SC 14D9

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14D-9

(Rule 14d-101)

SOLICITATION/RECOMMENDATION STATEMENT

UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

SJW GROUP

(Name of Subject Company)

SJW GROUP

(Name of Person(s) Filing Statement)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

784305104

(CUSIP Number of Class of Securities)

Suzy Papazian

General Counsel and Corporate Secretary

SJW Group

110 West Taylor Street

San Jose, California 95110

(408) 279-7800

(Name, Address and Telephone Number of Person Authorized to

Receive Notices and Communications on Behalf of the Person(s) Filing Statement)

Copies to:

Leif B. King

Kenton J. King

Pankaj K. Sinha

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, California 94301

(650) 470-4500

☐ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

TABLE OF CONTENTS

		Page
Item 1.	Subject Company Information		1
Item 2.	Identity and Background of Filing Person		1
Item 3.	Past Contacts, Transactions, Negotiations and Agreements		4
Item 4.	The Solicitation or Recommendation		9
Item 5.	Persons/Assets, Retained, Employed, Compensated or Used		21
Item 6.	Interest in Securities of the Subject Company		21
Item 7.	Purposes of the Transaction and Plans or Proposals		21
Item 8.	Additional Information		22
Item 9.	Exhibits		27

Item 1. Subject Company Information

Name and Address

The name of the subject company to which this Solicitation/Recommendation Statement on Schedule 14D-9 (together with any exhibits and annexes attached hereto, this “Statement”) relates is SJW Group, a Delaware corporation (“SJW” or the “Company”). The Company’s principal executive offices are located at 110 West Taylor Street, San Jose, CA. The Company’s telephone number at this address is (408) 279-7800.

Securities

The title of the class of equity securities to which this Statement relates is the Company’s common stock, par value $0.001 per share (the “Shares”). As of June 1, 2018 there were 20,594,486 Shares outstanding. As specified in the preliminary joint proxy statement/prospectus included in the registration statement on Form S-4 filed by the Company on April 25, 2018, at the close of business on March 12, 2018, (i) 65,210 Shares were issuable upon vesting of SJW restricted share units and SJW performance share units, (ii) 7,000 Shares were deliverable pursuant to the terms of vested and deferred SJW restricted share units and (iii) 118,195 deferred SJW common shares, including deferred SJW common shares with dividend equivalent rights convertible into deferred SJW common shares, were deliverable subject to and upon the terms of applicable deferral elections and based upon the foregoing there were approximately 20,692,454 Shares outstanding on a fully diluted basis on June 1, 2018.

Item 2. Identity and Background of Filing Person

Name and Address

The name, business address and business telephone number of the Company, which is the subject company and the person filing this Statement, are set forth in “Item 1. Subject Company Information” above. The Company’s website address is www.sjwgroup.com. The information on the Company’s website should not be considered a part of this Statement or incorporated herein by reference.

Tender Offer

This Statement relates to the unsolicited tender offer by Waltz Acquisition Sub, Inc., a Delaware corporation (the “Offeror”), which, according to the Schedule TO (as defined below), is a wholly owned subsidiary of California Water Service Group, a Delaware corporation (“California Water”), pursuant to which the Offeror has offered to acquire all of the outstanding Shares at a price of $68.25 per Share net to the seller in cash, without interest and less any required withholding taxes. The value of the consideration offered, together with all of the terms and conditions applicable to the tender offer, is referred to in this Statement as the “Offer.” The Offer is subject to the terms and conditions set forth in the Tender Offer Statement on Schedule TO (together with all exhibits thereto, as may be amended from time to time, the “Schedule TO”) filed by the Offeror and California Water with the Securities and Exchange Commission (the “SEC”) on June 7, 2018.

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According to the Schedule TO, the purpose of the Offer is for California Water, through the Offeror, to acquire control of, and ultimately the entire equity interest in, the Company. California Water has stated that if the Offer is consummated, California Water and the Offeror intend to complete a second-step merger (the “California Water Proposed Merger”) with the Company in which the Company will become a wholly owned subsidiary of California Water and all outstanding shares that are not purchased in the Offer (other than shares held by California Water and its subsidiaries or stockholders who perfect their appraisal rights) will be exchanged for an amount in cash per Share equal to the highest price paid per Share pursuant to the Offer. The Offer currently is scheduled to expire at 5:00 p.m., New York City time, on August 3, 2018 (the “Expiration Date”). Offeror has stated that Offeror may, in its sole discretion, extend the Offer from time to time for any reason.

The Schedule TO provides that the Offer is subject to numerous conditions, which include the following, among others:

• the “Minimum Tender Condition”— there being validly tendered and not withdrawn before the expiration of the Offer a number of Shares which, together with the Shares then owned by California Water and its subsidiaries, represents at least a majority of the total number of Shares outstanding on a fully diluted basis;

• the “Termination Condition” — the Amended and Restated Agreement and Plan of Merger, dated as of May 30, 2018, by and among SJW, Hydro Sub, Inc., a Connecticut corporation and wholly owned subsidiary of SJW, and Connecticut Water Service, Inc., a Connecticut corporation (“CTWS”) (such agreement, the “CTWS Merger Agreement”), and the Voting and Support Agreements by and among SJW and each of the stockholders that are a party thereto as referenced in the CTWS Merger Agreement having been validly terminated in accordance with their respective terms;

• the “Section 203 Condition” — the board of directors of the Company (the “Board”) having approved the Offer under Section 203 of the Delaware General Corporation Law (“DGCL”) or the Offeror being satisfied, in its reasonable discretion, that Section 203 of the DGCL is inapplicable to the Offer;

• the “State Regulatory Condition” — the approvals required by the California Public Utilities Commission (“CPUC”) and the Public Utility Commission of Texas (“TPUC”) shall have been obtained; and

• the “HSR Condition” — the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) having expired or been terminated.

In addition, the Offer provides that Offeror will not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (relating to the Offeror’s obligation to pay for or return tendered Shares promptly after termination or expiration of the Offer), pay for any Shares, and may terminate or amend the Offer, if before the Expiration Date any of the Minimum Tender Condition, the Termination Condition, the Section 203 Condition, the State Regulatory Condition, or the HSR Condition shall not have been satisfied, or if, at any time on or after the date of this Offer to Purchase and before the time of payment for such Shares (whether or not any Shares have theretofore been accepted for payment pursuant to the Offer), any of the following conditions exist:

• any Legal Restraint (as defined in the CTWS Merger Agreement) shall be in effect, or any suit, action or other proceeding that has been initiated by a Governmental Entity having jurisdiction over SJW, any Regulated SJW Subsidiary, California Water or any Regulated California Water Subsidiary shall be pending, in which such Governmental Entity seeks to impose, or has imposed, any Legal Restraint, in each case that, prevents, makes illegal or prohibits the consummation of the Offer, the California Water Proposed Merger, or the other transactions contemplated by the Offer to Purchase;

• since the date of the Offer, there shall have occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has had or would reasonably be expected to have a

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Material Adverse Effect with respect to the Company that has not been ameliorated or cured such that a Material Adverse Effect no longer exists; and

• California Water or any of its affiliates has entered into a definitive agreement or announced an agreement in principle with the Company providing for a merger or other similar business combination with the Company or any of its subsidiaries or the purchase of securities or assets of the Company or any of its subsidiaries pursuant to which it is agreed that the Offer will be terminated, or reached any other agreement or understanding pursuant to which it is agreed that the Offer will be terminated.

For the purposes of the conditions to the Offer, the following terms shall have the respective meanings assigned to them below:

(a) “Governmental Entity” means a relevant federal, national, state, provincial or local, whether domestic or foreign, government or any court of competent jurisdiction, administrative agency or regulatory commission or other governmental authority or instrumentality, whether domestic, foreign or supranational.

(b) “Judgment” means any judgment, order or decree of a Governmental Entity or arbitrator.

(c) “Law” means any statute, law (including common law), ordinance, rule, regulation or other binding legal requirement, including the rules and regulations of the NYSE or the NASDAQ Global Select Market, as applicable.

(d) “Legal Restraints” means Law and Judgment, preliminary, temporary or permanent, issued by any court or tribunal of competent jurisdiction.

(e) “Material Adverse Effect” means, with respect to SJW, any fact, circumstance, effect, change, event or development that materially adversely affects the business, properties, financial condition or results of operations of SJW and its Subsidiaries, taken as a whole, excluding any fact, circumstance, effect, change, event or development to the extent that it results from or arises out of (i) changes or conditions generally affecting the industries in which SJW and any of its Subsidiaries operate, except to the extent such change or condition has a materially disproportionate effect on SJW and its Subsidiaries, taken as a whole, relative to others in the industries in which SJW and any of its Subsidiaries operate, (ii) general economic or political conditions or securities, credit, financial or other capital markets conditions, in each case in the United States or any foreign jurisdiction, except to the extent such condition has a materially disproportionate effect on SJW and its Subsidiaries, taken as a whole, relative to others in the industries in which SJW and any of its Subsidiaries operate, (iii) any failure, in and of itself, by SJW to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect), (iv) the commencement of the Offer or the public announcement, pendency or performance of the Offer or any of the other transactions contemplated by this Offer to Purchase, including the impact thereof on the relationships, contractual or otherwise, of SJW or any of its Subsidiaries with employees, labor unions or other similar organizations, customers, suppliers or partners, (v) any change, in and of itself, in the market price or trading volume of SJW’s securities (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect), (vi) any change in applicable Law or United States generally accepted accounting principles (or authoritative interpretation thereof), except to the extent such change has a materially disproportionate effect on SJW and its Subsidiaries, taken as a whole, relative to others in the industries in which SJW and any of its Subsidiaries operate, (vii) geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of the Offer, except to the extent such effect has a materially disproportionate effect on SJW and its

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Subsidiaries, taken as a whole, relative to others in the industries in which SJW and any of its Subsidiaries operate, (viii) the occurrence of natural disasters, force majeure events or weather conditions adverse to the business being carried on by SJW, California Water or any of their respective Subsidiaries, (ix) any proceeding brought or threatened by shareholders of California Water or stockholders of SJW (whether on behalf of SJW, the Offeror, California Water or otherwise) asserting allegations of breach of fiduciary duty relating to the Offer or otherwise arising out of or relating to the Offer, the California Water Proposed Merger and the other transactions contemplated by this Offer to Purchase or violations of securities Laws in connection therewith, (x) changes in interest or currency exchange rates, or (xi) any actions required to be taken pursuant to the express terms of the Offer.

(f) “Person” means any natural person, firm, corporation, partnership, company, limited liability company, trust, joint venture, association, Governmental Entity or other entity.

(g) “Regulated SJW Subsidiary” means San Jose Water Company and SJWTX, Inc. (dba Canyon Lake Water Service Company).

(h) “Regulated California Water Subsidiary” means California Water Service Company, New Mexico Water Service Company, Washington Water Service Company, and Hawaii Water Service Company, Inc.

(i) “Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, more than 50% of the equity interests of which) is owned directly or indirectly by such first Person.

According to the Schedule TO, the principal business address of the Offeror is 1720 North First Street, San Jose, CA 95112 (telephone number (408) 367-8200).

With respect to all information described in this Statement contained in the Schedule TO and any exhibits, amendments or supplements thereto, including information concerning the Offeror, California Water or their respective affiliates, officers or directors, or actions or events with respect to any of them, the Company takes no responsibility for the accuracy or completeness of such information or for any failure by California Water or the Offeror to disclose any events or circumstances that may have occurred and may affect the significance, completeness or accuracy of any such information.

Item 3. Past Contacts, Transactions, Negotiations and Agreements

Except as described in this Statement or as otherwise incorporated herein by reference, including in exhibits (e)(4)-(e)(28) in Item 9 and in the excerpts from the Company’s Definitive Proxy Statement on Schedule 14A, dated and filed with the SEC on March 6, 2018 (the “2018 Proxy Statement”), relating to the Company’s 2018 annual meeting of stockholders, which excerpts are set forth as Exhibits (e)(2) and (e)(3) hereto, as of the date of this Statement there are no material agreements, arrangements or understandings, nor any actual or potential conflicts of interest, between the Company or any of its affiliates, on the one hand, and (i) the Company or any of its executive officers, directors, or affiliates, or (ii) the Offeror or any of its respective executive officers, directors, or affiliates, on the other hand. Exhibits (e)(2) and (e)(3) are incorporated herein by reference and includes the following sections from the 2018 Proxy Statement: “Compensation of Directors” and “Executive Compensation and Related Information” respectively.

Any information contained in the pages from the 2018 Proxy Statement incorporated by reference herein shall be deemed modified or superseded for purposes of this Statement to the extent that any information contained herein modifies or supersedes such information.

Shares Held by Non-Employee Directors and Executive Officers of the Company

As a group, the non-employee directors and executive officers of the Company hold beneficial ownership of an aggregate of approximately 2,313,025 Shares as of June 7, 2018. If the Company’s non-employee directors

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and executive officers were to tender any Shares they own for purchase pursuant to the Offer, then they would receive the same cash consideration per Share on the same terms and conditions as the other stockholders of the Company who tender their Shares. If the non-employee directors and executive officers were to tender all of the approximately 2,313,025 Shares beneficially owned by them (including 2,137,868 Shares held in trusts for which one of the Company’s directors, Robert Van Valer, is the trustee) for purchase pursuant to the Offer and those Shares were purchased by the Offeror for $68.25 per Share, then the non-employee directors and executive officers (or the trusts for which Mr. Van Valer serves as trustee) would collectively receive an aggregate amount of approximately $157,863,956 in cash. To the knowledge of the Company, none of the Company’s non-employee directors or executive officers currently intends to tender any of the Shares beneficially owned by them pursuant to the Offer.

Arrangements with Current Non-Employee Directors of the Company

Set forth below is a discussion of the treatment in connection with the Offer of equity incentive compensation awards held by the Company’s non-employee directors. For purposes of valuing the amount of benefits that could be realized by the non-employee directors in respect of such awards in connection with the Offer, the discussion below assumes that the non-employee directors will receive, with respect to the Shares subject to such awards, the same $68.25 per Share consideration being offered to all other stockholders of the Company in connection with the Offer.

Restricted Stock Units Under the Formulaic Equity Award Program

The Company has implemented a Formulaic Equity Award Program for non-employee directors under the Company’s Long Term Incentive Plan (the “LTIP”) which provides that at the close of business on the date of each annual stockholders meeting, each individual who is elected or re-elected to serve as a non-employee director will automatically be granted restricted stock units covering that number of Shares (rounded up to the next whole Share) determined by dividing the Applicable Annual Amount by the fair market value per Share on such date. The Applicable Annual Amount for 2018 was $60,000. Each restricted unit awarded entitles the non-employee director to one Share on the applicable vesting date of that unit. Each restricted stock unit award will vest in full upon the non-employee director’s continuation in Board service through the day immediately preceding the date of the first annual stockholder meeting following the annual stockholder meeting at which that restricted stock unit award was made, subject to accelerated vesting on a change in control of the Company.

Pursuant to this program, on April 25, 2018, each non-employee director elected at the 2018 annual stockholder meeting received an award of restricted stock units covering 1,055 Shares. The restricted stock units will vest in full upon the non-employee director’s continuation in Board service through the day immediately preceding the date of the Company’s 2019 annual stockholder meeting, subject to accelerated vesting on a change in control of the Company.

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The Offer, if consummated according to its terms without a waiver of the Minimum Tender Condition, would constitute a change in control of the Company as defined in the LTIP under which the awards were granted and the vesting of such awards would be accelerated. The following table summarizes, with respect to each non-employee director, the estimated cash value, based on the Offer price of $68.25 per Share, in respect of the unvested restricted stock units as of June 7, 2018, if the vesting of such restricted stock units were to be accelerated in connection with the Offer.

	SJW Restricted Stock Units
Name	Shares     (#)		Value     ($)
Non-Employee Directors
Katharine Armstrong		1,055	$	72,004
Walter J. Bishop		1,055	$	72,004
Douglas R. King		1,055	$	72,004
Gregory P. Landis		1,055	$	72,004
Debra C. Man		1,055	$	72,004
Daniel B. More		1,055	$	72,004
Robert A. Van Valer		1,055	$	72,004

Deferred Restricted Stock Program

Messrs. King and Van Valer hold awards of deferred stock which are fully vested and will be issued from the LTIP on a distribution commencement date tied to the director’s cessation of Board service. A distribution of the deferred stock would commence if the director’s service is terminated in connection with the Offer.

The following table summarizes the estimated cash value, based on the Offer price of $68.25 per Share, of the deferred shares held by Messrs. King and Van Valer as of June 7, 2018. None of the Company’s other non-employee directors hold deferred stock.

	SJW Deferred Stock
	Shares (#)		Value ($)
Non-Employee Directors
Douglas R. King		9,294	$	634,316
Robert A. Van Valer		2,705	$	184,616

Pension Arrangements

Mr. King participates in the Director Pension Plan under which Mr. King will receive a benefit equal to one half of the aggregate annual retainer for service on the Board and the boards of directors of San Jose Water Company and SJW Land Company, following his cessation of service as a director, payable for four years with the same frequency as the ongoing retainers. In the event Mr. King’s service with the Company is terminated in connection with the Offer, Mr. King’s benefits under the Director Pension Plan would commence. If Mr. King’s service was terminated on June 7, 2018, he would be entitled to receive a benefit equal to $25,000 annually over the four years following such termination.

