def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a party other than the Registrant o
Check the appropriate box:
o |
|
Preliminary Proxy Statement |
|
o |
|
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
þ |
|
Definitive Proxy Statement |
|
o |
|
Definitive Additional Materials |
|
o |
|
Soliciting Material Under Rule 14a-12 |
California Water Service Group
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
|
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
(3) |
|
Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): |
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
(5) |
|
Total fee paid: |
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing. |
|
|
(1) |
|
Amount Previously Paid: |
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
(3) |
|
Filing Party: |
|
|
|
(4) |
|
Date Filed: |
California Water Service
Group
California Water Service Company, Hawaii Water Service
Company,
New Mexico Water Service Company, Washington Water Service
Company, CWS Utility Services, and HWS Utility Services
1720
North First Street
San Jose, CA
95112-4598
(408) 367-8200
April 7, 2008
Dear Fellow Stockholder:
You are cordially invited to attend our Annual Meeting of
Stockholders at 9:30 a.m. on May 27, 2008, at the
executive offices of California Water Service Group, located at
1720 North First Street in San Jose, California.
Enclosed are a notice of matters to be voted on at the meeting,
our Proxy Statement, a proxy card and our 2007 Annual Report.
Whether or not you plan to attend, your vote is important.
Please vote your shares, as soon as possible, in one of three
ways: via mail, telephone or Internet. Instructions regarding
Internet and telephone voting are included on the proxy card. If
you choose to vote by mail, please mark, sign and date the proxy
card and return it in the enclosed postage-paid envelope.
In a continued effort to reduce costs and conserve natural
resources, we produced a summary annual report this year, opting
not to duplicate the financial information that continues to be
provided in the
10-K. We
care about what you think of the report. Please send your
feedback to annualreport@calwater.com.
Thank you for your investment in the California Water Service
Group.
Sincerely,
ROBERT W. FOY
CHAIRMAN OF THE BOARD
2008
ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT
TABLE OF
CONTENTS
This Proxy Statement, dated April 7, 2008, relates to the
solicitation of proxies by the Board of Directors of California
Water Service Group for use at our 2008 Annual Meeting of
Stockholders, which is scheduled to be held on May 27,
2008. We expect to begin mailing this Proxy Statement to
stockholders on or about April 15, 2008.
|
|
|
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
6
|
|
|
|
|
10
|
|
|
|
|
12
|
|
|
|
|
14
|
|
|
|
|
26
|
|
|
|
|
27
|
|
|
|
|
27
|
|
|
|
|
28
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
|
|
30
|
|
For directions to the Annual Meeting, please refer to the map
included as the last page of the proxy.
CALIFORNIA
WATER SERVICE GROUP
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of California Water Service
Group will be held on May 27, 2008, at 9:30 a.m., at
the Executive Offices of California Water Service Group, 1720
North First Street, San Jose, California
95112-4598,
for the following purposes:
1. Election of directors;
2. Ratify the selection of Deloitte & Touche LLP
as the Groups independent registered public
accountants; and
3. To consider such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
March 31, 2008, as the record date for the determination of
holders of common and preferred stock entitled to notice of and
to vote at the Annual Meeting.
Please submit a proxy as soon as possible so that your shares
can be voted at the meeting in accordance with your
instructions. You may submit your proxy: (a) via the mail,
(b) by telephone, or (c) by Internet. For specific
instructions, please refer to Questions and Answers About
the Proxy Materials and the Annual Meeting of this Proxy
Statement and the instructions on the proxy card.
By Order of the Board of Directors
LYNNE P. MCGHEE, Esq.
Corporate Secretary
1
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL
MEETING
What am I
voting on?
|
|
|
|
|
Election of nine directors to serve until the 2009 Annual
Meeting.
|
|
|
|
Ratification of the Audit Committees selection of
Deloitte & Touche LLP as the Groups independent
registered public accounting firm for 2008.
|
Those elected to serve as directors of California Water Service
Group, which we refer to in this Proxy Statement as the Group,
will also serve as the directors of California Water Service
Company and CWS Utility Services, two of the Groups
operating subsidiaries.
Who may
attend the Annual Meeting?
All Group stockholders may attend.
Who is
entitled to vote?
Stockholders of record at the close of business on
March 31, 2008 (the Record Date), or those with
a valid proxy from a brokerage firm or another similar
organization which held shares on the Record Date.
How many
votes do I get?
Each share of common stock is entitled to one vote. Each share
of preferred stock is entitled to 16 votes. You may also use
cumulative voting in the election of directors as
described below.
What is
cumulative voting and how does it work?
You may elect to cumulate your vote in the election
of directors. Cumulative voting permits you to allocate among
the director nominees the total number of votes you may cumulate.
If you hold common stock, the total number of votes you may
cumulate is determined by multiplying the number of shares you
hold by the number of director positions to be filled. For
example, if you own 100 shares of common shock, you may
distribute 900 FOR votes (100 shares x
9 director positions to be filled) among as few or as many
of the nine director nominees as you choose.
Because each preferred share is entitled to 16 votes, preferred
stockholders may cumulate 144 votes (16 votes per share x
9 director positions to be filled) for each share owned.
Thus, if you hold preferred stock, the total number of votes you
may cumulate is determined by multiplying the number of shares
you hold by the number of votes you may cumulate per share. For
example, if you own 100 shares of preferred stock, you may
distribute 14,400 FOR votes (100 shares x 144
votes you may cumulate per share) among as few or as many of the
nine director nominees as you choose.
If you wish to cumulate your vote for director nominees, you
must follow the special instructions on the proxy card or voting
instruction card and vote by mail. If you do not indicate
otherwise, the proxies may use their discretion to cumulate
votes.
How are
the directors elected?
The nine nominees receiving the highest number of votes are
elected to the Board. Common and preferred shares vote together
on directors.
Who are
the Boards nominees?
The nominees are Douglas M. Brown, Robert W. Foy, Edwin A.
Guiles, Edward D. Harris, Jr., M.D., Bonnie G. Hill,
Richard P. Magnuson, Linda R. Meier, Peter C. Nelson, and George
A. Vera. All the nominees are current Board members. See
Proposal No. 1 Election of
Directors for biographical information, including the
nominees current directorships in other publicly held
companies.
2
What is
the required vote for the second proposal to pass?
In order for the Audit Committees selection of
Deloitte & Touche LLP as independent registered public
accounting firm to be ratified, the proposal must receive the
affirmative vote of a majority of the shares present in person
or represented by proxy and entitled to vote at the meeting.
How do I
vote?
You may vote by mail.
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.
You may vote by telephone.
You do this by following the Vote by Telephone
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 may vote on the Internet.
You do this by following the Vote by Internet
instructions on the proxy card. If you vote on the Internet, you
do not have to mail in your proxy card.
You may vote in person at the meeting.
We will hand out written ballots to anyone who wants to vote at
the meeting. If you hold your shares in street name, you must
request a legal proxy from your stockbroker in order to vote at
the meeting.
If you return a signed card but do not provide voting
instructions, your shares will be voted:
|
|
|
|
|
for the nine named director nominees
|
|
|
|
for the ratification of the selection of the independent
registered public accounting firm
|
We have been advised by legal counsel that these telephone and
Internet voting procedures comply with Delaware law.
What if I
change my mind after I return my proxy?
You may revoke your proxy any time before the polls close at the
meeting. You may do this by:
|
|
|
|
|
signing another proxy with a later date,
|
|
|
|
voting by telephone or on the Internet (your latest telephone or
Internet proxy is counted),
|
|
|
|
voting again at the 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 (that is, you hold your
shares in your own name), and you do not return your proxy, your
shares will not be voted unless you attend the meeting and vote
in person. Different rules apply if your stockbroker holds your
shares for you.
What
happens if my shares are held by my stockbroker?
If you do not return your proxy then your stockbroker, under
certain circumstances, may vote your shares.
Stockbrokers must write to you asking how you want your shares
voted. However, if you do not respond, stockbrokers have
authority under exchange regulations to vote your unvoted shares
on certain routine matters,
3
including election of directors and ratification of the
selection of the independent registered public accounting firm.
If you wish to change voting instructions you give to your
stockbroker, you must ask your stockbroker how to do so.
If you do not give your stockbroker voting instructions, the
stockbroker may either:
|
|
|
|
|
proceed to vote your shares on routine matters and refrain from
voting on nonroutine matters, or
|
|
|
|
leave your shares entirely unvoted.
|
Shares that your stockbroker does not vote (stockbroker
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
meeting.
You may have granted to your stockbroker discretionary voting
authority over your account. If so, your stockbroker may be able
to vote your shares even on nonroutine matters, depending on the
terms of the agreement you have with your stockbroker.
What
happens if I abstain from voting on a proposal?
If you abstain from voting on a proposal (either by proxy or in
person at the Annual Meeting), your shares will be counted in
determining whether we have a quorum, but the abstention will
have the same effect as a vote against a proposal.
Who will
count the vote?
Representatives of American Stock Transfer and
Trust Company, our transfer agent, will serve as the
inspector of elections and count the votes.
What does
it mean if I get 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
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 part of the quorum.
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 2,813 stockholders of record.
There were 20,715,612 shares of our common stock
outstanding and entitled to vote at the Annual Meeting and
139,000 shares of our preferred stock outstanding and
entitled to be voted at the Annual Meeting.
What
percentage of stock do the directors and executive officers
own?
Together, they own less than one percent of our common and
preferred stock. See Stock Ownership of Management and
Certain Beneficial Owners for more details.
Who are
the largest common stockholders?
As of April 7, 2008, the largest principal stockholder was
SJW Corp., which held 1,099,952 shares of common stock,
representing 5.3% of our aggregate outstanding common stock. To
the best of our knowledge, no other stockholders held over 5% of
our common shares.
4
What is
the deadline for submitting stockholder proposals for the
Groups proxy materials for next years Annual
Meeting?
Any proposals which stockholders intend to present at the 2009
Annual Meeting of Stockholders must be received by the Corporate
Secretary of the Group by December 28, 2008, in order to be
considered for inclusion in the Groups 2009 proxy
materials. A proposal and any supporting statement together may
not exceed 500 words. Please submit the proposal to Corporate
Secretary, California Water Service Group, 1720 North First
Street, San Jose, California
95112-4598.
How can a
stockholder propose a nominee for the Board?
Any stockholder of record who is entitled to vote at a
stockholders meeting may propose a nominee for the Board.
The bylaws contain the requirements for doing so. Contact the
Corporate Secretary to request a copy of the full bylaw
requirements. Briefly, a stockholder must give timely prior
notice to the Group. The notice must be received by the
Corporate Secretary at the Groups principal place of
business by the 150th day before the first anniversary of
the prior years Annual Meeting. If we move the date of the
meeting by more than thirty days before or more than sixty days
after the date of the previous meeting, notice is due by the
150th day before the Annual Meeting or the 10th day
after we publicly announce the holding of the meeting.
If the Board calls a special meeting to elect directors,
stockholder notice is due by the 150th day prior to that
meeting or the 10th day after we publicly announce the
holding of the special meeting and identify the Boards
director nominees. The bylaws do not affect the rights of
preferred holders to nominate directors where they are otherwise
entitled to do so.
The bylaws specify what the notice must contain. The notice
deadline for the 2008 Annual Meeting was January 6, 2008.
How can a
stockholder propose business at a stockholders
meeting?
Any stockholder of record who is entitled to vote at a
stockholders meeting may propose business for the meeting.
