DEF 14A 1 tm212302-1_def14a.htm DEF 14A tm212302-1_def14a - none - 8.1719341s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.      )
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Soliciting Material under §240.14a-12
California Water Service Group
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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 95112-4508
(408) 367-8200
April 14, 2021
Dear Fellow Stockholder:
It is my pleasure to invite you to join us for The California Water Service Group 2021 Annual Meeting of Stockholders at 9:30 a.m. Pacific Time on Wednesday, May 26, 2021. This year, we again will hold the Annual Meeting online due to the continuing public health impact of the COVID-19 pandemic and to support the health and well-being of our employees and stockholders. The virtual Annual Meeting will also allow for greater participation by all of our stockholders, regardless of their geographic location. Please see the Notice of Annual Meeting on the next page for more information about how to virtually attend and participate. Your vote is very important, we encourage you to read the Proxy Statement and vote your shares at your earliest convenience, even if you plan to attend the meeting.
2020 was a year of unprecedented societal and business challenges. Through it all, we remained focused on fulfilling our essential role of providing our customers and communities continued access to a safe, reliable, and affordable water supply. We took extraordinary measures to keep our employees healthy and to support our customers and the communities we serve during this difficult year. We also made tremendous effort to make critical improvements to our infrastructure so that our water systems remain safe and reliable, both now and in the future.
Notwithstanding these changes, we had a record year of financial performance, delivering strong results to our stockholders. It was also a year focused on evolving and maturing our enterprise risk management program and reporting to meet the expectations of our customers, regulators, stockholders and other stakeholders. We believe that managing and addressing environmental, social, and governance risks as part of our overall risk management program is critical to the long-term sustainability of our business.
This year’s Board nominees represent a wide range of backgrounds and expertise, including the nomination of Dr. Yvonne Maldonado who has already proven to be a critical advisor to us throughout our pandemic response. We believe our diversity of experiences, perspectives, and skills contributes to the Board’s effectiveness in managing risk and overseeing strategy and execution, positioning us for long-term success.
On behalf of the California Water Service Group Board of Directors, thank you for your continued support and investment.
Sincerely,
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Peter C. Nelson
Chairman of the Board

California Water Service Group
Notice of Annual Meeting of Stockholders
Date and Time
Location
Record Date
Wednesday, May 26, 2021
9:30 a.m. Pacific Time
To attend and participate in the Annual Meeting visit
www.virtualshareholdermeeting.com/CWT2021
Only stockholders at the close of business on March 30, 2021 are entitled to receive notice of and to vote at the Annual Meeting
The 2021 Annual Meeting of Stockholders of California Water Service Group (Group) will be held on May 26, 2021, at 9:30 a.m. Pacific Time. You will be able to attend the Annual Meeting, vote your shares electronically, and submit your questions during the live webcast by visiting www.virtualshareholdermeeting.com/CWT2021. At the Annual Meeting, stockholders will consider and vote on the following matters:
1.
Election of the twelve directors named in the Proxy Statement;
2.
An advisory vote to approve executive compensation;
3.
Ratification of the selection of Deloitte & Touche LLP as the Group’s independent registered public accounting firm for 2021; and
4.
Such other business as may properly come before the Annual Meeting.
These matters are more fully described in the proxy statement accompanying this notice. We believe your vote is important. Please submit a proxy as soon as possible so that your shares can be voted at the Annual Meeting in accordance with your instructions. You may submit your proxy: (a) online, (b) by telephone, or (c) by U.S. Postal Service mail. You may revoke your proxy at any time prior to the vote at the Annual Meeting. Of course, in lieu of submitting a proxy, you may vote online during the Annual Meeting. For specific instructions, please refer to “Questions and Answers about the Proxy Materials and the Annual Meeting” in this proxy statement and the instructions on the proxy card.
In the event of a technical malfunction or other situation that the Chair determines may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of stockholders to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the Annual Meeting, the Chair or Corporate Secretary will convene the meeting at 10:30 a.m. Pacific Time on the date specified above and at the address specified above solely for the purpose of adjourning the meeting to reconvene at a date, time, and physical or virtual location announced by the Chair. Under either of the foregoing circumstances, we will post information regarding the announcement on our Investor Relations website at http://ir.calwatergroup.com.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 26, 2021: Electronic copies of the Group’s Form 10-K, including exhibits, and this Proxy Statement will be available at www.proxyvote.com.
The Group expects to mail the Notice Regarding Internet Availability of Proxy Materials to its stockholders commencing on or about April 14, 2021.
By Order of the Board of Directors
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MICHELLE R. MORTENSEN
Vice President, Corporate Secretary
April 14, 2021

At this time, we plan to hold the Annual Meeting entirely online. We are actively monitoring the public health and safety concerns relating to the novel coronavirus (COVID-19) and the advisories or mandates that federal, state, and local governments, and related agencies, may issue. Depending on developments relating to COVID-19, we may make alternative arrangements relating to the Annual Meeting, which could include changing the date and/or time of the meeting, or providing for the ability to attend the meeting in person as well as online if it is feasible to do so. We will announce any alternative arrangements for the meeting as promptly as practicable. Please monitor our Investor Relations website at http://ir.calwatergroup.com/​ and check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
BOARD STRUCTURE 6
PROPOSAL NO. 1 – ELECTION OF DIRECTORS 22
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS 32
COMPENSATION DISCUSSION AND ANALYSIS 36
1
36
2
37
3
38
4
40
5
54
6
55
63
ORGANIZATION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 63
PROCEDURES FOR APPROVAL OF RELATED PERSON TRANSACTIONS 63
PROPOSAL NO. 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION 64
REPORT OF THE AUDIT COMMITTEE 66
RELATIONSHIP WITH THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 67
68
OTHER MATTERS 68
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING 70

PROXY SUMMARY
Information about our 2021 Annual Meeting of Stockholders
Date and time:
Wednesday, May 26, 2021 at 9:30 a.m. Pacific Time
Location:
To attend and participate in the Annual Meeting visit www.virtualshareholdermeeting.com/CWT2021
Record Date:
March 30, 2021
Voting matters:   Stockholders will be asked to vote on the following matters at the Annual Meeting:
Items of Business
Board’s
Recommendation
Where to
Find Details
1.
Election of twelve directors
FOR all nominees
pp. 22-29
2.
Advisory Vote on Executive Compensation
FOR
p. 64
3.
Ratification of Deloitte & Touche LLP as the Group’s independent registered public accounting firm
FOR
p. 68
What’s New
We continue to enhance our governance, compensation, and sustainability practices and disclosures. Among many other items, since last year California Water Service Group has:

Designed and implemented a robust COVID-19 response to support our customers, communities, and employees

Adopted four new policies: Environmental Sustainability; Diversity, Equality, and Inclusion;Political Engagement; and Human Rights

Published our 2020 Environmental, Social, and Governance (ESG) report with disclosures that are aligned with the Sustainability Accounting Standards Board (SASB) Water Utilities & Services Industry Standards and reference Global Reporting Initiate (GRI) standards

Included environmental leadership in the 2020 long-term incentive compensation program for the three-year performance period 2020 – 2022
Governance Highlights(PAGE 6)
Effective Board Leadership and Independent Oversight

Separation of Chairman and CEO roles plus independent Lead Director with well-defined responsibilities

Executive session led by independent Lead Director at Board meetings

Ongoing review of the Board composition and succession planning

Focus on the appropriate diversity of experience, skills, and attributes for our Board

Mandatory director retirement age at 75

Substantial majority of independent directors and all-independent committees
Overview of Corporate Governance

Code of Conduct for Directors, Officers, and Employees

Clawback policy

Stock ownership guidelines for directors and executive officers

Prohibition on short sales, transactions in derivatives, and hedging and pledging of stock by directors and executive officers

Annual election of all directors

Majority voting for directors in uncontested elections
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   1

California Water Service Group Board of Directors(PAGE 6)
Director Nominees
Group’s Board is composed of a diverse, experienced group of global thought, business, and academic leaders.
Director
Since
Committees
Name and Principal Occupation
Age
Independent
A
C
F
NG
S
Gregory E. Aliff
Former Vice Chairman and Senior Partner of
U.S. Energy & Resources, Deloitte LLP
67
2015
YES
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Terry P. Bayer
Former COO of Molina Healthcare, Inc.
70
2014
YES
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Shelly M. Esque
Former Vice President and Global Director of
Corporate Affairs of Intel Corporation
60
2018
YES
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Martin A. Kropelnicki
President & CEO of California Water Service Group
54
2013
Thomas M. Krummel, M.D.
Emile Holman and Chair Emeritus of the
Department of Surgery at Stanford University
School of Medicine
69
2010
YES
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Richard P. Magnuson
Lead Director
Managing Director of Orpheum Capital
65
1996
YES
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Yvonne A. Maldonado, M.D.
Professor of Global Health and Infectious Diseases, Departments of Pediatrics and Epidemiology and Population Health, Stanford University
65
New
Nominee
YES
Scott L. Morris
Chairman of Avista Corporation
63
2019
YES
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Peter C. Nelson
Chairman of the Board of California Water
Service Group
73
1996
Carol M. Pottenger
Principal and Owner of CMP Global, LLC
65
2017
YES
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Lester A. Snow
Director and Former President of the Klamath River
Renewal Corporation
69
2011
YES
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Patricia K. Wagner
Former Group President of U.S. Utilities for
Sempra Energy
58
2019
YES
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Number of meetings held during 2020
5
3
2
2
4
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg] Chair
A: Audit
C: Organization and Compensation
[MISSING IMAGE: tm212302d1-icon_vicepn.jpg] Vice Chair
F: Finance and Capital Investment
NG: Nominating/Corporate Governance
[MISSING IMAGE: tm212302d1-icon_memberpn.jpg] Member
S: Enterprise Risk Management, Safety and Security
2   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Optimal Mix of Skills and Experience of Director Nominees
California Water’s director nominees collectively contribute significant experience in the areas most relevant to overseeing the Company’s business and strategy.
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CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   3

2020 Financial Highlights
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Compensation Highlights(PAGE 36)
Our compensation program supports California Water Service Group’s long-term business strategy and high value business model to create long-term stockholder value
WHAT WE DO
WHAT WE DON’T DO
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We pay-for-performance with compensation in the form of annual short-term performance-based incentives, as well as award more than half of long-term equity incentive compensation in the form of restricted stock units (RSUs) subject to performance-based vesting criteria over a three-year period.
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We retain an independent compensation consultant who reports to the Organization and Compensation Committee.
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We hold an annual “say-on-pay” advisory vote.
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We require stock ownership with minimum holding requirements for all directors and officers to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and officers.
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We cap individual payouts for short-term performance-based incentive and long-term equity incentive compensation plans.
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We have an officer compensation recovery (“clawback”) policy requiring the reimbursement of excess incentive-based compensation provided to the Group’s officers in the event of certain restatements of the Group’s financial statements.
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No excessive perquisites; the Group provides officers with only limited perquisites consisting of a company vehicle with related excess liability insurance.
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No tax gross-ups on perquisites or other personal benefits.
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No employment agreements; other than participation in the Executive Severance Plan, none of our officers are party to individual employment or severance agreements.
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No single-trigger change-in-control benefits; the Group’s Executive Severance Plan provides for change-in-control severance benefits upon a termination of employment following a change-in-control; the Group’s equity incentive plan does not require single-trigger vesting acceleration upon a change-in-control.
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No hedging and pledging of Group stock; the Group’s directors and officers are prohibited from hedging their ownership of Group stock, including trading in options, puts, calls, or other derivative instruments related to Group stock or debt, in accordance with the anti-hedging prohibition in our insider trading policy; directors and officers are also prohibited from pledging their ownership of Group stock in accordance with an anti-pledging provision in our insider trading policy.
4   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Environmental, Social, and Governance Highlights
As a company, we have always stood for “doing the right thing.” We strive to make the world a better place and take pride in our long-standing efforts to provide safe water at affordable rates, plan for our customers’ future water needs, be responsible stewards of the environment, invest and give back to our communities, have the best-trained employees, and maintain high ethical standards. This commitment is instilled in our shared purpose, which is to enhance the quality of life for our customers, communities, employees, and stockholders.
COVID-19 RESPONSE
We fully recognized early on the significant impact COVID-19 could have on our customers, communities, and employees. In response to the global public health crisis we:

Suspended water service disconnections for those unable to pay prior to any mandate and provided more than $402,000 in hardship grants

Offered our customers flexible payment plans and extensions

Asked our regulator to defer any customer rate increases in 2020

Partnered with local organizations in our service areas to support our communities by donating more than $1.7 million to our community support partners

Implemented a matching program for employees to contribute financially, together with the Company giving an additional $88,200 to local non-profits
To protect our employees, we developed and instituted new safety protocols and delivered extensive training, provided employees with up to 15 days of paid COVID leave beyond their regular sick and vacation days, provided emotional support and education about the spread and prevention of the virus, and activated our Emergency Operations Center to enable communication and coordination for these efforts.
2020 ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT
We made significant progress on our environmental, social, and governance (ESG) efforts. In 2020, we conducted an in-depth materiality assessment to identify and prioritize the ESG topics most relevant to our internal and external partners. After a rigorous process of researching and benchmarking, mapping topics across our business processes, conducting internal and external interviews, analyzing external sources, and scoring and validating results, we prioritized our top ESG topics. This process will inform our ESG strategy, reporting, and resource allocation going forward.
We also produced an Environmental, Social, and Governance Report that aligns with the Sustainability Accounting Standards Board (SASB) Water Utilities & Services Industry Standards and references Global Reporting Initiative (GRI) Standards. The full report may be accessed at www.calwatergroup.com/esg2020. Web links are provided throughout this proxy statement for convenience and are inactive textual references only. The content on the referenced websites does not constitute a part of and is not incorporated by reference into this proxy statement.
In addition to completing the materiality assessment and upgrading our report to align with SASB and GRI, we established a new Water Resource Sustainability Department and completed the first phase of a water resource monitoring and adaptation plan, both of which are expected to better enable us to address the risks posed by climate change. Our efforts to further mature our climate change strategy will be guided by the framework from the Task Force on Climate Related Financial Disclosures (TCFD).
Additionally, in February, our Board of Directors adopted four new policies: Environmental Sustainability; Diversity, Equality, and Inclusion; Political Engagement; and Human Rights. In 2021, we will continue to refine our ESG strategy, data collection, and reporting.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   5

CORPORATE GOVERNANCE PRACTICES AT CALIFORNIA WATER SERVICE GROUP
We are committed to objective, independent leadership for our Board and each of its committees. In addition, our Board believes the active, objective, and independent oversight of management is central to effective Board governance, and serves the best interests of all stakeholders, including customers, stockholders, regulators, suppliers, associates, and the general public.
Specifically, our Board has adopted Corporate Governance Guidelines comprised of rigorous governance practices and procedures. To maintain and enhance its independent oversight, our Board has implemented measures to further enrich Board composition, leadership, and effectiveness. These measures align our corporate governance structure with achieving our strategic objectives and enable our Board to effectively communicate and oversee our culture of compliance and in-depth risk management. Our Board frequently discusses business and other matters with the senior management team and principal advisors such as our legal counsel, auditors, consultants, and financial advisors. Our Board annually reviews and approves the Corporate Governance Guidelines and charters of the Board committees to align with evolving best practices and regulatory requirements, including the New York Stock Exchange (NYSE) corporate governance listing standards. The Corporate Governance Guidelines and the current charters for the Audit, Organization and Compensation, Finance and Capital Investment, Nominating/Corporate Governance, and Enterprise Risk Management, Safety and Security committees are posted on our website at http://www.calwatergroup.com.
Our Board of Directors
Board Structure and Independence
Our Board encompasses the optimal mix of diverse backgrounds, experiences, skills, expertise, and an uncompromising commitment to integrity and thorough judgment. The Board thoughtfully advises and guides management as they work to achieve our long-term strategic goals. To promote sound board structure and independence standards, our Board adheres to the following policies and procedures:

Directors must retire no later than the Annual Meeting that follows the date of the director’s 75th birthday

Our Board conducts an ongoing review of Board composition and succession planning, resulting in refreshment of the Board and a diversity of skills, attributes, and perspectives on the Board

Upon election at the annual meeting, the average tenure of the members of the Board will be approximately nine years

Our Board has a majority of independent directors
Board Oversight
Our Board is responsible for seeing that our organization is appropriately stewarding the resources entrusted to it and following legal and ethical standards. In addition, our Board has the fundamental and legal responsibility to provide oversight and accountability for the organization. By respecting the following key risk management principles, our Board provides a solid foundation of organizational oversight:

Understands the organization’s key drivers of success

Continually assesses the risks in the organization’s strategy

Appropriately defines the role of the full Board and its standing committees specific to risk oversight
6   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement


Assesses the organization’s risk management system – including people and processes – to ensure appropriateness and sufficient resources

Works with management to understand and agree on the types (and format) of risk information the Board requires

Encourages dynamic and constructive risk dialogue between management and the Board, including a willingness to challenge assumptions

Closely monitors the potential risks to culture and the incentives structure

Oversees the critical alignment of strategy, risk, controls, compliance, incentives, and people
Director Education
Our director education about California Water Service Group, our strategy, control framework, regulatory environment, and our industry begins when a director is elected to our Board and continues throughout his or her tenure on the Board. Upon joining our Board, new directors are provided with a comprehensive orientation about our company which includes an overview of director duties and our corporate governance, one-on-one sessions with the Chairman and President & CEO, and presentations by senior management and other key management representatives on the organization’s strategy, regulatory framework, and control framework. As directors are appointed to new committees or assume a leadership role, such as committee chair, they receive additional orientation sessions specific to such responsibilities.
Board and Committee presentations, educational briefings, discussions with subject matter experts on business, governance, regulatory, and control matters help to keep directors appropriately apprised of key developments in our business and in our industry, including material changes in regulation, so they can carry on their oversight responsibilities.
Leadership Structure
Peter C. Nelson has served as Chairman of the Board since 2012. The roles of Chairman of the Board and CEO for the organization are separate. Our Board believes separating these roles is the most appropriate leadership structure based on numerous factors, including the Board’s historical practice (which has predominantly been to separate the roles), its assessment of the organization’s leadership, and the organization’s current and anticipated needs. The Board attributes a portion of the historical success of its leadership model to the Chairman of the Board’s 17-plus years of service as the former President & CEO, including his industry knowledge and executive management skills, rather than by the particular leadership structure chosen. The Board believes that Mr. Nelson, who retired as CEO in 2013, brings significant experience in the water and public utility industries making him best positioned to lead the Board as it oversees and monitors implementation our business strategy, considers risks related to strategy and business decisions, and performs its oversight function.
Lead Independent Director
Our Lead Independent Director is selected from and by the independent directors, serves for a period of at least one year, and has expansive duties and authority as included in our Corporate Governance Guidelines.
Richard P. Magnuson currently serves as Lead Independent director. Our Corporate Governance Guidelines list the Lead Independent Director’s responsibilities and authority including:

Presides at meetings of the Board in the absence of the Chairman of the Board

Recommends to the Chairman of the Board items for consideration to be included in the Board meeting agendas and schedules

Serves as liaison between the Chairman of the Board and the independent directors
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   7


Consults and communicates with major stockholders upon request
In evaluating candidates for Lead Independent Director, the independent directors consider several factors, including each candidate’s corporate governance experience, board service and tenure, leadership roles, and the ability to meet the necessary time commitment. For an incumbent Lead Independent Director, the independent directors also consider the results of the annual Lead Independent Director assessment as described on Page 7.
Independence of Directors
As discussed in our Corporate Governance Guidelines, a substantial majority of the Board is comprised of independent directors. Based the recommendation of the Nominating/Governance Committee, the Board determined that, other than Martin A. Kropelnicki and Peter C. Nelson, each of our director nominees (Gregory E. Aliff, Terry P. Bayer, Shelly M. Esque, Thomas M. Krummel, M.D., Richard P. Magnuson, Yvonne A. Maldonado, M.D., Scott L. Morris, Carol M. Pottenger, Lester A. Snow, and Patricia K. Wagner) is independent.
Under the listing standards of the New York Stock Exchange, a director is independent if he or she has no material relationship, whether commercial, industrial, banking, consulting, accounting, legal, charitable, familial, or otherwise, with the organization, either directly or indirectly as a partner, stockholder, or executive officer of an entity that has a material relationship with us. Our Board makes an affirmative determination regarding the independence of each director annually, based on the recommendation of the Nominating/Corporate Governance Committee.
The Board has adopted standards to assist in assessing the independence of directors, which are set forth in the Corporate Governance Guidelines, which are posted on our website at http://www.calwatergroup.com. Under these standards, our Board has determined that a director is not independent if:
Director Independence

The director is, or has been within the last three years, an employee of any company that comprises 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

The director has received, or has an immediate family member who has received, during any 12-month period during the last three years, more than $120,000 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 (compensation received by an immediate family member for service as an employee, other than an executive officer, of the Group is not considered for purposes of this standard)

The director, or an immediate family member, is a current partner of the Group’s internal or external auditor; the director is a current employee of such a firm; the director’s immediate family member is a current employee of such a firm who personally works on the Group’s audit, or the director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on the Group’s audit within that time

The director, or an immediate family member, is, or has been within the last three years, employed as an executive officer of another company where any of the Group’s present executive officers serves or served at the same time on that company’s compensation committee
8   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement


The director is a current employee, or has an immediate family member who is a current executive officer, of a customer or vendor or other party that has made payments to or received payments from companies that comprise the Group for property or services in an amount that, in any of the last three fiscal years, exceeded the greater of  $1 million or 2% of the party’s consolidated gross revenues

The director, or the director’s spouse, is an executive officer of a non-profit organization to which the Group makes, or in the past three years has made, payments that, in any single fiscal year, exceeded the greater of  $1 million or 2% of the non-profit organization’s consolidated gross revenues
In addition, our Board has determined that none of the following relationships, by itself, is a material relationship that would impair a director’s independence:

Being a residential customer of any service territory

Being a current executive officer or employee of, or being otherwise affiliated with, a commercial customer from which the Group has received payments that, in any of the last three fiscal years, did not exceed the greater of  (i) 1% of the Group’s consolidated gross revenues for the year; or (ii) $500,000

Being a current executive officer or employee of, or having a 5% or greater ownership or similar financial interest in, a supplier or vendor that has received payments from the Group that, in any of the last three fiscal years, did not exceed the lesser of  (i) 1% of the Group’s consolidated gross revenues for the year; or (ii) $500,000

Being a director of any of the Group’s subsidiaries
Directors inform the Board as to any relationships they may have with the organization and provide other pertinent information in annual questionnaires they complete, sign, and certify. The Board reviews relevant relationships to identify possible impairments to director independence and in connection with disclosure obligations. For those directors who reside in one of our service territories and are customers, our Board has determined that it is not a material relationship that would impair their independence under the above standards.
Annual Evaluation of Board, Committees, and Independent Lead Director
Our Board and Committees maintain a regular and robust evaluation process to promote the effective functioning of our Board. It is important to examine Board, Committee, and director performance and to solicit and act upon feedback received from each member of our Board. The Board utilizes several long-standing corporate governance practices and processes to support evaluations, including annual assessments of the Board and its committees, annual assessments of the Lead Independent Director, annual assessments of individual directors, director questionnaires, and one-on-one discussions. Evaluations are intended to assess the effectiveness in board composition and conduct, meeting structure, materials and information, committee composition and effectiveness, strategic and succession planning, culture and exercise of oversight, as well as continued education and access to management.
Board Composition
Our Board believes our directors should possess a combination of skills, professional experience, and a diversity of backgrounds necessary to oversee our business. Also, the Board believes every director should possess certain attributes as reflected in the Board’s membership criteria.
The Nominating/Corporate Governance Committee assesses the composition of and criteria for membership on the Board and its committees on an ongoing basis in consideration of our current and future business and operations. In fulfilling this responsibility, the Nominating/Corporate Governance Committee takes a long-term view and seeks a variety of occupational and personal backgrounds on the Board in order to obtain a range of viewpoints and perspectives and to enhance the diversity of the Board as a group. The Nominating/Corporate Governance Committee considers a variety of factors, including our long-term strategy, the skills and experiences that directors provide to the Board (including in the context of the our business strategy), the performance of the Board and the organization, the
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   9

Board’s director retirement policy, the Board’s view that a balanced and effective board should include members across a continuum of tenure, and the belief that valuable insights can be gained from diversity of gender, race, ethnic and national background, geography, age, and sexual orientation. As a result of these long-term strategic assessments, the Nominating/Corporate Governance Committee has articulated a set of principles on board composition, which include:
Board Composition
Diversity
Our Board is comprised of members who demonstrate a diversity of thought, perspectives, skills, backgrounds and experiences, and has a goal of identifying candidates that can contribute to that diversity in a variety of ways, including ethnically and gender diverse candidates
Board Skills Our Board is composed of a collective set of skills to address management challenges, especially in the areas of business strategy, financial performance, risk management, cybersecurity, technology and enterprise innovation, and executive talent and leadership, and should evolve with the organization’s business strategy
Industry Experience
Our Board seeks and retains members with industry experience including water, utility and technology, that align with our long-term strategy; recognizes the utility industry is complex and understands the importance of having directors who have witnessed challenging business cycles and can share the wisdom of those experiences
Tenure
Our Board retains members across the director tenure spectrum to promote effective oversight, and embrace innovation, a changing market and customer expectations; seeks to have a mix of long-standing members, relatively new members, and remaining members at different points along the tenure spectrum
Board Size
Our Board considers the appropriate size of the board in relation to promoting active engagement, open discussion and effective challenge of management; continuously assesses the bench of successors for Board leadership positions in both expected and unexpected departure scenarios
Director Criteria
The Nominating/Corporate Governance Committee’s regular evaluation of the composition of, and criteria for membership on, the Board is ongoing. Incumbent directors eligible for re-election, nominees to fill vacancies on the Board, and any nominees recommended by stockholders all undergo a strenuous review by the Committee.
10   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

The Nominating/Corporate Governance Committee focuses on the development of a Board composed of directors that meet the criteria set forth below:
Director Criteria
Personal Characteristics

High personal and professional ethics, integrity and honesty, good character, and sound judgment

Independence and absence of any actual or perceived conflicts of interest

The ability to be an independent thinker
Commitment to the Organization

A willingness to put in the time and energy to satisfy the requirements of Board and committee membership, including attendance and participation in Board and committee meetings of which they are a member and the annual meeting of stockholders and be available to management to provide advice and counsel

Possess, or be willing to develop, a broad knowledge of critical issues facing the organization
Diversity

Diversity, including the candidate’s professional and personal experience, background, perspective, and viewpoint; as well as the candidate’s gender and ethnicity
Skills and Experience

The value derived from each nominee’s skills, qualifications, experience, and ability to impact long-term strategic objectives

Solid educational background

Substantial tenure and experience in leadership capacities

Business and financial experience

Understanding the intricacies of a public entity

Experience in risk management

Additionally, Section 2.9 of our bylaws contains requirements that a person must meet to avoid conflicts of interest that would disqualify that person from serving as a director
Identification of Director Nominees

Through a variety of sources, the Nominating/Corporate Governance Committee identifies new director nominees and will consider director nominees recommended by stockholders in the same manner it considers other nominees. This process is described in “Director Qualifications and Diversity” and found elsewhere in this Proxy Statement.
Retirement Age of Directors

We have established a mandatory retirement age for directors. A director must retire no later than the Annual Meeting that follows the date of the director’s 75th birthday. An employee director must retire as an employee no later than the Annual Meeting that follows the date of his or her 70th birthday, but may remain on the Board at the discretion of the Board of Directors.
Executive Sessions of the Board

Under our Corporate Governance Guidelines, the non-management directors meet at least four times each year in executive session without management present, and the independent directors meet in executive session at least once a year. The Lead Independent Director, Richard P. Magnuson, chairs these sessions.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   11

Our directors and nominee as of April 14, 2021, are as follows:
Name
Age
California Water
Service Group
Position
Current
Term
Expires
Director
Since
Independent
Occupation
Other
Board
Experience
Public
Utilities
or Public
Health
Experience
Gregory E. Aliff
67
Director
2021
2015
Yes
Former Vice Chairman and Senior Partner of U.S. Energy & Resources, Deloitte LLP
Yes
Yes
Terry P. Bayer
70
Director
2021
2014
Yes
Former COO of Molina Healthcare, Inc.
Yes
Yes
Shelly M. Esque
60
Director
2021
2018
Yes
Former Vice President and Global Director of Corporate Affairs of Intel Corporation
Yes
Martin A. Kropelnicki
54
President & CEO and Director
2021
2013
No
President & CEO of California Water Service Group
Yes
Yes
Thomas M. Krummel, M.D.
69
Director
2021
2010
Yes
Emile Holman and Chair Emeritus of the Department of Surgery at Stanford University School of Medicine
Yes
Yes
Richard P. Magnuson
65
Lead Director & Chair of the Board’s Executive Sessions
2021
1996
Yes
Managing Director of Orpheum Capital
Yes
Yvonne A. Maldonado, M.D.
65
Director Nominee
N/A
2021*
Yes
Professor of Global Health and Infectious Diseases, Departments of Pediatrics and Epidemiology and Population Health, Stanford University
Yes
Yes
Scott L. Morris
63
Director
2021
2019
Yes
Chairman of Avista Corporation
Yes
Yes
Peter C. Nelson
73
Chairman of the Board
2021
1996
No
Chairman of the Board of California Water Service Group
Yes
Yes
Carol M. Pottenger
65
Director
2021
2017
Yes
Principal and Owner of CMP Global, LLC
Yes
Lester A. Snow
69
Director
2021
2011
Yes
Director and Former President of the Klamath River Renewal Corporation
Yes
Yes
Patricia K. Wagner
58
Director
2021
2019
Yes
Former Group President of U.S. Utilities for Sempra Energy
Yes
Yes
*
Subject for election at the Annual Meeting
Identification of Director Nominees
Through a variety of sources, the Nominating/Corporate Governance Committee identifies new director nominees and will consider director nominees recommended by stockholders in the same manner it considers other nominees. This process is described in “Director Criteria” and found on page 10 in this Proxy Statement. Stockholders seeking to recommend nominees for consideration by the Nominating/​Corporate Governance Committee should submit a recommendation in writing describing the nominee’s qualifications and other relevant biographical information together with confirmation of the nominee’s consent to serve as director. Please submit this information to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508.
Stockholders may also propose director nominees by adhering to the advance notice procedure described under “Questions and Answers About the Proxy Materials and the Annual Meeting – How can a stockholder propose a nominee for the Board or other business for consideration at a stockholders’ meeting?” on page 75 in this Proxy Statement.
12   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Board Role in Risk Oversight
Inherent in the Board’s responsibilities is an understanding of and oversight over the various risks facing the Company. The Board does not view risk in isolation, but includes risk as part of its regular consideration of business decisions and business strategy. As effective risk oversight is an important priority of the Board, the Board has allocated responsibilities for risk oversight among the full Board and its committees.
Board Committee
Role and Oversight
Audit Oversees risks related to financial reporting and internal controls, cybersecurity, and third party suppliers.
Organization and Compensation
Oversees risks related to human capital management and periodic assessments of risks relating our compensation plans and programs to see that these plans and programs do not encourage management to take unreasonable risks relating to our business
Finance and Capital Investment Oversees risks within the capital investment programs including infrastructure failures and credit risk
Nominating/Corporate Governance Oversees risks related to matters of corporate governance, including director independence and Board performance, as well as risks related to environmental, social responsibility, and sustainability matters
Enterprise Risk Management, Safety and Security
Oversees management’s development and execution of the Group’s enterprise risk management, safety and security programs, including those related to physical safety and security
The Group has a Management Committee (MC) that is chaired by our President & CEO and membership is comprised of our Group and subsidiary executives, hereafter collectively known as “executives” and meets monthly. Among other functions, the MC identifies and prioritizes key risks and recommends the implementation of appropriate mitigation measures, as needed. The MC provides reporting to the Audit Committee and Enterprise Risk Management, Safety, and Security Committee no less frequently than annually. Further review or reporting on risks is conducted as needed or as requested by the Board or committee.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   13