Arrangements with Current Executive Officers of the Company

Equity-Based Awards Held by Executive Officers of the Company

Set forth below is a discussion of the treatment in connection with the Offer of equity incentive compensation awards held by the Company’s executive officers. For purposes of valuing the amount of benefits that could be realized by the executive officers in respect of such awards in connection with the Offer, the

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discussion below assumes that the executive officers will receive, with respect to the Shares subject to such awards, the same $68.25 per Share consideration being offered to all other stockholders of the Company in connection with the Offer.

The Company has granted service-based and performance-based restricted stock units under the LTIP to its executive officers. The service-based restricted stock unit awards granted to the executive officers vest in full on a change in control if the awards are not assumed, replaced or otherwise continued. If the awards are assumed, replaced or otherwise continued following a change in control, then the awards will continue to vest over the service period subject to vesting in full on a qualifying termination following the change in control.

The performance-based restricted stock unit awards granted to the executive officers will vest with respect to the target number of Shares on a change in control if the awards are not assumed, replaced or otherwise continued. If the awards are assumed, replaced or otherwise continued following a change in control, then the awards will continue to vest with respect to the target number of Shares or other securities into which the awards are converted over the performance period subject to vesting in full on a qualifying termination following the change in control.

The Offer, if consummated according to its terms without a waiver of the Minimum Tender Condition, would constitute a change in control of the Company as defined in the LTIP under which the awards were granted. The following table summarizes, with respect to each executive officer of the Company, the estimated cash value, based on the Offer price of $68.25 per Share, in respect of unvested restricted stock units if the vesting of such restricted stock units were to be accelerated in connection with the Offer as of June 7, 2018.

	SJW Restricted Stock Units		Total Value of SJW Restricted Stock Units (#)
	Shares (#)		Value ($)
Executive Officers
Eric W. Thornburg		26,976	$	1,841,112
Andrew R. Gere		5,182	$	353,672
Palle L. Jensen		4,817	$	328,760
James P. Lynch		5,431	$	370,666
Suzy Papazian		4,657	$	317,840
Andrew F. Walters		4,686	$	319,820

No Other Equity-Based Awards

Other than the service-based and performance-based restricted stock units described above, there are no stock options or other equity or equity-based awards covering Shares held by the Company’s executive officers.

Employment Agreements

None of the executive officers are a party to an employment agreement that provides for payment or benefits in connection with a change in control or termination of employment following a change in control.

Executive Severance Plan

Executive officers of the Company who are serving in such capacity at the time of a change in control or ownership of the Company may become entitled to severance benefits under the Company’s Executive Severance Plan if (a) his or her employment is terminated by the Company for any reason other than good cause (as defined in such plan) after the Company enters into an agreement to effect the change in control or ownership but before such agreement is terminated or prior to the expiration of a 24-month period following the effective

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date of the change in control or ownership, or (b) he or she resigns for good reason (as defined in such plan) within the 24-month period following the effective date of the change in control or ownership. If an executive officer experiences a qualifying termination, such officer will be entitled to (i) a cash severance benefit consisting of three times the annual base salary and target annual cash incentive compensation (as in effect for the fiscal year of such cessation of employee status or, if higher, immediately before the change in control or ownership), and for Mr. Thornburg, an amount equal to the annual bonus for the year of termination based on actual performance, pro-rated for the number of days of employment during the year of termination, (ii) he or she will be reimbursed for the cost of COBRA continuation coverage under the Company’s group health care plans for himself or herself and his or her spouse and eligible dependents until the earlier of (x) the date of the last annual installment of his or her cash severance benefit or (y) the first date on which the executive officer is covered under another employer’s health benefit program without exclusion for any pre-existing medical condition, and (iii) to the extent such executive officer participates in the Executive Supplemental Retirement Plan (the “SERP”), he or she will be deemed to be three years older and be given three additional years of service for purposes of calculating his or her pension benefit under the SERP (the “Enhanced Pension Benefit”). Under the Executive Severance Plan, equity awards will be treated in accordance with the applicable award agreement. As discussed above, in the section entitled “Equity-Based Awards Held by Executive Officers of the Company,” the outstanding equity awards held by the executive officers will immediately vest and become exercisable upon a change in control if the awards are not assumed, replaced or otherwise continued or a qualifying termination thereafter.

If an officer qualifies for benefits under the Executive Severance Plan and any payment made in connection with a change in control or the subsequent termination of the officer’s employment becomes subject to an excise tax under Section 4999 of the Internal Revenue Code of 1986 (the “Excise Tax”), then such payment or benefit will be grossed-up (except for Mr. Thornburg) to ensure that such officer does not incur any out-of-pocket cost with respect to such Excise Tax, and such officer will accordingly receive the same net after-tax benefit he or she would have received had no Excise Tax been imposed.

Retirement and Pension Arrangements

Executive officers are eligible to receive retirement benefits under San Jose Water Company’s Retirement Plan, a tax-qualified defined benefit plan covering a broad spectrum of the Company’s employees (the “Retirement Plan”). Messrs. Jensen and Gere and Ms. Papazian also participate in the SERP and will receive a monthly benefit that supplements the pension they earn under the Retirement Plan. Messrs. Jensen and Gere and Ms. Papazian are each fully vested in his or her SERP benefit.

Messrs. Thornburg, Lynch and Walters participate in the Company’s Cash Balance Executive Supplemental Retirement Plan (the “Cash Balance SERP”), in which they each receive compensation credits and interest credits on a quarterly basis to the book account maintained for participants under the plan. Accrued benefits under the Cash Balance SERP are payable in a lump sum on the first day of the seventh month following the participant’s separation from service. Messrs. Lynch and Walters are fully vested in their Cash Balance SERP benefit. As of June 7, 2018, Mr. Thornburg had not vested in his accrued benefit under such plan. If the Offer is consummated, the vesting of the benefit under the Cash Balance SERP for Mr. Thornburg will accelerate. The actuarial present value of the accumulated benefit under the Cash Balance SERP for Mr. Thornburg, as of June 7, 2018, is $103,464, which takes into account assumptions described in the 2018 Proxy Statement and Note 10 to the Company’s consolidated financial statements included in its annual report on Form 10-K for the 2017 fiscal year.

Indemnification of Directors and Officers; Limitation on Liability of Directors

Section 145 of the DGCL authorizes a court to award or a corporation’s board of directors to grant indemnification to directors and officers in terms sufficiently broad to permit the indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act.

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Article V of the Company’s bylaws provides mandatory indemnification, to the full extent permitted by DGCL, the officer, directors and other persons, in specified legal proceedings involving the Company or such person. Article XI of the Company’s certificate of incorporation provides that, subject to DGCL, its directors will not be personally liable for monetary damages for breach of the director’s fiduciary duty as director to the Company and its stockholders.

This provision in the certificate of incorporation does not eliminate a director’s fiduciary duty, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to the Company or its stockholders for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock purchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. In connection with the Reincorporation, the Board approved a new form of indemnification agreement to be entered into by the officers and directors and the Company. In addition, the form of indemnification agreement approved by the Board clarifies and enhances the rights and obligations of the Company and the applicable indemnitee with respect to indemnification and advancement of expenses as provided in the Company’s bylaws. A copy of the form of Indemnification Agreement is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 15, 2016. The Company also maintains insurance policies that insure its officers and directors against certain liabilities.

Arrangements with California Water

On May 18, 2018, the Company and California Water entered into a confidentiality agreement (the “Confidentiality Agreement”) in connection with a demand by California Water to inspect certain stockholder materials of the Company pursuant to Section 220 of the DGCL. Pursuant to the Confidentiality Agreement, the Company agreed to make available to California Water certain materials in response to such stockholder records demand, and California Water agreed, among other things, to keep such materials and any information contained in such materials confidential and to use such information solely for the purpose stated in its stockholder records demand. This summary is qualified in its entirety by reference to the full text of the Confidentiality Agreement, a copy of which has been filed as Exhibit (e)(1) hereto and is incorporated herein by reference.

Item 4. The Solicitation or Recommendation

Solicitation/Recommendation

The Board has reviewed the Offer after consulting with the Company’s management and financial and legal advisors. After careful consideration, the Board has determined that the Offer does not constitute a Superior SJW Proposal (as defined in the Merger Agreement) and is not in the best interests of SJW and its stockholders and recommends that SJW’s stockholders reject the Offer and not tender their Shares into the Offer. Accordingly, and for the reasons described in more detail below, the Board of Directors of the Company recommends that you REJECT the Offer and NOT TENDER your Shares pursuant to the Offer.

If you have tendered any of your Shares, you can withdraw them. For assistance in withdrawing your Shares, you can contact your broker or the Company’s information agent, Georgeson LLC (“Georgeson”), at the contact information below:

Georgeson LLC

1290 Avenue of the Americas, 9th Floor

New York, New York 10104

Stockholders, Banks and Brokers May Call Toll-Free: (866) 357-4029

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A copy of a letter to stockholders communicating the Board’s recommendation and a form of press release announcing such recommendation are set forth as Exhibits (a)(3) and (a)(4) hereto, respectively, and are incorporated herein by reference.

Background of the Offer; Reasons for Recommendation

Background

From time to time, the Board and SJW senior management have reviewed and evaluated various strategic alternatives available to SJW. Among the strategic alternatives evaluated were (i) maintaining SJW as an independent public company, including making strategic acquisitions, (ii) a business combination with a strategic partner or (iii) a whole-company sale of SJW. Except as otherwise described below, in recent years none of the matters evaluated in connection with any of the strategic alternatives that involved a transaction with a third party (other than strategic acquisitions by SJW and the planned Merger of Equals (defined below)) has progressed beyond the initial stages. In connection with review of such a possible transaction, the Board and SJW senior management from time to time sought the advice of J.P. Morgan Securities LLC (“J.P. Morgan”), SJW’s financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), SJW’s outside legal counsel.

On September 12, 2016, a representative of Company A, a large water utility company, presented Mr. W. Richard Roth, then-chairman, chief executive officer and president of SJW, with an illustrative example of a transaction pursuant to which Company A would acquire all outstanding SJW shares at $55.00 per share, reflecting a 30% premium to SJW’s closing price on September 9, 2016 (the “Company A indication”).

On September 19, 2016, the finance committee of the Board (the “SJW finance committee”) held a meeting with members of SJW management in attendance. During the meeting, among other things, Mr. Roth described the September 12, 2016 meeting and the Company A indication, which the SJW finance committee reviewed and discussed along with forecasts of SJW’s standalone plan.

On October 26, 2016, the Board held a meeting with members of SJW management in attendance and representatives of Skadden and J.P. Morgan in attendance for a portion of the meeting. During the meeting, the Board discussed the Company A indication, SJW’s standalone plan and another potential strategic combination. Following such discussion, as well as consideration of financial advice from representatives of J.P. Morgan and legal advice from representatives of Skadden, the Board concluded not to proceed with discussions with Company A for various reasons, including, without limitation, SJW’s analysis of valuation under multiple methodologies, including by comparison to alternative transactions and SJW’s standalone long-term plan at the time, execution and regulatory risks, operational and timing considerations and ability to engage in a strategic or sale transaction at a later date that would likely, in the opinion of the Board, better maximize shareholder value. The Board instructed SJW’s management to inform Company A that SJW was not interested in pursuing a sale transaction on the terms proposed. At this meeting, the Board also determined to engage J.P. Morgan as SJW’s financial advisor and to delegate to the SJW finance committee certain additional powers and responsibilities regarding consideration of potential transactions, including to engage additional advisors on behalf of SJW, to enter into discussions or negotiations and to make recommendations to the Board in connection with such potential transactions.

On November 11, 2016, the SJW finance committee held a meeting with members of SJW management and a representative of Skadden in attendance. During the meeting, among other things, the SJW finance committee determined, as previously recommended by the Board, to inform Company A that the Board was not interested at the time in pursuing a potential transaction with Company A on the terms described in the Company A indication.

On December 2, 2016, Mr. W. Richard Roth held a call with the representative of Company A and conveyed that the Board was not interested at the time in pursuing a potential transaction with Company A on the terms described in the Company A indication.

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Thereafter, during the first half of 2017, members of the Board received various contacts from representatives of Company B, a large water utility company, Company C, a large electric utility company, Company D, a large infrastructure fund, and Company E, a large infrastructure fund, in each case indicating general interest in acquiring SJW if it were to engage in a sale process and without providing specific transaction terms. Following such indications of interest, the Board continued to believe that SJW’s standalone prospects would provide superior value to SJW stockholders and that significant third-party interest in acquiring SJW would remain present as SJW’s management continued to implement its long-term strategic plan.

On April 11, 2017, a representative of Company A presented Mr. Robert A. Van Valer, lead independent director of the Board, and Mr. Roth with a revised illustrative example of a transaction pursuant to which Company A would acquire all outstanding SJW shares at $64.90 per share, reflecting a 35% premium to its closing price on April 7, 2017 (the “revised Company A indication”). The representative of Company A noted that the revised Company A indication did not constitute an offer but that Company A would prepare a more formal proposal if the Board was interested in pursuing further discussions.

On May 22, 2017, the SJW finance committee held a meeting with representatives of Skadden in attendance. During the meeting, which was the first regularly scheduled meeting of the SJW finance committee following receipt of the revised Company A indication, the SJW finance committee discussed the terms of the revised Company A indication as well as SJW’s standalone plan.

On May 24, 2017, the Board held a meeting with members of SJW management and a representative of Skadden in attendance. During the meeting, which was the first meeting of the full Board following receipt of the revised Company A indication, Messrs. Van Valer and Roth described the April 11, 2017 meeting and the conversation resulting in the presentation of the revised Company A indication. The Board discussed the revised Company A indication, including as compared to the initial Company A indication, as well as other potential alternative transactions and SJW’s standalone plan, following which the Board determined to instruct Mr. Daniel B. More, chairman of the SJW finance committee, to inform Company A that SJW was not for sale at the time but that the Board would consider the revised Company A indication in due course.

On May 30, 2017, Mr. More held a call with the representative of Company A, introducing himself as chairman of the SJW finance committee and noting that the Board had determined that communications regarding potential strategic initiatives should be directed to him. During the call, Mr. More noted that SJW was not for sale at the time but that the Board would consider the revised Company A indication in due course.

On June 5, 2017, the SJW finance committee held a meeting to discuss the revised Company A indication. At the meeting, the SJW finance committee determined to authorize J.P. Morgan to prepare an analysis of the revised Company A indication for presentation at the next meeting of the Board.

On June 26, 2017, the Board held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. During the meeting, Mr. More updated the Board on recent meetings of the SJW finance committee and conversations with Company A. Following a financial presentation by representatives of J.P. Morgan and a legal presentation by representatives of Skadden, the Board considered the revised Company A indication as well as SJW’s standalone plan, executive succession plan and other strategic priorities and determined that pursing SJW’s standalone plan was a more attractive alternative for stockholders relative to the revised Company A indication. Mr. More thereafter informed the representative of Company A that SJW was not interested in pursuing a sale transaction on the terms proposed, to which Company A expressed continued interest in acquiring SJW if it were to engage in a sale process.

In August 2017, a representative of California Water contacted Mr. W. Richard Roth, then-chairman, chief executive officer and president of SJW, regarding a potential transaction, to which Mr. Roth responded that any inquiries regarding a potential transaction should be directed to Mr. Daniel B. More, chairman of the SJW finance committee.

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On September 18, 2017, a representative of California Water contacted Mr. More, to inform Mr. More that he would be delivering a letter from California Water’s chief executive officer expressing interest in a business combination with SJW. California Water’s letter, dated the same day, proposed a cash, stock or combination of cash-and-stock transaction at a 25% to 30% premium to SJW’s then-current stock price (the “California Water letter”). While the California Water letter did not specify a price per share of SJW common stock, the 25%-to-30% premium offered implied a range of $70.43 to $73.24 per share based on SJW’s closing price on September 15, 2017, the prior business day. Following receipt, Mr. More thereafter informed the representative that SJW had retained legal counsel and a financial advisor and would review the California Water letter.

On September 21, 2017, the Board held a meeting with members of SJW management in attendance and a representative of Skadden in attendance for a portion of the meeting. During the meeting, the Board discussed the California Water letter and requested that J.P. Morgan prepare a financial analysis of the financial terms proposed in the California Water letter for consideration by the SJW finance committee.

On September 28, 2017, SJW announced that the Board had appointed Eric W. Thornburg to serve as president and chief executive officer of SJW, effective as of November 6, 2017.

On October 19, 2017, the SJW finance committee held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. During the meeting, representatives of J.P. Morgan presented a financial analysis of the proposed financial terms of the transaction proposed by California Water. Members of the SJW finance committee proceeded to engage in a discussion of the terms proposed in the California Water letter, SJW’s standalone prospects and other strategic alternatives, the likelihood that SJW could obtain comparable or superior proposals in the future and the desirability of providing SJW’s new chief executive officer with an opportunity to develop and present his strategic vision to the Board, following which the SJW finance committee recommended that the full Board reject the non-binding indication of interest included in the California Water letter.