Just as with nominations, the bylaws contain the requirements.
Contact the Corporate Secretary and request a copy of the full
bylaw requirements. The stockholder must give timely prior
notice to the Group. The deadlines are the same as for
stockholder nominations discussed above. If the Groups
Secretary receives a proposal after that deadline it will be
considered untimely, and the persons named in the proxy for the
2008 meeting may exercise their discretion in voting with
respect to the proposal.
The bylaws specify what the notice must contain. Stockholders
must comply with all requirements of the securities laws
regarding proposals. The bylaws do not affect any stockholder
right to request inclusion of proposals in the Groups
Proxy Statement under the rules of the Securities and Exchange
Commission.
Because of the
150-day
notice requirement discussed above, stockholders who have not
given prior notice may not raise a proposal (or a nomination) at
this years meeting.
How can a
stockholder or other interested party contact the independent
directors, the director who chairs the Boards executive
sessions or the full Board?
Stockholders or other interested parties may address inquiries
to any of the Groups directors, to the director who chairs
the Boards executive sessions, or to the full Board, by
writing to Corporate Secretary, California Water Service Group,
1720 North First Street, San Jose, California
95112-4598.
All such communications are sent directly to the intended
recipient.
Can I
make comments and/or ask questions during the Annual
Meeting?
Yes, most certainly. Stockholders wishing to address the meeting
are welcome to do so by adhering to the following guidelines:
1. Stockholders may address the meeting when recognized by
the Chairman or President and Chief Executive Officer.
5
2. Each stockholder, when recognized, should stand and
identify himself or herself.
3. Stockholder remarks must be limited to matters before
the meeting and may not exceed two minutes in duration per
speaker. No cameras, video or recording equipment will be
permitted at the meeting.
BOARD
STRUCTURE
This section briefly describes the structure of the Board and
the functions of the principal committees of the Board. The
charters for the Audit, Organization and Compensation, Finance
and Nominating/Corporate Governance committees are posted on the
Groups website at
http://www.calwatergroup.com.
The charters are also available in written form upon request to
the Corporate Secretary, California Water Service Group, 1720
North First Street, San Jose, California
95112-4598.
The Groups policy is that all directors must be able to
devote the required time to carry out director responsibilities
and should attend all meetings of the Board and of committees on
which they sit.
Committees:
AUDIT: Reviews the Groups auditing,
accounting, financial reporting and internal audit functions.
Also, the Committee is directly responsible for the appointment,
compensation and oversight of the independent registered public
accounting firm, although stockholders are asked to ratify the
Committees selection. All members are nonemployee
directors, are independent as defined in the listing standards
of the New York Stock Exchange and meet the additional
independence requirements for audit committee members imposed by
the Sarbanes-Oxley Act and the rules of the SEC thereunder. The
Group has not relied on any exemptions in the SECs rules
from the audit committee independence requirements.
The Board has determined that George A. Vera, chair of the Audit
Committee, is a financial expert and is independent as defined
in the rules of the SEC and in the listing standards of the New
York Stock Exchange. This means that the Board believes
Mr. Vera has:
(i) an understanding of generally accepted accounting
principles and financial statements;
(ii) the ability to assess the general application of such
principles in connection with the accounting for estimates,
accruals and reserves;
(iii) experience preparing, auditing, analyzing or
evaluating financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable
to the breadth and complexity of issues that can reasonably be
expected to be raised by the Groups financial statements,
or experience actively supervising one or more persons engaged
in such activities;
(iv) an understanding of internal control over financial
reporting; and
(v) an understanding of Audit Committee functions.
Designation of a person as an audit committee financial expert
does not result in the person being deemed an expert for any
purpose, including under Section 11 of the Securities Act
of 1933. The designation does not impose on the person any
duties, obligations or liability greater than those imposed on
any other audit committee member or any other director and does
not affect the duties, obligations or liability of any other
member of the Audit Committee or Board of Directors.
ORGANIZATION AND COMPENSATION: Reviews the
Groups executive and director compensation, employee
benefit plans and programs, including their establishment,
modification and administration. All members are nonemployee
directors and independent as defined in the listing standards of
the New York Stock Exchange.
For a description of the processes and procedures used by the
Organization and Compensation Committee for the consideration
and determination of executive and director compensation, see
Compensation Discussion & Analysis
elsewhere in this Proxy Statement.
6
FINANCE: Assists the Board in reviewing the
Groups financial policies, strategies and capital
structure, and makes reports and recommendations to the Board as
the committee deems advisable. All members are nonemployee
directors and independent as defined in the listing standards of
the New York Stock Exchange.
NOMINATING/CORPORATE GOVERNANCE: Assists the
Board by (i) identifying candidates and nominating
individuals qualified to become Board members and
(ii) developing and recommending a set of corporate
governance principles applicable to the Group. All members are
nonemployee directors and are independent as defined in the
listing standards of the New York Stock Exchange. The full
responsibilities of the Nominating/Corporate Governance
Committee are set forth in its charter, a copy of which is
posted on the Groups website at
http://www.calwatergroup.com.
EXECUTIVE: Has limited powers to act on behalf
of the Board whenever it is not in session. This committee meets
only as needed. The committee consists of four nonemployee
directors and one employee director.
During 2007, there were eleven regular meetings of the Board,
four meetings of the Audit Committee, two meetings of the
Organization and Compensation Committee, one meeting of the
Finance Committee, two meetings of the Nominating/Corporate
Governance Committee and one meeting of the Executive Committee.
Each of the director-nominees who served on the Board of
California Water Service Group in 2007 attended at least 91% of
all Board and applicable committee meetings. Collectively, they
attended an average of 99% of all of the Board and applicable
committee meetings.
Independence
of Directors
The Board has adopted a standard of director independence. The
standard determines that a director is independent if he or she
has no material relationship, whether commercial, industrial,
banking, consulting, accounting, legal, charitable or familial,
with the Group, either directly or indirectly as a partner,
stockholder or officer of an entity that has a material
relationship with the Group.
A director is not independent if he or she fails the standard
for independence in Section 303A of the New York Stock
Exchange Listed Company Manual or the Groups independence
standards. The following relationships or transactions
disqualify a person from being considered independent under the
Exchanges standards:
|
|
|
|
|
the director has a material relationship (including, among
others, commercial, industrial, banking, consulting, legal,
accounting, charitable and familial relationships) with
companies that comprise the Group;
|
|
|
|
the director is, or has been within the last three years, an
employee of companies that comprise the Group or an immediate
family member is, or has been within the last three years, an
executive officer of any company that comprises the Group;
|
|
|
|
receipt during any twelve-month period within the past three
years by the person, or by an immediate family member of the
person, of more than $100,000 in direct compensation from
companies that comprise the Group, other than director or
committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is
not contingent in any way on continued service);
|
|
|
|
the director or an immediate family member is a current partner
of the Groups internal or external auditor; the director
is a current employee of such a firm; the directors
immediate family member is a current employee of such a firm who
participates in the firms audit, assurance or tax
compliance (but not tax planning) practice or the director or an
immediate family member was in the last three years (but is no
longer) a partner or employee of such a firm and personally
worked on the Groups audit within that time;
|
|
|
|
employment of the director or of an immediate family member
within the last three years as an executive officer of a company
whose Organization and Compensation Committee includes an
executive officer of the Group; and
|
|
|
|
being an employee or having an immediate family member who is an
executive officer of a customer or vendor or other party which
has made payments to or received payments from companies that
comprise the Group for property or services of at least 2% or
$1 million, whichever is greater, of the partys
consolidated gross revenues, in any of the past three years.
|
7
The Board has determined that none of the following
relationships, in itself, is material for purposes of these
standards:
|
|
|
|
|
being a residential customer of the Group;
|
|
|
|
being an executive officer or employee, or being otherwise
affiliated with, a commercial customer from which the
Groups consolidated gross revenues in any of the last
three years are or were not more than the greater of (i) 1%
of the Groups consolidated gross revenues for the year or
(ii) $500,000;
|
|
|
|
being an executive officer or employee of a supplier or vendor
that has or had consolidated gross revenues from the Group in
any of the last three years of not more than the lesser of
(i) 1% of the Groups consolidated gross revenues for
the year or (ii) $500,000;
|
|
|
|
having a 5% or greater ownership interest or similar financial
interest in a supplier or vendor that has or had consolidated
gross revenues from the Group in any of the last three years of
not more than the lesser of (i) 1% of the Groups
consolidated gross revenues for such year or
(ii) $500,000; and
|
|
|
|
being a director of any of the Groups subsidiaries.
|
If a director is eligible for treatment as an independent
director under Section 303A, but has a relationship with
the Group other than one of the five relationships described
above, the Board of Directors or the Nominating/Corporate
Governance Committee will review the facts and circumstances of
the relationship and make a good faith determination whether it
considers the director independent in light of the purposes of
the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange
Listing Standards and, if it determines that the director is
independent, will disclose the basis for its determination in
the Groups Proxy Statement for its next Annual Meeting of
Stockholders as required by applicable laws and regulation.
In making a determination regarding independence of a director,
the Board of Directors will consider, among other things, the
materiality of the relationship to the Group, to the director,
and, if applicable, to the organization with which the director
is affiliated.
The Board has determined that a majority of the members of the
Board meet the standard and also are independent, as
defined in the listing standards of the New York Stock Exchange.
Director
Qualifications
The Group seeks directors with the following specific
qualifications:
|
|
|
|
|
shows evidence of leadership in
his/her
particular field;
|
|
|
|
has broad experience and exercises sound business judgment;
|
|
|
|
has expertise in an area of importance to Group and its
subsidiaries;
|
|
|
|
is able to work in a collegial Board environment;
|
|
|
|
has high personal and professional ethics and integrity;
|
|
|
|
is able to devote the required time to carry out director
responsibilities;
|
|
|
|
has the ability and willingness to contribute special
competencies to Board activities, to include appointment to
Board committees;
|
|
|
|
is free from conflicts of interest which would interfere with
serving and acting in the best interests of the Group and its
stockholders;
|
|
|
|
has proven to be a high caliber individual who has achieved a
level of prominence in his or her career; for example, a CEO or
highest level financial officer of a sizeable organization, a
director of a major corporation, a prominent civic or academic
leader, etc.
|
In addition, Section 2.8 of the Groups bylaws
contains requirements which a person must meet to avoid
conflicts of interest which would disqualify that person from
serving as a director.
8
Identification
of Director Nominees
The Group identifies new director candidates by director
recommendations and by the use of search firms selected by the
Nominating/Corporate Governance Committee.
The Group considers nominees of stockholders in the same manner
as all other nominees. The Group will consider director nominees
recommended by stockholders who adhere to the procedure
described under Questions and Answers About the Proxy
Materials and the Annual Meeting How can a
stockholder propose a nominee for the Board? elsewhere in
this Proxy Statement.
Executive
Sessions of the Board
As required by the listing standards of the New York Stock
Exchange, the Group schedules regular executive sessions of
directors in which directors meet without management
participation. Mr. Douglas M. Brown has been appointed by
the Board as lead director and to chair these sessions.
Corporate
Governance Guidelines
The Board has adopted corporate governance guidelines as defined
by the listing standards of the New York Stock Exchange. The
guidelines are posted on the Groups website at
http://www.calwatergroup.com.
The guidelines are also available in written form upon request
to Corporate Secretary, California Water Service Group,
1720 North First Street, San Jose, California
95112-4598.
