Equity Plans

SJW Corp. accounts for share-based compensation based on the grant date fair value of the awards issued to employees in accordance with FASB ASC Topic 718 - “Compensation - Stock Compensation,” which requires the measurement and recognition of compensation expense based on the estimated fair value for all share-based payment awards.

The Incentive Plan allows SJW Corp. to provide employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the company or any parent or subsidiary the opportunity to acquire an equity interest in SJW Corp. The types of awards included in the Incentive Plan are restricted stock awards, restricted stock units, performance shares, or other share-based awards. In addition, shares are issued to employees under an ESPP. SJW Corp. also has a Dividend Reinvestment and Stock Purchase Plan ("DRSPP") which allows eligible participants to buy shares and reinvest cash dividends in SJW Corp. common stock. As of June 30, 2011, the remaining shares available for issuance under the Incentive Plan were 1,200,827, and 364,459 shares are issuable upon the exercise of outstanding options, restricted stock units, and deferred restricted stock units under the Incentive Plan.

The compensation costs charged to income is recognized on a straight-line basis over the requisite service period. A summary of compensation costs charged to income, proceeds from the exercise of stock options and similar instruments, and the tax benefit realized from stock options and similar instruments exercised, that are recorded to additional paid-in capital and common stock, by award type, are presented below for the three and six months ended June 30, 2011 and 2010.



	THREE MONTHS ENDED JUNE 30,			SIX MONTHS ENDED JUNE 30,
	2011		2010	2011		2010
Compensation costs charged to income:
ESPP	$	—	—	$	45	46
Restricted stock and deferred restricted stock	126		182	283		377
Total compensation costs charged to income	$	126	182	$	328	423
Excess tax benefits realized from share options exercised and stock issuance:
Stock options	$	—	—	$	—	4
Restricted stock and deferred restricted stock	—		—	7		—
Total excess tax benefits realized from share options exercised and stock issuance	$	—	—	$	7	4
Proceeds from the exercise of stock options and similar instruments:
Stock options	$	—	—	$	—	32
Dividend Reinvestment and Stock Purchase Plan	8		—	8		—
ESPP	—		—	254		258
Total proceeds from the exercise of stock options and similar instruments	$	8	—	$	262	290

Stock Options

No options were granted during the three and six months ended June 30, 2011 and 2010.

As of June 30, 2011, there were no unrecognized compensation costs related to stock options.

Restricted Stock and Deferred Restricted Stock

On January 3, 2011, restricted stock units covering an aggregate of 13,631 shares of common stock of SJW Corp. were granted to several executives of SJW Corp. and its subsidiaries. The units vest in four equal successive installments upon completion of each year of service with no dividend equivalent rights. Share-based compensation expense is being recognized at grant date fair value of $23.70 per unit over the vesting period beginning in 2011.

On January 25, 2011, market performance-vesting restricted stock units granted to a key executive of SJW Corp. on April 30, 2008 covering 7,000 shares of common stock of SJW Corp. were canceled because the market performance objective was not attained. However, since the requisite service over the three-year service period of the award was rendered, even though the market condition was not achieved, compensation cost over the three-year requisite service period was not reversed.

On April 25, 2011, a total of 149 shares of common stock were distributed to a retired member of SJW Corp.'s Board of Directors. There was no excess tax benefit realized from this stock issuance.

On June 30, 2011, an executive of SJW Corp. retired from the Company and as a result, a total of 4,725 unvested restricted shares were forfeited. Compensation costs of $22 previously recognized relating to these unvested shares was reversed during the second quarter of 2011.

As of June 30, 2011, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $994. This cost is expected to be recognized over a weighted-average period of 1.81 years.

Dividend Equivalent Rights

Under the Incentive Plan, certain holders of options, restricted stock, and deferred restricted stock awards may have the right to receive dividend equivalent rights (“DERs”) each time a dividend is paid on common stock after the grant date. Stock compensation on DERs is recognized as a liability and recorded against retained earnings on the date dividends are issued. For the three and six months ended June 30, 2011, $32 and $64, respectively, related to DERs were recorded against retained earnings and were accrued as a liability. For the three and six months ended June 30, 2010, $31 and $62, respectively, related to DERs were recorded against retained earnings and were accrued as a liability.

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of SJW Corp.’s common stock at 85% of the fair value of shares on the purchase date. Under the ESPP, employees can designate up to a maximum of 10% of their base compensation for the purchase of shares of common stock, subject to certain restrictions. A total of 270,400 shares of common stock have been reserved for issuance under the ESPP.

After considering estimated employee terminations or withdrawals from the plan before the purchase date, SJW Corp.’s recorded expenses were $25 and $40 for the three and six months ended June 30, 2011, respectively, and $24 and $39 for the three and six months ended June 30, 2010, respectively, related to the ESPP.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 31, 2011 for the ESPP is approximately $8. This cost is expected to be recognized during the third quarter of 2011.

Dividend Reinvestment and Stock Purchase Plan

SJW Corp. adopted the DRSPP effective April 19, 2011. The DRSPP offers eligible participants to buy shares and reinvest cash dividends in SJW Corp. common stock. A total of 3,000,000 shares of common stock have been reserved for issuance under the DRSPP. As of June 30, 2011, 349 shares have been issued under the DRSPP.