On October 25, 2017, the Board held a meeting with members of SJW management in attendance and representatives of J.P. Morgan and Skadden in attendance for a portion of the meeting. During the meeting, J.P. Morgan presented a financial analysis regarding the financial terms proposed in the California Water letter and Skadden made a legal presentation regarding certain other terms of the California Water letter, which the Board discussed, along with the recommendation of the SJW finance committee. Following consideration of the terms of the California Water letter, a discussion of SJW’s estimated valuation under multiple methodologies, a discussion of alternative transactions that might be available to SJW as well as SJW’s standalone long-term plan and the related risks under each scenario, and a discussion of the desirability of providing SJW’s new chief executive officer with an opportunity to develop and present his strategic vision, the Board determined to reject the non-binding indication of interest included in the California Water letter and to independently consider SJW’s strategic alternatives, standalone plan and growth initiatives. The next day, Mr. More informed a representative of California Water that the Board had carefully considered its non-binding indication of interest and had unanimously decided that it was not in the best interest of SJW’s stockholders.

In November 2017, in consultation with and pursuant to authorization from the Board, a representative of SJW contacted a representative of CTWS to propose that the parties explore a merger of equals transaction. SJW and CTWS had previously engaged in in-person and telephonic discussions between August 2016 through January 2017 regarding various matters relating to a potential transaction. Following meetings of the CTWS board of directors to discuss the merits and potential risks and benefits of a return communication, CTWS informed SJW that its board of directors would be open to reviewing a proposal from SJW regarding a merger of equals transaction and would give such a proposal careful consideration.

From November 2017 through March 2018, SJW and CTWS engaged in in-person and telephonic discussions from time to time about various matters relating to a potential transaction and, with assistance from their respective financial advisors and legal counsel, negotiated the commercial and legal terms of a potential

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transaction and related documentation, including a draft of the CTWS Merger Agreement. Throughout this time period, the Board, the SJW finance committee and members of SJW management evaluated the potential benefits and risks of a merger of equals transaction with CTWS and consulted with representatives of J.P. Morgan and Skadden.

On March 14, 2018, the Board held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. Following a legal presentation by representatives of Skadden and a financial presentation by representatives of J.P. Morgan, the Board unanimously declared advisable and in the best interests of SJW and its stockholders and determined to approve the CTWS Merger Agreement and other transactions and agreements related thereto.

On the evening of March 14, 2018, SJW, CTWS and a wholly owned subsidiary of SJW executed the CTWS Merger Agreement, and certain stockholders of SJW beneficially owning, in the aggregate, approximately 16% of the outstanding shares of SJW common stock executed voting and support agreements, pursuant to which, subject to certain conditions, such SJW stockholders agreed to vote shares controlled by them in favor of the matters to be submitted to SJW stockholders at the special meeting of SJW stockholders (the “SJW Special Meeting”) to consider certain proposals related to the planned merger of equals between SJW and CTWS (the “Merger of Equals”). The following morning, SJW and CTWS issued a joint press release announcing the Merger of Equals and the execution of the CTWS Merger Agreement.

On April 4, 2018, SJW received an unsolicited non-binding indication of interest from California Water with respect to a potential proposal to acquire all of the issued and outstanding shares of SJW in an all-cash transaction for $68.25 per share (the “April 4 California Water indication”). Mr. Thornburg promptly informed the Board, members of SJW management, Skadden and J.P. Morgan of the receipt of the April 4 California Water indication.

Also on April 4, 2018, the Board held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. At the meeting, the Board was presented with the April 4 California Water indication and a representative of Skadden then reviewed and discussed with the members of the Board the provisions of the CTWS Merger Agreement setting forth SJW’s obligations with respect to the April 4 California Water indication and provided legal advice, including regarding the directors’ fiduciary duties in connection with considering the April 4 California Water indication, and the Board instructed J.P. Morgan to prepare a financial analysis of the all-cash transaction described in the April 4 California Water indication. Following the meeting, in accordance with the terms of the CTWS Merger Agreement, SJW promptly notified CTWS of the receipt of the April 4 California Water indication and that the Board planned to review and consider the April 4 California Water indication in consultation with its legal counsel and financial advisor.

On April 13, 2018, the Board held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. Following a careful and thorough review in consultation with SJW’s management and legal and financial advisors, the Board voted unanimously to reject the April 4 California Water indication. The Board determined that the April 4 California Water indication neither constituted nor was reasonably likely to lead to a superior proposal as defined in the CTWS Merger Agreement with CTWS. In reaching this determination, the Board concluded that the all-cash transaction described in the April 4 California Water indication would not permit SJW stockholders the opportunity to share in the benefits expected from being shareholders of the combined company with CTWS. The Board believes that the planned Merger of Equals will result in SJW stockholders having the ability to realize greater long-term value than in an acquisition of SJW by California Water. The opportunity presented by the Merger of Equals includes the long-term benefits of increased scale, enhanced financial strength and geographic diversity; expected continued payment of consistently growing dividends over time; anticipated higher future growth profile and associated share price appreciation; the tax-free nature of the Merger of Equals; and significant earnings accretion – all of which the Board believes are unique to the planned Merger of Equals. Moreover, the Board determined that there is a significant risk that the all-cash transaction described in the April 4 California Water indication would not close

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in a reasonable period of time, if at all, due to the risks presented by the substantial amount of financing that the proposed all-cash transaction would require and the uncommitted nature of California Water’s sources of financing and the potentially protracted regulatory review. The Board determined that such regulatory review by the CPUC could take as long as 18 months based upon the advice of SJW’s California regulatory counsel and its belief that the CPUC could take even longer to review a potential acquisition of SJW than it did in the case of California Water’s acquisition of Dominguez Services Corporation, which was less than 20% of the current size of SJW, where it took 15 months to receive CPUC approval after the initial application was filed.

In addition, at the April 13, 2018 meeting, the Board determined that the non-binding nature of the April 4 California Water indication means it is subject to significant contingencies, including, among other things, performance of due diligence by California Water and negotiation of binding documentation. The Board’s unanimous decision to reject the April 4 California Water indication was made after careful consideration thereof in consultation with SJW’s management, legal advisors and financial advisors. The Board also unanimously reaffirmed its recommendation that SJW stockholders vote “FOR” the proposal to approve the issuance of shares of SJW common stock to CTWS shareholders pursuant to the Merger of Equals, for the reasons that it initially approved such recommendation, including, among others, that: the Merger of Equals is expected to result in mid- to-high single-digit percentage accretion on an earnings per share basis to both companies by the second full year following completion of the Merger of Equals; SJW stockholders are expected to continue to own approximately 60% of the combined company; the Merger of Equals is expected to offer greater financial flexibility to grow the business through increased investments and to compete more effectively across a national footprint and in a fragmented industry; the belief that the combined company will be able to continue and further SJW’s historic practice of paying robust and stable quarterly dividends to stockholders; the expectation that the combined company would maintain SJW’s strong credit profile, which would enable a share repurchase program of up to $100 million; and the belief that all required regulatory approvals are capable of being obtained during the fourth quarter of 2018.

On April 17, 2018, in response to a letter received the earlier that day by SJW, a representative of SJW informed a representative of California Water that SJW would respond to the April 4 California Water indication “in due course.”

On April 25, 2018, Mr. Thornburg delivered a letter to the chief executive officer and president and the chairman of the board of directors of California Water, informing them that the Board had unanimously determined to reject the April 4 California Water indication.

Also on April 25, 2018, SJW filed with the SEC a preliminary proxy (the “Preliminary Proxy”) in connection with SJW’s solicitation of proxies to be used at the SJW Special Meeting. The Preliminary Proxy disclosed that on April 4, 2018, SJW received an unsolicited non-binding indication of interest from “Company X,” described as a third-party strategic acquiror, with respect to a potential proposal to acquire all of the issued and outstanding shares of SJW in an all-cash transaction for $68.25 per share. The Preliminary Proxy also disclosed that on April 13, 2018, the Board, following a careful and thorough review consistent with its fiduciary duties, in consultation with SJW’s management and legal and financial advisors, voted unanimously to reject Company X’s non-binding indication of interest, which the Board determined neither constituted nor was reasonably likely to lead to a superior proposal as defined in the CTWS Merger Agreement. “Company X” was the name used in the Preliminary Proxy to refer to California Water.

On April 26, 2018, California Water issued a press release confirming its interest in acquiring SJW for $68.25 per share in an all-cash transaction, which included the text of the letter sent to SJW the same day reiterating California Water’s interest in such a transaction with SJW. Later that day, SJW issued a press release confirming its rejection of the April 4 California Water indication and reiterating its commitment to pursue its existing CTWS Merger Agreement with CTWS. SJW’s press release included the text of the rejection letter sent to California Water the previous day explaining why the planned Merger of Equals is superior to a potential acquisition of SJW by California Water for the shareholders as well as employees, customers and communities of both SJW and CTWS.

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On May 2, 2018, California Water filed with the SEC a preliminary proxy in connection with California Water’s solicitation of proxies to be used at the SJW Special Meeting, recommending that the SJW stockholders vote against the proposals related to the planned Merger of Equals. Later that day, California Water issued a press release announcing the filing of its preliminary proxy and reiterating California Water’s interest in acquiring SJW for $68.25 per share in an all-cash transaction.

Also on May 2, 2018, SJW issued a press release reaffirming its intention to recommend that the SJW stockholders vote for the proposals related to the planned Merger of Equals at the SJW Special Meeting and explaining why the planned Merger of Equals is superior to a potential acquisition of SJW by California Water for the shareholders as well as employees, customers and communities of both SJW and CTWS.

Following such announcement, each of California Water and SJW have issued a number of communications and press releases and engaged in other activities related to the planned Merger of Equals and California Water’s proxy solicitation campaign in opposition, but during such time SJW and California Water have not engaged in any direct discussions or negotiations regarding the April 4 California Water indication. The Board has not changed its determination that the April 4 California Water indication neither constitutes nor is reasonably likely to lead to a superior proposal.

Also on May 10, 2018, California Water, as an owner of shares of SJW common stock, sent a demand letter to SJW to inspect and make copies of certain books, records and documents of SJW pursuant to DGCL Section 220.

On May 15, 2018, California Water filed with the SEC an amended preliminary proxy statement.

On May 18, 2018, SJW and California Water entered into a confidentiality agreement regarding California Water’s access to certain materials in response to requests in its May 10, 2018 demand letter.

On May 26, 2018, a representative of J.P. Morgan received an unsolicited call from a representative of Lazard Frères & Co. LLC (“Lazard”), who indicated that Lazard represented an unnamed “strategic” company that had noted its potential interest in an acquisition of SJW if the Board were to pursue other strategic alternatives in the event the planned Merger of Equals did not occur and believed that, in such case, it could provide superior value as compared to other potential acquirers.

Also, in response to concerns expressed by certain CTWS stakeholders since the planned Merger of Equals was announced, during the second-half of May 2018, at the direction of each of the Board and the CTWS board of directors, representatives of SJW and CTWS discussed and negotiated the terms of an amendment to the CTWS Merger Agreement that would allow CTWS to actively solicit alternative acquisition proposals for an alternative merger, acquisition or other strategic transaction involving CTWS through July 14, 2018. On May 30, 2018, each of the Board and the CTWS board of directors approved of, and later that day, SJW and CTWS executed, an amended and restated CTWS Merger Agreement.

On May 31, 2018, California Water filed with the SEC a definitive proxy statement and issued a press release announcing that California Water had sent a letter reiterating its interest in acquiring SJW for $68.25 per share in an all-cash transaction and white proxy card to SJW stockholders.

Also on May 31, 2018, SJW issued a press release reaffirming the Board’ support of the Merger of Equals and reiterating that the Board had previously considered the April 4 California Water indication and determined that it was neither a superior proposal nor reasonably likely to lead to a superior proposal.

On June 7, 2018, California Water filed with the SEC a Schedule TO and issued a press release announcing that it had commenced the Offer.

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Later on June 7, 2018, SJW issued a press release noting that the Board will review the Offer and intends to advise SJW stockholders of its formal position regarding the Offer within 10 business days by making available to stockholders and filing with the SEC a solicitation/recommendation statement on Schedule 14D-9 and advised its stockholders to take no action at the time in response to the Offer.

Also on June 7, 2018, the Board held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. The Board reviewed and discussed the terms of the Offer with management and its advisors. Following discussion, the Board determined to reconvene at a later date to consider the Offer further and to receive additional advice from management and its advisors.

On June 8, 2018, the Connecticut Public Utilities Regulatory Authority (the “PURA”) issued a draft decision finding that the Merger of Equals is not ripe for review by PURA until after the completion of the CTWS solicitation period and dismissing the joint application filed by CTWS and SJW without prejudice. In the event that such draft decision becomes final, CTWS and SJW would be permitted to refile their joint application after that solicitation period ends on July 14, 2018.

By letter dated June 8, 2018, the General Counsel of the CPUC directed San Jose Water Company to submit an application for approval of the Merger of Equals by the CPUC. On June 13, 2018, SJW and San Jose Water Company responded to this letter through counsel. In their response, SJW and San Jose Water Company stated their belief that CPUC approval is not required because, among other reasons, no person is acquiring “control” over the San Jose Water Company as a result of the Merger of Equals. As of the date of this Statement, the matter remains ongoing.

On June 14, 2018, the Board held a meeting with members of SJW management and representatives of J.P. Morgan and Skadden in attendance. Following a financial presentation by representatives of J.P. Morgan and a legal presentation by representatives of Skadden, the Board discussed and considered the terms of the Offer with management and SJW’s advisors. Thereafter, the Board unanimously determined that the Offer does not constitute a Superior SJW Proposal (as defined in the Merger Agreement) and is not in the best interests of SJW and its stockholders, recommended that SJW’s stockholders reject the Offer and not tender their Shares into the Offer and reaffirmed the Board’s recommendation in favor of the Merger of Equals and the transactions contemplated by the CTWS Merger Agreement.

On the morning of June 15, 2018, SJW issued a press release announcing the Board’s recommendation that stockholders reject the Offer and not tender their Shares into the Offer and reaffirming SJW’s commitment to the Merger of Equals.

Reasons for the Recommendation

In reaching the conclusions and in making the recommendation described above, the Board considered, in consultation with the Company’s financial and legal advisors, numerous factors, including but not limited to those described below.

The Offer neither constitutes nor is reasonably likely to lead to a SJW Superior Proposal under the Company’s existing CTWS Merger Agreement.

The Board determined that the Offer neither constitutes nor is reasonably likely to lead to a SJW Superior Proposal as defined in the CTWS Merger Agreement. In reaching this determination, the Board concluded that the Offer would not permit SJW stockholders the opportunity to share in the benefits expected from being shareholders of the combined company with CTWS. The Board believes that the Merger of Equals will result in SJW stockholders having the ability to realize greater long-term value than in an all-cash acquisition of SJW by California Water.

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The opportunity presented by the Merger of Equals includes the long-term benefits of increased scale, enhanced financial strength and geographic diversity; expected continued payment of dividends over time; anticipated higher future growth profile and associated share price appreciation; the tax-free nature of the Merger of Equals; and significant earnings accretion – all of which the Board believes are unique to the planned Merger of Equals with CTWS. In this regard, the Board noted that the Offer does not afford stockholders any of these benefits, and may have significant tax consequences for certain stockholders.

Moreover, the Board determined that there is a significant risk that the Offer would not close in a reasonable period of time, if at all, due to the risks presented by the substantial amount of financing that the Offer would require and the uncommitted nature of California Water’s sources of financing and the potentially protracted regulatory review. The Board further noted its belief that such regulatory review by the CPUC could take as long as 18 months based upon the advice of California regulatory counsel and its belief that the CPUC could take even longer to review a potential acquisition of SJW than it did in the case of California Water’s acquisition of Dominguez Services Corporation, which was less than 20% of the current size of SJW, where it took 15 months to receive CPUC approval after the initial application was filed. In this regard, the Board took into account its continuing belief that, notwithstanding the June 8, 2018 letter of the General Counsel of the CPUC directing SJW’s subsidiary San Jose Water Company to submit an application for approval of the Merger of Equals by the CPUC, no CPUC approval is required for the Merger of Equals because no person is acquiring “control” over the San Jose Water Company as a result of the Merger of Equals.

The Offer significantly undervalues SJW’s long-term prospects, particularly in light of the Merger of Equals.

The Board determined that the Offer significantly undervalues SJW’s long-term prospects, particularly in light of the opportunity to share in the benefits expected from being stockholders of the combined company with CTWS following the Merger of Equals, including the following:

• SJW expects the combined company to maintain a strong “A” credit profile, which in conjunction with the incremental debt capacity resulting from the merger, will enable the combined company to pursue a share repurchase program of up to $100 million;

• factoring in the expected savings from the elimination of public company and other related costs, and assuming a contemplated share repurchase following the merger of approximately $100 million, the Merger of Equals is expected to generate an increase in 2020 earnings per share of approximately 5.5% to 6%, relative to forecasted 2020 earnings per share;

• the Merger of Equals should result in the combined company’s earnings being derived from more diversified operations both from a geographic and regulatory perspective;

• SJW stockholders are expected to continue to own approximately 60% of the combined company;

• the transaction is expected to offer greater financial flexibility to grow the business through increased investments and to compete more effectively across a national footprint and in a fragmented industry;

• the belief that the combined company will be able to continue and further SJW’s historic practice of paying robust and stable quarterly dividends to stockholders; and

• the belief that the required Connecticut and Maine regulatory approvals are capable of being obtained during the fourth quarter of 2018.

The Offer involves high execution risk because California Water does not have cash on hand sufficient to consummate the Offer nor does it have committed financing for this purpose.