Retirement
Age of Directors
The Group has established a mandatory retirement age for
directors. A director must retire no later than the Annual
Meeting that follows the date of the directors
75th birthday. An employee director must retire as an
employee no later than the Annual Meeting that follows the date
of their 70th birthday, but may remain on the Board at the
discretion of the Board.
Annual
Meeting Attendance
All directors are expected to attend each Annual Meeting of the
Groups stockholders, unless attendance is prevented by an
emergency. All of the Groups directors who were in office
at that time attended the Groups 2007 Annual Meeting of
Stockholders.
Our directors as of April 7, 2008, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Term
|
|
Director
|
Name
|
|
Age
|
|
Position
|
|
Expires
|
|
Since
|
|
Douglas M. Brown(1)(2)(5)(8)(11)(12)
|
|
|
70
|
|
|
Lead Director
|
|
|
2008
|
|
|
|
2001
|
|
Robert W. Foy(10)
|
|
|
71
|
|
|
Chairman of the Board and Director
|
|
|
2008
|
|
|
|
1977
|
|
Edwin A. Guiles(12)
|
|
|
58
|
|
|
Director
|
|
|
2008
|
|
|
|
2008
|
|
Edward D. Harris, Jr., M.D.(1)(5)(7)(12)
|
|
|
70
|
|
|
Director
|
|
|
2008
|
|
|
|
1993
|
|
Bonnie G. Hill(3)(5)(12)
|
|
|
66
|
|
|
Director
|
|
|
2008
|
|
|
|
2003
|
|
Richard P. Magnuson(1)(2)(3)(4)(9)(12)
|
|
|
52
|
|
|
Director
|
|
|
2008
|
|
|
|
1996
|
|
Linda R. Meier(1)(2)(3)(5)(12)
|
|
|
67
|
|
|
Director
|
|
|
2008
|
|
|
|
1994
|
|
Peter C. Nelson(1)
|
|
|
60
|
|
|
President, Chief Executive Officer and Director
|
|
|
2008
|
|
|
|
1996
|
|
George A. Vera(4)(6)(12)
|
|
|
64
|
|
|
Director
|
|
|
2008
|
|
|
|
1998
|
|
|
|
|
(1) |
|
Member of the Executive Committee |
|
(2) |
|
Member of the Audit Committee |
|
(3) |
|
Member of the Organization and Compensation Committee |
9
|
|
|
(4) |
|
Member of the Finance Committee |
|
(5) |
|
Member of the Nominating/Corporate Governance Committee |
|
(6) |
|
Chair of the Audit Committee |
|
(7) |
|
Chair of the Organization and Compensation Committee |
|
(8) |
|
Chair of the Finance Committee |
|
(9) |
|
Chair of the Nominating/Corporate Governance Committee |
|
(10) |
|
Chair of the Executive Committee |
|
(11) |
|
Chair of Boards Executive Sessions |
|
(12) |
|
Independent director |
PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are nine nominees for election to our Board this year.
Except for the newest director, Edwin A. Guiles, all of the
nominees have served as directors since the last Annual Meeting.
Mr. Guiles fills the director position formerly held by
David N. Kennedy, who retired in 2007. Mr. Guiles was
initially identified to the Nominating/Corporate Governance
Committee by a third-party search firm. Information regarding
the business experience of each nominee is provided below. All
directors are elected annually to serve until the next Annual
Meeting and until their respective successors are elected.
Vote
Required
The nine persons receiving the highest number of votes
represented by outstanding shares present or represented by
proxy and entitled to vote will be elected. Except as otherwise
indicated, each director has served for at least five years in
the positions stated below.
The Board of Directors recommends a vote FOR the election of
each of the following nominees:
Douglas M. Brown
Director since 2001
Age 70
Mr. Brown is lead director and a resident of the State of
New Mexico. He is the former Treasurer for the State of New
Mexico. From 1999 to 2005, he was president and chief executive
officer of Tuition Plan Consortium and from 1990 to 1999, he was
president and chief executive officer of Talbot Financial
Services. He is also a former trustee of Stanford University and
former regent of the University of New Mexico.
Robert W. Foy
Director since 1977
Age 71
Mr. Foy is Chairman of the Board of California Water
Service Group and its subsidiaries. Mr. Foy retired as an
executive officer and employee director at the 2007 Annual
Meeting in accordance with California Water Service Groups
retirement policy. See Board Structure
Retirement Age of Directors. Mr. Foy is standing for
reelection as a non-employee director. He was formerly president
and chief executive officer of Pacific Storage Company, a
diversified transportation, warehousing and business and record
management company with offices throughout Northern California;
he remains an owner and director of that company. He has served
as Chairman of California Water Service Group since
January 1, 1996. He serves as a member of the San Jose
State University College of Business Advisory Board.
10
Edwin A. Guiles
Director since March, 2008
Age 58
Mr. Guiles is executive vice president of corporate
development at Sempra Energy. He was previously chairman and
chief executive officer of San Diego Gas &
Electric and Southern California Gas Company, Sempra
Energys California regulated utilities. Mr. Guiles is
also a director and chairman of the California Chamber of
Commerce.
Edward D. Harris, Jr., M.D.
Director since 1993
Age 70
Dr. Harris is the George DeForest Barnett professor of
medicine, emeritus, at Stanford University Medical Center. He is
the Academic Secretary Emeritus to Stanford University. He is a
director of the Genentech Research and Educational Foundation.
He is also the executive secretary of Alpha Omega Alpha, the
National Medical Honor Society, and editor of The
Pharos. He is a Master of the American College of
Rheumatology, a Master of the American College of Physicians and
a fellow of the Royal College of Physicians (London).
Bonnie G. Hill
Director since 2003
Age 66
Ms. Hill is the president of B. Hill Enterprises, LLC, a
consulting firm specializing in corporate governance and board
organization and public policy issues. She is also co-founder of
Icon Blue, a brand marketing company. From 1997 to 2001, she was
president and chief executive officer of Times Mirror Foundation
and senior vice president, communications and public affairs, of
The Los Angeles Times. She is a director of AK Steel Holdings
Corp., Home Depot, Inc. and Yum Brands, Inc. She is also a
director of the Financial Industry Regulatory Authority Investor
Education Foundation and the Center for International Private
Enterprise (CIPE).
Richard P. Magnuson
Director since 1996
Age 52
Mr. Magnuson is a private venture capitalist. From 1984 to
1996, he was a general partner of Menlo Ventures, a venture
capital firm. He also is a director of two privately held
companies.
Linda R. Meier
Director since 1994
Age 67
Ms. Meier is a member of the National Board of the
Institute of International Education and the Board of Trustees
of the World Affairs Council of Northern California. She is
co-chair of the The Stanford Challenge and chair of
outreach activities. She is a former director of Greater Bay
Bancorp. From
1992-1997,
Ms. Meier was chair of the Stanford University Hospital
Board of Directors. From
1984-1994,
she was a trustee of Stanford University.
Peter C. Nelson
Director since 1996
Age 60
Mr. Nelson is president and chief executive officer of
California Water Service Group and its subsidiaries. Before
joining California Water Service Group in 1996, he was vice
president, division operations
(1994-1995)
and region vice president
(1989-1994)
of Pacific Gas & Electric Company. He is a director of
the California Chamber of Commerce and chair of the Chamber
Water Resources Committee, and a director of the National
Association of Water Companies.
11
George A. Vera
Director since 1998
Age 64
Mr. Vera is vice president and chief financial officer of
the David and Lucile Packard Foundation. Until 1997, he was an
audit partner at Arthur Andersen, LLP.
STOCK
OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Ownership
of Directors and Executive Officers
Our Board of Directors strongly encourages stock ownership by
directors and believes it is desirable for all directors to own
an amount of shares having a value of four times the amount of
such directors annual director retainer. Pursuant to the
Groups Corporate Governance Guidelines, available on the
Groups website at
http://www.calwatergroup.com,
directors elected before April 27, 2005, who own less than
the desirable amounts are strongly encouraged to increase their
holdings to that amount by April 26, 2009. Directors
elected after April 27, 2005, who own less than the desired
amount are strongly encouraged to increase their holdings to
four times the annual director retainer level before the end of
four years from the date of their election to the Board of
Directors.
The following table shows the common stock ownership of our
directors and officers as of April 7, 2008. No director or
executive officer owns any shares of Series C preferred
stock. All directors and executive officers have sole voting and
investment power over their shares (or share such powers with
their spouses).
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Beneficially Owned
|
|
Name
|
|
(*)
|
|
|
Douglas M. Brown
|
|
|
4,403
|
(1)
|
Director
|
|
|
|
|
Paul G. Ekstrom
|
|
|
5,000
|
(2)
|
Executive Officer
|
|
|
|
|
Francis S. Ferraro
|
|
|
4,259
|
(3)
|
Executive Officer
|
|
|
|
|
Robert W. Foy
|
|
|
42,072
|
(4)
|
Director
|
|
|
|
|
Edwin A. Guiles
|
|
|
1,090
|
(5)
|
Director
|
|
|
|
|
Robert R. Guzzetta
|
|
|
12,599
|
(6)
|
Executive Officer
|
|
|
|
|
Edward D. Harris, Jr., M.D.
|
|
|
3,462
|
(7)
|
Director
|
|
|
|
|
Bonnie G. Hill
|
|
|
3,898
|
(8)
|
Director
|
|
|
|
|
Martin A. Kropelnicki
|
|
|
3,019
|
(9)
|
Executive Officer
|
|
|
|
|
Richard P. Magnuson
|
|
|
22,162
|
(10)
|
Director
|
|
|
|
|
Linda R. Meier
|
|
|
5,365
|
(11)
|
Director
|
|
|
|
|
Peter C. Nelson
|
|
|
62,907
|
(12)
|
Director and Executive Officer
|
|
|
|
|
George A. Vera
|
|
|
4,886
|
(13)
|
Director
|
|
|
|
|
All directors and executive officers as a group
|
|
|
175,122
|
(14)
|
|
|
|
* |
|
To the knowledge of the Group, as of March 31, 2008, all
directors and executive officers together beneficially owned an
aggregate of less than 1% of the Groups outstanding common
shares. |
12
|
|
|
(1) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 4, 2008, which have a 12 month
vesting period. |
|
(2) |
|
Includes 272 shares held in the Employees Savings Plan,
1,500 shares under outstanding stock options,
1,854 shares of vested stock-settled stock appreciation
rights, and 1,355 shares restricted stock (276 shares
vested and 1,079 shares not vested which includes
630 shares awarded on March 4, 2008). |
|
(3) |
|
Includes 1,031 shares held in the Employees Savings Plan,
1,854 shares of vested stock-settled stock appreciation
rights, and 1,355 shares restricted stock (276 shares
vested and 1,079 shares not vested which includes
630 shares awarded on March 4, 2008). |
|
(4) |
|
Includes 28,000 shares outstanding under options,
4,062 shares of vested stock-settled stock appreciation
rights, and 2,729 shares of restricted stock
(1,192 shares vested and 1,537 shares not vested which
includes 1,090 shares awarded on March 4, 2008). |
|
(5) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 27, 2008, which have a 12 month
vesting period. |
|
(6) |
|
Includes 3,371 shares held in the Employees Savings Plan,
6,000 shares outstanding under options, 1,854 shares
of vested stock-settled stock appreciation rights, and
1,355 shares of restricted stock (276 shares vested
and 1,079 shares not vested which includes 630 shares
awarded on March 4, 2008). |
|
(7) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 4, 2008, which have a 12 month
vesting period. |
|
(8) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 4, 2008, which have a 12 month
vesting period. |
|
(9) |
|
Includes 1,645 shares of vested stock-settled stock
appreciation rights, and 1,355 shares of restricted stock
(248 shares vested and 1,107 shares not vested which
includes 630 shares awarded on March 4, 2008). |
|
(10) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 4, 2008, which have a 12 month
vesting period. |
|
(11) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 4, 2008, which have a 12 month
vesting period. |
|
(12) |
|
Includes 1,963 shares held in the Employees Savings Plan,
42,500 shares outstanding under options, 8,805 shares
of vested stock-settled stock appreciation rights, and
5,513 shares of restricted stock (1,291 shares vested
and 4,222 shares not vested which includes
2,240 shares awarded on March 4, 2008). |
|
(13) |
|
Includes 1,090 shares outstanding of restricted stock
awarded on March 4, 2008, which have a 12 month
vesting period. |
|
(14) |
|
Includes an aggregate of 6,637 shares held in the Employees
Savings Plan for the benefit of the directors and executive
officers, 78,000 shares outstanding under options which are
currently exercisable or exercisable by the directors and
executive officers within 60 days; 17,188 shares of
vested stock-settled stock appreciation rights for the benefit
of the executive officers and 28,942 shares of restricted
stock held by the directors and executive officers. |
Ownership
of Largest Principal Stockholders
As of March 31, 2008, the Groups records and other
information available from outside sources indicated that the
following stockholder was the beneficial owner of more than five
percent of the outstanding shares of our common stock.
