOVIEW MATERIALS & VOTE
CALIFORNIA WATER SERVICE GROUPATTN: MICHELLE MORTENSEN1720 NORTH FIRST STREETSAN JOSE, CA 95112-4508
VOTE BY INTERNETBefore The Meeting - Go to www.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery ofinformation. Vote by 11:59 p.m. Eastern Time May 24, 2022 for shares held directly and by11:59 p.m. Eastern Time May 22, 2022 for shares held in a Plan. Have your proxy card inhand when you access the web site and follow the instructions to obtain your records and tocreate an electronic voting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/CWT2022You may attend the meeting via the Internet and vote during the meeting. Have the informationthat is printed in the box marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by11:59 p.m. Eastern Time May 24, 2022 for shares held directly and by 11:59 p.m. Eastern Timeon May 22, 2022 for shares held in a Plan. Have your proxy card in hand when you calland then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope wehave provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:KEEP THIS PORTION FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLYD46373-P507582. Advisory vote to approve executive compensation.The Board of Directors recommends you vote FORproposals 2 and 3.3. Ratification of the selection of Deloitte & Touche LLP asthe Group's independent registered public accountingfirm for 2021.NOTE: I authorize the proxies to vote according to theirdiscretion on any other matters that properly come beforethe Annual Meeting of Stockholders or any adjournment orpostponement thereof.For Against AbstainFor Against AbstainFor Against Abstain! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !! ! !CALIFORNIAONLY
CALIFORNIA WATER SERVICE GROUPCALIFORNIA WATER SERVICE GROUPATTN: MICHELLE MORTENSEN1720 NORTH FIRST STREETSAN JOSE, CA 95112-45081a.GROUP1a. Gregory E. Aliff1e. Thomas M. Krummel, M.D.1c. Shelly M. Esque1g. Yvonne A. Maldonado, M.D.1j. Carol M. Pottenger1b. Terry P. Bayer1f. Richard P. Magnuson1d. Martin A. Kropelnicki1h. Scott L. Morris1k. Lester A. Snow1i. Peter C. Nelson1l. Patricia K. Wagner1. ELECTION OF DIRECTORSNominees:The Board of Directors recommends you vote FOR eachof the nominees listed in proposal 1.Please1. For Against Abstain The Board of Directors recommends you vote FORproposals 2, 3, and 4.3. Ratification of the selection of Deloitte & Touche LLP asthe Group's independent registered public accountingfirm for 2022.4. Approval of Amendment to the Group’s Certificate ofIncorporation to Increase the Number of AuthorizedShares of Common Stock.NOTE: I authorize the proxies to vote according to theirdiscretion on any other matters that properly come beforethe Annual Meeting of Stockholders or any adjournment orpostponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,administrator, or other fiduciary, please give full title as such. Joint ownersJointowners should each signpersonally.sign personally. All holders must sign. If a corporation or partnership, please sign in full corporateorcorporate or partnership name by authorized officer.VOTE BY INTERNETBefore The Meeting - Go to www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic deliveryof information up until 11:59 p.m. Eastern Time on May 25, 2021. Have yourproxy card in hand when you access the web site and follow the instructions toobtain your records and to create an electronic voting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/CWT2021You may attend the meeting via the Internet and vote during the meeting. Havethe information that is printed in the box marked by the arrow available andfollow the instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until11:59 p.m. Eastern Time on May 25, 2021. Have your proxy card in hand whenyou call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paidenvelope we have provided or return it to Vote Processing, c/o Broadridge,51 Mercedes Way, Edgewood, NY 11717.Importantofficer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Proxy Statement and the Annual Report on Form 10-K are available at www.proxyvote.com.D46374-P50758
![[MISSING IMAGE: tm212302d1-pc_califorpg2bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-21-050200/tm212302d1-pc_califorpg2bw.jpg) www.proxyvote.com. D80129-P69687 CALIFORNIA WATER SERVICE GROUPTHIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSMARTIN A. KROPELNICKI and MICHELLE R. MORTENSEN, and each of them with full power of substitution, are hereby authorizedtoauthorized to vote, as designated on the reverse side, all the shares of California Water Service Group common stock of the undersigned attheat the Annual Meeting of Stockholders of California Water Service Group to be held on May 26, 2021,25, 2022, or at any adjournment orpostponementor postponement thereof (including, if applicable, for the election of a person toany substitute nominee named by the Board of Directors if any nominee named inproposalin proposal 1 becomes unavailable to serve). By my signature on the reverse side of this proxy, I acknowledge that I have receivedareceived a copy of the Notice of Meeting and Proxy Statement relating to this meeting and of the Group's most recent Annual Report toStockholders.THISto Stockholders.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNEDSTOCKHOLDER(S)UNDERSIGNED STOCKHOLDER(S), AND IN THE DISCRETION OF THE PROXY HOLDERS UPON ANY OTHER MATTER THAT MAY PROPERLY COMEBEFORECOME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF NO DIRECTION IS MADE, THIS PROXYWILLPROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3, AND FORPROPOSAL 3.PleaseFOR PROPOSAL 4.Please date, sign and mail in the enclosed envelope, or vote by Internet or telephone, as soon as possible.Continued and to be signed on reverse side
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