The Board noted that the Offer entails high execution risk and presents a substantial risk of not being consummated because California Water neither has cash on hand sufficient to consummate the Offer nor does it have committed financing for this purpose.

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California Water estimates in its Offer to Purchase that it will need approximately $1.55 billion to purchase all outstanding shares of SJW common stock pursuant to the Offer and the California Water Proposed Merger, and to pay related fees and expenses, including the $42.5 million termination fee that may become payable to CTWS by SJW if SJW terminates the CTWS Merger Agreement to enter into a merger agreement with California Water.

California Water’s SEC filings indicate that California Water does not have sufficient cash on hand to finance the acquisition of SJW. Based on the balance sheet included in California Water’s quarterly report for the first quarter of 2018, California Water only had $34,702,000 in cash and cash equivalents as of March 31, 2018, a decrease from $94,776,000 at December 31, 2017. In addition, California Water incurred a net loss of $2.5 million for the first quarter of 2018, a decrease of $3.7 million from the comparable period in 2017.

Nor has California Water obtained committed financing for its Offer. Instead, California Water’s financial advisor, Morgan Stanley & Co. LLC (“MS&Co.”), delivered to California Water a letter, dated April 2, 2018, expressing that as of that date MS&Co. was “highly confident” of its ability to arrange and underwrite up to $1.55 billion for the SJW acquisition, including through its affiliates or joint venture partners (the “Highly Confident Letter”). As California Water indicates in the Offer to Purchase, the Highly Confident Letter is not intended to be and should not be construed as a commitment by MS&Co. to, when delivered or in the future, provide, arrange, underwrite, purchase or place all or any portion of the required financing.

The Highly Confident Letter further noted that “while such view may change subsequent to the date of the date of the Highly Confident Letter, MS&Co. does not have any obligation to inform California Water of any change in such view or to withdraw or reaffirm such view in the Highly Confident Letter.” As noted, the Highly Confident Letter was dated April 2, 2018, and California Water has not disseminated an updated Highly Confident Letter since that date, which also preceded the announcement of California Water’s quarterly loss. In short, the Offer provides no indication that MS&Co. or any other financial advisor is “highly confident” in California Water’s current ability to obtain the financing required to consummate the Offer.

The Offer involves high execution risk due to the need for regulatory approval in California and significant debt financing.

There is a significant risk that California Water’s proposed transaction will not close in a reasonable period of time, or at all, due to the potentially protracted regulatory review in California, which could be as long as 18 months. The Board noted that the CPUC’s regulatory approval of California Water’s acquisition of Dominguez Services Corporation, which was less than 20% of the current size of SJW, took 15 months to receive CPUC approval after the initial application was filed. Based upon the advice of California regulatory counsel, the Board believes that the CPUC could take even longer to review a potential acquisition of SJW.

In addition, the Board noted that the substantial debt and equity financing that California Water would require in order to consummate the Offer — representing approximately 75% of California Water’s closing equity market capitalization on June 13, 2018, could increase regulatory scrutiny of the transaction by the CPUC. Moreover, as reported in California Water’s Form 10-Q for the quarter ended March 31, 2018, as of March 31, 2018, California Water had long-term debt of $521,594,000, inclusive of $5,924,000 of current maturities, and short-term borrowings of $275,100,000.

Incurrence of a substantial amount of additional indebtedness, even if California Water is successful in replacing a portion of it with the issuance of additional equity, would likely result in downgrades to California Water’s credit ratings, which would increase its borrowing costs. Increased borrowing costs, in turn, could reduce the amount of funds available to California Water to invest in needed capital expenditures to replace or improve its aging infrastructure. On June 12, 2018, S&P Global RatingsDirect downgraded its outlook of San Jose Water Company to “negative” from “stable,” citing “the possibility that SJW’s previously agreed-upon merger agreement with CTWS may not close as expected, resulting in high event risk, including the potential that SJW

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could be acquired by California Water in a manner that results in greater use of leverage” (names conformed). Similarly, on June 12, 2018, S&P Global RatingsDirect downgraded its outlook of California Water Service Co. to “negative” from “stable,” noting that “[t]he negative outlook reflects increased event risk associated with a potential for California Water’s financial measures to weaken further in light of the announced cash tender offer” and “the announced cash Offer signals an aggressive shift in California Water’s financial policies that could result in lower ratings for California Water, collectively warranting the outlook revision” (terms conformed). See also California Water’s Form 10-K for the year ended December 31, 2017 (“We invest significant funds to replace or improve aging infrastructure such as property, plant and equipment. [. . .] Our ability to access the capital markets is affected by the ratings of certain of our debt securities. Standard & Poor’s Rating Agency issues a rating on California Water Service Company’s ability to repay certain debt obligations. The credit rating agency could downgrade our credit rating based on reviews of our financial performance and projections or upon the occurrence of other events that could impact our business outlook. Lower ratings by the agency could restrict our ability to access equity and debt capital. We can give no assurance that the rating agency will maintain ratings which allow us to borrow under advantageous conditions and at reasonable interest rates. A future downgrade by the agency could also increase our cost of capital by causing potential investors to require a higher interest rate due to a perceived risk related to our ability to repay outstanding debt obligations.”).

The Offer values the Company below the price that California Water proposed to pay in the fall of 2017.

The Board took into account the fact that the Offer price is below the price that California Water had proposed to pay in the fall of 2017. On September 18, 2017, California Water delivered to SJW a letter proposing a cash, stock or combination of cash-and-stock transaction at a 25% to 30% premium to SJW’s then-current stock price. While this letter did not specify a price per share of SJW common stock, the 25%-to-30% premium offered implied a range of $70.43 to $73.24 per share based on SJW’s closing price on September 15, 2017, the prior business day.

The Board believes that the Offer price is below the price that prospective acquirors would be willing to pay in an acquisition of SJW, whether now or in the future.

The Board has not made a decision to sell the Company, but believes that the Offer price is below the price that prospective acquirors would be willing to pay were it to do so, whether now or in the future. The Board’ view is based on the expressions of interest that it has received from third parties over the years, including as described above under “Background of the Offer.” In this regard, the Board particularly noted that California Water’s own September 2017 proposal was for a higher price than the offer. The Board further took note of the May 26, 2018 unsolicited inquiry that was made to a representative of J.P. Morgan by a representative of Lazard, who indicated that Lazard represented an unnamed “strategic” company that had noted its potential interest in an acquisition of SJW if the Board were to pursue other strategic alternatives in the event the planned Merger of Equals did not occur and believed that, in such case, it could provide superior value as compared to other potential acquirers.

The Board further noted its belief that, were it to consider a sale of the Company in the future, the Company’s anticipated growth, whether or not the Merger of Equals is consummated, has the potential to increase the price that prospective acquirors would be willing to pay for SJW.

The Offer’s conditions create significant uncertainty and risk, raising significant doubts about whether it will ever be completed.

The Offer is highly conditional and the Schedule TO indicates that California Water has reserved the ability to change the conditions of the Offer. All of the conditions to the Offer are for the sole benefit of California Water and its affiliates and may be asserted by California Water in its sole discretion regardless of the circumstances giving rise to any such conditions or may be waived by California Water in its sole discretion in whole or in part at any time or from time to time before the Expiration Date. Moreover, California Water

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expressly reserves the right to make any change in the terms of or conditions to the Offer. California Water’s ability to change the conditions to the Offer at any time means that the Offer could become subject not only to modified conditions but also to additional unknown conditions.

Included in the express conditions to which the Offer is subject are the following conditions:

• the Minimum Tender Condition;

• the Termination Condition;

• the Section 203 Condition;

• the State Regulatory Condition;

• the HSR Condition; and

• no Material Adverse Effect condition.

The Company’s stockholders have no assurance that the Offer will ever be completed. Many of the conditions to the Offer are subject to California Water’s discretion, making it easy for California Water to claim that a condition is not satisfied and terminate the Offer. According to the Schedule TO, all of the conditions to the Offer may be asserted by California Water regardless of the circumstances giving rise to any such condition. In other words, the Schedule TO claims that California Water may assert that a condition has not been satisfied — even if the failure of such condition to be satisfied was caused by California Water’s action or inaction — and such determination will not be subject to challenge.

Moreover, the conditions give California Water wide latitude not to consummate the Offer. For example, the no material adverse effect condition permits California Water not to purchase any Shares pursuant to the Offer if there is any fact, circumstance, effect, change, event or development that — in California Water’s judgment — materially adversely affects the business, properties, financial condition or results of operations of the Company.

California Water has discretion to extend the Offer indefinitely.

California Water has stated that it may, in California Water’s sole discretion, extend the Offer from time to time for any reason. The Company’s stockholders have no assurance that they will ever receive payment for shares tendered in a timely fashion. California Water has given itself broad discretion to disrupt the Company’s business indefinitely without any assurance as to when it may provide value to stockholders.

Neither of the State Regulatory Condition and the HSR Condition is satisfied as of the date of this Statement and it is uncertain when these conditions will be satisfied. In particular, the State Regulatory Condition is unlikely to be satisfied prior to the initial expiration date of the Offer.

* * * *

ACCORDINGLY, BASED ON THE FOREGOING REASONS, THE BOARD RECOMMENDS THAT HOLDERS OF SHARES REJECT THE OFFER AND NOT TENDER ANY OF THEIR SHARES PURSUANT TO THE OFFER.

The foregoing discussion of the information and factors considered by the Board is not meant to be exhaustive, but includes the material information, factors, and analyses considered by the Board in reaching its conclusions and recommendations. The members of the Board evaluated the various factors listed above in light of their knowledge of the business, financial condition, and prospects of the Company and considered the advice of the Board’ financial and legal advisors. In light of the number and variety of factors that the Board considered, the members of the Board did not find it practicable to assign relative weights to the foregoing factors. However, the recommendation of the Board was made after considering the totality of the information and factors involved. In addition, individual members of the Board may have given different weight to different factors.

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In light of the factors described above, the Board has determined that the Offer is not in the best interests of the Company’s stockholders. Therefore, the Board recommends that the stockholders reject the Offer and not tender any of their Shares to the Offeror for purchase pursuant to the Offer.

Intent to Tender

To the Company’s knowledge, after making reasonable inquiry, none of the Company’s executive officers, directors, affiliates, or subsidiaries intends to tender any Shares he, she, or it holds of record or beneficially owns for purchase pursuant to the Offer.

Item 5. Persons/Assets, Retained, Employed, Compensated or Used

The Company has retained J.P. Morgan as its financial advisor in connection with the Company’s consideration of a possible transaction, including the Offer and other matters. The Company has agreed to pay J.P. Morgan for its services, including a transaction fee payable upon consummation of certain transactions, which may include with respect to the Offer. The Company has agreed to reimburse J.P. Morgan for its documented expenses and indemnify J.P. Morgan against certain liabilities that may arise out of its engagement.

The Company has engaged Georgeson to assist it in connection with the Company’s communications with its stockholders in connection with the Offer. The Company has agreed to pay customary compensation to Georgeson for such services. In addition, the Company has agreed to reimburse Georgeson for its documented costs and expenses and to indemnify it and certain related persons against certain liabilities relating to or arising out of its engagement.

The Company has also retained Abernathy MacGregor as its public relations advisor in connection with the Offer. The Company has agreed to pay Abernathy MacGregor customary compensation for such services and to reimburse Abernathy MacGregor for its reasonable out-of-pocket expenses and to indemnify it against certain liabilities relating to or arising out of its engagement. In addition, the Company has retained Haystack Needle LLC as its digital communications advisor in connection with the Offer and has agreed to pay Haystack Needle LLC customary compensation for such services.

Except as set forth above, neither the Company nor any person acting on its behalf has or currently intends to employ, retain or compensate any person to make solicitations or recommendations to the Company’s stockholders with respect to the Offer.

Item 6. Interest in Securities of the Subject Company

Other than in the ordinary course of business in connection with the Company’s employee benefit plans (including the LTIP), no transactions with respect to the Shares have been effected by the Company or, to the knowledge of the Company, by any of its executive officers, directors, affiliates or subsidiaries during the past 60 days.

Item 7. Purposes of the Transaction and Plans or Proposals

As discussed above in Item 4, the Company continues to pursue the Merger of Equals. Except as set forth in this Statement or incorporated by reference, the Company does not have any knowledge of any negotiations being undertaken or engaged in by the Company in response to the Offer that relate to or would result in (a) a tender offer for or other acquisition of the Company’s Shares by the Company, any subsidiary of the Company, or any other person; (b) any extraordinary transaction, such as a merger, reorganization, or liquidation, involving the Company or any subsidiary of the Company; (c) any purchase, sale, or transfer of a material amount of assets of the Company or any subsidiary of the Company; or (d) any material change in the present dividend rate or policy, indebtedness, or capitalization of the Company. Except as otherwise set forth in this Statement or

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incorporated by reference, to the knowledge of the Company, there are no transactions, resolutions of the Board, agreements in principle, or signed contracts in response to the Offer that relate to one or more of the events referred to in this paragraph.

Item 8. Additional Information

Golden Parachute Compensation

The following table sets forth the information required by Item 402(t) of the Regulation S-K regarding the compensation for the Company’s named executive officers that is based on or otherwise relates to the Offer, assuming that the Offer was consummated on June 7, 2018 and that the named executive officers experienced a qualifying termination on the same day under circumstances entitling him or her to full severance benefits under the Executive Severance Plan, and for Mr. Thornburg, additional benefits under the Cash Balance SERP.

Named Executive Officer1	Cash Severance Payment ($) (1)		Value of Accelerated Restricted Stock Unit Awards (2)		Present Value of Enhanced Pension Benefit ($) (3)			Estimated Value of Reimbursed COBRA Continuation Health Care Coverage (4)		Excise Tax Gross-Up ($) (5)		Total
Eric W. Thornburg	$	3,301,507	$	1,841,112	$	103,464		$	49,905		—	$	5,295,988
Andrew R. Gere	$	1,728,000	$	353,672	$	397,228		$	71,950	$	1,317,996	$	3,868,846
Palle L. Jensen	$	1,458,000	$	328,760	$	540,173		$	71,950	$	1,117,333	$	3,516,216
James P. Lynch	$	1,653,000	$	370,666		—	(6)	$	63,530		—	$	2,087,196
Suzy Papazian	$	1,425,000	$	317,840	$	282,628		$	6,414	$	1,001,256	$	3,033,138

(1) Represents severance benefits payable in cash in an amount equal to three times the executive’s annual salary plus three times the executive’s target annual cash incentive compensation and with respect to Mr. Thornburg, an additional amount equal to his annual bonus for the year of termination based on actual performance, pro-rated for the number of days of employment during the year of termination (the “Additional Bonus Amount”). The annual salary and target annual cash incentive compensation for each executive as follows: Mr. Thornburg — $700,000 and $350,000; Mr. Gere — $461,000 and $115,000; Mr. Jensen — $389,000 and $97,000; Mr. Lynch — $441,000 and $110,000; and Ms. Papazian — $380,000 and $95,000. The Additional Bonus Amount for Mr. Thornburg has been determined based on his target bonus pro-rated for the period of service in 2018 through June 7, 2018. Each of the Cash Severance Payment amounts are “double trigger” payments, meaning they are payable upon a termination in connection with a change in control, as discussed in more detail in the section of Item 3 entitled “Executive Severance Plan.” No executive officer is entitled to a “single trigger” cash severance payment as a result of a change in control.

(2) As discussed in more detail in the section of Item 3 entitled Equity-Based Awards Held by Executive Officers of the Company, the unvested restricted stock units either (i) will automatically vest on an accelerated basis upon a termination in connection with a change in control if the awards are assumed, replaced or otherwise continued in the change in control, and are therefore “double trigger” or (ii) will vest on an accelerated basis (without a termination in connection with a change in control) if such awards are not assumed, replaced, or otherwise continued and therefore may be “single trigger”. The reported dollar values of these unvested units are based on the Offer price of $68.25 per Share.

(3) The amounts above are “double trigger” payments in that they reflect each executive officer’s enhanced pension benefit if the executive officer is terminated in connection with a change in control, as discussed in more detail in the section of Item 3 entitled “Executive Severance Plan”. No executive officer is entitled to an enhanced pension benefit on a “single trigger” basis as a result of a change in control. The actuarial and

¹  W. Richard Roth was a named executive officer in the 2018 Proxy Statement; however, Mr. Roth’s employment with the Company terminated effective December 31, 2017, and therefore he is not entitled to any severance or vesting benefits in connection with the Offer.

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economic assumptions used above to value the enhanced pension benefits under the SERP and Cash Balance SERP include the RP-2014 Mortality Table basis adjusted to 2006 published by The Society of Actuaries, with projection scale MP-2017 Mortality Improvement Scale and a 3.44% discount rate (the RP-2014 Mortality Table basis adjusted to 2006, published by The Society of Actuaries, with projection scale MP-2016 Mortality Improvement Scale and 3.84% for 2016). There is no assumption for pre-retirement mortality or cessation of service, and retirement is assumed to occur at the earliest age at which each named executive officer can receive the pension benefits without actuarial reductions.

(4) Reflects the COBRA continuation health care coverage that is “double trigger” or payable upon a termination in connection with a change in control, as discussed in more detail in the section of Item 3 entitled “Executive Severance Plan.” No executive officer is entitled to “single trigger” COBRA continuation health care coverage as a result of a change in control.