The information below is as reported in filings made by third
parties with the Securities and Exchange Commission. Based
solely on the review of our stockholder records and public
filings made by the third parties with
13
the Securities and Exchange Commission, the Group is not aware
of any other beneficial owners of more than five percent of the
common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of
|
|
|
|
|
Class
|
|
Beneficial Owner
|
|
|
Common Stock
|
|
|
Percent of Class
|
|
|
Common
|
|
|
SJW Corp.(1)
|
|
|
|
1,099,952
|
|
|
|
5.3
|
%
|
|
|
|
374 W. Santa Clara Street
|
|
|
|
|
|
|
|
|
|
|
|
|
San Jose, CA 95196
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
SJW Corp. has sole voting and investment power over these shares. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934,
requires our directors, certain officers, and holders of more
than 10% of our common stock to file with the Securities and
Exchange Commission reports regarding their ownership of our
securities.
Based solely on its review of the copies of forms furnished to
the Group, or written representations that no annual forms (SEC
Form 5) were required, the Group believes that during
the fiscal year ended December 31, 2007, our directors,
executive officers and holders of more than ten percent of our
common stock complied with all applicable SEC Section 16(a)
filing requirements.
COMPENSATION
DISCUSSION AND ANALYSIS
The Organization and Compensation Committee (Committee)
administers the Groups compensation plans and programs for
board members and executive officers. After a review of
compensation levels, the Committee recommends to the full Board
of Directors compensation levels, including the equity incentive
plan awards for board members and executive officers for the
12-month
period beginning January 1st of each year. The
Groups principal executive officer, principal financial
officer and three most highly compensated executive officers in
a particular year are referred to herein as executive
officers. More information on the committee and related
charter can be found at the Groups website at
http://www.calwatergroup.com in the corporate governance section.
The material elements of the Groups executive compensation
program include:
|
|
|
|
|
Salary
|
|
|
|
Equity Compensation
|
|
|
|
Pension Plan Benefits
|
|
|
|
Supplemental Executive Retirement Plan Benefits
|
|
|
|
Deferred Compensation Plan Benefits
|
|
|
|
Perquisites
|
Compensation
Philosophy for Executive Officers
The Groups overall philosophy is to provide compensation
that attracts, retains, and motivates talented executives,
rewards excellent job performance, promotes the Groups
one team approach, and provides for fair,
reasonable, and competitive total compensation. The Committee
believes that compensating executives using these criteria is a
benefit to both stockholders and customers.
Historically, the Group has not used annual bonuses as a
compensation mechanism and did not use annual bonuses for the
2007 fiscal year. The Committee is mindful that as a holding
company for a California regulated utility, the Groups
financial performance is to a large extent dependent upon
California Public Utilities Commission (CPUC) ratemaking
decisions and other factors beyond the control of the executives
such as rainfall and average temperatures. Therefore, the
Committees decisions are determined largely by its
comparisons with peer groups and evaluation of factors that are
within the executives control.
14
Each year the Committee reviews, assesses, and approves all
compensation for directors and executive officers after
establishing assurance that the compensation for executive
officers is competitive relative to companies of comparable
size, complexity, location and business nature (see below for
additional discussion of this comparison). In addition, the
Committee approves the retention, fees, and termination of any
compensation consultant or compensation consulting firm used to
assist in the evaluation of director and executive compensation.
In 2007, the Committee retained the services of an independent
compensation consultant, Pearl Meyer & Partners
(PM&P), for investigation into and advice on total
compensation for executive officers for the 2008 fiscal year.
The Committee believes that having an independent evaluation of
executive officer compensation is a valuable tool for the
Committee and stockholders. PM&P is not otherwise engaged
to perform work for the Group.
The Committee retained PM&P for a number of purposes,
including:
|
|
|
|
|
Constructing and reviewing peer groups for compensation
comparison purposes;
|
|
|
|
Performing a competitive assessment of the Groups
compensation programs, practices, and levels for its executive
officers and other senior officers.
|
The Committee made a number of compensation decisions, including
decisions with respect to the executive officers, based on the
competitive assessments provided by and through consultation
with PM&P. The Committees decisions were made,
however, entirely by the Committee, in its sole discretion.
Determining
Executive Compensation
Overall compensation levels for executives are determined based
on one or more of the following factors:
|
|
|
|
|
The individuals duties and responsibilities within the
Group,
|
|
|
|
The individuals experience and expertise,
|
|
|
|
The compensation levels for the individuals peers within
the Group,
|
|
|
|
Compensation levels for similar positions in the utility
industry or local industry other than utilities,
|
|
|
|
Performance of the individual and the Group as a whole,
|
|
|
|
The levels of compensation necessary to recruit, retain, and
motivate executives.
|
In order to determine competitive compensation practices for
2007, the Committee relied on compensation data from a national
survey compiled each year by the specialty firm, Saje Consulting
Group, Inc, of market data for the water services industry, as
well as compensation data developed by Watson Wyatt from a
national survey of compensation.
After consideration of the data collected on external
competitive levels of compensation and internal relationships
within the executive officer group, the Committee makes
decisions regarding each individual executives target
total compensation opportunities based on Group and individual
performance and the need to attract, motivate and retain an
experienced and effective management team. The Committee
examines the relationship of each executives base salary
and long-term equity incentives to the comparable market data at
the 25th, 50th and 75th percentiles. Total
compensation for specific individuals will vary based on a
number of factors in addition to Group and individual
performance, including scope of duties, tenure, institutional
knowledge
and/or
difficulty in recruiting a replacement executive.
In making compensation decisions for the 2007 fiscal year for
the executive officers, the Committees general objective
was to set target salary above the 50th percentile of the
comparable market data (in light of the Groups lack of
annual incentive opportunities), and target total compensation
(base pay plus the value of long-term equity awards) for these
officers at approximately the 50th percentile of the
comparable market data. Actual compensation decisions for the
executive officers were, however, influenced by a variety of
additional factors, including considerations of each
individuals experience and expertise, the Groups
performance, and internal equity among the executive officers.
15
Elements
of Compensation
Salary
Base salaries are not increased automatically each year. To
assist the Committee in its annual review of base salaries, the
Groups chief executive officer provides an assessment of
performance and recommendations regarding base salary
adjustments to the Committee for each of the executive officers
based on the survey data and the other factors described above
under Determining Executive Compensation. The CEO
provides a full self-assessment of his own performance and
degree of success in meeting the goals set for him at the
beginning of the year, and this is followed by the
Committees assessment of the Groups performance and
the CEOs role in achieving that performance. The Committee
then reviews and discusses the performance of each executive and
the competitive data described above provided by PM&P. Once
reviewed and agreed upon, the Committee recommends to the full
Board of Directors the base salaries for the executive officers
(including the chief executive officer). As a result of this
analysis, the base salaries in 2007 were increased for each of
the executive officers to the amounts set forth in the Summary
Compensation Table below.
Equity
Compensation
The purpose of the Groups long-term equity incentive
compensation program is to align executive compensation with
stockholder interests, create incentives for executive
retention, encourage long-term performance by the Groups
executive officers, and promote stock ownership. In years 2003,
2004, and 2005, the Committee did not grant equity compensation.
In 2005, the Committee engaged two executive compensation
consulting firms, Clark Consulting and PM&P, to assist the
Group in developing a long-term equity incentive plan and
compensation strategy. As described above under
Determining Executive Compensation, for 2007 the
Committee reviewed the equity compensation levels paid to
executives at similar positions in both the Watson Wyatt and
Saje surveys, and determined the total value of equity
compensation awards on those bases. The Committee also decided
in the interest of fostering the Groups
one-team approach that the annual equity incentive
awards granted to each of the Groups executive officers
(other than the chief executive officer because of his
substantially greater level of responsibility and ability to
influence the Groups operational results) would be the
same for each.
Each year the Committee first establishes the total value of the
equity compensation awards to be granted to the chief executive
officer and the other executive officers. For 2007 these values
were $125,000 and $30,000, respectively. In 2007, annual equity
compensation awards granted to the executive officers were
granted in the form of stock-settled stock appreciation rights
(SARs) and restricted stock awards (RSAs), with 50% of the total
value allocated to each. The Committee believes this mix of SARs
and RSAs creates an effective combination of incentives and
retention for those executives who are most responsible for
influencing stockholder value.
The Committee grants equity awards to the executive officers in
March of each year following the release of annual financial
results. The exercise price of the SARs is the closing price of
the Groups common stock on the grant date.
Both the SARs and RSAs granted to the executive officers in
March 2007 vest in monthly installments over 48 months
following the date of grant. In addition, the SARs have a
ten-year term. The exercise price of the SARs is the closing
price for the Groups common stock on the New York Stock
Exchange on the grant date. Neither the SARs nor the RSAs
provide for automatic vesting acceleration if there is a change
in control in the ownership of the Group.
Pension
Plan and Supplemental Executive Retirement Plan
Benefits
In addition to the tax-qualified defined benefit plan that
covers virtually all union and non-union employees, the Group
provides supplemental retirement benefits to executive officers
under the Supplemental Executive Retirement Plan (SERP). The
plan is an unfunded, unsecured obligation of the Group and is
designed to assist in attracting and retaining key executives
while providing a competitive, total compensation program.
Furthermore, the plan, in part, is designed to make up for
limitations imposed by the Internal Revenue Code on allocations
and benefits that may be paid to our executive officers under
the Groups tax-qualified plan. Since the tax code
restricts benefits under our tax-qualified plan, our executives
would not otherwise be eligible to receive the retirement
16
benefits that are proportional to the benefits received by our
employees generally based on compensation. The benefits under
the SERP are obtained by applying the benefit provisions of the
tax-qualified plan to all compensation included under the
tax-qualified plan, without regard to these limits, reduced by
benefits actually accrued under the tax-qualified plan.