The following is our Enterprises Risk Management and Risk Responsibility Matrix which identifies our major corporate risks, board oversight, and lead officer and department currently responsible for risk mitigation. It also demonstrates our commitment to transparency and accountability for management of the key risks facing the company and effective risk management:
Board Oversight
Tier 1 Risk(1)
Lead Officer
Department
Full Board
Political Risk
VP, Customer Service & Chief
Citizenship Officer
Government Affairs
Regulatory Risk VP, Corporate Development &
Chief Regulatory Officer
Regulatory Relations
Water Supply Risk VP, Customer Service & Chief
Citizenship Officer
Water Resource
Sustainability
Climate Change Risk VP, Customer Service & Chief
Citizenship Officer
Water Resource Sustainability
Enterprise Risk
Management, Safety, and
Security Committee
(ESSC)(2)
Environmental Contamination
Risk
VP, Engineering & Chief Water
Quality & Environmental Compliance Officer
Environmental
Physical Safety and Security
Risk
VP, IT & Chief Risk Officer Safety
Natural or Human Caused
Disaster Risk
VP, IT & Chief Risk Officer, and
VP, Operations
Safety
Emergency Preparedness &
Business Continuity Risk
VP, IT & Chief Risk Officer Safety & I.T.
Water Quality Risk VP, Engineering & Chief Water
Quality & Environmental
Compliance Officer
Water Quality
Finance Committee
Infrastructure Failure Risk
VP, Engineering & Chief Water
Quality & Environmental
Compliance Officer and Chief
Engineering Officer
Engineering
Credit Risk VP, CFO & Treasurer and VP,
Corporate Controller
Finance
Organization/Compensation Committee Talent Risk, including Diversity,
Equality, and Inclusion
VP, Human Resources Human Resources
Audit Committee
Cybersecurity Risk
VP, IT & Chief Risk Officer
I.T.
Third-Party Supplier Risk VP, CFO & Treasurer and Chief
Procurement Officer
Procurement
(1)
Each Tier 1 Risk topic is also led by designated officers of the Company across departments.
(2)
The Enterprise Risk Management, Safety, and Security Committee is responsible for the oversight of the emergency response managmement process, including emergency response management updates and annual reporting to the Board regarding compliance.
Annual Meeting Attendance
All directors are expected to attend the Annual Meeting of Stockholders, unless attendance is prevented by an emergency. All of our board members who were directors as of the date of our 2020 Annual Meeting attended the meeting.
Board Meetings and Committees
Board Meetings
Our 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.
Members of the Board are expected to attend Board meetings in person, unless the meeting is held by teleconference. During 2020, there were ten meetings of the Board and collectively 16 committee meetings. The incumbent directors attended at least 75%, and on average attended 100%, of all Board and applicable committee meetings in 2020 (held during the period each director served).
14   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Board Committees
There are five committees within our Board of Directors: (1) Audit; (2) Organization and Compensation; (3) Finance and Capital Investment; (4) Nominating/Corporate Governance; (5) and Enterprise Risk Management, Safety, and Security. The membership and the function of each of these committees are described below.
Name
Audit
Organization and
Compensation
Finance and
Capital
Investment
Nominating/​
Corporate
Governance
Enterprise Risk
Management,
Safety, and
Security
Gregory E. Aliff
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg]
Terry P. Bayer
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg]
Shelly M. Esque
Martin A. Kropelnicki
Thomas M. Krummel, M.D.
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg]
Richard P. Magnuson
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg]
Scott L. Morris
Peter C. Nelson
Carol M. Pottenger
[MISSING IMAGE: tm212302d1-icon_vicepn.jpg]
Lester A. Snow
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg]
Patricia K. Wagner
Number of meetings held during 2020
5
3
2
2
4
[MISSING IMAGE: tm212302d1-icon_chairpn.jpg]   Chair       [MISSING IMAGE: tm212302d1-icon_vicepn.jpg]   Vice Chair      [MISSING IMAGE: tm212302d1-icon_memberpn.jpg]   Member
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   15

AUDIT COMMITTEE
AUDIT COMMITTEE
Primary Responsibilities:
Current Members:
Gregory E. Aliff, Chair
Terry P. Bayer
Richard P. Magnuson
Patricia K. Wagner
Committee Meetings Held in 2020: 5

Represents and assists the Board in oversight of the quality and integrity of the Company’s financial statements, the Company’s compliance with legal, environmental, regulatory and reporting requirements; the qualifications, performance and independence of the Company’s Independent Registered Public Accounting Firm; the Company’s internal audit function; cybersecurity risk; and third party supplier risk

Responsible for the appointment, retention, compensation, and oversight of the Independent Registered Public Accounting Firm

Reviews with management each Form 10-K and 10-Q report required to be submitted to the SEC

Reviews annually the quality of internal accounting and financial controls, internal auditor reports and opinions, and any recommendations the Independent Registered Public Accounting Firm may have for improving or changing the Company’s internal controls

Oversees and reviews with management risks related to the Company’s financial reporting and internal controls

Oversees the Company’s compliance program with respect to legal and regulatory requirements, including the Company’s codes of conduct, and oversees the Company’s policies and procedures for monitoring compliance

Oversees the Company’s cybersecurity program, including management’s response to emerging risks and compliance with all federal and state cybersecurity standards and privacy laws

Oversees the Company’s program to identify, manage, and mitigate third party supplier risk and reviews with management compliance with the Supplier Code of Conduct and performance of the Supplier Diversity Program
All members of the Audit Committee are independent as defined in the New York Stock Exchange, and meet additional independence requirements for audit committee members applicable under SEC rules and the New York Stock Exchange listing standards.
The Board has determined that each Audit Committee member has considerable knowledge in financial and auditing matters to serve on the Audit Committee. Gregory E. Aliff, Terry P. Bayer, and Patricia K. Wagner meet the New York Stock Exchange listing standards of financial sophistication and are “audit committee financial experts” under SEC rules.
16   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

ORGANIZATION AND COMPENSATION COMMITTEE
ORGANIZATION AND
COMPENSATION
COMMITTEE
Primary Responsibilities:
Current Members:
Thomas M. Krummel, M.D., Chair
Terry A. Bayer
Scott L. Morris
Lester A. Snow
Committee Meetings Held in 2020: 3

Oversees the Company’s officer compensation structure, policies and programs, assesses whether the Company’s compensation structure establishes appropriate incentives for officers, and assesses the results of the Company’s most recent advisory vote on executive compensation

Oversees the evaluation and recommendations of the compensation of the CEO to the independent directors and of the executive officers to the Board of Directors

Reviews the organizational structure for the Company’s senior management

Oversees the strategies and policies related to human capital management, including matters such as diversity and inclusion, workplace environment, culture, talent development and retention, and succession planning

Oversees a periodic assessment of the risk related to the Company’s compensation policies and practices applicable to offices and employees, and review the results

Reviews and discusses with our management the Compensation Discussion and Analysis disclosure required to be included in the proxy statement for the annual meeting of stockholders to be filed with the SEC and, based on such review and discussion, determines whether to recommend to the Board that the Compensation Discussion and Analysis disclosure be included in such filing

Oversees preparation of the Compensation Committee report required by SEC rules to be included in the proxy statement for the annual meeting of stockholders
All members are independent as defined in the listing standards of the New York Stock Exchange, and meet additional independence requirements for compensation committee members applicable under SEC rules and the New York Stock Exchange listing standards.
Compensation Consultant:   The Organization and Compensation Committee retained Veritas Executive Compensation Consultants (Veritas) to advise it on marketplace trends in executive compensation, management proposals for the 2021 compensation program, and executive officer compensation decisions. Additionally, Veritas generally evaluated our equity compensation programs. Veritas has been retained for advice on 2022 executive compensation.
Veritas was directly accountable to the Organization and Compensation Committee. To maintain the independence of their advice, Veritas did not provide any services to us other than those described above and as described for the Nominating/Corporate Governance Committee found on page 19 in this Proxy Statement. In addition, the Organization and Compensation Committee conducted a conflict of interest assessment, considering the six factors below with respect to Veritas and no conflict of interest was identified:

The provision of other services to the Group by Veritas

The amount of fees received from the Group by Veritas, as a percentage of total revenue of Veritas
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   17


The policies and procedures of Veritas that are designed to prevent conflicts of interest

Any business or personal relationship between the consultants at Veritas with whom the Group work and any members of the Organization and Compensation Committee

Any of our stock owned by the Veritas consultants

Any business or personal relationship of Veritas or the Veritas consultants with any of the Group’s executive officers
For a description of the processes and procedures used by the Organization and Compensation Committee for the consideration and determination of executive compensation, see “Compensation Discussion and Analysis” on page 36 in this Proxy Statement.
FINANCE AND CAPITAL INVESTMENT COMMITTEE
FINANCE AND CAPITAL INVESTMENT
COMMITTEE
Primary Responsibilities:
Current Members:
Terry P. Bayer, Chair
Richard P. Magnuson
Carol M. Pottenger
Lester A. Snow
Committee Meetings Held in 2020: 2

Assists the Board of Directors in fulfilling its oversight responsibilities with respect to the monitoring and oversight of our financial resources, including its capital investment management and rate recovery and resolution planning and processes

Assists the Board in reviewing our financial policies, strategies, and capital structure

Reviews and make recommendations to the Board for approval, where authority to do so has been delegated by the Board, regarding:
o
long-term financial objectives and policies
o
financing requirements and financing plans
o
the annual dividend plan
o
oversight of the annual operating budgets
o
oversight of the annual capital investment plans including periodic updates on the progress over the annual construction and capital investment programs efforts to increase stockholder value
o
reports received from the employee benefit finance committee
o
other finance matters as appropriate
In addition, the Committee will discuss with management the policies and procedures concerning the major risk exposures, including exposures to infrastructure failure risk and credit risk, and the steps management has taken and/or proposes to take to monitor, mitigate, and control such exposures within the capital investment process.
All members are independent as defined in the listing standards of the New York Stock Exchange.
18   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

NOMINATING/CORPORATE GOVERNANCE COMMITTEE
NOMINATING/CORPORATE
GOVERNANCE COMMITTEE
Primary Responsibilities:
Current Members:
Richard P. Magnuson, Chair
Shelly M. Esque
Thomas M. Krummel, M.D.
Carol M. Pottenger
Patricia K. Wagner
Committee Meetings Held in 2020: 2

Oversees director succession planning and actively seeks diverse individuals qualified to become Board members

Evaluates the composition of the board annually to assess whether the skills, experience, characteristics and other criteria established by the Board are currently represented on the Board as a whole and in individual directors, and to assess the criteria that may be needed in the future

Evaluate the performance of the individual directors and full Board annually

Oversees risks related to matters of corporate governance, including director independence and Board performance

Recommends to the Board the size, structure, composition, and functioning of the Board and its committees

Reviews the compensation of directors for service on the Board and its committees and recommends changes to the Board as appropriate

Reviews the Corporate Governance Guidelines annually and recommends changes to the Board

Oversees the Company’s Code of Business Conduct and Ethics for Directors and compliance with the code

Provides oversight of and reviews the Company’s strategy, policies, practices, risks, and disclosures with respect to ESG matters, and makes recommendations to management as appropriate

Assists management in overseeing internal and external communications with employees, investors, and other stakeholders regarding the Company’s position on or approach to ESG matters
All members are independent as defined in the listing standards of the New York Stock Exchange.
Compensation Consultant:   The Nominating/Corporate Governance Committee retained Veritas to advise it on marketplace trends in director compensation for the 2021 compensation program and has been retained for advice on 2022 director compensation.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   19

ENTERPRISE RISK MANAGEMENT, SAFETY, AND SECURITY COMMITTEE
ENTERPRISE RISK MANAGEMENT,
SAFETY, AND SECURITY COMMITTEE
Primary Responsibilities:
Current Members:
Lester A. Snow, Chair
Carol M. Pottenger, Vice Chair
Gregory E. Aliff
Shelly M. Esque
Scott L. Morris
Committee Meetings Held in 2020: 4

Assists the Board in the oversight of our enterprise risk management, safety, and security programs, including those related to physical safety and security

Discusses with management our principal risks and the effectiveness of the processes used by management to both identify and analyze major risk, as well as the effectiveness of the programs to manage and mitigate risks

Reviews with management our risk assessments, the steps management has taken or would consider taking to minimize such risks or exposures, safeguarding assets, and our underlying policies with respect to risk assessment, risk management, and asset protection

Discusses with management current and emerging applicable matters that may affect the business, operations, performance, or public image of the organization or are otherwise pertinent to us and our stakeholders

Reviews our Emergency Preparedness program, including emergency response and coordination with authorities

Reviews our physical safety and security programs to ensure preventive detection and remedial controls and processes are in place

Oversees our other compliance programs for enterprise risk management, safety, and security, as well as our policies and procedures for monitoring compliance