(5) These amounts assume a “double trigger” event where the executive is terminated in connection with a change in control. Calculated based on (i) W-2 wages for the five-year period 2013-2017, (ii) an effective tax rate of 55.25% (Federal, 39.6%; State, 13.3%; and Medicare, 2.35%) and (iii) the vesting of all outstanding unvested stock-based awards on the assumed June 7, 2018 change in control/separation from service date.

(6) There would be no enhancement to Mr. Lynch’s benefits under the Cash Balance SERP, whether in the form of additional compensation credits or contributions or additional years of service credit, triggered by the change in control event or the termination of his employment in connection therewith as discussed in more detail in Item 3.

Narrative to Golden Parachute Compensation Table

Each of the named executive officers is a participant in the Executive Severance Plan, under which the named executive officer would become entitled to a cash termination payment and other payments upon a qualifying termination. Each of the named executive officers also holds unvested restricted stock units under the LTIP which may become fully vested in connection with a change in control of the Company. The Offer, if consummated according to its terms without a waiver of the Minimum Tender Condition, would constitute a change in control of the Company as defined in the LTIP. For more information relating to these arrangements, see “Item 3. Past Contracts, Transactions, Negotiations and Agreements” (which is incorporated into this Item 8 by reference).

State Anti-Takeover Laws — Delaware Business Combination Statute

The Company is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL prevents an “interested stockholder” (defined generally to include a person who, together with such person’s affiliates and associates, owns or has the right to acquire 15% or more of a corporation’s outstanding voting stock) from engaging in a “business combination” (defined to include mergers and certain other actions and transactions) with a Delaware corporation whose stock is publicly traded or held of record by more than 2,000 stockholders for a period of three (3) years following the date such person became an interested stockholder unless:

• the transaction in which the stockholder became an interested stockholder or the business combination was approved by the board of directors of the corporation before the time of the business combination;

• upon completion of the transaction that made it an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the commencement of the transaction, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by (i) directors who are also officers and (ii) held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan; or

• the business combination was approved by the board of directors of the corporation and ratified by 66 ²⁄₃% of the outstanding voting stock which the interested stockholder did not own.

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Neither the Company’s Certificate of Incorporation nor Amended and Restated Bylaws exclude the Company from the coverage of Section 203 of the DGCL. Unless Offeror’s acquisition of 15 percent or more of the Shares is approved by the Board before the Offer closes, Section 203 of the DGCL will prohibit consummation of the California Water Proposed Merger (or any other business combination with California Water) for a period of three years following consummation of the Offer unless each such business combination (including the California Water Proposed Merger) is approved by the Board and holders of 66 ²⁄₃% of the Shares, excluding California Water, or unless California Water acquires at least 85% of the Shares in the Offer. The provisions of Section 203 of the DGCL would be satisfied if, prior to the consummation of the Offer, the Board approves the Offer.

State Anti-Takeover Laws — Other

A number of states have adopted laws and regulations that purport to apply to attempts to acquire corporations that are incorporated in such states, or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, employees, principal executive offices or principal places of business in such states. The Offeror has stated in its Offer that it has not made efforts to comply with state takeover statutes in connection with the Offer. In the event that it is asserted that one or more state takeover statutes apply to the Offer or any such merger or other business combination, and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer, as applicable, the Offeror may be required to file certain information with, or receive approvals from, the relevant state authorities, and according to the Offer, the Offeror may be unable to accept for payment or pay for Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer or any such merger or business combination. In such case, according to the Offer, the Offeror may not be obligated to accept for payment, or pay for, any Shares tendered in the Offer.

Appraisal Rights

No appraisal rights are available in connection with the Offer. However, if Offeror purchases Company Shares in the Offer and the California Water Proposed Merger is consummated, stockholders who do not validly tender into the Offer and who otherwise comply with the applicable requirements and procedures of Section 262 of the DGCL will be entitled to demand appraisal of their Shares and receive in lieu of the consideration payable in the California Water Proposed Merger a cash payment equal to the “fair value” of their Shares, as determined by the Delaware Court of Chancery, in accordance with Section 262 of the DGCL, plus interest, if any, on the amount determined to be the fair value, subject to the provisions of Section 262 of the DGCL. Any such judicial determination of the fair value of the Shares could be based upon factors other than, or in addition to, the price per share to be paid in the California Water Proposed Merger or the market value of the Shares. The value so determined could be more or less than the price per Share to be paid in the California Water Proposed Merger. Any Company stockholder contemplating the exercise of its appraisal rights should review carefully the provisions of Section 262 of the DGCL, particularly the procedural steps required to properly demand and perfect such rights.

United States Antitrust Clearance

Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the “FTC”), certain acquisition transactions may not be consummated unless required information and documentation has been furnished to the FTC and the Antitrust Division of the Department of Justice (the “Antitrust Division”) and certain waiting period requirements have been observed. The purchase of Shares pursuant to the Offer is subject to such requirements. According to the Schedule TO, the Offeror intends to file a Notification and Report Form with respect to the Offer with the Antitrust Division and the FTC. The Company will be required to submit a responsive Notification and Report Form with the Antitrust Division and the FTC within 10 calendar days of such filing.

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Under the provisions of the HSR Act applicable to the acquisition of Shares pursuant to the Offer, such purchase may not be made until the expiration of a 15-calendar day waiting period following the required filing of a Notification and Report Form under the HSR Act by the Offeror.

As a result, the waiting period applicable to the purchase of Shares pursuant to the Offer will expire at 11:59 p.m., New York City time, 15 calendar days following the Offeror’s HSR Act filing, unless early termination of the waiting period is granted by the FTC and Antitrust Division or the Offeror receives a request for additional information or documentary material (a “Second Request”) prior thereto. If a Second Request is made to the Offeror, the waiting period will be extended until 11:59 p.m., New York City time, 10 calendar days after the Offeror’s substantial compliance with such request, unless terminated earlier by the FTC and Antitrust Division. If a Second Request is issued, the purchase of and payment for Shares pursuant to the Offer will be deferred until the additional waiting period expires or is terminated. Complying with a Second Request may take a significant amount of time.

According to the Schedule TO, Shares will not be accepted for payment or paid for pursuant to the Offer until the expiration or earlier termination of the applicable waiting period under the HSR Act. If the Offeror’s acquisition of Shares is delayed pursuant to a request by the issuance of a Second Request by the Antitrust Division or the FTC, or by any other antitrust regulator, the Offer may, but need not, be extended.

At any time before or after the consummation of the Offer, the FTC or the Antitrust Division could take such action under the antitrust laws of the United States as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of the Shares so acquired or divestiture of substantial assets of the Company. Private parties (including individual States) may also bring legal actions under the antitrust laws of the United States. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be.

Other Regulatory Approvals

The Schedule TO provides that the Offer is subject to the State Regulatory Condition. The California Public Utilities Code requires CPUC approval before a utility may sell the whole of or necessary or useful components of a public utility system, and before any person shall “merge, acquire, or control either directly or indirectly any public utility organized and doing business” in California. The CPUC will review the transaction to determine whether the transaction will be “adverse to the public interest.” Because the Company is the parent of a Texas water utility, approval of the TPUC will also be required for the Offer and the California Water Proposed Merger. The laws of the State of Texas require TPUC approval of any “sale, transfer, merger, consolidation, acquisition, lease, or rental” of a water utility.

Litigation

On June 7, 2018, a putative class action complaint was filed against the members of the CTWS board of directors, the Company and Eric W. Thornburg on behalf of the CTWS shareholders. The complaint alleges that the members of the CTWS board of directors breached their fiduciary duties owed to CTWS shareholders in connection with the Merger of Equals, and that the Company and Mr. Thornburg aided and abetted those breaches. Among other remedies, the action seeks to recover rescissory and other damages and attorney’s fees and costs. The defendants believe such a lawsuit to be without merit and intend to defend vigorously against these allegations.

Annual and Quarterly Reports

For additional information regarding the business and the financial results of the Company, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed with the SEC on February 27, 2018 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 as filed with the SEC on May 8, 2018.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

All of the statements in this document (including those incorporated by reference), other than historical facts are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “strategy,” or “anticipates,” or the negative of those words or other comparable terminology. Forward-looking statements made herein with respect to the Offer, the California Water Proposed Merger, the Merger of Equals and any transactions related to the foregoing, including, for example, the timing of the completion of the California Water Proposed Merger or the Merger of Equals and the potential benefits of the California Water Proposed Merger or the Merger of Equals, reflect the current analysis of existing information and are subject to various risks and uncertainties. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) uncertainties as to the timing of the Offer, the California Water Proposed Merger and the Merger of Equals; (2) uncertainties as to how many Company stockholders will tender their Shares in the Offer; (3) the possibility that competing offers will be made; (4) the risk that the conditions to the closing of the Merger of Equals may not be satisfied or waived, including the risk that required approvals from the security holders of each party to the Merger of Equals may not be obtained; (5) the risk that the regulatory approvals required for the Merger of Equals or the California Water Proposed Merger may not be obtained, or that in order to obtain such regulatory approvals, conditions are imposed that adversely affect the anticipated benefits from the proposed transaction or cause the parties to abandon the proposed transaction; (6) the risk that the anticipated tax treatment of the Merger of Equals or the California Water Proposed Merger may not be obtained; (7) the effect of water, utility, environmental and other governmental policies and regulations; (8) litigation relating to the Merger of Equals or the California Water Proposed Merger; (9) uncertainties as to the timing of the consummation of the transaction and the ability of each party to consummate the Merger of Equals or the California Water Proposed Merger; (10) risks that the proposed Merger of Equals or the California Water Proposed Merger disrupts the current plans and operations of Connecticut Water, California Water or the Company; (11) the ability of Connecticut Water, California Water and the Company to retain and hire key personnel; (12) competitive responses to the proposed Merger of Equals or the California Water Proposed Merger; (13) unexpected costs, charges or expenses resulting from the Merger of Equals or the California Water Proposed Merger; (14) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger of Equals or the California Water Proposed Merger; (15) the combined companies’ ability to achieve the growth prospects and synergies expected from the Merger of Equals or the California Water Proposed Merger, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses; and (16) legislative and economic developments. In addition, actual results are subject to other risks and uncertainties that relate more broadly to the Company’s overall business, including those more fully described in its filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2017 and its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018, and Connecticut Water’s overall business and financial condition, including those more fully described in its filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2017 and its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018. Forward looking statements are not guarantees of performance, and speak only as of the date made, and neither SJW nor its management undertakes any obligation to update or revise any forward-looking statements except to the extent required by applicable law.

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Item 9. Exhibits

The following exhibits are filed with this Statement:

Exhibit No.	Description
(a)(1)	Press Release issued by SJW Group on June 7, 2018 (incorporated by reference to Form 425 filed by SJW Group on June 7, 2018).
(a)(2)	Email to SJW Group Employees on June 8, 2018 (incorporated by reference to Form 425 filed by SJW Group on June 8, 2018).
(a)(3)	Letter to the SJW Group’s Stockholders.*
(a)(4)	Press Release issued by the Company on June 15, 2018.*
(e)(1)	Confidentiality Agreement, dated May 18, 2018, by and between SJW Group and California Water.
(e)(2)	Compensation of Directors (excerpts from SJW Group’s Definitive Proxy Statement on Schedule 14A, filed on March 6, 2018).
(e)(3)	Executive Compensation and Related Information (excerpts from SJW Group’s Definitive Proxy Statement on Schedule 14A, filed on March 6, 2018).
(e)(4)	San Jose Water Company Executive Supplemental Retirement Plan, as amended and restated effective January 1, 2012 (incorporated by reference to Exhibit 10.20 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2011).
(e)(5)	The First Amendment to the Executive Supplemental Retirement Plan effective November 15, 2016 (incorporated by reference to Exhibit 10.14 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(6)	San Jose Water Company Cash Balance Executive Supplemental Retirement Plan as amended and restated effective January 1, 2012 (incorporated by reference to Exhibit 10.23 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2011).
(e)(7)	First Amendment to San Jose Water Company’s Cash Balance Executive Supplemental Retirement Plan effective as of October 30, 2013 (incorporated by reference to Exhibit 10.15 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2013).
(e)(8)	Second Amendment to San Jose Water Company’s Cash Balance Executive Supplemental Retirement Plan effective as of January 31, 2014 (incorporated by reference to Exhibit 10.2 to Form 8-K filed by SJW Group on January 30, 2014).
(e)(9)	Third Amendment to San Jose Water Company’s Cash Balance Executive Supplemental Retirement Plan effective November 15, 2016 (incorporated by reference to Exhibit 10.18 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(10)	Fourth Amendment to San Jose Water Company’s Cash Balance Executive Supplemental Retirement Plan effective November 6, 2017 (incorporated by reference to Exhibit 10.5 to SJW Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).
(e)(11)	SJW Corp. Long-Term Incentive Plan, as amended and restated on July 29, 2015 (incorporated by reference to Exhibit 10.1 to SJW Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015).
(e)(12)	First Amendment to the SJW Group Long-Term Incentive Plan dated November 15, 2016 (incorporated by reference to Exhibit 10.21 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(13)	SJW Corp. Executive Severance Plan, as amended and restated, effective January 1, 2010 and amended effective October 26, 2010 (incorporated by reference to Exhibit 10.23 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2010).

27

Exhibit No.	Description
(e)(14)	First Amendment to the Executive Severance Plan dated November 15, 2016 (incorporated by reference to Exhibit 10.35 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(15)	Second Amendment to the Executive Severance Plan dated July 26, 2017 (incorporated by reference to Exhibit 10.1 to SJW Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).
(e)(16)	Third Amendment to the Executive Severance Plan effective November 6, 2017 (incorporated by reference to Exhibit 10.2 to SJW Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).
(e)(17)	SJW Corp. Amended and Resisted Deferred Restricted Stock Program, effective January 1, 2008 (incorporated by reference to Exhibit 10.1 to SJW Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
(e)(18)	First Amendment to the Amended and Restated Deferred Restricted Stock Program dated November 15, 2016 (incorporated by reference to Exhibit 10.39 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(19)	Form of SJW Group Restricted Stock Unit Award Agreement for Non-Employee Board Members (incorporated by reference to Exhibit 10.1 to SJW Group’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017).
(e)(20)	Formulaic Equity Award Program for Non-Employee Board Members (incorporated by reference to Exhibit 10.34 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2013).
(e)(21)	First Amendment to the Formulaic Equity Award Program for Non-Employee Board Members dated October 26, 2016 (incorporated by reference to Exhibit 10.44 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(22)	Second Amendment to the Formulaic Equity Award Program for Non-Employee Board Members dated November 15, 2016 (incorporated by reference to Exhibit 10.45 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(23)	Deferred Restricted Stock Award Agreement, amended and restated as of October 22, 2008 for Non-Employee Board Members (incorporated by reference to Exhibit 10.21 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2008).
(e)(24)	Form of Chief Executive Officer SJW Group Restricted Stock Unit Issuance Agreement (TSR Goals) (incorporated by reference to Exhibit 10.55 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(25)	Form of SJW Group Restricted Stock Unit Issuance Agreement (incorporated by reference to Exhibit 10.52 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(26)	Form of SJW Group Restricted Stock Unit Issuance Agreement (ROE Goal) (incorporated by reference to Exhibit 10.54 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(27)	Form of SJW Group Restricted Stock Unit Issuance Agreement (EPS Goal) (incorporated by reference to Exhibit 10.55 to SJW Group’s Annual Report on Form 10-K for the year ended December 31, 2016).
(e)(28)	Form of Director and Officer Indemnification Agreement between SJW Group and its officers and Board members (incorporated by reference to Exhibit 10.1 to Form 8-K filed by SJW Group on November 15, 2016).

* Included in copy of Solicitation/Recommendation Statement on Schedule 14D-9 mailed to stockholders.

28

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

SJW GROUP
By:	/s/ Eric W. Thornburg
	Name: Eric W. Thornburg
	Title:   Chairman of the Board, President and             Chief Executive Officer

Dated: June 15, 2018

EX-99.(A)(3)

Exhibit (a)(3)

SJW STOCKHOLDERS: DO NOT TENDER YOUR SHARES INTO CAL WATER’S INFERIOR AND HIGHLY-CONDITIONAL OFFER

Dear Fellow SJW Group Stockholders:

Consistent with our fiduciary duties, we have conducted a careful and thorough review of California Water Service Group’s (“Cal Water”) unsolicited tender offer to acquire all outstanding shares of SJW Group at a price of $68.25 per share in cash. Our unanimous recommendation is to REJECT this highly-conditional offer, the terms of which are no different than those in Cal Water’s recent unsolicited non-binding indication of interest that we previously carefully reviewed and rejected.

CAL WATER OFFERS NOTHING NEW – JUST THE SAME OLD, REPACKAGED TERMS WE’VE DETERMINED FOR A SECOND TIME ARE INFERIOR

What Cal Water calls a ‘common sense combination’ is just the same inferior, uncertain, and non-binding indication of interest we’ve seen before, dressed up as a tender offer, but every bit as conditional, with a lengthy and uncertain timeline to close and the risk of significant tax consequences for our stockholders.

The tender offer is explicitly conditioned on the SJW Board’s approval of the offer under the Delaware anti-takeover statute or Cal Water otherwise being satisfied that the Delaware anti-takeover statute is inapplicable, which means that Cal Water cannot realistically succeed with its illusory tender offer and takeover without the approval of our Board. What’s more, it cannot possibly be described as ‘binding’ since it can be withdrawn by Cal Water at any time.