The Group believes that its non-qualified supplemental executive
retirement plan enhances the competitiveness of its executive
compensation package and promotes retention. The primary reason
for the pension plans, particularly the SERP, is to attract and
retain senior management by offering a competitive total
compensation package.
Deferred
Compensation Plan
The Group maintains a deferred compensation plan for its
directors, officers, and qualified managers. The plan permits
the Groups executives and eligible managers to defer up to
50% of their base salary. The plan is intended to promote
retention by providing eligible employees, including the
executive officers, with a long-term savings opportunity on an
income tax-deferred basis. The plans investment options
are similar, but not identical, to the Groups
tax-qualified 401(k) plan. The plans benefits are
unsecured, but assets earmarked to satisfy the Groups
liabilities under the plan are held in a rabbi trust.
401(k)
Plan
All employees satisfying the eligibility requirements are
entitled to participate in our 401(k) plan and receive matching
funds. Pursuant to the plan, executive officers are entitled to
contribute up to the statutory limit set by the Internal Revenue
Service and the Group matches 50 percent for each dollar
contributed up to a maximum company match of 4%.
Perquisites
As part of the Groups general automobile policy, the
Groups executive officers have the use of a company-owned
automobile. The Committee believes that the provision of a
company-owned automobile allows our executive officers to work
more efficiently since many of the areas served by the Group are
most effectively reached by automobile as opposed to forms of
mass transportation, such as airlines. Any personal mileage
incurred by the executive is taxed as additional compensation in
accordance with IRS regulations. Other than this automobile
policy, the Committees general philosophy is not to
provide perquisites and other personal benefits of substantial
value to the Groups executive officers.
Severance
Arrangements
None of the executive officers is a party to an individual
employment agreement with the Group that provides for severance
benefits.
Consistent with the Groups compensation philosophy, the
Committee believes that the interests of stockholders are best
served if the interests of senior management are aligned with
those of the stockholders. To this end, the Group provides
enhanced change in control severance benefits to executive
officers under the Groups Executive Severance Plan to
reduce any reluctance of the executive officers to pursue or
support potential change in control transactions that would be
beneficial to the Groups stockholders. The plan was
adopted in 1998, and its purpose is to promote the continued
employment and dedication of our executives without distraction.
The Executive Severance Plan provides severance pay equal to
three times base salary to each of the executive officers if
their employment is terminated without good cause or they resign
for a good reason during the two-year period following a change
in control.
In addition to the Executive Severance Plan, each executive
officer is covered by the Groups general severance policy.
Under the severance policy, each non-union employee of Group
whose employment is terminated without cause is entitled to
severance pay of either one weeks 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 executive officers are entitled to a
pay-out of six weeks of vacation time upon any termination of
employment.
17
Tax and
Other Compensation Policies
When designing all aspects of compensation, the Group considers
the impact of tax treatment, but the primary factor influencing
program design is the support of business objectives. The
Committee has reviewed the Groups compensation structure
in light of Section 162(m) of the Internal Revenue Code,
which limits the amount of compensation that the Group may
deduct in determining its taxable income for any year to
$1,000,000 for a specified group of executive officers as
determined by law. Stock appreciation rights are intended to
satisfy the requirements for performance-based compensation as
defined in Section 162(m) of the Internal Revenue Code.
Restricted stock awards do not qualify as performance-based
compensation within the meaning of Section 162(m). In 2006,
no executive officers compensation exceeded the limitation
set by Section 162(m).
Since historically the Committee has not used stock of the Group
as a significant portion of executive compensation, the Group
does not currently have any formal stock ownership guidelines
for its executive officers, nor does it require that executive
officers own a specific number of shares. The Board of Directors
strongly encourages stock ownership by directors. Pursuant to
the Groups Corporate Governance Guidelines, available on
the Groups website at
http://www.calwatergroup.com,
beneficial ownership of an aggregate amount of shares having a
value of four times the amount of the annual director retainer
is desirable. Directors elected before April 27, 2005, who
own less than the desirable amount are strongly encouraged to
increase their holdings to that amount by April 26, 2009.
Directors elected after April 27, 2005, who own less than
the desired amount are strongly encouraged to increase their
holdings to four times the annual director retainer level before
the end of four years from the date of their election to the
Board.
Summary
Compensation Table
The table below summarizes the total compensation paid or earned
by our Chief Executive Officer, Chief Financial Officer and the
three most highly compensated executive officers of the Group
for the fiscal year ended December 31, 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Grants
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
|
Peter C. Nelson
|
|
|
2007
|
|
|
$
|
732,760
|
(5)
|
|
|
0
|
|
|
$
|
28,489
|
|
|
$
|
41,369
|
|
|
|
0
|
|
|
$
|
511,773
|
|
|
$
|
28,365
|
|
|
$
|
1,342,756
|
|
President and
|
|
|
2006
|
|
|
$
|
676,500
|
|
|
|
0
|
|
|
$
|
14,749
|
|
|
$
|
22,081
|
|
|
|
0
|
|
|
$
|
522,752
|
|
|
$
|
27,274
|
|
|
$
|
1,263,356
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin A. Kropelnicki
|
|
|
2007
|
|
|
$
|
313,862
|
(6)
|
|
|
0
|
|
|
$
|
6,573
|
|
|
$
|
9,796
|
|
|
|
0
|
|
|
$
|
48,543
|
|
|
$
|
20,224
|
|
|
$
|
398,998
|
|
Vice President,
|
|
|
2006
|
|
|
$
|
219,232
|
|
|
|
0
|
|
|
$
|
1,998
|
|
|
$
|
3,301
|
|
|
|
0
|
|
|
$
|
37,534
|
|
|
$
|
15,342
|
|
|
$
|
277,407
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis S. Ferraro
|
|
|
2007
|
|
|
$
|
314,246
|
(6)
|
|
|
0
|
|
|
$
|
6,248
|
|
|
$
|
9,065
|
|
|
|
0
|
|
|
$
|
149,341
|
|
|
$
|
18,658
|
|
|
$
|
497,558
|
|
Vice President,
|
|
|
2006
|
|
|
$
|
295,000
|
|
|
|
0
|
|
|
$
|
2,850
|
|
|
$
|
4,410
|
|
|
|
0
|
|
|
$
|
185,598
|
|
|
$
|
18,330
|
|
|
$
|
506,188
|
|
Corporate Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert R. Guzzetta
|
|
|
2007
|
|
|
$
|
261,363
|
(7)
|
|
|
0
|
|
|
$
|
6,248
|
|
|
$
|
9,065
|
|
|
|
0
|
|
|
$
|
71,388
|
|
|
$
|
14,091
|
|
|
$
|
362,155
|
|
Vice President,
|
|
|
2006
|
|
|
$
|
245,000
|
|
|
|
0
|
|
|
$
|
2,850
|
|
|
$
|
4,410
|
|
|
|
0
|
|
|
$
|
88,045
|
|
|
$
|
11,305
|
|
|
$
|
351,610
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Ekstrom
|
|
|
2007
|
|
|
$
|
221,480
|
(8)
|
|
|
0
|
|
|
$
|
6,248
|
|
|
$
|
9,065
|
|
|
|
0
|
|
|
$
|
92,346
|
|
|
$
|
19,635
|
|
|
$
|
348,774
|
|
Vice President, Customer Service and Information
Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The executive officers were not entitled to receive payments
which would be characterized as bonus payments for
the fiscal year ended December 31, 2007 and 2006. |
18
|
|
|
(2) |
|
Amounts reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended
December 31, 2007 and 2006, in accordance with the
provisions of Statement of Financial Accounting Standards
No. 123R, and thus may include amounts from awards granted
in the year to which the disclosure relates as well as prior
years. Assumptions used in the calculation of these amounts are
included in footnote 13 of Groups annual report on
Form 10-K
filed with the Securities and Exchange Commission on
February 29, 2008. |
|
(3) |
|
Amounts in this column reflect the actuarial increase in the
present value of the executive officers benefits under the
Groups pension plan and Supplemental Executive Retirement
Plan (SERP) determined using interest rate and mortality rate
assumptions consistent with those used in the Groups
financial statements and includes amounts which the executive
officers may not currently be entitled to receive because such
amounts are not vested. Earnings on the nonqualified deferred
compensation plan are noted on the Nonqualified 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) |
|
All other compensation is comprised of 401(k) matching
contributions made by Group on behalf of the executive officer
and the personal use of company-provided cars. The value
attributable to personal use of company-provided cars is
included as compensation on the
W-2 of each
executive officer who receives such benefits. Each such officer
is responsible for paying income tax on such amount. |
|
(5) |
|
For 2008, the Organization and Compensation Committee
recommended and the board approved a $794,000 annual salary for
Mr. Nelson as well as the issuance of 2,240 shares of
restricted stock and 13,320 shares of stock appreciation
rights. Such equity was granted on the close of business on
March 4, 2008, four business days after the release of
year-end results. The restricted stock vests ratably over
48 months, and the stock appreciation rights have a
10-year term
and vest ratably over 48 months. |
|
(6) |
|
For 2008, the Organization and Compensation Committee
recommended and the board approved a $340,000 annual salary for
Mr. Kropelnicki and Mr. Ferraro, as well as the
issuance of 630 shares of restricted stock and
3,750 shares of stock appreciation rights. Such equity was
granted on the close of business on March 4, 2008, four
business days after the release of year-end results. The
restricted stock vests ratably over 48 months, and the
stock appreciation rights have a
10-year term
and vest ratably over 48 months. |
|
(7) |
|
For 2008, the Organization and Compensation Committee
recommended and the board approved a $280,000 annual salary for
Mr. Guzzetta, as well as the issuance of 630 shares of
restricted stock and 3,750 shares of stock appreciation
rights. Such equity was granted on the close of business on
March 4, 2008, four business days after the release of
year-end results. The restricted stock vests ratably over
48 months, and the stock appreciation rights have a
10-year term
and vest ratably over 48 months. |
|
(8) |
|
For 2008, the Organization and Compensation Committee
recommended and the board approved a $235,000 annual salary for
Mr. Ekstrom, as well as the issuance of 630 shares of
restricted stock and 3,750 shares of stock appreciation
rights. Such equity was granted on the close of business on
March 4, 2008, four business days after the release of
year-end results. The restricted stock vests ratably over
48 months, and the stock appreciation rights have a
10-year term
and vest ratably over 48 months. |
19
Grants of
Plan-Based Awards
For
Fiscal Year Ended 2007
The table below sets forth certain information with respect to
awards granted during or for the fiscal year ended
December 31, 2007, to each of our executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
Base
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Under Equity
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
Incentive Plan Awards
|
|
|
Incentive Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
Options
|
|
|
|
Approval
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
(m)
|
|
|
Peter C. Nelson(1)
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
309
|
|
|
|
0
|
|
|
|
|
|
|
$
|
11,776
|
|
President and
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,526
|
|
|
$
|
38.11
|
|
|
$
|
15,886
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin A. Kropelnicki(2)
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
75
|
|
|
|
0
|
|
|
|
|
|
|
$
|
2,858
|
|
Vice President,
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
375
|
|
|
$
|
38.11
|
|
|
$
|
3,904
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis S. Ferraro(2)
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
75
|
|
|
|
0
|
|
|
|
|
|
|
$
|
2,858
|
|
Vice President,
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
375
|
|
|
$
|
38.11
|
|
|
$
|
3,904
|
|
Corporate Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert R. Guzzetta(2)
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
75
|
|
|
|
0
|
|
|
|
|
|
|
$
|
2,858
|
|
Vice President,
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
375
|
|
|
$
|
38.11
|
|
|
$
|
3,904
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Ekstrom(2)
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
75
|
|
|
|
0
|
|
|
|
|
|
|
$
|
2,858
|
|
Vice President,
|
|
|
11/15/2006
|
|
|
|
3/6/2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
375
|
|
|
$
|
38.11
|
|
|
$
|
3,904
|
|
Customer Service and Information Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For 2008, the Committee recommended to award Mr. Nelson
2,440 shares of restricted stock and 13,320 shares of
stock appreciation rights. The restricted stock award was
granted on March 4, 2008, and will vest ratably over
48 months. The stock appreciation rights were awarded on
March 4, 2008 and have a
10-year term
and vest ratably over 48 months. |
|
(2) |
|
For 2008, the Committee recommended to award each named
executive officer other than Mr. Nelson 630 shares of
restricted stock and 3,750 shares of stock appreciation
rights. The restricted stock award was granted on March 4,
2008, and will vest ratably over 48 months. The stock
appreciation rights were awarded on March 4, 2008 and have
a 10-year
term and vest ratably over 48 months. |
The restricted stock awards noted above were granted on
March 6, 2007 and will vest ratably over 48 months.