Makes recommendations to the Board and to our senior management with respect to any of the above matters as the Committee deems necessary or appropriate
All members are independent as defined in the listing standards of the New York Stock Exchange.
Other Governance Best Practices
We adopted other practices we believe reflects our commitment to good corporate governance including:
Policies Prohibiting Hedging and Pledging
In accordance with our Insider Trading Policy, our directors and executives are prohibited from (i) hedging their ownership of Group stock, including trading in options, puts, calls, or other derivative instruments related to Group stock or debt; and (ii) pledging their ownership of Group stock.
Executive Compensation Recovery (“Clawback”) Policy
Our Board has adopted an executive compensation recovery, or “clawback,” policy requiring the reimbursement of excess incentive-based compensation provided to the executives in the event of certain restatements of our financial statements. A more detailed description of the Executive Compensation Recovery Policy appears in the “Compensation Discussion and Analysis” section of this Proxy Statement.
20   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Stock Ownership Requirements
Our Board has adopted stock ownership requirements for directors and executives. These stock ownership requirements were adopted to promote a long-term perspective of the organization and to help align the interests of our stockholders, directors, and executives. As of March 30, 2021, 20 of our non-employee directors and executives have met or exceeded their ownership requirements. New directors have five years after the date of their election to the Board to meet the requirements and must retain 75% of the net after-tax shares from equity awards until the ownership requirement is achieved. Our executives must retain 50% of the net after-tax shares from equity awards until the relevant ownership requirement is achieved. A complete description of the stock ownership requirements for directors and executives appears in the “Compensation Discussion and Analysis” section of this Proxy Statement.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   21

PROPOSAL NO. 1 – ELECTION OF DIRECTORS
Upon the recommendation of the Nominating/Corporate Governance Committee, our Board has nominated for election at the 2021 Annual Meeting of Stockholders a slate of twelve director nominees. All of the nominees, except Dr. Maldonado, have served as directors since the last Annual Meeting. Dr. Maldonado was recommended to the Nominating/Corporate Governance Committee by Mr. Kropelnicki. All directors are elected annually to serve until the next Annual Meeting or until their respective successors are elected.
Nominee Qualifications
When an incumbent director is up for re-election, the Nominating/Corporate Governance Committee reviews the performance, skills, and characteristics of such incumbent director before making a determination to recommend the Board nominate the incumbent director for re-election.
The Nominating/Corporate Governance Committee believes that all of the following twelve director nominees listed are highly qualified and have the skills and experience required for membership on our Board. A description of the specific experience, qualifications, attributes, and skills that led our Board to conclude that each of the nominees should serve as a director follows the biographical information of each nominee.
Vote Required
Each director must be elected by the affirmative vote of a majority of the votes cast. A majority of the votes cast means that the number of votes cast “FOR” a director nominee exceeds the number of votes cast “AGAINST” that nominee for director.
22   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Recommendation of the Board
Our Board of Directors unanimously recommends that you vote “FOR” the election of each of the following nominees:
Gregory E. Aliff
[MISSING IMAGE: ph_gregaliffnew-bw.jpg]
Independent
Age: 67
Director Since 2015
Committees:

Chair, Audit

Enterprise Risk Management, Safety and Security
Previous Board Directorships:

SCANA Corporation

Grid Alternatives

United States Energy Association
Current Board Directorship:

New Jersey Resources Corp
Retired
Mr. Aliff is a retired Vice Chairman and Senior Partner, US Energy and Resources, at Deloitte LLP. From 2012 to his retirement in 2015, Mr. Aliff led Deloitte’s US Sustainability Services, which focused on industrial and commercial water and energy management. From 2002 to 2012, he led Deloitte’s US Energy and Resources practice, where he oversaw all professional services to the sector. Mr. Aliff earned his Bachelor of Science in Accounting and his Master of Business Administration from Virginia Tech. He is a Certified Public Accountant and is a designated Board Leadership Fellow of the National Association of Corporate Directors (NACD). He also holds a CERT Certificate in Cybersecurity Oversight from NACD.
Mr. Aliff brings extensive accounting, auditing, and financial reporting experience to the Board, with specific expertise in both the public utility and energy and resources industries. He has in-depth experience in strategy, enterprise risk management, and regulatory affairs from his many years providing professional services to numerous major utilities. Mr. Aliff’s deep understanding of public utility markets and the breadth of experience he has gained from working with public companies make him a valuable resource to the Board.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   23

Terry P. Bayer
[MISSING IMAGE: ph_terrybayernew-bw.jpg]
Independent
Age: 70
Director Since 2014
Committees:

Chair, Finance and Capital Investment

Organization & Compensation

Audit
Previous Board Directorship:

Apria Healthcare Group, Inc.
Retired
Ms. Bayer is the former Chief Operating Officer (COO) for Molina Healthcare, Inc., a managed care company that provides solutions to meet the healthcare needs of low-income individuals and families who participate in government programs, including Medicaid, Medicare, and Marketplace. She held that position from 2005 until her retirement in February 2018. She was previously Executive Vice President of Health Plan Operations and also held management positions at Family Health Plan (FHP), Maxicare, Matria Healthcare, and AccentCare, Inc. She holds a Juris Doctor Degree from Stanford University, a master’s degree in Public Health from the University of California, Berkeley, and a bachelor’s degree in Communication from Northwestern University.
Ms. Bayer brings senior leadership, financial, operational, and public health expertise to the Board from her service as the COO of Molina Healthcare, Inc., a public company. She has many years of experience as an operating executive with a strong focus on government program compliance, public health and administration, as well as customer service. Ms. Bayer’s significant background and experience in healthcare supports the Board’s efforts in overseeing and advising on employee health matters. Her previous experience as a director of Apria Healthcare Group, Inc. and her compliance and compensation committee memberships also allows Ms. Bayer to contribute to the Board.
Shelly M. Esque
[MISSING IMAGE: ph_shellyesquenew-bw.jpg]
Independent
Age: 60
Director Since 2018
Committees:

Nominating/Corporate Governance

Enterprise Risk Management, Safety and Security
Retired
Ms. Esque, prior to her retirement in 2016, served as Vice President and Global Director of Corporate Affairs at Intel Corporation, a leader in the semiconductor industry, overseeing professionals in more than 35 countries responsible for enhancing Intel’s reputation as the world’s leading technology brand and corporate citizen. She also served as both president and chair of the Intel Foundation. In her capacity as a leader of Intel’s corporate social responsibility, community, education, foundation, and government relations worldwide, Ms. Esque represented Intel at numerous events, including the World Economic Forum, World Bank, UNESCO, and forums promoting women in the workplace.
Ms. Esque received the Greater Phoenix Chamber of Commerce 2011 ATHENA Businesswoman of the Year Award for excellence in business and leadership, exemplary community service, and support and mentorship of other women. She was also recognized by AZ Business Magazine as one of the 50 Most Influential Women in Arizona. Ms. Esque is active on many non-profit boards, including Basis Charter Schools, Take the Lead, and the Boyce Thompson Arboretum, among others. Ms. Esque’s strong understanding of corporate social responsibility, education, media relations, and government and community affairs makes her a valuable resource to the board.
24   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Martin A. Kropelnicki
[MISSING IMAGE: ph_martykropelnickinew-bw.jpg]
Age: 54
Director Since 2013
President & CEO, California Water Service Group
Mr. Kropelnicki is President & CEO of the Group. Mr. Kropelnicki joined the Group as Vice President, Chief Financial Officer (CFO) and Treasurer in 2006 and was named the President and COO in 2012. He then was appointed President & CEO of the Group effective September 1, 2013. He has over 32 years of experience in finance and operations, including 15-plus years as CFO at public listed companies and has held executive positions at PowerLight Corporation, Hall Kinion & Associates, Deloitte & Touche Consulting Group, and Pacific Gas & Electric Company. He serves as a director for the Bay Area Council, and the California Foundation on the Environment & Economy, and is a member of the Silicon Valley Leadership Group. Mr. Kropelnicki is the past President of the National Association of Water Companies and currently serves on their Executive Committee. He holds a Bachelor of Arts Degree and Master of Arts Degree in Business Economics from San Jose State University. In 2016, Mr. Kropelnicki was awarded the United States Navy Memorial Fund’s Naval Heritage Award. He is the 12th recipient of this award since its inauguration.
Mr. Kropelnicki is well positioned to lead the Group’s management team and give guidance and perspective to the Board. His experience as the former CFO of the Group provides expertise in both corporate leadership and financial management and his management experience enables him to offer valuable perspectives to our corporate planning, rate making, and budgeting along with operational and financial reporting.
Thomas M. Krummel, M.D.
[MISSING IMAGE: ph_thomaskrummelnew-bw.jpg]
Independent
Age: 69
Director Since 2010
Board Committees:

Chair, Organization & Compensation

Nominating/Corporate Governance
Emile Homan and Chair Emeritus, Department of Surgery, Stanford University
Dr. Krummel is a leader in his field. He has been honored with the Henry J. Kaiser Family Foundation Award for Excellence in Clinical Teaching; the John Austin Collins, M.D. Memorial Award for Outstanding Teaching and Dedication to Resident Training; and the Lucile Packard Children’s Hospital Recognition of Service Excellence. He has been Chair of the Board of Directors at The Fogarty Institute for Innovation since 2014 and has served as a Director of The Morgridge Institute for Research – University of Wisconsin since 2015.
Dr. Krummel brings to the Board experience with professional training and development, as well as expertise with medical, public health, and science issues. He offers the Board unique insight on public health matters, including healthcare policy and legislation, drinking water quality, and employee health.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   25

Richard P. Magnuson
[MISSING IMAGE: ph_rickmagnusonnew-bw.jpg]
Independent
Age: 65
Director since 1996
Board Committees:

Chair, Nominating/​Corporate Governance

Audit

Finance and Capital Investment
Previous Board
Directorships:

Rogue Wave Software

IKOS System, Inc.

OrCAD Sytems Corporation
Managing Director of Orpheum Capital
Mr. Magnuson is a venture capital investor and our Lead Independent Director. He is Managing Director of Orpheum Capital, a private investment fund. From 1984 to 1996, he was a general partner of Menlo Ventures, a venture capital firm. Mr. Magnuson holds an undergraduate degree in economics, a law degree and a master’s degree in business administration from Stanford University. In addition to his previous public company experience, Mr. Magnuson has served on the boards of several privately held companies.
With his legal and venture capital background, Mr. Magnuson brings valuable financial and business strategy expertise to the Board. His past experience on the boards of other public companies, as well as his insight on financial and operational matters, adds value to the Board. His past and current Board service also provides insight on corporate governance practices.
Yvonne (Bonnie) A.
Maldonado, M.D.
[MISSING IMAGE: ph_maldonado-bw.jpg]
Independent
Age: 65
Professor of Global Health and Infectious Diseases, Departments of Pediatrics and Epidemiology and Population Health, Stanford University
Dr. Maldonado is currently a pediatric infectious diseases epidemiologist at Stanford University School of Medicine as well as the medical director of Infection Prevention and Control and an attending physician at Packard Children’s Hospital at Stanford. She is also a professor in the Departments of Pediatrics and Health Research and Policy; chief of the Division of Infectious Diseases; director of Global Child Health; and senior associate dean for faculty development and diversity at Stanford’s School of Medicine. Dr. Maldonado is currently the chair of the American Academy of Pediatrics Committee on Infectious Diseases and a member of numerous medical associations and committees.
Nationally and internationally renowned for her knowledge, research, and expertise in infectious and vaccine-preventable disease control and international health, Dr. Maldonado has led studies and investigations funded by the United States, CDC, WHO, NIH, and Gates Foundation around the world on HIV, polio, and measles. Dr. Maldonado brings a unique perspective and valuable insight to the Board.
26   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Scott L. Morris
[MISSING IMAGE: ph_scottmorrisnew-bw.jpg]
Independent
Age: 63
Director Since 2019
Committees:

Organization & Compensation

Enterprise Risk Management, Safety and Security
Current Board Directorship:

McKinstry
Chairman, Avista Corporation
Mr. Morris has been Chairman of Avista Corporation, a publicly traded electrical and natural gas utility serving customers primarily in the Pacific Northwest, since January 2008. From January 2008 to October 1, 2019, he also served as Avista’s CEO. From January 2008 to January 2018 he served as its President. From May 2006 to December 2007, he served as its President and Chief Operating Officer. Mr. Morris joined Avista in 1981 and his experience at the company includes management positions in construction and customer service and general manager of the company’s Oregon utility business. He is a graduate of Gonzaga University and received his master’s degree from Gonzaga University in organizational leadership. He also attended the Stanford Business School Financial Management Program and the Kidder Peabody School of Financial Management. Mr. Morris serves on the board of McKinstry and on the Board of Trustees of Gonzaga University. He has served on a number of Spokane non-profit and economic development boards.
Mr. Morris brings to the Board a deep knowledge and understanding of the utility industry, having spent his entire career in the industry. As a former senior executive, he also contributes senior leadership experience and valuable perspectives on strategy, operations and business management.
Peter C. Nelson
[MISSING IMAGE: ph_petenelsonnew-bw.jpg]
Age: 73
Director since 1996
Chairman, California Water Service Group
Mr. Nelson is Chairman of the Board of the Group and its subsidiaries. He is a director of the California Chamber of Commerce and a past president of the National Association of Water Companies (NAWC). Mr. Nelson has a strong record of operational and strategic leadership in the public utility business, including his 17-plus years of experience as the former President & CEO of the Group. An engineer by training with a graduate degree in business administration, he gained extensive senior executive experience at Pacific Gas & Electric Company. He has a vast understanding of the water industry from his role as the former President & CEO of the Group and from his leadership roles representing the water profession nationally at NAWC as well as in California at the State Chamber of Commerce.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   27

Carol M. Pottenger
[MISSING IMAGE: ph_carolpottengernew-bw.jpg]
Independent
Age: 65
Director Since 2017
Committees:

Vice Chair, Enterprise Risk Management, Safety and Security

Finance and Capital Investment

Nominating/Corporate Governance
Principal and Owner, CMP Global, LLC
As principal and owner of CMP Global LLC, Ms. Pottenger’s organization, which was founded in 2014, provides consulting services in business development, process improvement, corporate governance, strategic planning, and cyber and information systems. The first female three-star Admiral in American history to lead in a combat branch, Ms. Pottenger commanded two ships, a logistic force of 30 ships, a Japan-based strike-group of eight ships, and the Expeditionary Force of 40,000 sailors during her 36 years in the U.S. Navy before retiring in 2013. She was also the senior U.S. Flag Officer responsible for military transformation and sensitive military topics such as counterterrorism and cyber security while on assignment with NATO.
Ms. Pottenger brings unique experience to the board, ranging from operations to technology to risk management. A graduate of Purdue University in Lafayette, Indiana, she also serves on various private, defense, and non-profit boards, including the U.S. Navy Memorial Foundation in Washington, D.C. and PricewaterhouseCoopers LLP Board of Partners and Principals.
Lester A. Snow
[MISSING IMAGE: ph_lestersnownew-bw.jpg]
Independent
Age: 69
Director Since 2011
Committees:

Chair, Enterprise Risk Management, Safety and Security

Finance and Capital Investment

Organization & Compensation
Retired
Mr. Snow has served as Secretary of the California Natural Resources Agency, Director of the California Department of Water Resources, Regional Director of the U.S. Bureau of Reclamation, Executive Director of the CALFED Bay Delta Program, and General Manager of the San Diego County Water Authority. He served as Executive Director of the California Water Foundation, an initiative of the Resources Legacy Fund, and serves on the board of the Klamath River Renewal Corporation. He holds a Master of Science Degree in Water Resources Administration from the University of Arizona and a Bachelor of Science Degree in Earth Sciences from Pennsylvania State University.
Mr. Snow brings more than 40 years of water and natural resource management experience to the Board. His distinguished public service career enables him to assist the Board in addressing water and environmental issues as well as regulatory and public policy matters. Mr. Snow’s executive experience in the public sector provides the Board with critical insight on a variety of operational and financial matters.
28   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Patricia K. Wagner
[MISSING IMAGE: ph_pattiwagnernew-bw.jpg]
Independent
Age: 58
Director Since 2019
Committees:

Audit

Nominating/Corporate Governance
Previous Board Directorship:

SoCalGas
Current Board Directorship:

Apogee Enterprises
Retired
Ms. Wagner, prior to her retirement in 2019, served as Group President, U.S. Utilities for Sempra Energy, an energy-services holding company whose subsidiaries include San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas), both California regulated utilities, as well as other companies operating in the electric and gas infrastructure business. Prior to her role as Group President, from 2017 to 2018 she served as Chairman and Chief Executive Officer of SoCalGas, one of the largest natural gas utilities in the country. She served as Executive Vice President of Sempra Energy in 2016, and as President and Chief Executive Officer of Sempra U.S. Gas & Power from 2014 to 2016. During her 24-year career in the utility sector, Ms. Wagner held a range of other leadership positions, including: Vice President of Audit Services for Sempra Energy; Vice President of Accounting and Finance for SoCalGas; Vice President of Information Technology for SoCalGas and SDG&E; and Vice President of Operational Excellence for SoCalGas and SDG&E. Ms. Wagner is currently a director of Apogee Enterprises, Inc., a public company that designs and develops commercial glass and metal products. Ms. Wagner earned her Master of Business Administration from Pepperdine University and a bachelor’s degree in chemical engineering from California State Polytechnic University, Pomona.
Ms. Wagner has immense working knowledge and familiarity with the California regulatory environment and has worked with the California Public Utilities Commission. Her deep understanding of regulatory affairs and experience working for an investor-owned utility make her a valuable asset to the Group. She also brings valuable accounting and finance, senior leadership and operational experience to the Board.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   29

Director Compensation
For Fiscal Year Ended 2020
Our non-employee directors receive retainers comprised of both a cash award and an equity award along with meeting fees for their service. The Nominating/Corporate Governance Committee is responsible for non-employee director compensation and makes recommendations to the Board. For 2020, the Nominating/Corporate Governance retained the services of Veritas for determining non-employee director compensation.
Our 2020 director compensation program is summarized in the table below:
2020 Director Compensation Program
Board Retainers:
Annual Base Retainer – All Directors
$ 65,500
Chairman of the Board Retainer
$ 60,000
Lead Director Retainer
$ 22,000
Committee Chair Retainers:
Audit Committee Chair Retainer
$ 18,000
Organization and Compensation Committee Chair Retainer
$ 13,500
Nominating/Corporate Governance Committee Chair Retainer
$ 12,500
Finance and Risk Management Committee Chair Retainer
$ 10,000
Enterprise Risk Management, Safety and Security Committee Chair Retainer
$ 11,000
Enterprise Risk Management, Safety and Security Committee Vice Chair Retainer
$ 5,500
Board/Committee Meeting Attendance Fees:
Chairman of the Board – Board Attendance Fee
$ 4,600
All other Directors – Board Attendance Fee
$ 2,300
Chairman of the Board – Committee Attendance Fee
$ 1,800
All other Directors – Committee Attendance Fees
$ 1,800
Equity:
Annual RSA Equity Grants(1)
$ 87,500
(1)
In 2020, non-employee directors received grants of restricted stock valued at $87,500 as the Board retainer. The restricted stock grants were made on March 3, 2020, and were fully vested on the first anniversary of the grant date.
In September of 2020, Veritas provided assistance to the Nominating/Corporate Governance Committee in the annual review of director compensation, with recommendations based on competitive positioning, both in terms of individual compensation components and total compensation. With consideration for this review, the Nominating/Corporate Governance Committee did not increase director compensation for fiscal year 2021. In response to the coronavirus pandemic and its devastating effects on the communities we serve, all directors elected to take a temporary voluntary cash compensation (cash retainer and meeting attendance fees) reduction of 10% for fiscal year 2021, contributing the value of their compensation reduction to the Cal Water Hardship Fund to assist our customers. In lieu of the value of their reduced cash compensation, a special equity grant with risk of forfeiture was issued to each director on January 4, 2021 in the form of a restricted stock award, vesting on the one-year anniversary of the grant.
The Board of Directors requires non-employee directors to maintain a certain amount of stock ownership consistent with our stock ownership requirements. Pursuant to the Group’s Corporate Governance Guidelines, available on the Group’s website at http://www.calwatergroup.com, beneficial ownership of an aggregate amount of shares having a value of five times the amount of the annual base retainer is required. Non-employee directors are required to achieve the relevant ownership threshold within five years following adoption of the requirements or five years after commencing service, whichever is later. The Nominating/Corporate Governance Committee will review compliance with these requirements for non-employee directors on an annual basis.
30   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Directors may elect to defer cash compensation payable to them under the Group’s deferred compensation plan in the same manner as applicable to the Group’s executives as described below.
Non-Employee Director Compensation
Name (a)
Fees
Earned or
Paid in
Cash($)
(b)
Stock Awards
($)(2)(3)
(c)
Total($)
(h)
Peter C. Nelson(1)
Chairman
$ 200,300 $ 83,798 $ 284,098
Richard P. Magnuson
Lead Director
142,800 83,798 226,598
Gregory E. Aliff 131,700 83,798 215,498
Terry P. Bayer 120,100 83,798 203,898
Shelly M. Esque 99,300 83,798 183,098
Thomas M. Krummel, M.D. 116,400 83,798 200,198
Scott L. Morris 101,100 83,798 184,898
Carol M. Pottenger 108,400 83,798 192,198
Lester A. Snow 122,900 83,798 206,698
Patricia K. Wagner 101,100 83,798 184,898
(1)
Mr. Nelson’s retainer includes $60,000 for his role as Chairman of the Board.
(2)
Amounts reflect the full grant date fair value of each RSA granted in 2020 to the non-employee directors, calculated in accordance with FASB ASC Topic 718, disregarding estimates for forfeitures. Assumptions used in the calculation of these amounts are included in footnote 12 of Group’s annual report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2021.
(3)
At the end of 2020, the aggregate number of RSAs held by each current non-employee director was as follows: Peter C. Nelson, 3,369; Gregory E. Aliff, 10,915; Terry P. Bayer, 14,499; Shelly M. Esque, 4,322; Dr. Thomas M. Krummel, M.D., 24,920; Richard P. Magnuson, 13,380; Scott L. Morris, 1,884; Carol M. Pottenger, 5,841; Lester A. Snow, 16,250; Patricia K. Wagner, 1,884.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   31

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Ownership of Directors and Executive Officers
Our Corporate Governance Guidelines, available on the Group’s website at http://www.calwatergroup.com, include the stock ownership requirements for non-employee directors and executive officers. The requirements were adopted to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and executive officers. A more complete description of the stock ownership requirements appears in the “Compensation Discussion and Analysis” section of this Proxy Statement.
Directors are required to achieve the relevant ownership threshold within five years following adoption of the requirements or five years after commencing service, whichever is later. Executives must retain 50% of the net after-tax shares from equity awards until the relevant ownership requirement is achieved.
32   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

The following table shows the common stock ownership of our directors and executives as of March 30, 2021. All directors and executives have sole voting and investment power over their shares (or share such powers with their spouses).
Name
Common Stock
Beneficially
Owned(*)
Gregory E. Aliff
Director
13,339
Terry P. Bayer
Director
16,246
Shannon C. Dean
Executive Officer
15,443
Shelly M. Esque
Director
6,156
David B. Healey
Executive Officer
16,371
Martin A. Kropelnicki
Director and Executive Officer
100,649
Thomas M. Krummel, M.D.
Director
28,984
Robert J. Kuta
Executive Officer
13,472
Michael B. Luu
Executive Officer
16,959
Richard P. Magnuson
Director
58,090
Michael S. Mares, Jr.
Executive Officer
3,936
Lynne P. McGhee
Executive Officer
26,288
Greg A. Milleman
Executive Officer for California Subsidiary
3,420
Scott L. Morris
Director
3,598
Michelle R. Mortensen
Executive Officer
8,622
Peter C. Nelson
Director and Retired Executive Officer
17,990
Elissa Y. Ouyang
Executive Officer
6,162
Todd K. Peters
Executive Officer for California Subsidiary
2,497
Carol M. Pottenger
Director
7,569
Gerald A. Simon
Executive Officer
7,566
Thomas F. Smegal III
Executive Officer
43,836
Lester A. Snow
Director
19,924
Paul G. Townsley
Executive Officer
26,226
Ronald D. Webb
Executive Officer
20,277
Patricia K. Wagner
Director
3,595
All directors and executives as a group
487,215
*
To our knowledge, as of March 30, 2021, all directors and executives together beneficially owned an aggregate of approximately 1.0% of outstanding common shares. No one director or executive beneficially owns more than 1.0% of outstanding common shares.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   33

2020 Say-on-Pay Vote and Stockholder Outreach
Our Board and management value the views of our stockholders and believe that maintaining an active dialogue with them is important to our commitment to long-term stockholder value. For fiscal year 2020, we received continued support with 92% of the votes cast on the Say-on-Pay advisory vote taken at the 2020 Annual Meeting of Stockholders (Say-on-Pay).
The Committee recognizes that best practices in executive compensation continue to evolve and we strongly believe in soliciting feedback from stockholders to better understand their perspectives, to receive their input on our business strategy and execution, and to gather feedback regarding other matters of investor interest. Over the course of 2020, management engaged regularly with investors at conferences and other forums and discussed several topics including corporate strategy, executive compensation, and environmental, social, and governance issues.
Through stockholder feedback, we have observed the following:

Stockholders have shared favorable views of our executive leadership team, including each of the named executive officers, and the alignment between pay and performance.

Stockholders understand the drivers of the non-cash change in pension, which can represent a large non-cash portion of the reported total compensation for our CEO and did not see the reported amount as a risk factor that influenced their Say-on-Pay vote. Instead, stockholders tend to focus on changes in our CEO’s pay excluding the actuarial change in pension value.
Although stockholders understand the nature of the non-cash change in pension, based upon feedback we received, we decided to conduct an independent, third-party review of the assumption methodologies used for the pension and supplemental executive retirement (SERP) plans, as well as a review of the plan design for the SERP. Based upon those findings, we revised the methodologies used to determine our plans’ actuarial assumptions and amended the SERP, increasing the plan’s unreduced retirement age from 60 to 65.
Additionally, to meet the expectations of our customers, regulators, stockholders, and other stakeholders regarding Environmental, Social, and Governance matters, we conducted a materiality assessment in 2020 and produced our first report aligned with recognized reporting frameworks, including the Sustainability Accounting Standards Board, which provides information about our Company’s approach to corporate responsibility and sustainability. For the full report, please visit www.calwatergroup.com/esg2020.
34   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Ownership of Largest Stockholders
As of December 31, 2020, our records and other information available from outside sources indicated that the following stockholders were 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 SEC. Based solely on the review of our stockholder records and public filings made by the third parties with the SEC, we are not aware of any other beneficial owners of more than five percent of the common stock.
Class
Beneficial Owner
Number of
Shares of
Common Stock
Percent of
Class
Common
BlackRock, Inc.(1)
55 East 52nd Street
New York, NY 10055
8,253,577 16.6%
Common
The Vanguard Group, Inc.(2)
100 Vanguard Blvd.
Malvern, PA 19355
5,731,833 11.50%
Common
State Street Corporation(3)
One Lincoln Street
Boston, MA 02111
3,770,555 7.57%
(1)
BlackRock, Inc. has sole voting power over 8,182,794 shares and sole investment power over 8,253,577 shares, and no shared voting power or shared investment power as of December 31, 2020, as disclosed on Schedule 13G/A filed with the SEC on January 25, 2021.
(2)
The Vanguard Group, Inc. has sole voting power over 0 shares; sole investment power over 5,543,450 shares; shared voting power over 151,322 shares; and shared investment power over 188,383 shares as of December 31, 2020, as disclosed on Schedule 13G/A filed with the SEC on February 10, 2021.
(3)
State Street Corporation (“State Street”) has shared voting power over 3,545,144 shares, shared investment power over all 3,770,555 shares, and no sole voting power or sole investment power over any shares. SSGA Funds Management, Inc., a wholly owned subsidiary of State Street, has shared voting power over 2,503,681 shares, shared investment power over 2,515,222 shares, and no sole voting power or sole investment power over any shares. This information is as of December 31, 2020, as disclosed on Schedule 13G filed with the SEC on February 11, 2021.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   35

COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation
In this section, we describe our executive compensation philosophy and program that supports our strategic objectives and serves the long-term interests of our stockholders. We also discuss how our President & Chief Executive Officer, Chief Financial Officer, and other Named Executive Officers (our NEOs) were compensated in 2020 and describe how their compensation fits within our executive compensation philosophy. For fiscal 2020, our NEOs were:
Name
Title
Martin A. Kropelnicki President & CEO
Thomas F. Smegal III Vice President, Chief Financial Officer
Paul G. Townsley Vice President, Corporate Development and Chief Regulatory Officer
Robert J. Kuta Vice President, Engineering and Chief Water Quality and Environmental Compliance Officer
Lynne P. McGhee Vice President, General Counsel
Table of Contents
Page
This Compensation Discussion and Analysis is organized as follows:
1
36
2
37
3
38
4
40
5
54
6
55
1   2020 Compensation Overview
Executive Compensation Philosophy and Framework
Our executive compensation programs are designed to attract, motivate, and retain key officers with the ultimate goal of generating strong operating results and creating long-term alignment with our stockholders and customers. We reward for excellent job performance, overall leadership, long-term results, and provide for fair, reasonable, and competitive total compensation.
Our executive compensation programs are built upon the following framework:

Pay-for-performance by aligning officer compensation to pre-established, quantifiable performance goals

Use performance metrics that are understandable and are tied to key performance indicators; all of our officers have the ability to make an impact

Provide competitive pay to attract and retain highly-qualified officers

Align management interests with the long-term interests of our customers and stockholders