CAL WATER’S CREDIT DESTRUCTIVE OFFER VS. OUR CREDIT ENHANCING MERGER

Just like its prior proposal, Cal Water’s tender offer and hostile takeover – if consummated – could cause a credit rating downgrade that would impact San Jose Water Company’s cost of capital and corresponding ability to invest in its operations and customer service. In fact, S&P Global Ratings shares this concern, recently lowering its rating outlook on SJW Group’s San Jose Water Company on June 12, 2018, noting that the reduced outlook “incorporates the potential that [SJW Group] could be acquired by [Cal Water] in a manner that results in greater use of leverage.”

These new ratings, which result directly from Cal Water’s decision to launch its hostile, unsolicited tender offer, are in direct contrast with S&P Global Ratings’ favorable perspective this past March about the positive impact our proposed merger of equals with Connecticut Water Service, Inc. (“Connecticut Water”) would have on San Jose Water Company’s credit rating. In the March report, S&P Global Ratings stated that it expects “the additional regulatory diversity and scale for the newly combined entity to improve the consolidated group credit profile if the merger is completed.”

DO NOTHING NOW BUT WAIT FOR THE GREEN PROXY CARD TO SUPPORT OUR VALUE-ACCRETIVE TRANSACTION WITH CONNECTICUT WATER

We believe that Cal Water’s tender offer, in addition to being inadequate in its own right, would deny SJW Group’s stockholders the opportunity to share in the benefits expected to result from SJW Group’s signed, definitive and value-accretive merger agreement with Connecticut Water. We believe our transaction with Connecticut Water will deliver significant immediate and long-term value to SJW Group’s stockholders in the form of continued, robust dividends and potential share price appreciation.

We will soon be sending you a proxy statement describing the strategic merits of what we consider to be our superior merger with Connecticut Water along with a GREEN proxy card. You should read these materials carefully. We urge you to vote on the GREEN card FOR all proposals related to our merger with Connecticut Water.

The reasons for our recommendation to reject Cal Water’s tender offer are set forth in more detail in a solicitation/recommendation statement on Schedule 14D-9, which was filed with the Securities and Exchange Commission (“SEC”) and is included in this mailing to you.

Sincerely,

The SJW Board of Directors

Copies of the Schedule 14D-9 and solicitation/recommendation statement are available on the SEC’s website at www.sec.gov and on the Company’s website at www.sjwgroup.com. If you have any questions please contact our proxy solicitors:

Georgeson LLC

866-357-4029, SJW@Georgeson.com

Forward Looking Statements

This document contains forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “strategy,” or “anticipates,” or the negative of those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the risk that the conditions to the closing of the proposed business combination transaction between SJW Group and Connecticut Water Service, Inc. (“Connecticut Water”) may not be satisfied or waived, including the risk that required approvals from the security holders of each party to the proposed transaction are not obtained; (2) the risk that the regulatory approvals required for the proposed transaction are not obtained, or that in order to obtain such regulatory approvals, conditions are imposed that adversely affect the anticipated benefits from the proposed transaction or cause the parties to abandon the proposed transaction; (3) the risk that the anticipated tax treatment of the proposed transaction is not obtained; (4) the effect of water, utility, environmental and other governmental policies and regulations; (5) litigation relating to the proposed transaction; (6) uncertainties as to the timing of the consummation of the proposed transaction and the ability of each party to consummate the proposed transaction; (7) risks that the proposed transaction disrupts the current plans and operations of Connecticut Water or SJW Group; (8) the ability of Connecticut Water and SJW Group to retain and hire key personnel; (9) competitive responses to the proposed transaction; (10) unexpected costs, charges or expenses resulting from the proposed transaction; (11) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; (12) the combined companies’ ability to achieve the growth prospects and synergies expected from the proposed transaction, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses; and (13) legislative and economic developments. These risks, as well as other risks associated with the proposed transaction, are more fully discussed in the joint proxy statement/prospectus that is included in the registration statement on Form S-4 that has been filed with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction. In addition, actual results are subject to other risks and uncertainties that relate more broadly to SJW Group’s overall business, including those more fully described in its filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2017 and its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018, and Connecticut Water’s overall business and financial condition, including those more fully described in its filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2017 and its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018. Forward looking statements are not guarantees of performance, and speak only as of the date made, and neither SJW Group or its management nor Connecticut Water or its management undertakes any obligation to update or revise any forward-looking statements except as required by law.

IMPORTANT INFORMATION FOR INVESTORS AND SHAREHOLDERS

In response to the tender offer for all the outstanding shares of common stock of SJW Group commenced by California Water Service Group (“California Water”) through its wholly owned subsidiary, Waltz Acquisition Sub, Inc., SJW Group has filed a solicitation/recommendation statement on Schedule 14D-9 with the SEC.

Investors and shareholders of SJW Group are urged to read the solicitation/recommendation statement on Schedule 14D-9 and other documents that are filed or will be filed with the SEC carefully and in their entirety because they contain important information. Investors and shareholders of SJW Group may obtain a copy of these documents free of charge at the SEC’s website at www.sec.gov. These materials are also available free of charge at SJW Group’s investor relations website at https://sjwgroup.com/investor_relations. In addition, copies of these materials may be requested from SJW Group’s information agent, Georgeson LLC, toll-free at (866) 357-4029.

ADDITIONAL IMPORTANT INFORMATION AND WHERE TO FIND IT

In connection with the proposed transaction between SJW Group and Connecticut Water, on April 25, 2018, SJW Group filed with the SEC a registration statement on Form S-4 that includes a joint proxy statement of SJW Group and Connecticut Water that also constitutes a prospectus of SJW Group. These materials are not yet final and may be amended. SJW Group and Connecticut Water may also file other documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus, registration statement on Form S-4 or any other document which SJW Group or Connecticut Water may file with the SEC. Investors and shareholders of SJW Group and Connecticut Water are urged to read the registration statement on Form S-4, the joint proxy statement/prospectus and all other relevant documents that are filed or will be filed with the SEC, as well as any amendments or supplements to these documents, carefully and in their entirety because they contain or will contain important information about the proposed transaction and related matters. Investors and shareholders of SJW Group and Connecticut Water may obtain free copies of the registration statement on Form S-4 and the joint proxy statement/prospectus and other documents filed with the SEC by SJW Group and Connecticut Water through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by SJW Group are available free of charge on SJW Group’s investor relations website at https://sjwgroup.com/investor_relations. Copies of documents filed with the SEC by Connecticut Water are available free of charge on Connecticut Water’s investor relations website at https://ir.ctwater.com/.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Participants in the Solicitation

SJW Group, Connecticut Water and certain of their respective directors and officers, and other members of management and employees, may be deemed to be participants in the solicitation of proxies from the holders of SJW Group and Connecticut Water securities in respect of the proposed transaction. Information regarding SJW Group’s directors and officers is available in SJW Group’s annual report on Form 10-K for the fiscal year ended December 31, 2017 and its proxy statement for its 2018 annual meeting dated March 6, 2018, which are filed with the SEC. Information regarding Connecticut Water’s directors and officers is available in Connecticut Water’s annual report on Form 10-K for the fiscal year ended December 31, 2017, and its proxy statement for its 2018 annual meeting dated April 6, 2018, which are filed with the SEC. Investors may obtain additional information regarding the interest of such participants by reading the Form S-4 and the joint proxy statement/prospectus and other documents filed with the SEC by SJW Group and Connecticut Water. These documents are available free of charge from the sources indicated above.

EX-99.(A)(4)

Exhibit (a)(4)

SJW Group Board of Directors Unanimously Rejects California Water Service Group’s Unsolicited Cash Tender Offer

Reaffirms Unanimous Recommendation in Support of Signed, Definitive and Value-Accretive Merger Agreement with Connecticut Water Service

Urges Stockholders Not to Tender Their Shares to Cal Water’s Inferior, Stale and Highly Conditional Tender Offer

San Jose, CA – June 15, 2018 – SJW Group (NYSE: SJW) (the “Company”) today announced that its Board of Directors, following a careful and thorough review in consultation with SJW Group’s management as well as legal and financial advisors consistent with its fiduciary duties, unanimously rejected the highly-conditional unsolicited tender offer made by California Water Service Group (NYSE: CWT) (“Cal Water”) to acquire all outstanding shares of SJW Group at a price of $68.25 per share in cash. The Board recommends that SJW Group shareholders NOT tender their shares into Cal Water’s offer (the “Offer”) and reaffirms its recommendation that SJW Group stockholders vote FOR the signed, definitive merger agreement with Connecticut Water Service, Inc. (NASDAQ: CTWS) (“Connecticut Water”).

“My fellow directors and I carefully reviewed all aspects of Cal Water’s tender offer and unanimously concluded that its terms are effectively no different than those in Cal Water’s recent unsolicited non-binding indication of interest that we also carefully reviewed and rejected,” said Robert A. Van Valer, the lead independent director of SJW Group’s Board of Directors and trustee of the Roscoe Moss Jr. Revocable Trust, which is the largest stockholder of the Company. “Simply put, there’s nothing new here – it’s the same, highly conditional approach, just with a new moniker on the front cover.”

“What Cal Water calls a ‘common sense combination’ is in reality the same inferior, uncertain, and non-binding indication of interest, dressed up as a tender offer, but every bit as conditional, with a lengthy and uncertain timeline to close and the risk of significant tax consequences for our stockholders. We note particularly that the tender offer is explicitly conditioned on the SJW Board’s approval under the Delaware anti-takeover statute or Cal Water otherwise being satisfied that the Delaware anti-takeover statute is inapplicable, which means that Cal Water cannot realistically succeed with its illusory tender offer and merger without the approval of our Board. What’s more, it cannot possibly be described as ‘binding’ since it can be withdrawn by Cal Water at any time.”

In its careful review of Cal Water’s tender offer, SJW Group’s Board also took into consideration the impact the offer would have on SJW Group’s and its subsidiaries’ credit ratings and related cost of capital. In a report issued on June 12, 2018, S&P Global Ratings lowered its rating outlook on Cal Water from stable to negative to reflect “increased downside event risk associated with a potential transaction with [SJW Group].” This event risk includes, according to S&P Global Ratings, “the potential for [Cal Water’s] financial measures to weaken further in light of the announced cash tender offer.” These new ratings, which result directly from Cal Water’s decision to launch its unsolicited tender offer, are in direct contrast with S&P Global Ratings’ favorable perspective this past March about the positive impact SJW Group’s proposed merger of equals with Connecticut Water would have on San Jose Water Company’s credit rating. In the March report, S&P Global Ratings stated that it expects “the additional regulatory diversity and scale for the newly combined entity to improve the consolidated group credit profile if the merger is completed.”

SJW Group’s Board also believes that Cal Water’s tender offer, in addition to being inadequate in its own right, would deny SJW Group’s stockholders the opportunity to share in the value creation and numerous benefits expected to arise from the merger with Connecticut Water. The Board believes that SJW Group’s merger with Connecticut Water will deliver significant immediate and long-term value to SJW Group’s stockholders in the form of continued, robust dividends and potential share price appreciation and benefits to customers, all employees and the combined company’s communities in the form of lower cost infrastructure investments, sharing of best-practices and environmental stewardship, and increased career advancement opportunities.

The reasons for the SJW Group Board’s recommendation to reject Cal Water’s tender offer are set forth in more detail in a solicitation/recommendation statement on Schedule 14D-9, which is being filed with the Securities and

Exchange Commission (“SEC”) and disseminated to stockholders. In reaching the conclusions and in making the recommendation described above, the Board considered numerous factors, including, but not limited to, the following from SJW Group’s Schedule 14D-9:

• The Offer neither constitutes nor is reasonably likely to lead to a SJW Superior Proposal under the Company’s existing Merger Agreement with Connecticut Water.

• The Offer significantly undervalues SJW Group’s long-term prospects, particularly in light of the Merger of Equals.

• The Offer involves high execution risk:

• Because Cal Water does not have cash on hand sufficient to consummate the Offer nor does it have committed financing for this purpose; and

• Due to the need for regulatory approval in California and significant debt financing.

• Incurrence of a substantial amount of additional indebtedness would likely result in downgrades to Cal Water’s credit ratings, which would increase its borrowing costs and reduce the funds available to invest in needed infrastructure expenditures.

• The Offer values the Company below the price that Cal Water proposed to pay in the fall of 2017.

• The Board believes that the Offer price is below the price that prospective acquirors would be willing to pay in an acquisition of SJW Group, whether now or in the future.

• The Offer’s conditions create significant uncertainty and risk, raising significant doubts about whether it will ever be completed.

• Cal Water has discretion to extend the Offer indefinitely, and stockholders have no assurance they will receive payment in a timely fashion for shares tendered.

Copies of the Schedule 14D-9 and solicitation/recommendation statement are available on the SEC’s website at www.sec.gov and on the Company’s website at www.sjwgroup.com. Stockholders may also request additional copies of the Schedule 14D-9 by contacting the Company’s information agent, Georgeson, toll-free at (866) 357-4029 or by e-mail at SJW@Georgeson.com.

J.P. Morgan Securities LLC is serving as financial advisor to SJW Group, and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel.

Forward Looking Statements

This document contains forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “strategy,” or “anticipates,” or the negative of those words or other comparable terminology. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the risk that the conditions to the closing of the proposed business combination transaction between SJW Group and Connecticut Water Service, Inc. (“Connecticut Water”) may not be satisfied or waived, including the risk that required approvals from the security holders of each party to the proposed transaction are not obtained; (2) the risk that the regulatory approvals required for the proposed transaction are not obtained, or that in order to obtain such regulatory approvals, conditions are imposed that adversely affect the anticipated benefits from the proposed transaction or cause the parties to abandon the proposed transaction; (3) the risk that the anticipated tax treatment of the proposed transaction is not obtained; (4) the effect of water, utility, environmental and other governmental policies and regulations; (5) litigation relating to the proposed transaction; (6) uncertainties as to the timing of the consummation of the proposed transaction and the ability of each party to consummate the proposed transaction; (7) risks that the proposed transaction disrupts the current plans and operations of Connecticut Water or SJW Group; (8) the ability of Connecticut Water and SJW Group to retain and hire key personnel; (9) competitive responses to the proposed transaction; (10) unexpected costs, charges or expenses resulting from the proposed

transaction; (11) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; (12) the combined companies’ ability to achieve the growth prospects and synergies expected from the proposed transaction, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses; and (13) legislative and economic developments. These risks, as well as other risks associated with the proposed transaction, are more fully discussed in the joint proxy statement/prospectus that is included in the registration statement on Form S-4 that has been filed with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction. In addition, actual results are subject to other risks and uncertainties that relate more broadly to SJW Group’s overall business, including those more fully described in its filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2017 and its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018, and Connecticut Water’s overall business and financial condition, including those more fully described in its filings with the SEC, including its annual report on Form 10-K for the fiscal year ended December 31, 2017 and its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018. Forward looking statements are not guarantees of performance, and speak only as of the date made, and neither SJW Group or its management nor Connecticut Water or its management undertakes any obligation to update or revise any forward-looking statements except as required by law.

IMPORTANT INFORMATION FOR INVESTORS AND SHAREHOLDERS

In response to the tender offer for all the outstanding shares of common stock of SJW Group commenced by California Water Service Group (“California Water”) through its wholly owned subsidiary, Waltz Acquisition Sub, Inc., SJW Group has filed a solicitation/recommendation statement on Schedule 14D-9 with the SEC. Investors and shareholders of SJW Group are urged to read the solicitation/recommendation statement on Schedule 14D-9 and other documents that are filed or will be filed with the SEC carefully and in their entirety because they contain important information. Investors and shareholders of SJW Group may obtain a copy of these documents free of charge at the SEC’s website at www.sec.gov. These materials are also available free of charge at SJW Group’s investor relations website at https://sjwgroup.com/investor_relations. In addition, copies of these materials may be requested from SJW Group’s information agent, Georgeson LLC, toll-free at (866) 357-4029.

ADDITIONAL IMPORTANT INFORMATION AND WHERE TO FIND IT

In connection with the proposed transaction between SJW Group and Connecticut Water, on April 25, 2018, SJW Group filed with the SEC a registration statement on Form S-4 that includes a joint proxy statement of SJW Group and Connecticut Water that also constitutes a prospectus of SJW Group. These materials are not yet final and may be amended. SJW Group and Connecticut Water may also file other documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint proxy statement/prospectus, registration statement on Form S-4 or any other document which SJW Group or Connecticut Water may file with the SEC. Investors and shareholders of SJW Group and Connecticut Water are urged to read the registration statement on Form S-4, the joint proxy statement/prospectus and all other relevant documents that are filed or will be filed with the SEC, as well as any amendments or supplements to these documents, carefully and in their entirety because they contain or will contain important information about the proposed transaction and related matters. Investors and shareholders of SJW Group and Connecticut Water may obtain free copies of the registration statement on Form S-4 and the joint proxy statement/prospectus and other documents filed with the SEC by SJW Group and Connecticut Water through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by SJW Group are available free of charge on SJW Group’s investor relations website at https://sjwgroup.com/investor_relations. Copies of documents filed with the SEC by Connecticut Water are available free of charge on Connecticut Water’s investor relations website at https://ir.ctwater.com/.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, or a solicitation of any vote or approval in any

jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Participants in the Solicitation

SJW Group, Connecticut Water and certain of their respective directors and officers, and other members of management and employees, may be deemed to be participants in the solicitation of proxies from the holders of SJW Group and Connecticut Water securities in respect of the proposed transaction. Information regarding SJW Group’s directors and officers is available in SJW Group’s annual report on Form 10-K for the fiscal year ended December 31, 2017 and its proxy statement for its 2018 annual meeting dated March 6, 2018, which are filed with the SEC. Information regarding Connecticut Water’s directors and officers is available in Connecticut Water’s annual report on Form 10-K for the fiscal year ended December 31, 2017, and its proxy statement for its 2018 annual meeting dated April 6, 2018, which are filed with the SEC. Investors may obtain additional information regarding the interest of such participants by reading the Form S-4 and the joint proxy statement/prospectus and other documents filed with the SEC by SJW Group and Connecticut Water. These documents are available free of charge from the sources indicated above.