The stock appreciation rights described above were granted on
March 6, 2007, and have a
10-year term
and vest ratably over 48 months.
20
Outstanding
Equity Awards at Fiscal 2007 Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
of Unearned
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
of Securities
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Shares or
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights That
|
|
|
Rights That
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
Peter C. Nelson(1)
|
|
|
12,500
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
23.20
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
25.94
|
|
|
|
1/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
15,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
25.15
|
|
|
|
1/1/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,989
|
|
|
|
6,511
|
(3)
|
|
|
0
|
|
|
$
|
38.51
|
|
|
|
1/4/2016
|
|
|
|
846
|
(3)
|
|
$
|
31,319
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
1,526
|
|
|
|
6,614
|
(5)
|
|
|
0
|
|
|
$
|
38.11
|
|
|
|
3/6/2017
|
|
|
|
1,341
|
(5)
|
|
$
|
49,664
|
|
|
|
0
|
|
|
|
0
|
|
Martin A. Kropelnicki(2)
|
|
|
989
|
|
|
|
1,511
|
(4)
|
|
|
0
|
|
|
$
|
42.51
|
|
|
|
5/1/2016
|
|
|
|
197
|
(4)
|
|
$
|
7,293
|
|
|
|
0
|
|
|
|
0
|
|
Vice President, Chief
|
|
|
375
|
|
|
|
1,625
|
(5)
|
|
|
0
|
|
|
$
|
38.11
|
|
|
|
3/6/2017
|
|
|
|
325
|
(5)
|
|
$
|
12,032
|
|
|
|
0
|
|
|
|
0
|
|
Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis S. Ferraro(2)
|
|
|
1,197
|
|
|
|
1,303
|
(3)
|
|
|
0
|
|
|
$
|
38.51
|
|
|
|
1/4/2016
|
|
|
|
170
|
(3)
|
|
$
|
6,293
|
|
|
|
0
|
|
|
|
0
|
|
Vice President,
|
|
|
375
|
|
|
|
1,625
|
(5)
|
|
|
0
|
|
|
$
|
38.11
|
|
|
|
3/6/2017
|
|
|
|
325
|
(5)
|
|
$
|
12,032
|
|
|
|
0
|
|
|
|
0
|
|
Corporate Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert R. Guzzetta(2)
|
|
|
3,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
25.94
|
|
|
|
1/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President,
|
|
|
3,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
25.15
|
|
|
|
1/1/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
1,197
|
|
|
|
1,303
|
(3)
|
|
|
0
|
|
|
$
|
38.51
|
|
|
|
1/4/2016
|
|
|
|
170
|
(3)
|
|
$
|
6,293
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
375
|
|
|
|
1,625
|
(5)
|
|
|
0
|
|
|
$
|
38.11
|
|
|
|
3/6/2017
|
|
|
|
325
|
(5)
|
|
$
|
12,032
|
|
|
|
0
|
|
|
|
0
|
|
Paul G. Ekstrom(2)
|
|
|
1,500
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
25.15
|
|
|
|
1/1/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President,
|
|
|
1,197
|
|
|
|
1,303
|
(3)
|
|
|
0
|
|
|
$
|
38.51
|
|
|
|
1/4/2016
|
|
|
|
170
|
(3)
|
|
$
|
6,293
|
|
|
|
0
|
|
|
|
0
|
|
Customer Service and
|
|
|
375
|
|
|
|
1,625
|
(5)
|
|
|
0
|
|
|
$
|
38.11
|
|
|
|
3/6/2017
|
|
|
|
325
|
(5)
|
|
$
|
12,032
|
|
|
|
0
|
|
|
|
0
|
|
Information Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For 2008, the Committee recommended to award Mr. Nelson
2,240 shares of restricted stock and 13,320 shares of
stock appreciation rights. The restricted stock award was
granted on March 4, 2008, and will vest ratably over
48 months. The stock appreciation rights were granted on
March 4, 2008, with a
10-year term
and vest ratably over 48 months. |
|
(2) |
|
For 2008, the Committee recommended to award executive officers
630 shares of restricted stock and 3,750 shares of
stock appreciation rights. The restricted stock award was
granted on March 4, 2008, and will vest ratably over
48 months. The stock appreciation rights were awarded on
March 4, 2008, with a
10-year term
and vest ratably over 48 months. |
|
(3) |
|
Awards were granted on January 4, 2006, and vest ratably
over 48 months. |
|
(4) |
|
Awards were granted on May 1, 2006, and vest ratably over
48 months. |
|
(5) |
|
Awards were granted on March 6, 2007, and vest ratably over
48 months. |
21
Option
Exercises and Stock Vested
For
Fiscal Year Ended 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value
|
|
|
Number of Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
Name of Executive
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Officer
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Peter C. Nelson
|
|
|
0
|
|
|
|
N/A
|
|
|
|
715
|
|
|
$
|
27,636
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin A. Kropelnicki
|
|
|
0
|
|
|
|
N/A
|
|
|
|
156
|
|
|
$
|
6,056
|
|
Vice President, Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis S. Ferraro
|
|
|
0
|
|
|
|
N/A
|
|
|
|
156
|
|
|
$
|
6,029
|
|
Vice President, Corporate Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert R. Guzzetta
|
|
|
0
|
|
|
|
N/A
|
|
|
|
156
|
|
|
$
|
6,029
|
|
Vice President, Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Ekstrom
|
|
|
0
|
|
|
|
N/A
|
|
|
|
156
|
|
|
$
|
6,029
|
|
Vice President, Customer Service and Information
Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
For
Fiscal Year Ended 2007
The table below shows the present value of accumulated benefits
payable to each of the executive officers, including the number
of years of service credited to each executive officer under the
California Water Service Pension Plan and the Supplemental
Executive Retirement Plan, each of which is described elsewhere
in this Proxy Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
|
Present Value of
|
|
|
Payments During
|
|
|
|
|
|
Credited Service
|
|
|
Accumulated Benefit
|
|
|
Last Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)(1)(2)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Peter C. Nelson
|
|
California Water Service Pension Plan
|
|
|
11.92
|
|
|
$
|
469,816
|
|
|
|
0
|
|
President and Chief
|
|
Supplemental Executive Retirement Plan
|
|
|
15.00
|
(3)(4)
|
|
$
|
4,558,749
|
|
|
|
0
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin A. Kropelnicki
|
|
California Water Service Pension Plan
|
|
|
1.80
|
|
|
$
|
31,344
|
|
|
|
0
|
|
Vice President, Chief
|
|
Supplemental Executive Retirement Plan
|
|
|
1.80
|
|
|
$
|
54,733
|
|
|
|
0
|
|
Financial Officer and
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis S. Ferraro
|
|
California Water Service Pension Plan
|
|
|
18.42
|
|
|
$
|
640,510
|
|
|
|
0
|
|
Vice President,
|
|
Supplemental Executive Retirement Plan
|
|
|
15.00
|
(4)
|
|
$
|
1,411,165
|
|
|
|
0
|
|
Corporate Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert R. Guzzetta
|
|
California Water Service Pension Plan
|
|
|
30.58
|
|
|
$
|
783,443
|
|
|
|
0
|
|
Vice President,
|
|
Supplemental Executive Retirement Plan
|
|
|
15.00
|
(4)
|
|
$
|
407,506
|
|
|
|
0
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Ekstrom
|
|
California Water Service Pension Plan
|
|
|
34.67
|
|
|
$
|
968,970
|
|
|
|
0
|
|
Vice President,
|
|
Supplemental Executive Retirement Plan
|
|
|
15.00
|
(4)
|
|
$
|
163,568
|
|
|
|
0
|
|
Customer Service and Information Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The present value is determined using interest rate and
mortality rate assumptions consistent with those used in the
Groups financial statements. |
|
(2) |
|
Includes amounts which the named executive officer may not
currently be entitled to receive because such amounts are not
vested. |
22
|
|
|
(3) |
|
Full vesting in the SERP is 15 years. In February 1996,
Mr. Nelson was awarded, for purposes of calculating his
accrued benefit under the SERP, credit for an additional ten
years of service. |
|
(4) |
|
All eligible officers are fully vested after 15 years of
service under the SERP. Under the tax qualified pension plan,
eligible employees, including officers are fully vested after
30 years of service. |
Nonqualified
Deferred Compensation
For
Fiscal Year Ended 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance
|
|
|
|
Last FY
|
|
|
Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
at Last FY
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
Peter C. Nelson
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
562,721
|
|
|
$
|
0
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin A. Kropelnicki
|
|
$
|
5,000
|
|
|
$
|
0
|
|
|
$
|
7
|
|
|
$
|
0
|
|
|
$
|
5,007
|
|
Vice President, Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis S. Ferraro
|
|
$
|
120,000
|
|
|
$
|
0
|
|
|
$
|
66,065
|
|
|
$
|
0
|
|
|
$
|
627,270
|
|
Vice President, Corporate Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert R. Guzzetta
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Vice President, Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Ekstrom
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Vice President, Customer Service and Information
Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Deferred Compensation Plan provides specified benefits to
select group of management and highly compensated employees who
contribute materially to the continued growth, development and
future business success of California Water Service Group. This
plan is described in more detail on page 17.
Potential
Payments Upon 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, 2007, given the executive officers
compensation and service levels as of such date. In addition to
the benefits described below, upon any termination of
employment, each of the executive officers would also be
entitled to the benefits described in the table of Pension
Benefits for Fiscal Year 2007 above and the amount shown in the
column labeled Aggregate Balance at Last FY of the
table of Nonqualified Deferred Compensation for Fiscal Year 2007
above.
On December 16, 1998, the Group adopted the Executive
Severance Plan. The Executive Severance Plan provides that if
within 24 months following a change in control of the
ownership of the Group, the executive officers employment
is terminated for any reason other than good cause or by the
executive for good reason, the Group will make a cash payment to
the executive officer equal to three times the sum of such
executive officers base salary as of the date of the
change in control or the date the officers 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 officers employment
terminated and payable thereafter on the anniversary of the
initial payment date.
Each officers entitlement to the severance payment is
conditioned upon execution of a release agreement. Additionally,
the executive 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.