Establish performance goals that are aligned with our organizational strategy

Maintain a one-team approach, meaning all eligible officers and department heads share the same performance targets and compensation plan
36   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Our officer team’s 2020 performance demonstrates our commitment to delivering value to our stockholders and customers, with strong performance on both financial and non-financial measures. This resulted in 175% achievement of target for the short-term incentive compensation plan and 183% achievement of target and payout for the long-term performance-based equity grant for performance period 2018-2020.
2   NEO Compensation Components and Pay Mix
Our officers’ total direct compensation is heavily weighted towards performance and appropriately balances officer focus on our short- and long-term priorities with annual and long-term rewards. Consistent with our compensation philosophy, our total compensation program was developed by taking into account competitive market data, as well as a variety of additional factors including individual experience, tenure, performance and leadership, Group performance, and internal equity among the officers. Our compensation decisions for 2020 are outlined below.
Elements of Compensation
Base salary
We believe it is important to drive strong performance with respect to traditional measures of success in the utilities industry. For 2020, as well as 2019, base salaries for NEOs were increased for the cost of living and, in some cases, performance. This is intended to compensate NEOs for job performance and overall leadership while maintaining salaries within the “competitive range” of the market data. This market data is updated annually by our independent compensation consultant retained by the board.
In response to the coronavirus pandemic and its devastating effects on the communities we serve, all executives elected to take a temporary voluntary pay reduction for fiscal year 2021, contributing the value of their pay reduction to the Cal Water Hardship Fund to assist our customers. In lieu of the value of their salary reduction, a special equity grant with risk of forfeiture was granted to each executive on January 4, 2021 in the form of a restricted stock award, vesting on the one-year anniversary of the date of grant.
Name
2019
Base Salary
2020
Base Salary
Percent
Increase
2021
Base Salary
Percent
Decrease
Martin A. Kropelnicki $ 987,000 $ 1,021,545 3.5 $ 900,000 (12.0)
Thomas F. Smegal III 457,500 475,800 4.0 428,220 (10.0)
Paul G. Townsley 405,000 419,500 3.6 377,550 (10.0)
Robert J. Kuta 347,500 360,000 3.6 324,000 (10.0)
Lynne P. McGhee 319,500 345,500 8.1 310,950 (10.0)
Short-term Performance Incentive Award Opportunity
For 2020, the target opportunity for short-term incentives was unchanged from 2019. For our President & CEO, the target opportunity was 100% of salary, and 30% of base salary for all other officers. The payout ranges from 0% to 200% of target, based on actual performance.
Performance and Time-Based Equity Compensation
For 2020, the Organization & Compensation Committee set the target total value for the equity compensation awards at $920,000 for our President & CEO, $160,000 for the Group’s vice presidents, and $95,000 for all other NEOs. For our CEO, 60% of equity compensation awards are in the form of performance-based RSUs with a three-year performance period and vesting 0% to 200% based on performance of each metric, and 40% of equity compensation awards are in the form of time-based RSAs vesting over three years. For the Group’s vice presidents, 53% of their equity compensation awards are in the form of performance-based RSUs with a three-year performance period and vesting 0% to 200% based on performance of each metric, and 47% are in the form of time-based RSAs vesting over three years. Each year of the performance period is measured and aggregated to attain the three-year performance period’s actual achieved performance.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   37

3   Executive Compensation Governance and Process
Role of the Organization and Compensation Committee
We are committed to the highest standards of compensation governance. We design and administer our executive compensation program to motivate, retain, and focus key officers to drive our strategy, generate strong operating results, and deliver solid, long-term returns to our stockholders and customers. Our compensation programs are also intended to align the interests of our leadership team with our stockholders and customers and to promote our pay-for-performance culture and philosophy.
Comprised entirely of independent outside directors, the Organization & Compensation Committee (Committee) is responsible for overseeing our compensation programs for officers and officer succession. The Committee recommends to the Board compensation levels and incentive performance objectives for officers for the 12-month period beginning January 1 of each year. These objectives align with stockholder and customer interests and support our long-term growth and health of the Company. The Committee starts its planning and review process in February of each preceding year and generally concludes its process in November. After year-end results are final, the Committee reviews the achieved results for the prior year, certifies the achievement of each goal, approves payment of incentive compensation as certified, and approves the incentive compensation targets for the current year.
The following summary outlines the key features of our officer compensation program:
WHAT WE DO
WHAT WE DON’T DO
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We pay for performance with compensation in the form of annual short-term performance-based incentives, as well as award a substantial portion of long-term equity incentive compensation in the form of restricted stock units (RSUs) subject to performance-based vesting criteria over a three-year period.
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We retain an independent compensation consultant who reports to the Organization and Compensation Committee.
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We hold an annual “say-on-pay” advisory vote.
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We require stock ownership with minimum holding requirements for all directors and officers to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and officers.
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We cap individual payouts for short-term performance-based incentive and long-term equity incentive compensation plans.
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We have an officer compensation recovery (“clawback”) policy requiring the reimbursement of excess incentive-based compensation provided to the Group’s officers in the event of certain restatements of the Group’s financial statements.
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No excessive perquisites; the Group provides officers with only limited perquisites consisting of a company vehicle with related excess liability insurance.
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No tax gross-ups on perquisites or other personal benefits.
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No employment agreements; other than participation in the Executive Severance Plan, none of our officers are party to individual employment or severance agreements.
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No single-trigger change-in-control benefits; the Group’s Executive Severance Plan provides for change-in-control severance benefits upon a termination of employment following a change-in-control; the Group’s equity incentive plan does not require single-trigger vesting acceleration upon a change-in-control.
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No hedging and pledging of Group stock; the Group’s directors and officers are prohibited from hedging their ownership of Group stock, including trading in options, puts, calls, or other derivative instruments related to Group stock or debt, in accordance with the anti-hedging prohibition in our insider trading policy; directors and officers are also prohibited from pledging their ownership of Group stock in accordance with an anti-pledging provision in our insider trading policy.
Total Compensation Factors
Each year the Organization & Compensation Committee reviews, assesses, and recommends to the full Board all compensation for our officers after determining that the compensation for these individuals is competitive relative to companies of comparable size, complexity, location, and business nature (see below for additional discussion of this comparison). With respect to 2020 compensation decisions, the Committee engaged Veritas Executive Compensation Consultants (Veritas) as its independent executive compensation consultant.
Under the terms of its engagement, Veritas reports directly to the Committee; the Committee has sole authority to retain, terminate, and approve the fees paid to Veritas; and Veritas may not be engaged to
38   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

provide any other services to us without the approval of the Committee. Other than its engagement by the Committee, Veritas does not perform any other services for the Group. The Committee believes having an independent evaluation of compensation is a beneficial tool for the Committee, the Group, and stockholders. The Committee retained Veritas for several purposes, including:

Constructing and reviewing compensation comparisons from readily available published survey and public filings data

Performing a competitive assessment of the compensation programs, practices, and levels for directors and officers

Reviewing our compensation plans relative to the plans of our proxy peer group
The Committee made a number of compensation recommendations, including those pertaining to the officers that were based on the competitive assessments provided by and through consultation with Veritas. The Committee’s recommendations were made, however, entirely by the Committee, in its sole discretion.
The total compensation level for each officer is based on one or more of the following factors:

The individual’s duties and responsibilities within the Group

The individual’s tenure and experience

The compensation levels for the individual’s peers within the Group

Compensation levels for similar positions based on a review of published compensation surveys

The levels of compensation necessary to retain, motivate, and recruit officers
In order to determine competitive compensation practices for 2020, the Committee relied, in part, on published survey compensation data, as well as proxy data for individual companies. The individual companies are referred to in this proxy statement as the “Peer Group.” The Peer Group includes companies that are generally highly regulated public gas, water, or multi-utility-based organizations with one-half to two times the annual revenue size of the Group. In addition, a portion of the Peer Group is subject to unique California statutes similar to the Group.
On November 18, 2020, the Committee approved the following companies for inclusion in our Peer Group:
Allete, Inc. NorthWestern Corp.
American States Water Company Otter Tail Corporation
Aqua America, Inc. Ormat Technologies
Avista Corporation PNM Resources
Black Hills Corp. Portland General Electric
Chesapeake Utilities Corp. San Jose Water Company
MGE Energy South Jersey Industries, Inc.
Northwest Natural Gas Company Unitil Corporation
To properly advise the committee, Veritas utilized data from these sources to compile the competitive pay information comparing each officer’s compensation to market levels for his/her executive position.
After consideration of the competitive data, the Committee makes decisions regarding each individual officer’s target total compensation opportunities based on the Group and individual performance and the need to attract, motivate, and retain an experienced and effective management team. The Committee examined the relationship of each officer’s base salary, long-term equity incentives, short-term incentive
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   39

awards, and total compensation to the competitive data from several perspectives by reviewing the following:

The competitive data without any adjustments

Annual incentive or bonus valued at 50% of median of the market competitive data

The lower range of 20% below the median of the market competitive data

Target total direct compensation reduced by 20% from the median of the market competitive data

Actual short-term incentive compensation reduced by 20% from the median of the market competitive data
In making compensation recommendations for the 2020 fiscal year for the officers, the Committee’s general objective was to set total compensation within a “competitive range” for each officer’s position based on the competitive data. The Committee considers the “competitive range” to mean that compensation levels are within plus or minus 20% of the median compensation levels as determined by reference to the competitive data. Actual compensation decisions for the officers were, however, influenced by a variety of additional factors including considerations of each individual’s experience, tenure, performance and leadership, Group’s performance, and internal equity among the officers.
The Committee annually reviews Veritas in light of various factors including those factors required by SEC rules and NYSE Listed Company Rules regarding compensation consultant independence and has affirmatively concluded that Veritas is independent from California Water Service Group and has no conflicts of interest relating to its engagement by the Committee. The Committee also reviews the performance of Veritas.
Say-on-Pay
As described above, our Board and management value the views of our stockholders and believe that maintaining an active dialogue with them is important to our commitment to long-term stockholder value. For fiscal year 2020, we received 92% of the votes cast on the Say-on-Pay advisory vote taken at the 2020 Annual Meeting of Stockholders. Other than the changes described above regarding the methodologies used to determine our plans’ actuarial assumptions and amendment of the SERP to increase the plan’s unreduced retirement age from 60 to 65, in light of the strong support received at our last Say-on-Pay vote, we did not make any changes to the executive compensation program in response to the 2020 Say-on-Pay vote.
4   2020 Performance Goals and Performance
Pay-for-Performance
Our executive compensation program is designed to link officer compensation to our overall short-term and long-term performance (as measured by key operational and financial objectives incorporated in both long-term (LTI) and short-term (STI) performance-based compensation programs) as outlined below.

We utilize a short-term performance-based compensation program consisting of an annual performance-based short-term incentive that supports our long-term growth objectives of the Group.

More than half of long-term equity incentive compensation is in the form of restricted stock units (RSUs) subject to performance-based vesting criteria. The Group’s President & CEO is awarded 60% of long-term equity incentive compensation in the form of RSUs subject to performance-based vesting criteria, with the remaining 40% awarded in the form of time-based restricted stock awards (RSAs). The Group’s vice presidents are awarded 53% of long-term equity incentive compensation in the form of RSUs subject to performance-based vesting criteria, with the remaining 47% awarded in the form of RSAs.
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We use a three-year performance period for the long-term performance-based RSUs with vesting based upon achievement of annual performance targets related to each of the following: environmental, social, and governance (ESG), shareholder value, and earnings per share.
2020 Group Achievements
Our NEOs’ performance-based pay for 2020 was based on achieving objective, pre-established financial goals.
Financial Goals
Achievements
Financial Results Including Capital Investment and Return on Equity

Achieved net income of  $96.8 million and diluted earnings per share of  $1.97 (each determined in accordance with GAAP)

Achieved the majority of its operational goals while keeping controllable costs within budget

Invested $298.7 million of capital in accordance with our infrastructure improvement program

Increased the Group’s 2021 annual dividend by seven cents, or 8.2%, which represents our 54th consecutive annual dividend increase

Raised net proceeds of  $81.8 million through an at-the-market equity program, better matching the Company’s capital needs with funding

Maintained the Group’s strong credit rating of A+ stable and AA− for first mortgage bonds and “exceptional” liquidity rating from Standard & Poor’s (one of the only North American utilities to do so)

Achieved consolidated Group earnings per share in 2020 representing a return on equity (determined in accordance with GAAP) of 11.38% as reported in item 7 of the Group’s Form 10-K for the year ended December 31, 2020 as filed with the SEC

On December 4, 2020, the California Public Utilities Commission (CPUC) approved the Group’s largest subsidiary, California Water Service Company’s (Cal Water), October 14, 2020 proposed decision for its 2018 General Rate Case (GRC) application. The decision authorizes total revenue of up to $696.5 million and to:

Continue its decoupling balancing accounts through 2022

Invest $828 million in new capital through 2021

Recover $148 million of water system infrastructure upgrades to via the CPUC’s advice letter procedure once the project is completed
Water Quality and Customer
Service Accomplishments

Met all state and all federal primary and secondary water quality standards in all water systems Group owns during the pandemic

Completed two treatment facilities to remove per- and polyfluoroalkyl substances (PFAS)

Met or exceeded all customer service standards as set by the CPUC
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Financial Goals
Achievements
Safety Achievement

Activated our Emergency Operations Center to enable communication and coordination on instituting new COVID-19 protocols across operations and offices in four U.S. states, including 22 California districts

Developed and delivered multiple levels of employee training and guidance for COVID-19 protocols and safety measures

During Public Safety Power Shutoffs (PSPS), Cal Water customers maintained water service through the activation of the company’s Emergency Response Centers and deployment of operational, engineering, water quality, and other experts and resources statewide, including portable generators, booster pumps, and emergency trailers

Virtually conducted twelve community Emergency Operation Center joint exercises with local police, fire, and city authorities

Launched the Power 4 America (P4A) program, a partnership with the Utility Workers of America, to improve safety awareness and protect our employees

Implemented a “Drive to Zero” initiative to eliminate preventable accidents and developed a hands-on course for driving heavy equipment
Total Compensation Philosophy for Executives
Providing compensation that attracts, retains, and motivates talented officers is our committed goal. Our compensation programs reward excellent job performance, identify exceptional leadership, and represent fair, reasonable, and competitive total compensation that aligns officers’ interests with the long-term interests of our stockholders and customers.
The Committee believes a balance of fixed and variable compensation components, with short-term and long-term compensation elements, maintains a strong link between the NEOs’ compensation and the overall Group’s performance while promoting the interests of both customers and stockholders. The Committee annually re-evaluates the mix of fixed and variable compensation, including the proportions of incentive compensation awarded as short-term cash-based and long-term equity-based awards and stockholder feedback. Additionally, the Committee continues to monitor our program on an annual basis to ensure the structure will not incentivize excessive risk-taking.
In addition, our executive compensation program considers the following factors:

The overall financial and operating performance of our company

Each officer’s performance and contributions to the achievement of short-term and long-term financial goals and operational milestones

Each NEO’s job responsibilities, expertise, historical compensation, and years and level of experience

Our overall succession planning and the importance of retaining each NEO and each NEO’s potential to assume greater responsibilities in the future

Peer group benchmarking data and compensation analyses
We believe our executive compensation program is achieving the intended results. Our compensation programs continue to be competitive in the industry and has resulted in the attraction and retention of talented officers who contribute to the long-term success of the Group. Our compensation programs create a strong linkage between pay and performance through long-term equity and annual performance-based short-term incentive compensation without encouraging imprudent risk taking by our officers.
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Elements of Compensation
The material elements of our officer compensation program for 2020 included:

Base Salary

Annual Short-Term Performance-Based Incentive Compensation

Performance and Time-Based Long-Term Equity Compensation

Basic and Supplemental Pension Plan Benefits

Deferred Compensation Plan Benefits

Limited Perquisites
In determining compensation, the Committee is mindful that as a holding company for a California regulated utility, the Group’s financial performance is substantially dependent upon CPUC regulation plus other factors, which to a large extent are beyond the control of officers. Therefore, the Committee’s decisions regarding overall compensation are determined largely by evaluation of factors that are within the officers’ control and its comparisons with companies in its peer group. As discussed below, the metrics used to determine our officers’ annual short-term performance-based incentive compensation and the vesting of long-term performance-based equity compensation awards are appropriate metrics that align officer performance in a manner beneficial to both stockholders and customers and do not encourage imprudent risk-taking.
Base Salary
The only guaranteed portion of executive total compensation is in the form of fixed base salaries commensurate with the performance of primary roles and responsibilities. The Committee reviews base salaries for our officers annually and determines whether or not to recommend adjustments to salaries based on performance. To assist the Committee in this review, our President & CEO provides an assessment of each officer’s performance and contribution towards the key corporate goals. Recommendations regarding base salary adjustments are provided to the Committee for each of our officers other than himself based on the competitive data and the other factors described below under “Determining Executive Compensation.”
The Committee has and continues to target fixed base salaries for each officer that are appropriate for the performance, skills, capabilities, tenure, and individual contributions in his/her position. The base salary levels are established by reference to the competitive data described below.
Consistent with established practice, the 2020 base salaries for our officers were compared to the base salaries for similar positions within the competitive data. Similarly, the total target cash compensation for our officers (taking into account annual short-term incentive compensation targets) was compared to the competitive market data for target total cash compensation. Each officer’s 2020 base salary was within the competitive range (defined as plus or minus 20% from the median compensation level, based upon available survey data) of target total cash compensation.
Each year, our officers establish a number of corporate goals and objectives that promote the long-term growth and align the interests of stockholders, customers, and employees. The objectives are communicated internally and monitored quarterly. Changes in base salary levels for our President & CEO and other NEOs are generally based on progress against certain of these key corporate goals and individual officer performance. For 2020, the following corporate goals were used to evaluate 2020 compensation based on performance for our current President & CEO and NEOs:
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Corporate Goals
Achievement
Group Operations:
Achieve planned operating results as defined in the 2020 Corporate Goals and Objectives

Operated within the approved 2020 budget

Continued enhancement of the Group’s safety organization and programs making safety a top priority

Developed and deployed a program that met the requirements of the California Consumer Privacy Act (CCPA), Telephone Consumer Protection Act (TCPA), and Senate Bill 998

Achieved the highest compliance control status for the Defense Federal Acquisition Regulations Supplement (DFARS) audit and engaged a qualified, third-party company to perform an annual network penetration test for the corporate and SCADA networks

Completed a materiality assessment to determine and prioritized the highest priority ESG topics for Group and its stakeholders and produced Group’s first ESG report

Completed the purchase of Rainier View Water Company to acquire its water system assets and provide water utility service to its 18,000-plus service connections
Stockholder Value:
Achieve budgeted earnings per share of $1.63, earn authorized return on equity on invested capital of 9.20%, and company-funded capital expenditures of  $275 million

Earnings per share of  $1.97, representing a return on equity (as determined in accordance with GAAP) of 11.38% as reported in item 7 of the Group’s Form 10-K for the year ended December 31, 2020 as filed with the SEC

The Group’s 2020 achieved capital expenditures was $298.7 million, inclusive of company-funded capital expenditures of  $294 million, as reported in item 7 of the Group’s Form 10-K for the year ended December 31, 2020 as filed with the SEC (excluding developer funded expenditures of  $18.9 million and including an increase in accounts payable accrual of  $14.2 million for capital project spend)
Regulatory Goal:
Conclude the 2018 Cal Water GRC

The California Public Utilities Commission (CPUC) issued a decision in our 2018 Infrastructure Investment Filing (GRC) authorizing Cal Water to invest $828 million in new capital through 2021 and to keep its decoupling balancing accounts through 2022

The CPUC approved Cal Water’s request for an additional $700 million of authorization for debt and equity financing to fund its capital improvement program which is expected to fund these improvements through 2025

The Hawaii Public Utilities Commission (HPUC) approved Hawaii Water Service Company’s (Hawaii Water) application for the purchase of the Membership Interests of Kalaeloa Water Company, LLC. Hawaii Water took control of the water system on November 2, 2020
Customer Service and Water Quality:
Complete key strategic projects in the areas of customer service and water quality including:

Meet or exceed all customer service standards as set by the PUC

Meet or exceed all water quality standards in every state, every day, with no primary or secondary water quality violations in 2020

Meet or exceed all wastewater discharge standards in every system, every day, in 2020

Met requirements of America’s Water Infrastructure Act (AWIA) of 2018, including submittal deadlines for risk and resilience assessments for priority 1 and 2 systems and emergency response plans for priority 1 systems

Exceeded nine CPUC standards which encompass key measurements for telephone responsiveness, service responsiveness, billing accuracy, and general levels of customer complaints (the nine CPUC customer service standards are found in the CPUC’s General Order 103-A)

Met all state and federal primary and secondary water quality standards in all water systems operated by Group during the pandemic

Maintained an excellent environmental standards record throughout 2020
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Corporate Goals
Achievement
Employee Retention and Development:
Implement key strategic projects in the area of employee retention and development

Implemented Workday human capital and payroll management application

Implemented a preventable vehicle accident reduction program including the rollout of our hand-on heavy equipment driving course

Recognized with a Silver Stevie Award in the category of Most Valuable Employer for COVID-19 response by the Stevie Awards for Great Employers

Named a “Top 100 Workplace” in the San Francisco Bay Area for the ninth consecutive year by the Bay Area News Group

Named a “Top Workplace” by Top Workplaces, LLC for the first time

Received recertification as a Great Place to Work® by the Great Place to Work® Institute for the fifth consecutive year
Once the Committee assesses the business results for each long-term goal as described above, the Committee then reviews and discusses the overall performance of each officer and the competitive data provided by the independent consultant retained by the Committee. Once reviewed and agreed upon, the Committee recommends to the Board the base salaries for our officers (including the President & CEO).
Any increase to salaries is intended to compensate NEOs for inflationary changes, job performance and overall leadership while being within the “competitive range” of the market data for target total cash compensation for similar positions (“competitive range” is described in more detail above and below) when taking into account the short-term incentive compensation described below.
Performance-Based Short-Term Incentive (STI) Compensation
As strategic goals are long-term in nature, we maintain an annual performance-based short-term incentive compensation program for officers designed to align annual performance and achievement with the long-term strategic goals of the Group. The performance-based short-term incentive compensation is fully at risk with payout dependent upon achievement of certain performance objectives over a one-year performance period.
The Committee considered a number of factors when establishing the 2020 performance metrics including our long-term strategic plan, historical performance, the regulatory environments it operates in, feedback from our independent compensation consultant, stockholder feedback, and management discussions. The performance metrics are intended to foster and enhance cross-functional integration, customer relationships, continuous improvement, and team accountability while focusing on key corporate goals and initiatives. Targets for each of the performance metrics were designed to be challenging but achievable given strong management performance.
For 2020, the Committee granted the opportunity for our officers (other than our President & CEO) to receive short-term performance incentive awards with a target payout equal to 30% of base salary with an actual payout range of 0% to 200% of target, based on performance. For our President & CEO, the Committee granted the opportunity to receive a short-term performance-based incentive award in 2020 with a target payout equal to 100% of base salary, with an actual payout range of 0% to 200% of target, based on performance.
Payment of the short-term performance incentive awards is typically made in March, following the Group’s receipt of audited financial statements and the subsequent certification of the Group’s performance by the Committee. See below for additional information regarding the performance goals and resulting payouts under the annual short-term incentive program for 2020.
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The following section provides a more detailed look at each performance metric, along with the maximum, target, and threshold levels for each and the benefits derived by our customers:

Water Quality:   This metric evaluates performance based on number of procedural violations and violations of primary and secondary drinking water standards. The CPUC has authority to set drinking water standards for Cal Water. It has adopted the California State Water Resources Control Board, Division of Drinking Water (DDW) standards, which also incorporate U.S. Environmental Protection Agency (EPA) drinking water standards. Similarly, the Group’s subsidiaries in Washington, Hawaii, and New Mexico are regulated by the EPA and their respective state health regulators. We have continued to include all state operations in the performance metric for primary water quality. The secondary and procedural water quality metrics measure activity in the California subsidiary only, but in the future, secondary and procedural water quality metrics could include other states’ compliance.

A primary drinking water standard violation is related to public health, either acute or long-term

A secondary drinking water standard violation is related to taste or aesthetics, such as excessive iron and manganese, and can generate customer complaints

A procedural violation is a missed sample or other non-compliance item that is not a violation of a primary or secondary standard
We make it a priority to meet all water quality standards, every day, in every service area. For this reason, the target performance level was set for no primary water standard violations, two or fewer secondary water standard violations, and no more than four procedural violations.
Performance Level*
Primary Water
Standards
Violations
(all states)
Secondary Water
Standards
Violations
(California only)
Procedural
Violations
(California only)
Goal
Achieved
Maximum
0
0
0
200%
Target
0
2 or fewer
Up to 4
100%
Threshold
1 or fewer
4 or fewer
Up to 8
50%
*
An additional tier applies between the target and maximum level.

Customer Service:   A combination of CPUC standards and three internal performance indicators for all California districts, Hawaii, New Mexico, and Washington which encompass key measurements for telephone responsiveness, service responsiveness, billing accuracy and timeliness, and general levels of customer complaints comprises this metric. CPUC customer service standards are found in the CPUC’s General Order 103-A.

An additional target was initially included in the performance metric, to decrease shut off for non-payment activities by 1% each year starting in 2020. Due to the coronavirus pandemic, the state prohibited shut-offs and we eliminated that target because it was no longer achievable and outside of management’s control.
The Customer Service metric is evaluated each quarter for 10 measurements in 20 California service areas, Hawaii, New Mexico, and Washington for an annual target of 863 – 848 and a maximum annual metric measurement of 920.
Performance Level*
Criteria
Goal
Achieved
Maximum
99.1% of maximum annual metric
200%
Target
92.1.% of maximum annual metric
100%
Threshold
90.0% of maximum annual metric
50%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
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Utility Plant Investment:   The annual Board-approved capital expenditures budget is the target for this metric. Investment in utility plant, property, and equipment is a driver of stockholder return and a key component of providing reliable, high-quality water service to customers. This metric is updated each year to reflect the annual approved capital program and budget for the Group and its subsidiaries and is tied to regulatory approvals. For 2020, the annual Board-approved capital expenditure budget and target performance level was set at $275 million.
Performance Level*
2020
(In Millions)
Goal
Achieved
Maximum $ 325 200%
Target $ 275 100%
Threshold $ 245 25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.

Earnings per Share (EPS):   This metric measures the annual budget-to-actual performance of the Company. Specifically, this measure compares the actual diluted earnings per share to the forecasted diluted earnings per share for the calendar year. The forecasted diluted earnings per share is adopted during the budget process by the Board of Directors each year at its January meeting. By adhering to budgets, management is able to demonstrate to the Board, stockholders and customers that the Company is effective at managing controllable costs and has the ability to efficiently execute its business plan.
Performance Level*
EPS Variance
from Budget
Goal
Achieved
Maximum
Over 10%
200%
Target
−2.5% to 2.5%
100%
Threshold
−7.6% to −10%
25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.

Emergency Preparedness and Safety:   This metric is measured annually and is comprised of five safety program components. These five components include Community Emergency Operations Center (EOC) training, full attendance at Cal Water mandated safety training for all employees (minimum of five training topics annually), Total Case Incident Rate (TCIR) which represents the average number of work-related injuries incurred by 100 workers during a one-year period as measured against California companies, the number of preventable vehicle accidents, and the number of unannounced site safety audit and immediate onsite reviews. The five safety components are weighted as follows:

EOC Training measure – 20%

Training attendance rate measure – 20%

TCIR measure – 20%

Preventable vehicle accident measure – 20%

Unannounced site safety audit and immediate onsite review – 20%
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Focused on improving the management of these safety programs, our officers have set this metric to improve performance from current conditions towards industry averages, where applicable, and performance expectations.
Performance Level*
Community EOC Training Performance Target
Goal
Achieved
Maximum Conduct 12 community EOC trainings 200%
Target Conduct 10 community EOC trainings 100%
Threshold Conduct eight community EOC trainings 25%
*
An additional tier applies between the target and maximum level.
Performance Level*
Training Rate Measure Performance Target
Goal
Achieved
Maximum 100% of applicable employees 200%
Target 85% of applicable employees 100%
Threshold 70% of applicable employees 25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
Performance Level*
TCIR Measure Performance Target
Numeric
Equivalent
Goal
Achieved
Maximum 25% improvement over 2019 achieved results 2.78 200%
Target 5% improvement over 2019 results 3.52 100%
Threshold 90% of 2019 achieved results 4.07 25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
Performance Level*
Preventable Vehicle Accident Measure
Performance Target
Numeric
Equivalent
Goal
Achieved
Maximum 20% improvement over 2019 achieved results 34 200%
Target Maintain 2019 achieved results 42 100%
Threshold 85% of 2019 achieved results 48 25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
Performance Level*
Unannounced Site Safety Audits and Immediate
Onsite Review Measure Performance Target
Goal
Achieved
Maximum 144 audits 200%
Target 72 audits 100%
Threshold 18 audits 25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
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Summary of Short-Term Performance Goal Achievements for 2020
The following charts set forth the performance goals used for short-term incentive-based compensation for 2020, and the achievement of each metric as certified by the committee for 2020.
Performance Metric
Minimum Threshold
Performance
Target Performance
Maximum
Performance
Achieved Results
Water Quality Up to one primary (all states), up to four secondary (California only), up to eight procedural violations (California only) No primary (all states), up to two secondary (California only), up to four procedural violations (California only) No primary (all states), no secondary (California only), no procedural violations (California only) 200% – No primary, no secondary, or procedural violations
Customer Service 90.0% of the maximum annual metric 92.1% of the maximum annual metric 99.1% of the maximum annual metric 175% – Achieved 98.7% of the maximum annual metric
Utility Plant $245 million in company-funded capital expenditures $275 million in company-funded capital expenditures $325 million in company-funded capital expenditures 150% – $298.7 million in capital expenditures, of which $294 million was company-funded
Earnings per Share (EPS) Negative 10% EPS variance from budget +/- 2.5% EPS variance from budget Positive10% EPS variance from budget 200% – Positive 21% EPS variance from budget
Safety

Conduct eight community EOC trainings,

70% of applicable employees trained

90% of 2019 achieved TCIR results

85% of 2019 preventable vehicle accident achieved results

18 unannounced site safety audits and immediate onsite reviews

Conduct 10 community EOC trainings,

85% of applicable employees trained

5% improvement over 2019 achieved TCIR results,

Maintain 2019 preventable vehicle accident achieved results,

72 unannounced site safety audits and immediate onsite reviews

Conduct 12 community EOC trainings

100% of applicable employees trained

25% improvement over 2019 achieved TCIR results

20% improvement over 2019 preventable vehicle accident achieved results

144 unannounced site safety audits and immediate onsite reviews

150%

Conducted eight community EOC trainings

96% of applicable employees trained

11% improvement over 2019 TCIR results,

19% improvement over 2019 preventable vehicle accident achieved results

188 unannounced site safety audits and immediate onsite reviews
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   49