Contacts

Investors

Andrew Walters

Chief Administrative Officer, SJW Group

408-279-7818, andrew.walters@sjwater.com

Georgeson LLC

William Fiske / Edward Greene

212-440-9800; 866-357-4029, SJW@Georgeson.com

Media

Jayme Ackemann

Director, Corporate Communications, SJW Group

408-918-7247, jayme.ackemann@sjwater.com

Abernathy MacGregor

Ian Campbell, 213-630-6550, idc@abmac.com

Chuck Dohrenwend, 212-371-5999, cod@abmac.com

Kendell Moore, 212-371-5999, kem@abamac.com

EX-99.(E)(1)

Exhibit (e)(1)

CONFIDENTIALITY AGREEMENT

WHEREAS, by a letter dated May 10, 2018, California Water Service Group (“California Water”) made a demand pursuant to Section 220 of the General Corporation Law of the State of Delaware (the “Demand”) to inspect certain stockholder list materials of SJW Group (the “Company”);

WHEREAS, the Company believes that certain of the materials sought by California Water contain non-public, confidential or proprietary information; and

WHEREAS, subject to California Water executing this Confidentiality Agreement (this “Agreement”), the Company, without waiving any rights or objections, will make available to California Water copies of certain materials in response to the Demand.

IT IS HEREBY AGREED by and between the undersigned parties, this 18th day of May 2018, as follows:

1. This Agreement applies to any materials the Company will make available to California Water in response to the Demand (the “Produced Documents”).

2. Any Produced Document, and any information contained in any Produced Document, shall be considered “Confidential Information” under the terms of this Agreement. Confidential Information shall include, but is not limited to, information, data, reports, interpretations, forecasts and records and other personally or commercially sensitive information concerning the Company, its subsidiaries or affiliates or its stockholders, including, but not limited to, the names, addresses and holdings of individual Company stockholders, contained in any Produced Document furnished to California Water by the Company or its attorneys, proxy solicitors or consultants, through the production of the Produced Documents or otherwise in response to the Demand, and all notes, reports, analyses, compilations, studies and other

1

materials prepared by California Water (in whatever form maintained, whether documentary, electronically stored or otherwise) containing, reflecting or based upon, in whole or in part, any such information; provided, however, that Confidential Information shall not be deemed to include any notes, reports, analyses, compilations, studies and other materials prepared by California Water or any of its Advisors (as hereinafter defined) without reference to or use of the Produced Documents. Confidential Information shall not include any such information that (a) on the date hereof, as shown by written evidence, is already properly in the possession of California Water or any of its Advisors; (b) after the date hereof properly comes into California Water’ or any of its Advisors’ possession from a third party which, to California Water’ knowledge after reasonable inquiry, is not violating a confidentiality obligation by divulging such information; or (c) on the date hereof is, or subsequently becomes, publicly available other than as a result of a breach of this Agreement by California Water.

3. By producing the Confidential Information to California Water, the Company does not admit that it has stated a proper purpose for the inspection of such information and expressly reserves all rights and defenses related to the Demand.

4. The production of the Confidential Information is not, and will not be construed as, a waiver of any applicable privilege or immunity, including without limitation, the attorney-client privilege or the work product privilege. The Company expressly reserves the right to withhold documents protected from disclosure by the attorney-client privilege, the work product privilege, or any other applicable privilege or doctrine. If information subject to a claim of attorney-client privilege, attorney work product or any other privilege or protection is inadvertently produced to California Water, such production shall in no way prejudice or otherwise constitute a waiver of any claim of privilege, work product or other privilege or

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protection. If a claim of inadvertent production is made with respect to information then in the custody of California Water or its Advisors, California Water or its Advisors shall promptly return the information and all copies thereof to the Company, and California Water or its Advisors shall not use such information for any purpose. Should California Water or its Advisors thereafter seek to compel production of such material, neither California Water nor its Advisors shall assert the fact or circumstance of the inadvertent production as a ground for compelling production.

5. California Water hereby covenants and agrees that the Produced Documents shall be used only for the purpose stated in the Demand.

6. California Water shall not disclose, publish or transmit any of the Confidential Information to any person, either directly or indirectly, other than (a) to its Advisors; or (b) as otherwise permitted by this Agreement or applicable law.

7. In the event that California Water determines in its good faith judgment that information in a Produced Document is not reasonably entitled to protection as Confidential Information, then California Water shall give written notice of its objection, specifying with reasonable certainty the information for which such protection is disputed, but such information shall remain subject to such protection and restrictions, to the extent required by this Agreement.

8. Subject to the provisions of this Agreement, California Water may provide Confidential Information to its Advisors only after California Water has received a duly executed undertaking in the form attached as Exhibit A hereto. Copies of such undertakings shall be provided to Leif B. King (“Mr. King”), at Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) within two business days after execution. In the event of litigation, the contents of any such undertaking(s) may be disclosed, summarized, described, characterized or otherwise

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communicated or made available in whole or in part to a court or other tribunal. For purposes of this Agreement, “Advisor” shall mean any attorney, proxy solicitor, or bona fide consultant retained by California Water for the purposes of conducting the inspection, or providing advice or assistance to California Water relating to the inspection.

9. California Water agrees as a condition to receiving any Confidential Information in response to the Demand that (a) any dispute, controversy or causes of action between, among or involving the parties to this Agreement or any of their affiliates arising out of, relating to, involving or in connection with this Agreement (including the negotiation, execution or performance hereof), documents produced pursuant to this Agreement, or the subject matter outlined in the Demand shall be heard and determined exclusively in the Court of Chancery of the State of Delaware or, in the event that the Court of Chancery of the State of Delaware declines to accept jurisdiction over such action, any state or federal court of competent jurisdiction located in the State of Delaware (the “Chosen Courts”), (b) California Water agrees and consents to submit itself to personal jurisdiction and venue in any such action brought in the Chosen Courts and that it will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any court; and (c) Confidential Information, including any privilege log, shall be deemed to be incorporated by reference into any complaint that California Water files related to the issues raised in the Demand.

10. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles.

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11. Notwithstanding the restrictions contained herein, California Water shall not be limited from using any Confidential Information in order to enforce its legal rights in a court of competent jurisdiction as a stockholder of the Company under applicable laws and regulations; provided however, that if California Water determines to bring a lawsuit using Confidential Information, it will seek prior court permission (to the extent legally permissible) to file the complaint and other submissions and any attachments or exhibits to the complaint or other submissions or portions thereof that constitute or contain Confidential Information under seal, and if permission is granted, file such complaint and other submissions and any attachments or exhibits to the complaint or other submissions or portions thereof constituting or containing Confidential Information under seal. California Water will provide Mr. King of Skadden a fax copy of any motion or request seeking permission to file under seal on the same day the motion or request is provided to the court. In the event that the pertinent court denies California Water’ motion to file its complaint(s) under seal, California Water may file its complaint(s) in such court, but shall be prohibited from referencing or otherwise incorporating any Confidential Information into its complaint(s), or attaching any Confidential Information thereto. In addition, California Water shall take all steps reasonably necessary to ensure the continued confidentiality of the Confidential Information, including but not limited to entering into a protective order with all parties in any litigation sufficient to protect the Confidential Information from disclosure.

12. Following the certification of the voting results for the Special Meeting (as defined in the Demand), California Water shall promptly return to the Company the original and all copies of the Confidential Information that relate to stockholder records of the Company and delete any electronic version of such Confidential Information; provided, however, if, at such time, there is any pending litigation between the Company and/or its directors, officers and employees, on the one hand, and California Water on the other hand, California Water shall not be required to return such Confidential Information until the litigation has been concluded, in which case such Confidential Information continues to be subject to the provisions of this Agreement.

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13. If California Water or any of its Advisors are required (orally or in writing, by interrogatory, subpoena or any similar process relating to any legal proceeding, investigation, hearing or otherwise) to disclose any Confidential Information, California Water and/or its Advisor shall (a) provide the Company with prompt written notice upon receipt of such process, so that the Company may seek, at its sole expense, a protective order or other appropriate remedy and/or waive compliance with this Agreement; and (b) without liability hereunder, California Water and/or its Advisor shall furnish only such portion of the Confidential Information as is called for by such process and shall exercise their commercially reasonable efforts to obtain assurance that confidential treatment will be accorded to any Confidential Information that is compelled to be disclosed.

14. All notices and other communications under this Agreement shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, or by Federal Express or registered or certified mail, postage pre-paid, return receipt requested, as follows:

If to the Company:

SJW Group

110 West Taylor Street

San Jose, CA 95110

Attention: Suzy Papazian, General Counsel and Corporate Secretary

Email: legal@sjwater.com

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, CA 94301

Attention: Leif B. King; Kenton J. King; Pankaj K. Sinha

Email: leifking@skadden.com; kenton.king@skadden.com;

           pankaj.sinha@skadden.com

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If to California Water:

California Water Service Company

1720 North First Street

San Jose, CA 95112-4598

Attn: Lynne McGhee, General Counsel

Email: lmcghee@calwater.com

with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP

555 Mission St, Suite 3000

San Francisco, CA 94105

Attn: Douglas Smith; Eduardo Gallardo

Email: dsmith@gibsondunn.com; egallardo@gibsondunn.com

15. This Agreement may be executed by the signatories hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

16. This Agreement may be modified or waived only by a separate writing executed by California Water and the Company that expressly so modifies or waives this Agreement. Failure or delay in exercising any right, power or privilege hereunder shall not operate as a waiver thereof, and no single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise of any right, power or privilege.

17. This Agreement constitutes the only agreement between California Water and the Company with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written. The terms and conditions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors, trusts, affiliates, heirs, executors, legal representatives and permitted assigns. No party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party hereto. This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other persons.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the 18th day of May, 2018 by their respective officers thereunto duly authorized.

SJW GROUP
By:	/s/ Suzy Papazian
Name:	Suzy Papazian
Title:	General Counsel and Corporate
	Secretary
CALIFORNIA WATER SERVICE GROUP
By:	/s/ Paul Townsley
Name:	Paul Townsley
Title:	Vice President

[Signature Page to Confidentiality Agreement]

Exhibit A

UNDERTAKING

I hereby certify my understanding that confidential information is being provided to me pursuant to the terms and restriction of the Confidentiality Agreement entered into by and between California Water Service Group (“California Water”) and SJW Group (the “Company”), dated May 18, 2018 (the “Agreement”). I have read, understand and agree to be fully bound by the terms of the Agreement. I hereby agree and consent to submit to personal jurisdiction and venue in any action brought in connection with any matter arising to enforce any provision of the Agreement, will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any court and understand that such court may grant such relief as it deems appropriate if it finds that I have violated any of the terms of the Agreement. I hereby agree that the Produced Documents (as defined in the Agreement) shall be used only for the purpose set forth in the demand letter of California Water, dated May 10, 2018.

Signature:	/s/ Paul Townsley
Name:	Paul Townsley
Date:	May 17, 2081

A-1

EX-99.(E)(2)

Exhibit (e)(2)

Compensation of Directors

The following table sets forth certain information regarding the compensation of each non-employee member of the Board of Directors of SJW Group for the 2017 fiscal year:

Name	Fees Earned or Paid in Cash ($)(2)		Stock Awards ($)(3)		Total ($)
Katharine Armstrong	$	92,000	$	59,055	$	151,055
Walter J. Bishop	$	100,000	$	59,055	$	159,055
Douglas R. King	$	103,000	$	59,055	$	162,055
Gregory P. Landis	$	80,000	$	59,055	$	139,055
Debra C. Man	$	79,000	$	59,055	$	138,055
Daniel B. More	$	105,000	$	59,055	$	164,055
Ronald B. Moskovitz (1)	$	29,666	$	—	$	29,667
George E. Moss	$	77,750	$	59,055	$	136,805
Robert A. Van Valer	$	84,000	$	59,055	$	143,055

(1) Mr. Moskovitz served on the Board of Directors of the Corporation until April 26, 2017.

(2) Consists of the annual retainer and meeting fees for service as a member of the Board of Directors of the Corporation, San Jose Water Company, SJW Land Company, and SJWTX, Inc., including amounts deferred under the Corporation’s Deferral Election Program for Non-Employee Board members. The respective dollar amounts of these fees are set forth in the table below. For further information concerning such fees, see the sections below entitled “Director Annual Retainer” and “Director Meeting Fees.”

Name	2017 Retainer		2017 Meeting Fees		Total Annual Service Fees
Katharine Armstrong	$	55,000	$	37,000	$	92,000
Walter J. Bishop	$	55,000	$	45,000	$	100,000
Douglas R. King	$	50,000	$	53,000	$	103,000
Gregory P. Landis	$	50,000	$	30,000	$	80,000
Debra C. Man	$	50,000	$	29,000	$	79,000
Daniel B. More	$	50,000	$	55,000	$	105,000
Ronald B. Moskovitz	$	16,667	$	13,000	$	29,667
George E. Moss	$	55,000	$	22,750	$	77,750
Robert A. Van Valer	$	60,000	$	24,000	$	84,000

(3) Represents the grant-date fair value of the restricted stock unit award for 1,155 shares made to the non-employee director on April 26, 2017. The applicable grant-date fair value of each award was calculated in accordance with FASB ASC Topic 718 and accordingly determined on the basis of the closing selling price per share of SJW Group’s common stock on the award date as appropriately discounted to reflect the lack of dividend equivalent rights. The reported grant-date value does not take into account any estimated forfeitures related to service-vesting conditions. In addition to the restricted stock units, as of December 31, 2017, Messrs. King and Van Valer held deferred stock awards covering 9,128 and 2,657 shares of SJW Group’s common stock, respectively, with dividend equivalent rights. Any deferred shares so held are attributable to the director’s prior participation in certain deferred compensation programs implemented under the Corporation’s Long-Term Incentive Plan. For further information concerning those programs, see the sections below entitled “Deferral Election Program for Non-Employee Board Members” and “Deferred Restricted Stock Program.” The phantom dividends that accumulate on those deferred shares pursuant to the dividend equivalent rights are converted annually into additional deferred shares. For further information concerning such dividend equivalent rights, see the section below entitled “Dividend Equivalent Rights.” Such dividend equivalent rights were factored into the original grant-date fair value of the deferred shares determined for financial accounting

purposes under FASB ASC Topic 718, and accordingly no amounts are reported in this column with respect to the additional deferred shares attributable to the phantom dividends that accumulated during the 2017 fiscal year as a result of those dividend equivalent rights. Those 2017 fiscal year phantom dividends were converted into the following additional deferred shares for the non-employee directors on January 2, 2018: Mr. King was credited with 166 shares and Mr. Van Valer was credited with 48 shares. At the time of such credit, the fair market value per share of the Corporation’s common stock was $63.47, the closing price on January 2, 2018.

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Director Annual Retainer

The following table sets forth the 2017 annual retainer fees for the non-employee Board members of SJW Group, San Jose Water Company, SJW Land Company, SJWTX, Inc. and Texas Water Alliance Limited (“TWA”). The Corporation sold all its equity interest in TWA on November 16, 2017. SJW Group’s Board members therefore no longer serve on the TWA Board. The Director Compensation and Expense Reimbursement Policies were amended on January 31, 2018 to remove all references to TWA.

	Annual Retainer
SJW Group
Chair	$	30,000
Other Board Members	$	5,000
Additional Fee for Lead Independent Director	$	5,000
San Jose Water Company
Chair	$	60,000
Other Board Members	$	40,000
SJW Land Company
Chair	$	10,000
Other Board Members	$	5,000
SJWTX, Inc.
Chair	$	5,000
Other Board Members	$	5,000
Texas Water Alliance Limited
Chair	$	0
Other Board Members	$	0

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Director Meeting Fees

The following table sets forth the 2017 per meeting Board and Committee fees for the non-employee Board members of SJW Group, San Jose Water Company, SJW Land Company, SJWTX, Inc. and TWA. TWA did not hold meetings in 2017.

	Per Meeting Fee
SJW Group
Chair	$	1,000
Other Board Members	$	1,000
SJW Group Committees
Audit Committee Chair (for attending audit committee meetings)	$	3,000
Other Committee Chair (for attending their respective committee meetings)		2,000
Other Board Members	$	1,000
San Jose Water Company
Chair	$	1,000
Other Board Members	$	1,000
SJW Land Company
Chair	$	500
Other Board Members	$	500
SJWTX, Inc.
Chair	$	2,500
Other Board Members	$	500
Texas Water Alliance Limited
Chair	$	500
Other Board Members	$	500

As indicated above, the Director Compensation and Expense Reimbursement Policies were amended on January 31, 2018 to remove all references to TWA.