For purposes of the Executive Severance Plan, the term
change in control means the occurrence of
(1) any merger or consolidation of the Group in which the
Group is not the surviving organization, a majority of the
capital
23
stock of which is not owned by the shareholders of the Group
immediately prior to such merger or consolidation; (2) a
transfer of all or substantially all of the assets of the Group;
(3) 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; (4) 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 (5) 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 will be deemed to exist if (1) 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 (2) the applicable
officer is convicted of a criminal violation involving fraud or
dishonesty.
For purposes of the Executive Severance Plan, good
reason will be deemed to exist if, without the applicable
officers consent (1) there is a significant change in
the nature or the scope of the applicable officers
authority or in his or her overall working environment;
(2) the applicable officer is assigned duties materially
inconsistent with his or her present duties, responsibilities
and status; (3) there is a reduction in the applicable
officers rate of base salary or bonus; or (4) 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 2007 and had
their employment been terminated on December 31, 2007,
either without good cause or by the executive for good reason,
the executive officers would have been eligible to receive the
payments set forth below.
Had a change in control not occurred during fiscal 2007 and had
their employment been terminated on December 31, 2007,
either without good cause or by the executive for good reason,
the executive officer would be covered by the Groups
general severance policy. Under the severance policy, the
executive officer would receive one weeks pay for each
year of service after completing two years of service or two
weeks pay for each year of service after completing five
or more years service; provided at least two weeks notice
is given and a release. In addition, executive officers are
entitled to a pay-out of six weeks of vacation time upon any
termination of employment.
In addition to the Executive Severance Plan, each executive
officer is covered by the Groups general severance policy.
Under the severance policy, each non-union employee of Group
whose employment is terminated without cause is entitled to
severance pay of either one weeks 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 executive officers are entitled to a
pay-out of six weeks of vacation time upon any termination of
employment. In the absence
24
of a change in control, had their employment been terminated on
December 31, 2007, without cause, the executive officers
would have been eligible to receive the payments set forth below.
Potential
payments Upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
Change in Control and
|
|
|
Termination of Employment
|
|
|
|
Termination of Employment
|
|
|
without a Change in Control
|
|
|
|
Severance Amount
|
|
|
Severance Amount
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Peter C. Nelson, President and Chief Executive Officer
|
|
$
|
2,205,000
|
|
|
$
|
113,077
|
|
Martin A. Kropelnicki, Vice President, Chief Financial
Officer and Treasurer
|
|
$
|
945,000
|
|
|
$
|
42,404
|
|
Francis S. Ferraro, Vice President, Corporate Development
|
|
$
|
945,000
|
|
|
$
|
48,462
|
|
Robert R. Guzzetta, Vice President, Operations
|
|
$
|
786,000
|
|
|
$
|
40,308
|
|
Paul G. Ekstrom, Vice President, Customer Service and
Information Technology
|
|
$
|
666,000
|
|
|
$
|
34,154
|
|
In addition to the benefits described above, if an executive
officers employment terminates within one year of change
of control, his or her options do not terminate or accelerate.
The executive officer, although no longer an employee of the
Group, may exercise his or her options in accordance with the
original vesting schedule. Please refer to the table of
Outstanding Equity Awards at Fiscal 2007 Year-End above.
Director
Compensation
For
Fiscal Year Ended 2007
The Groups nonemployee directors receive cash retainers
and meeting fees and equity awards for their service.
Nonemployee directors receive a $24,500 annual Board retainer,
except for the Audit Committee chair who receives $33,500. In
addition, each Board member receives $1,600 for each Board
meeting attended, and $1,600 for each committee meeting
attended. Further, each committee chair receives an additional
fee of $1,600 for each committee meeting chaired.
Each nonemployee director also receives annual restricted stock
grants under the Groups equity compensation plan. The
amount of these awards is determined each year by the Board.
These awards are generally granted at the same time as awards
are made to the Groups executive officers and fully vest
one year from the grant date. For 2007, each nonemployee
director received 665 shares of restricted stock.
Directors may elect to defer compensation payable to them under
the Groups deferred compensation plan in the same manner
as applicable to the Groups executive officers as
described above.
25
In addition, the Group maintains a Director Retirement Plan for
the benefit of its nonemployee directors. In December 2005 this
plan was closed to new participants, however, each of the
nonemployee directors listed in the table below were, at that
time, participants in the plan and thus continue to accrue
benefits thereunder. Under the Director Retirement Plan, a
director who participates in the plan and retires after serving
on the Board for a total of five or more years will receive a
retirement benefit equivalent to $22,000 per year. This benefit
will be paid for the number of years the director served on the
Board, up to 10 years. No amounts were paid to directors
under this program in fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Option Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Robert W. Foy(3)
|
|
$
|
61,200
|
|
|
$
|
34,704
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
92,955
|
|
|
$
|
191,703
|
|
|
$
|
380,562
|
|
Chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas M. Brown
|
|
$
|
56,500
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
13,661
|
|
|
$
|
0
|
|
|
$
|
91,132
|
|
Lead Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward D. Harris, Jr., M.D.
|
|
$
|
54,900
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
2,602
|
|
|
$
|
0
|
|
|
$
|
78,473
|
|
Bonnie G. Hill
|
|
$
|
48,500
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
10,903
|
|
|
$
|
0
|
|
|
$
|
80,374
|
|
David N. Kennedy(4)
|
|
$
|
33,039
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
54,010
|
|
Richard P. Magnuson
|
|
$
|
64,500
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
(1,916
|
)
|
|
$
|
0
|
|
|
$
|
83,555
|
|
Linda R. Meier
|
|
$
|
58,100
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1,040
|
|
|
$
|
0
|
|
|
$
|
80,111
|
|
George A. Vera
|
|
$
|
65,500
|
|
|
$
|
20,971
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
9,344
|
|
|
$
|
0
|
|
|
$
|
95,815
|
|
|
|
|
(1) |
|
Amounts reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended
December 31, 2007, in accordance with the provisions of
Statement of Financial Accounting Standards No. 123R and
thus may include amounts from awards granted in and prior to
2007 and/or 2006. Assumptions used in the calculation of these
amounts are included in footnote 13 of Groups annual
report on
Form 10-K
filed with the Securities and Exchange Commission on
February 28, 2008. |
|
(2) |
|
Amounts reflect change in the present value of accumulated
benefit in 2007 of the Directors Retirement Plan. Change in
pension value also includes change in the California Water
Service Pension and Supplemental Executive Retirement Plan
(SERP) benefit for 2007 for Mr. Foy. Nonqualified deferred
compensation earnings for directors participating in the
deferred compensation plan were not included in the table since
earnings were not at above market or at preferential rates. |
|
(3) |
|
Mr. Foy retired from service as an employee of the Group on
April 25, 2007, but remained a director and Chairman of the
Board. All Other Compensation for Mr. Foy represents salary
and other compensation paid as an employee. On January 1,
2008, the Company transferred to Mr. Foy the title of his
Company-owned vehicle at the Companys book value which
will be disclosed and recorded as compensation in 2008 |
|
(4) |
|
David N. Kennedy retired as a director September 2007. He was
not vested in the Director Retirement Plan. |
REPORT OF
THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Groups
Board of Directors has submitted the following report for
inclusion in this Proxy Statement:
Our 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, our Organization and Compensation
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in
26
this Proxy Statement and in the Groups Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, for filing
with the SEC.
The foregoing report is provided by the following directors, who
constitute the Organization and Compensation Committee:
ORGANIZATION
AND COMPENSATION COMMITTEE
Edward D. Harris, Jr., M.D., Committee Chair
Bonnie G. Hill
Richard P. Magnuson
Linda R. Meier
ORGANIZATION
AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
No member of the Organization and Compensation Committee was an
officer or employee of the Group or any of its subsidiaries
during 2007, 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, or any indebtedness to the Group, in each
case that would require disclosure under Certain Related
Persons Transactions included elsewhere in this Proxy
Statement.
None of the executive officers or non executive officers of the
Group has served on the Board of Directors or on the
Organization and 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.
CERTAIN
RELATED PERSONS TRANSACTIONS
Our wholly-owned subsidiary, CWS Utility Services (CWSUS),
provides laboratory services to a subsidiary of San Jose
Water Corporation (SJWC), which has ownership of over 5.3% of
our common stock outstanding. The rates charged are comparable
to rates charged to other third parties. We received
approximately $135,000 from SJW Corporation for water sampling.
The revenue and income from this activity is not significant to
our business. Certain of our properties are in SJWCs
service territory. As a result, we paid SJWC approximately
$75,000 for utility water service.
Procedures
for Approval of Related Persons Transactions
The Company does not have a stated policy for considering
related party transactions. Instead, the Board of Directors
reviews all related persons transactions on a case by case basis
and approves all such transactions in accordance with the
Delaware general corporation law.
27
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees the Groups financial
reporting process on behalf of the Board of Directors. The
Committees purpose and responsibilities are set forth in
the Audit Committee Charter. The current charter is available on
the Groups website at
http://www.calwatergroup.com.
The Committee consists of four members, each of whom meets the
New York Stock Exchange standards for independence and the
Sarbanes-Oxley Act independence standards for audit committee
membership, and has at least one member meeting the requirements
of a financial expert. During 2007, the Committee met four times.
The Groups management has primary responsibility for
preparing the Groups financial statements and the overall
reporting process, including the Groups system of internal
controls. KPMG LLP, the Groups independent registered
public accounting firm, audited the financial statements
prepared by the Group and expressed their opinion that the
financial statements present fairly the Groups financial
position, results of operations and cash flows in conformity
with generally accepted accounting principles. KPMG LLP also
audited managements assessment that the Group maintained
effective internal control over financial reporting as of
December 31, 2007, and expressed their opinion that
managements assessment is fairly stated, in all material
respects, and that the Group maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2007.
In connection with the December 31, 2007, financial
statements, the Audit Committee:
(1) reviewed and discussed the audited financial statements
with management and the independent registered public accounting
firm;
(2) discussed with the independent registered public
accounting firm the matters required by Statement on Auditing
Standards No. 61, Communication with Audit
Committees, as amended;
(3) received from KPMG LLP and discussed with the auditor
written disclosures required by the Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees and the Committee also discussed with KPMG LLP
the firms independence, and considered whether the
firms provision of non-audit services and the fees and
costs billed for those services are compatible with KPMG
LLPs independence; and
(4) met privately with the Groups independent
registered public accounting firm and internal auditors, each of
whom has unrestricted access to the Audit Committee, without
management present, and discussed their evaluations of the
Groups internal controls and overall quality of the
Groups financial reporting and accounting principles used
in preparation of financial statements. The Committee also met
privately with the Groups Chairman and the President and
Chief Executive Officer, the Chief Financial Officer and the
Controller to discuss the same issues.
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on
Form 10-K
to be filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
George A. Vera, Committee Chair
Douglas M. Brown
Richard P. Magnuson
Linda R. Meier
28
RELATIONSHIP
WITH THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Deloitte & Touche LLP
to serve as the Groups independent registered public
accounting firm for the year ending December 31, 2008. The
Committees selection of Deloitte & Touche LLP as
independent registered public accounting firm is submitted for
ratification by vote of the stockholders at their Annual Meeting.
