Equity Plans

Common Stock

SJW Corp. has a Long-Term Stock Incentive Plan (the “Plan”), which has 1,800,000 shares of common stock reserved for issuance. The Plan was initially adopted by the Board of Directors on March 6, 2002. The Plan was subsequently amended, and the amended and restated Plan was adopted by the Board on January 30, 2008 and became effective on April 30, 2008. The 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.

A participant in the Plan generally may not receive Plan awards covering an aggregate of more than 600,000 shares of common stock in any calendar year. Additionally, awards granted under the Plan may be conditioned upon the attainment of specified Company performance goals. The types of awards included in the Plan are restricted stock awards, restricted stock units, performance shares, or other share-based awards. In addition, shares are issued to employees under the Employee Stock Purchase Plan (“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 December 31, 2011, 2010 and 2009, 235,473, 213,207 and 178,759 shares have been issued pursuant to the Plan, and 363,700, 378,903 and 352,012 shares are issuable upon the exercise of outstanding options, restricted stock units, and deferred restricted stock units for the years ended 2011, 2010 and 2009, respectively. The remaining shares available for issuance under the Plan are 1,200,827, 1,207,890 and 1,269,229 for the years ended 2011, 2010 and 2009, respectively. 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 years ended December 31:



	2011		2010	2009
Compensation costs charged to income:
Stock options	$	—	—	11
ESPP	92		90	90
Restricted stock and deferred restricted stock	559		722	796
Total compensation costs charged to income	$	651	812	897
Proceeds from the exercise of stock options and similar instruments:
Stock options	$	—	180	29
ESPP	525		512	512
Restricted stock and deferred restricted stock	—		—	10
DRSPP	39		—	—
Other	—		—	—
Total proceeds from the exercise of stock options and similar instruments	$	564	692	551
Excess tax benefits realized from share options exercised and stock issuance:
Stock options	$	—	41	3
Restricted stock and deferred restricted stock	7		—	71
Total excess tax benefits realized from share options exercised and stock issuance	$	7	41	74

Stock Options

SJW Corp. applies FASB ASC Topic 718—“Compensation—Stock Compensation,” for all existing and new share-based compensation plans. To estimate the fair value of options at grant date as the basis for the share-based compensation awards, SJW Corp. utilizes the Black-Scholes option-pricing model, which requires the use of subjective assumptions. Further, as required under ASC Topic 718, SJW Corp. estimates forfeitures for the share-based awards that are not expected to vest. Changes in these inputs and assumptions can affect the measure of estimated fair value of our share based compensation and the amount and timing of expense recognition.

Awards in the form of stock options under the Plan allow executives to purchase common shares at a specified price. Options are granted at an exercise price that is not less than the per share market price on the date of the grant. Options vest at a 25% rate on each annual date over four years and are exercisable over a 10 year period.

As of December 31, 2011, all outstanding options were fully vested. A summary of SJW Corp.’s stock option awards as of December 31, 2011, and changes during the year ended December 31, 2011, is presented below:



	Shares	Weighted- Average Exercise Price		Weighted Average Remaining Life in Years	Aggregate Intrinsic Value
Outstanding as of January 1, 2011	85,526	$	18.24	3.73	$	721
Granted	—	—		—	—
Exercised	—	—		—	—
Forfeited or expired	—	—		—	—
Outstanding as of December 31, 2011	85,526	$	18.24	2.73	$	518
Options exercisable at December 31, 2011	85,526	$	18.24	2.73	$	518

The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009, was $0, $133, and $13, respectively.

As of December 31, 2011, there are no unrecognized compensation costs related to stock options.

Restricted Stock and Deferred Restricted Stock

Under SJW Corp.’s Amended and Restated Deferred Restricted Stock Program (the “Deferred Restricted Stock Program”), SJW Corp. granted deferred restricted stock units to non-employee Board members. This program was amended effective January 1, 2008. As a result of that amendment, no new awards of deferred restricted stock units will be made under the Deferred Restricted Stock Program with respect to Board service after December 31, 2007.

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 recognized 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.

On October 4, 2011, a total of 759 shares of common stock were distributed to a key employee of SJW Corp. There was no excess tax benefit realized from this stock issuance.

A summary of SJW Corp.'s restricted and deferred restricted stock awards as of December 31, 2011, and changes during the year ended December 31, 2011, is presented below:



	Units		Weighted Average Grant- Date Fair Value
Outstanding as of January 1, 2011	268,266		$	16.39
Issued	13,631		$	23.70
Exercised	(22,255	)	$	24.64
Forfeited or expired	(11,725	)	$	16.59
Outstanding as of December 31, 2011	247,917		$	16.04
Shares vested as of December 31, 2011	162,649		$	16.09

A summary of the status of SJW Corp.’s nonvested restricted and deferred restricted stock awards as of December 31, 2011, and changes during the year ended December 31, 2011, is presented below:



	Units		Weighted Grant- Date Fair Value
Nonvested as of January 1, 2011	105,479		$	16.82
Granted	13,631		$	23.70
Vested	(22,117	)	$	24.55
Forfeited	(11,725	)	$	16.59
Nonvested as of December 31, 2011	85,268		$	15.95

As of December 31, 2011, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $717. This cost is expected to be recognized over a weighted-average period of 1.45 years.

Dividend Equivalent Rights

Under the 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.

The Deferred Restricted Stock and Deferral Election Programs for non-employee Board members were amended effective January 1, 2008, to allow the DERs’ with respect to the deferred shares to remain in effect only through December 31, 2017. Accordingly, the last DERs’ conversion into deferred restricted stock units will occur on the first business day in January 2018. Previously, no such time limitation was placed in the Deferred Restricted Stock and Deferral Election Program.

As of December 31, 2011, 2010 and 2009, a cumulative of 50,888, 45,731 and 40,318 dividend equivalent rights were converted, since inception, to deferred restricted stock awards, respectively. For the years ended December 31, 2011, 2010 and 2009, $129, $123 and $122 related to dividend equivalent rights 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.

Since its inception, there have been eleven purchase intervals. As of December 31, 2011, 2010 and 2009, a total of 25,712, 25,860 and 24,674 shares, respectively, have been issued under the ESPP. The ESPP has no look-back provisions. As of December 31, 2011, 2010 and 2009, cash received from employees towards the ESPP amounted to $548, $512 and $537, respectively.

After considering estimated employee terminations or withdrawals from the plan before the purchase date, for the years ended December 31, 2011, 2010 and 2009, SJW Corp.’s recorded expenses were $96, $90 and $90 related to the ESPP.

The total unrecognized compensation costs related to the semi-annual offering period that ends January 31, 2012 for the ESPP is approximately $8. This cost is expected to be recognized during the first quarter of 2012.