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(1)
Company-funded capital expenditures were $294 million. The Group’s 2020 achieved capital expenditures was $298.7 million as reported in item 7 of the Group’s Form 10 K for the year ended December 31, 2020 as filed with the SEC. Excluding developer funded expenditures of  $18.9 million and including an increase in accounts payable accrual of  $14.2 million for capital project spend, the Group spent $294 million on company-funded capital expenditures for the 2020 performance period.
The table below summarizes the total performance-based short-term incentive compensation earned by our officers for the fiscal year ended December 31, 2020.
Name
2020
Short-Term
Incentive
Award
($)(1)
Martin A. Kropelnicki $ 1,787,704
Thomas F. Smegal 249,795
Paul G. Townsley 220,238
Robert J. Kuta 189,000
Lynne P. McGhee 181,388
(1)
The short-term incentive compensation is paid out annually following certification of the prior year’s results by the Committee.
2020 Long-term Performance and Time-Based Equity Compensation
The purpose of our long-term equity incentive compensation is to better align executive compensation with the interests of both stockholders and customers, to create incentives for officer recruiting and retention, to encourage long-term performance by our officers, and to promote stock ownership. Risk is taken into account in determining the aggregate amount of incentive compensation and performance criteria, including assessment of risk management and risk mitigation.
As with target short-term incentive compensation, the Committee reviewed the competitive range of long-term equity compensation and total direct compensation for similar positions within the competitive market in making decisions regarding long-term equity compensation awards for 2020. However, the Committee also believes that, in the interest of strengthening and rewarding teamwork and collaboration within the officer team, the annual equity incentive awards granted to each of our officers (other than our President & CEO) should be based on the same objectives and methodology. The Committee recommended awarding our President & CEO a greater value of equity awards in 2020 than our other officers because of his substantially greater level of responsibility and ability to influence Group’s operational results.
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Based on the methodology described above, for 2020, the Committee set the total value for the equity compensation awards at $920,000 for our President & CEO, $160,000 for the Group’s vice presidents, and $95,000 for all other officers, assuming a target level of performance. All equity awards for officers were granted 47% (40% for our President & CEO) in the form of time-based RSAs vesting over three years and 53% (60% for our President & CEO) in the form of performance-based RSUs with a three-year performance period and the opportunity to earn up to 200% of the target performance-based RSU award based on achievement with respect to Committee-approved objectives.
The performance-based RSUs awarded to our officers provide for a three-year performance period with vesting based solely upon the achievement of objective performance criteria. For the performance metrics applicable to the 2020 performance-based RSUs, the Committee approved a three-year performance metric and will certify the level of achievement at the end of the three-year performance period. The number of shares awarded at the end of the three-year performance period is based on the extent the performance criteria is met over such time and subject to the officer’s continued employment through such date. The following section provides a more detailed look at each revised performance metric, along with the maximum, target, and threshold levels for each and the benefits derived by our customers:

Return on Equity:   This metric measures return on equity (ROE) as shown in the public financial statements of California Water Service Group. It is defined as net income divided by average common stockholders’ equity for the three-year performance period. The final three-year achievement will be certified at the end of the three-year performance period. Stockholders expect the Company to earn its authorized return on equity for its regulated business. For this reason, the metric uses the authorized ROE as the target for 100% performance achievement. The rationale for tiers above and below the authorized ROE is to account for regulatory mechanisms and lag.
Performance Level*
Annual Return on Common Stockholders’ Equity
Goal
Achieved
Maximum
Target plus 50 basis points
200%
Target
California authorized ROE
100%
Threshold
Target minus 200 basis points
20%
*
An additional tier applies between the target and maximum level.

Growth in Stockholders’ Equity:   This metric measures growth in stockholders’ equity by the accumulation of two factors over the performance period, growth in total stockholders’ equity and actual dividends paid in the calendar year. These growth values can be objectively validated using the Company’s audited annual financial statements. The metric, in a stock-price neutral way, measures the growth in stockholders’ equity created by the Company over the performance period. Investors in water utilities are interested in value creation along with dividend growth.
Performance Level*
Accumulation of Stockholder Value Over the Performance Period
Goal
Achieved
Maximum
$450 million
200%
Target
$350 million
100%
Threshold
$275 million
25%
*
Multiple tiers apply between the threshold and target level and between the target and maximum level.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   51


Environmental Leadership: An increasing number of investors and other stakeholders prioritize the Company’s Environmental, Social, and Governance (ESG) reporting and performance. Management has adopted corporate objectives in 2020 to improve reporting, study climate change impacts to water supply, and manage supply and conservation holistically. Improving ESG disclosures will be a multi-year effort.
Performance Level*
Performance Target
Goal
Achieved
Maximum Annual framework-compliant reporting of material ESG data,
completion of water supply risk assessment from climate change and
signing agreements or beginning construction on with three water
supply diversification projects by 2022
200%
Target Annual framework-compliant reporting of material ESG data, completion of water supply risk assessment from climate change 100%
Threshold Annual framework-compliant reporting of material ESG data 50%
*
An additional tier applies between the target and maximum level.
2018 Performance-Based Equity Compensation Achievement
In 2018, we granted performance-based equity in the form of RSUs to our officers for the three-year performance period ending on December 31, 2020. The component weighting is 20% for each of the five performance metric. The payouts are summarized below:
Performance Metric
Annual Threshold
Performance
Annual Target
Performance
Annual Maximum
Performance
Water Quality Up to one primary, up to four secondary, up to eight procedural violations No primary, up to two secondary, up to four procedural violations No primary, no secondary, no procedural violations
Customer Service 92.5% of maximum annual metric 95.5% of maximum annual metric 99.5% of maximum annual metric
Utility Plant $195 million in 2018, $240 million in 2019, $245 in million in 2020 $210 million in 2018, $255 million in 2019, $275 million in 2020 $230 million in 2018, $275 million in 2019, $325 million in 2020
Return on Equity 7.20% in 2018, 2019 and 2020 CPUC authorized ROE: 9.20% in 2018, 2019, and 2020 9.70% in 2018, 2019, and 2020
Safety 10% improvement in TCIR, in preventable accidents measures over 2017 results, and 65% applicable employees trained 25% improvement in TCIR, in preventable accidents measures over 2017 results, and 80% of applicable employees trained 40% improvement in TCIR, in preventable accidents measures over 2017 results, and 100% of applicable employees trained
52   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

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Certified results for each perspective year of the three year performance are as follows:
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The table below summarizes the total performance-based equity compensation earned by our officers for the three-year performance period ended December 31, 2020.
Name
2018 Performance
Stock Earned
($)(1)
Martin A. Kropelnicki $ 579,065
Thomas F. Smegal 151,095
Paul G. Townsley 151,095
Robert J. Kuta 151,095
Lynne P. McGhee 151,095
(1)
The shares for the 2018 performance stock award, which is comprised of the years 2018, 2019, and 2020, were awarded following the end of the three-year performance period on March 5, 2021.
2021 Performance Based Compensation
There was no increase to the target value of the performance-based equity compensation awards for 2021 under the annual long-term incentive program or to the short-term incentive-based compensation awards.
For the CEO, the equity awards vest over three years respectively, with 60% subject to the achievement of long-term performance-based metrics and 40% subject to time-based vesting and continued employment. For all other officers, the equity awards vest over three years respectively, with 53% subject to the achievement of long-term performance-based metrics and 47% subject to time-based vesting and continued employment.
On March 2, 2021, the following awards were granted for the 2021 through 2023 performance period:

President & CEO – 6,428 shares of RSAs and 9,642 RSUs

Group’s Vice Presidents – 1,311 shares of RSAs and 1,485 RSUs

Other officers – 787 shares of RSAs and 874 RSUs
All RSUs are subject to performance-based vesting.
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   53

The following charts illustrate target variable incentive pay as a percentage of compensation for 2020 and 2021:
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5   Other Compensation Programs
Basic and Supplemental Pension Plan Benefits (SERP)
In addition to the tax qualified defined benefit plan that covers all permanent employees, supplemental retirement benefits are provided to our officers under the SERP. The SERP is designed primarily to compensate for limitations imposed by the Internal Revenue Code (Code) on allocations and benefits that may be paid to officers under the Group’s tax qualified plan. Because the Code restricts benefits under the tax qualified plan, our officers otherwise would not be eligible to receive the retirement benefits that are proportional to the benefits received by our employees. The benefits under the SERP are obtained by applying similar benefit provisions of the Pension Plan to all compensation included under the Pension Plan, without regard to these limits, reduced by benefits actually accrued under the Pension Plan. The SERP is structured as such that benefits are paid to our officers on a “pay as you go” basis. The SERP is an unfunded, unsecured obligation of the Group and is designed to assist in attracting and retaining key officers while providing a competitive, total compensation program. The annual expenses of the pension and SERP have allowable costs recovered in rates through the regulatory process in California and other states. We believe that pension benefits are an important recruitment and retention tool for our employees and is consistent with practice among most of our peers.
No pension benefits will be paid to any participant until after retirement. Any pension amounts listed in this Proxy Statement are the year-over-year, non-cash, changes in the actuarial present value of the accrued pension liability and do not represent actual cash compensation paid. During 2020, the SERP was amended, increasing the plan’s unreduced retirement age from 60 to 65.
Deferred Compensation Plan
The Group maintains a deferred compensation plan for its directors, officers, and eligible employees. The plan is intended to promote retention by providing eligible employees, including the officers, with a long-term savings opportunity on an income tax-deferred basis. This plan is voluntary and funded by the individuals who elect to participate in the program. There are no company or company-matching contributions.
401(k) Plan
All employees satisfying the eligibility requirements are entitled to participate in our 401(k) plan and receive matching contributions from the Group. Pursuant to the plan, all employees, including officers, are entitled to contribute up to the statutory limit set by the Internal Revenue Service (IRS) and the Group matches 75% for each dollar contributed up to eight percent for a maximum company-matching contribution of six percent of employee’s eligible earnings.
54   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Limited Perquisites and Other NEO Benefits
As part of the Group’s automobile policy, officers have the use of a company-owned vehicle, including excess liability insurance. The Committee believes the use of a company-owned vehicle allows our officers to work more efficiently because many of the geographic areas served by the Group are most effectively reached by automobile as opposed to other forms of transportation, such as air travel. Any personal mileage incurred by our officers is taxed as additional compensation in accordance with IRS regulations and paid for by the officers. The Group offers its officers a supplemental medical plan providing proactive health protection services including executive physicals and emergency travel assistance. Additionally, the Group also has a relocation program assisting employees required to move on behalf of the Group to remain as productive as possible during the relocation transition. Employees who receive relocation assistance are required to sign a repayment agreement. Other than these benefits, the Committee’s general philosophy is not to provide perquisites and other personal benefits of substantial value to the officers.
6   Executive Compensation Policies and Practices
CEO Pay Overview
Martin A. Kropelnicki, our CEO since September 1, 2013, made significant contributions managing our 2020 performance. Based on our annual performance objectives for 2020, the Committee granted Mr. Kropelnicki an equity incentive award of  $920,000 for 2020, consisting of  $368,000 in the form of time-based RSAs vesting over three years, and $552,000 in the form of performance-based RSUs with a three-year performance period. Mr. Kropelnicki also has the opportunity to earn up to 200% of the target performance-based RSU award based on achievement with respect to Committee approved objectives.
With a 2020 base salary of  $1,021,545 and $1,787,704 annual performance-based short-term incentive compensation (representing a payout of 175% of target and reflecting superior performance during the year as described in more detail below), Mr. Kropelnicki’s total direct compensation was $3,777,821 (comprised of salary, annual performance-based short-term incentive compensation bonus, long-term performance-based restricted stock units, and time-based restricted stock awards).
Mr. Kropelnicki is a participant in the tax-qualified defined benefit plan that covers all permanent employees as well as the non-qualified supplemental retirement benefit plan provided to our officers under the SERP. The primary difference between Mr. Kropelnicki’s total direct compensation and the amount reported in the 2020 Summary Compensation Table later in this Proxy Statement is the decrease in the actuarial estimate of his future potential pension benefits. The change in pension value represents the present value of future retirement benefits and does not represent any cash payment to or from Mr. Kropelnicki.
Changes in pension value historically have been impacted significantly by a completely external factor unrelated to Mr. Kropelnicki’s compensation. The discount rate, used to value the pension benefits use for financial statement reporting purposes, is itself driven in large part by the overall interest rate environment and can cause substantial volatility in the change in pension value. For example, over the last 10 years, Mr. Kropelnicki’s change in pension value has ranged from less than $100,000 (in 2013) to more than $10 million (in 2019) to $0 (in 2020).
No pension benefit will be paid to Mr. Kropelnicki until after his retirement from the Group. Changes in actuarial assumptions for the pension costs are included in customer rates through a rate recovery mechanism. The net present value of the pension benefit ultimately received by Mr. Kropelnicki will change based on a number of factors including changes in interest rates, changes in mortality tables, Mr. Kropelnicki’s current age, years of service, and age at retirement.
Stock Ownership Requirements
Officers and members of our Board are required to own shares of Group’s stock to further align their interests with those of our stockholders. The requirements were adopted to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and
CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement   55

officers. Each non-employee director and officer must directly own Group stock having a market or intrinsic value (i.e., paper gain for vested, unexercised stock options), whichever is higher, equal to:
Title
Equity
President & CEO 3X annual base salary
Group Vice Presidents 1.5X annual base salary
Other Officers 1X annual base salary
Non-Employee Directors 5X annual base retainer
Officers must retain 50% of the net after-tax shares from equity awards until the relevant ownership requirement is achieved. Non-employee directors are required to achieve the relevant ownership threshold within five years following adoption of the requirements or five years after commencing service, whichever is later. For officers, the Committee reviews compliance with these requirements annually. The Nominating/Corporate Governance Committee reviews compliance with these requirements for non-employee directors annually.
Transactions Involving Stock – Anti-hedging and No Pledging Policy
The Board adopted an insider trading policy in 2012 which prohibits our directors and officers from engaging in hedging transactions (such as swaps, puts and calls, collars, and similar financial instruments) that would eliminate or limit the risks and rewards of share ownership. In addition, our directors and officers may not at any time engage in any short selling, buy or sell options, puts or calls, whether exchange-traded or otherwise, or engage in any other transaction in derivative securities that reflects speculation about the price of our stock or that may place their financial interests ahead of the financial interests of the Group.
Executive Compensation Recovery – Our Clawback Policy
The Board also adopted an executive compensation recovery, or “clawback,” policy in 2012 which requires the reimbursement of excess incentive-based compensation provided to our officers in the event of certain restatements of the Group’s financial statements. The policy allows the Group to claw back incentive-based compensation from officers who were actually involved in the fraud or misconduct that triggered the accounting restatement to the extent the compensation was in excess of what would have been paid under the accounting restatement. This policy is applicable to all incentive-based compensation paid after implementation of the policy, and it covers the three-year period preceding the date on which the Group is required to prepare the accounting restatement.
Tax and Section 162(m) Implications
Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for certain “covered employees,” which term includes all of our named executive officers. While we consider the deductibility of awards as one factor in determining officer compensation, we also look at other factors in making decisions and we retain the flexibility to award compensation that we determine to be consistent with the goals of our officer compensation program even if the awards are not deductible by us for tax purposes.
56   CALIFORNIA WATER SERVICE GROUP |  2021 Proxy Statement

Summary Compensation Table
The table below summarizes the total compensation paid or earned by our President & CEO, CFO, and the three most highly compensated officer of the Group for the fiscal years ended December 31, 2020, 2019, and 2018.
Name and
Principal Position
(a)
Year
(b)
Salary
($)
(c)
Stock
Awards
($)(1)
(e)
Non-equity
Incentive Plan
Compensation
($)(2)
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings ($)(3)(4)
(h)
All Other
Compensation
($)(5)
(i)
Total
($)
(j)
Total
Excluding
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings(6)
Martin A. Kropelnicki
President & CEO
2020 $ 1,059,246 $ 880,653 $ 1,787,704 $ 0