The following fees relate to services provided by KPMG LLP, the
Groups independent registered public accounting firm for
fiscal years 2006 and 2007. No fees were paid to
Deloitte & Touche LLP in either 2006 or 2007.
|
|
|
|
|
|
|
|
|
Category of Services
|
|
2006
|
|
|
2007
|
|
|
Audit
Fees(1)
|
|
$
|
780,200
|
|
|
$
|
755,000
|
|
Audit-Related
Fees(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
Tax
Fees(3)
|
|
$
|
0
|
|
|
$
|
0
|
|
Subtotal
|
|
$
|
780,200
|
|
|
$
|
755,000
|
|
All Other
Fees(4)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
The audit services included audits of California Water Service
Group and California Water Service Company annual financial
statements for the years ended December 31, 2006 and 2007,
and quarterly reviews of the Groups interim financial
statements. Included for the year ended December 31, 2007,
fees are related to the audit of managements assessment of
internal control over financial reporting and an audit of the
effectiveness of internal control over financial reporting. |
|
(2) |
|
Services include assurance and related services by the auditor
that are reasonably related to the performance of the audit or
review of the Groups financial statements and are not
reported under Audit Fees. |
|
(3) |
|
Services include tax compliance, tax advice, and tax planning. |
|
(4) |
|
Services include other services (and products) provided by the
independent registered public accounting firm, other than the
services reported above in this table. |
Fees reported in the above table relate to that fiscal year and
were incurred either during the fiscal year or in the quarter
following the fiscal year end.
All non-audit services provided by the independent registered
public accounting firm are subject to preapproval by the Audit
Committee, as described in the Audit Committee Charter, which is
available on the Groups website at
http://www.calwatergroup.com.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2008
Stockholders will vote on the ratification of the selection of
Deloitte & Touche LLP, certified public accountants,
to audit the Groups books, records and accounts for the
year ending December 31, 2008. Following the recommendation
of the Audit Committee, the Board recommends a vote FOR the
adoption of this proposal. Representatives of
Deloitte & Touche LLP will be present at the meeting
to answer questions 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.
Vote
Required
In order for the ratification of the selection of the
independent registered public accounting firm to be approved, it
must receive the affirmative vote of a majority of the shares
present in person or represented by proxy and entitled to vote
at the meeting.
The Board urges you to vote FOR this proposal.
29
OTHER
MATTERS
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 which might have been transacted at the
original Annual Meeting.
Cost of
Proxy Solicitation
The Group will bear the entire cost of preparing, assembling,
printing and mailing this Proxy Statement, the proxies and any
additional materials which 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 & Co. was hired to assist in
the distribution of proxy materials and solicitation of votes
for $7,000, plus
out-of-pocket
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.
Other
Matters
The Board is not aware of any matters to come before the Annual
Meeting other than the proposals for the election of directors
and the ratification of the selection of the independent
registered public accounting firm. If any other matters should
be brought before the meeting or any adjournment thereof, upon
which a vote properly may be taken, the proxy holders will vote
in their discretion unless otherwise provided in the proxies.
The report of the Organization and Compensation Committee, the
report of the Audit Committee, and the statement of independence
of Audit Committee members referred to under Board
Structure Committees: Audit are not to be
considered as incorporated by reference into any other filings
which the Group makes with the Securities and Exchange
Commission 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 a written code of ethics that applies to
its principal executive officer, principal financial officer and
principal accounting officer or controller. The Group has also
adopted codes of ethics for its employees and directors. The
codes are posted on the Groups website at
http://www.calwatergroup.com.
The codes are also available in written form upon request to
Corporate Secretary, California Water Service Group, 1720 North
First Street, San Jose, California
95112-4598.
Stockholders
Sharing an Address
As permitted by the Securities Exchange Act of 1934, as amended,
the Group may deliver only one copy of this Proxy Statement to
stockholders residing at the same address, unless such
stockholders have advised the Group of their desire to receive
multiple copies of the Proxy Statement. Stockholders residing at
the same address may request delivery of multiple copies of the
Proxy Statement by directing a notice to Corporate Secretary,
California Water Service Group, 1720 North First Street,
San Jose, California
95112-4598
or calling
(408) 367-8200.
The Group will promptly deliver, upon oral or written request, a
separate copy of this Proxy Statement to any stockholder who so
requests.
Copies of
Annual Report on
Form 10-K
The Group, upon 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 2007. Copies of exhibits to
Form 10-K
also will be furnished upon request for a payment of a fee of
30
$0.50 per page. All requests should be directed to
Corporate Secretary, California Water Service Group, 1720 North
First Street, San Jose, California
95112-4598.
Electronic copies of the Groups
10-K,
including exhibits, and this Proxy Statement will be available
on the Groups website at:
http://www.calwatergroup.com.
Disclaimer
Regarding Website
The information contained on the Groups website is not to
be deemed included or incorporated by reference into this Proxy
Statement.
31
California Water Service Group
California Water Service Company,
Hawaii Water Service Company,
New Mexico Water Service Company,
Washington Water Service Company and
CWS Utility Services
HWS Utility Services
1720 North First Street
San Jose, CA 95112-4598
(408) 367-8200
ANNUAL MEETING OF STOCKHOLDERS OF
CALIFORNIA WATER SERVICE GROUP
May 27, 2008
Please date, sign, and mail
your proxy card in the
envelope provided, or vote
by telephone or Internet, as
soon as possible.
â Please
detach along perforated line and mail in the envelope provided. â
n
20930000000000000000 3
052708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
|
1. |
Election of Directors: You cannot cumulate your votes when voting by Internet or telephone.
In order to cumulate your votes, you must return this proxy card by mail in the enclosed
envelope. |
| |
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
|
|
|
2. |
|
Proposal to Ratify the Appointment of Deloitte & Touche LLP as the independent registered
public accounting firm of the Group for 2008. |
|
o |
|
o |
|
o |
|
|
|
|
NOMINEES: |
|
|
|
|
|
|
|
|
|
o
|
FOR ALL NOMINEES
|
|
¡ |
Douglas M. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
¡ |
Robert W. Foy |
|
|
|
|
|
|
|
o
|
WITHHOLD AUTHORITY
|
|
¡ |
Edwin A. Guiles |
|
|
|
IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2008 AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS PROPERLY
RAISED AT THE MEETING. THE COMPANY KNOWS OF NO OTHER MATTER TO BE RAISED AT THE MEETING OTHER THAN
AS SET FORTH IN THE COMPANYS PROXY STATEMENT.
Please date, sign, and return promptly. |
FOR ALL NOMINEES |
|
¡ |
Edward D. Harris, Jr., M.D. |
|
|
|
|
|
|
|
¡ |
Bonnie G. Hill |
|
|
|
o
|
FOR ALL EXCEPT
|
|
¡ |
Richard P. Magnuson |
|
|
|
(See Instruction below) |
|
¡ |
Linda R. Meier |
|
|
|
|
|
¡ |
Peter C. Nelson |
|
|
|
|
|
|
|
¡ |
George A. Vera |
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT and
fill in the circle next to each nominee you wish to withhold, (as shown here: ()To cumulate
your vote for one or more of the above nominee(s), write the manner in which such votes shall
be cumulated in the space to the right of the nominee(s) name(s). If you are cumulating your
vote, do not mark the circle. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To change the address on your account, please check the box at right and indicate your new address
in the address space above. Please note that changes to the registered name(s) on the account may
not be submitted via this method.
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
of Stockholder
|
|
Date:
|
|
Signature
of Stockholder
|
|
Date:
|
|
|
|
|
Note: |
|
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
|
n
n
CALIFORNIA WATER SERVICE GROUP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PETER C. NELSON and LYNNE P. MCGHEE, and each of them with full power of substitution, are
hereby authorized to vote, as designated on the reverse side, all the shares of California Water
Service Group common stock and preferred stock of the undersigned at the Annual Meeting of
Stockholders of California Water Service Group to be held at 1720 N. First Street, San Jose,
California on May 27, 2008 at 9:30 a.m., or at any adjournment thereof. By my signature on the
reverse side of this proxy, I acknowledge that I have received a copy of the notice of meeting and
proxy statement relating to this meeting and of the Groups Annual Report to Stockholders for 2008.
Unless otherwise specified below this proxy authorizes the proxies to cumulate all votes that the
undersigned is entitled to cast at the Annual Meeting for, and to allocate such votes among, one or
more of the nominees listed on the reverse side as the proxies determine in their discretion.
Please date, sign, and mail as soon as possible in the enclosed envelope.
(Continued and to be signed on the reverse side.)
ANNUAL MEETING OF STOCKHOLDERS OF
CALIFORNIA WATER SERVICE GROUP
May 27, 2008
|
|
|
|
|
|
|
PROXY VOTING INSTRUCTIONS
|
|
|
MAIL - Date, sign and mail your proxy card in the
envelope provided as soon as possible.
- or -
TELEPHONE-
Call toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from foreign countries and follow the instructions. Have your proxy card available when you call.
- OR
-
INTERNET - Access www.voteproxy.com and follow
the on-screen instructions. Have your proxy card
available when you access the web page.
- OR
-
IN PERSON - You may vote your shares in person by attending the Annual Meeting.
|
|
|
|
|
|
|
COMPANY NUMBER
|
|
|
|
|
|
ACCOUNT NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
You may enter your voting instructions at 1-800-PROXIES in the United States or 1-718-921-8500 from
foreign countries or www.voteproxy.com up until 11:59 PM Eastern Time the day before the meeting
date. We have been advised by counsel that these telephone and Internet voting procedures comply
with Delaware law.
â Please
detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet. â
n
20930000000000000000 3
052708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
|
1. |
Election of Directors: You cannot cumulate your votes when voting by Internet or telephone.
In order to cumulate your votes, you must return this proxy card by mail in the enclosed
envelope. |
| |
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
|
|
|
2. |
|
Proposal to Ratify the Appointment of Deloitte & Touche LLP as the independent registered
public accounting firm of the Group for 2008. |
|
o |
|
o |
|
o |
|
|
|
|
NOMINEES: |
|
|
|
|
|
|
|
|
|
o
|
FOR ALL NOMINEES
|
|
¡ |
Douglas M. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
¡ |
Robert W. Foy |
|
|
|
|
|
|
|
o
|
WITHHOLD AUTHORITY
|
|
¡ |
Edwin A. Guiles |
|
|
|
IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2008 AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS PROPERLY
RAISED AT THE MEETING. THE COMPANY KNOWS OF NO OTHER MATTER TO BE RAISED AT THE MEETING OTHER THAN
AS SET FORTH IN THE COMPANYS PROXY STATEMENT.
Please date, sign, and return promptly. |
FOR ALL NOMINEES |
|
¡ |
Edward D. Harris, Jr., M.D. |
|
|
|
|
|
|
|
¡ |
Bonnie G. Hill |
|
|
|
o
|
FOR ALL EXCEPT
|
|
¡ |
Richard P. Magnuson |
|
|
|
(See Instruction below) |
|
¡ |
Linda R. Meier |
|
|
|
|
|
¡ |
Peter C. Nelson |
|
|
|
|
|
|
|
¡ |
George A. Vera |
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT and
fill in the circle next to each nominee you wish to withhold, (as shown here: ()To cumulate
your vote for one or more of the above nominee(s), write the manner in which such votes shall
be cumulated in the space to the right of the nominee(s) name(s). If you are cumulating your
vote, do not mark the circle. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To change the address on your account, please check the box at right and indicate your new address
in the address space above. Please note that changes to the registered name(s) on the account may
not be submitted via this method.
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
of Stockholder
|
|
Date:
|
|
Signature
of Stockholder
|
|
Date:
|
|
|
|
|
Note: |
|
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
|
n
n