The meeting fees are the same for attending Board and Committee meetings held telephonically.

In the event a non-employee director attends an in-person Board or Committee meeting by telephone, he or she will be entitled to receive the applicable per meeting fee for the first meeting attended by telephone in a calendar year, and half of such meeting fee for each subsequent meeting attended by telephone in the same calendar year.

Non-employee directors may also receive fees determined on a case-by-case basis by SJW Group’s Executive Compensation Committee and ratified by the Board of Directors for attending additional meetings other than Board or Committee meetings, such as Board retreats, strategic planning meetings, or other programs organized by SJW Group, San Jose Water Company, SJW Land Company, or SJWTX, Inc. No such additional fees were paid in 2017.

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Deferral Election Program for Non-Employee Board Members

Pursuant to the Deferral Election Program, each non-employee member of the Corporation’s Board of Directors has the opportunity to defer: (i) either 50 percent or 100 percent of his or her annual retainer fees for serving on the Corporation’s Board and the Board of one or more subsidiaries; and (ii) 100 percent of his or her fees for attending pre-scheduled meetings of such Boards or any committees of such Boards on which he or she serves. The deferral election is irrevocable and must be made prior to the start of the year for which the fees are to be earned.

The fees which a non-employee Board member elects to defer under such program for the fiscal year are credited to a deferral election account pursuant to one of the following alternatives selected by the Executive Compensation Committee: (i) in a lump sum on the first business day of that calendar year or as soon as administratively practicable thereafter; or (ii) periodically when the fees would otherwise become due and payable during such calendar year in the absence of his or her deferral election for that calendar year in which case the amounts credited shall be fully vested on crediting. In the event of such lump sum credit, the non-employee Board members will vest in the portion of their account attributable to each Board or Board committee on which they serve during a calendar year in a series of 12 equal monthly installments upon their completion of each calendar month of service on that Board or Board committee during such calendar year. For the deferral election accounts established for the 2017 calendar year, the periodic credit alternative was utilized.

The deferral election account will be credited with a fixed rate of interest, compounded semi-annually, set at the start of each calendar year at the lower of (i) the then current 30-year long-term borrowing cost of funds to San Jose Water Company (or the equivalent thereof), as measured as of the start of such calendar year, or (ii) 120 percent of the long-term Applicable Federal Rate determined as of the start of such calendar year and based on semi-annual compounding.

Distribution of the vested balance credited to each Board member’s deferral election account will be made or commence on the 30^th day following his or her cessation of Board service. The cash distribution will be made either in a lump sum or through a series of up to 10 annual installments in accordance with the payment election such Board member made.

Messrs. More and Moss each elected to defer all of their 2017 annual retainer fees and pre-scheduled 2017 meeting fees, Messrs. King and Landis elected to defer all of their 2017 pre-scheduled meeting fees, Ms. Man elected to defer her 2017 annual retainer fees, and Mr. Bishop elected to defer 50 percent of his 2017 annual retainer fees.

Deferred Restricted Stock Program

Prior to the 2008 fiscal year, the non-employee directors were able to receive awards of deferred stock, either through the conversion of their deferred Board and Committee fees under the Deferral Election Program into deferred shares of SJW Group common stock or through their participation in the Deferred Restricted Stock Program. Both of those deferred stock programs were implemented under the Corporation’s Long-Term Incentive Plan (the “LTIP”).

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The principal features of the Deferred Restricted Stock Program may be summarized as follows:

Each non-employee director who commenced Board service on or after April 29, 2003 was granted: (i) a deferred stock award on the first business day of January following his or her completion of at least six months of service as a Board member; and (ii) annual grants of deferred stock on the first business day of January in each succeeding calendar year through the close of the 2007 calendar year, provided he or she remained a non-employee member of the Board through such date. The number of shares of the Corporation’s common stock underlying each annual deferred stock award was determined by dividing (i) the aggregate dollar amount of the annual retainer fees, at the levels in effect as of the date of grant, for service on the Board and for service on the Boards of Directors of the Corporation’s subsidiaries for the calendar year in which the grant was made by (ii) the fair market value per share of the Corporation’s common stock on the grant date. The shares subject to each deferred stock award are fully vested and will be issued from the LTIP on a distribution commencement date tied to the director’s cessation of Board service or other pre-specified date. The shares may be issued either in a single lump sum or in up to 10 annual installments, as elected by the director at the time of his or her initial entry into the Deferred Stock Program or pursuant to the special payment election made available in 2007.

In addition, each non-employee director who commenced Board service prior to April 29, 2003 and participated in the Director Pension Plan was given the opportunity during the 2003 calendar year to elect to convert his or her accumulated benefit under that plan into a deferred stock award. The accumulated benefit of each director who made such an election was converted, on September 1, 2003, into a deferred stock award of comparable value based on the fair market value per share of the Corporation’s common stock on such date. The award vested in 36 monthly installments over the director’s period of continued Board service measured from the conversion date.

In accordance with the foregoing, Mr. Moss elected to have his accumulated Director Pension Plan benefits converted into deferred stock pursuant to the Deferred Restricted Stock Program. As a result, Mr. Moss had $270,000 in Pension Plan benefits converted into a deferred stock award covering 19,014 shares of the Corporation’s common stock. The shares were distributed to Mr. Moss in 2008.

Restricted Stock Units and the Formulaic Equity Award Program for Non-Employee Board Members

The Company has implemented a Formulaic Equity Award Program for Non-Employee Board Members (“Formulaic Program”) under the LTIP which provides that at the close of business on the date of each annual stockholder meeting, beginning with the 2014 annual stockholder meeting, each individual who is elected or re-elected to serve as a non-employee Board member will automatically be granted restricted stock units covering that number of shares of common stock (rounded up to the next whole share) determined by dividing the Applicable Annual Amount by the fair market value per share on such date. The Applicable Annual Amount for 2017 was $60,000. Each restricted unit awarded entitles the non-employee Board member to one share of common stock on the applicable vesting date of that unit. Each restricted stock unit award will vest in full upon the non-employee Board member’s continuation

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in Board service through the day immediately preceding the date of the first annual stockholder meeting following the annual stockholder meeting at which that restricted stock unit award was made, subject to accelerated vesting under certain prescribed circumstances. Each non-employee Board member must retain beneficial ownership of at least 50 percent of the shares of common stock issued in connection with the vesting of such restricted stock units until such time as such individual is in compliance with the equity ownership guidelines that the Corporation from time to time establishes for its non-employee Board members. The Formulaic Program was amended on October 26, 2016 to increase the Applicable Annual Amount from $35,000 to $60,000 commencing with the 2017 annual stockholder meeting.

Pursuant to this program, on April 26, 2017, each non-employee Board member elected at the 2017 annual stockholder meeting received an award of restricted stock units covering 1,155 shares of common stock. The units will vest in full upon the Board member’s continuation in Board service through the day immediately preceding the date of the Corporation’s 2018 annual stockholder meeting, subject to accelerated vesting under certain prescribed circumstances.

Director Pension Plan

Mr. King continues to participate in the Director Pension Plan. Under such plan, Mr. King will receive a benefit equal to one half of the aggregate annual retainer for service on the Board of SJW Group, and the Boards of San Jose Water Company and SJW Land Company, following his cessation of service as a director. This benefit will be paid to Mr. King, his beneficiary or his estate, for four years. These payments will be made with the same frequency as the ongoing retainers. Directors who elected to convert their accumulated Director Pension Plan benefits into deferred restricted stock in 2003 and non-employee directors who commenced Board service on or after April 29, 2003, are not eligible to participate in the Director Pension Plan.

Dividend Equivalent Rights

Dividend Equivalent Rights (“DERs”) were part of the outstanding deferred stock awards credited to certain non-employee directors as a result of their pre-2008 participation in the Deferral Election and Deferred Restricted Stock Programs. Pursuant to those DERs, each such non-employee director’s deferred stock account under each program was credited, each time a dividend was paid on the Corporation’s common stock, with a dollar amount equal to the dividend paid per share multiplied by the number of shares at the time credited to the deferred stock account, including shares previously credited to the account by reason of the DERs. As of the first business day in January each year, the cash dividend equivalent amounts so credited in the immediately preceding year was converted into additional shares of deferred stock by dividing such cash amount by the average of the fair market value of the Corporation’s common stock on each of the dates in the immediately preceding year on which dividends were paid.

Effective as of January 1, 2008, the Corporation imposed a limitation on the maximum number of years such DERs continued to remain outstanding. Accordingly, such DERs terminated with the dividends paid by the Corporation during the 2017 calendar year, with the last DER conversion into deferred stock occurring on the first business day in January 2018. As part of the DER phase-out, each non-employee Board member was given the opportunity to

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make a special election by December 31, 2007, to receive a distribution from his accounts under the two programs in either (i) a lump sum distribution in any calendar year within the 10-year period from 2009 to 2018 or (ii) an installment distribution over a five or 10-year period within that 10-year period. The amount distributable from each such account would be equal to the number of deferred shares credited to that account as of December 31, 2007, plus the number of additional deferred shares subsequently credited to that account by reason of the DERs existing on those deferred shares during the period prior to their distribution. No further DERs will be paid on the distributed shares, but those shares will be entitled to actual dividends as and when paid to the Corporation’s stockholders. In the absence of such special payment election, the distribution of the non-employee Board member’s accounts will continue to be deferred until cessation of Board service.

On January 2, 2018, the following current non-employee Board members were credited with additional shares of deferred stock pursuant to their DERs: Mr. King, 166 shares; and Mr. Van Valer, 48 shares.

Expense Reimbursement Policies

Under the Corporation’s Director Compensation and Expense Reimbursement Policies, each non-employee director will be reimbursed for all reasonable expenses incurred in connection with his or her attendance at Board or committee meetings of SJW Group or its subsidiaries as well as his or her attendance at certain other meetings held by such companies. Expenses subject to reimbursement include the expense of traveling by non-commercial aircraft if within 1,000 miles of company headquarters and approved by the Chairman of the Board, and the expense of traveling first class for any travel within the United States. A copy of the Director Compensation and Expense Reimbursement Policies, amended and restated as of January 1, 2014, is attached as Exhibit 10.36 to the Form 10-K filed for the year ended December 31, 2013. The first amendment to such amended and restated Director Compensation and Expense Reimbursement Policies is attached as Exhibit 10.47 to the Form 10-K filed for the year ended December 31, 2016. A copy of the Director Compensation and Expense Reimbursement Policies amended and restated on January 31, 2018 is attached as Exhibit 10.53 to the Form 10-K filed for the year ended December 31, 2017.

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EX-99.(E)(3)

Exhibit (e)(3)

EXECUTIVE COMPENSATION AND RELATED INFORMATION

Compensation Discussion and Analysis

The Executive Compensation Committee (the “Committee”) of the Board of Directors is responsible for reviewing and approving the compensation payable to our officers and other key employees. This Compensation Discussion and Analysis discusses the principles underlying policies and decisions relating to named executive officer compensation for the 2017 fiscal year. Our “named executive officers” for 2017 are listed below:

Name	Title
Eric W. Thornburg	President and Chief Executive Officer of SJW Group (since November 6, 2017)
W. Richard Roth	Former President and Chief Executive Officer of SJW Group (until November 5, 2017) and Former Chief Executive Emeritus of SJW Group (until December 31, 2017)
Andrew R. Gere	President and Chief Operating Officer of San Jose Water Company (“SJWC”)
Palle L. Jensen	Executive Vice President of SJWC
James P. Lynch	Chief Financial Officer and Treasurer of SJW Group
Suzy Papazian	General Counsel and Corporate Secretary of SJW Group

Company Performance Highlights

The following charts highlight our performance on key financial metrics over each of the last five years:

Executive Compensation Highlights

We believe that compensation should motivate our executives to contribute to the Corporation’s long-term growth. In fiscal year 2017, we continued our strong commitment to pay for performance by aligning a significant portion of executive compensation with performance. Our compensation program for the named executive officers consisted primarily of base salary, a cash incentive program (“STI”) and an equity incentive program (“LTI”) in the form of performance-based and service-based restricted stock units (“RSU”).

The STI and LTI are driven by metrics that align with the Corporation’s business, short-term strategic operating goals and long-term growth strategy. For the 2017 fiscal year, the STI corporate performance goals were tied to capital additions, water quality compliance and several key operational goals measuring the successful operation of the business. For the performance-based RSUs, the goals included total shareholder return, return on equity and earnings per share.

Mr. Roth served as our President and Chief Executive Officer (“CEO”) until November 5, 2017 and as our Chief Executive Emeritus until December 31, 2017. His 2017 target pay mix was based on his 2014 amended employment agreement which is described on page 34 of this proxy statement. As indicated in the chart below, his 2017 performance-based and long-term incentives constituted 52 percent of his annual total target direct compensation; this allocation is generally consistent with the average for our peer group as set forth below.

Mr. Thornburg has been our President and CEO since November 6, 2017. His 2017 and 2018 target pay mix were negotiated under his employment agreement which is described on page 66 of this proxy statement. Since Mr. Thornburg joined the Corporation towards the end of the 2017 fiscal year, he was not granted performance-based equity or performance-based cash awards for the 2017 fiscal year. As indicated in the chart below, the 2018 performance-based and long-term incentives for Mr. Thornburg constituted 61 percent of his annual total target direct compensation (not including the special sign-on cash bonus paid in 2018); this allocation is generally consistent with the average for our peer group as set forth below.

As indicated by the chart below, the 2017 performance-based and long-term incentives for our other named executive officers constituted 37 percent of the officer’s annual total target direct compensation; this allocation is generally consistent with the average for our peer group as set forth below.

For further information regarding our cash and equity incentive compensation programs, see the sections entitled “Annual Cash Incentive Compensation” and “Equity Compensation” appearing later in this “Compensation Discussion Analysis” section.

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Compensation Program Changes for 2017

The Committee annually reviews our compensation programs and strives to enhance the connection between company performance, stockholder interests and executive compensation. The Committee had undertaken a comprehensive review of our compensation philosophy, policies and practices and had made significant changes to our 2015 executive compensation programs that we continued in 2017 to better align with our strategic objectives, respond to changes in the marketplace and to take into consideration feedback received from stockholders and stockholder advisory groups, specifically:

Changes to the Executive Compensation Programs Effective for 2017	Rationale for Change
Assessed the peer group used to benchmark executive compensation	Ensure peer group best represents the market for executive talent among similar size, publicly-traded regulated utility companies
Increased the portion of the equity awards that are tied to performance-based vesting from 30% to 50% for the other executive officers (subject to clawback)	Increase performance-based component of the other executive officers’ total compensation (and include clawback provisions in the performance-based equity awards)
Introduced multi-year financial performance goals for a portion of the equity awards for the other executive officers	Include long-term performance based equity awards for the other executive officers

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Conducted annual review of company performance metrics	Eliminate any overlap of performance metrics in our annual cash incentive and long-term incentive plans
Adjusted the target annual cash incentive opportunities for the other executive officers	Ensure more consistent executive officer pay mix (target annual cash incentive opportunity of 25% of salary for each of the executive officers)
Increased the weighting on company financial and operational goals in the annual cash incentive plan from 50% to 75% for the other executive officers	Increase alignment of the other executive officers with CEO cash incentive compensation

In negotiating the employment agreement with Mr. Thornburg, we took into account updated data regarding market practices, and additional feedback we had received from stockholders and stockholder advisory groups. In particular, we made changes to our compensation programs applied to Mr. Thornburg as outlined in the table below. The principal terms of the employment agreement are summarized in the section entitled “Employment Agreements, Termination of Employment and Change in Control Arrangements” that appears later in this proxy statement.

Additional Changes to the Executive Compensation Programs for the CEO	Rational for Change
Amended the Executive Severance Plan so the tax gross-up provisions do not apply to the newly appointed CEO	The CEO will not receive any tax gross-up under the Executive Severance Plan
Increased the 2018 target annual cash incentive compensation from 25% to 50% of base salary for the CEO	Increase performance-based component of the CEO’s total compensation and ensure that pay mix better reflects market data
CEO 2018 annual cash incentive compensation weighting changed from 100% based on company performance to 75% based on company performance and 25% based on individual performance based on key strategic goals	Increase alignment of CEO cash incentive compensation with the other executive officers, consistent with market practice
Tied 70% of the CEO’s 2018 equity awards to performance goals	Significant portion of the CEO equity awards subject to performance goals

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Executive Compensation Governance Highlights

Our compensation practices keep the best interests of our stockholders in mind. This means we adhere to certain best practices while avoiding certain other less favorable pay practices as summarized below:

• A significant portion of our named executive officer’s compensation is at risk, using a combination of financial, operational and market-based performance metrics that correlate to stockholder value;

• We use a combination of short-term and long-term incentives to ensure a strong connection between our performance and the actual compensation delivered;

• 35 percent of the equity awards granted to Mr. Roth in 2014 in connection with his amended employment agreement were subject to vesting based on attainment of financial performance goals over a three-year performance period (which ended on December 31, 2017);

• 70 percent of the equity awards granted to Mr. Thornburg in 2018 pursuant to the terms of his employment agreement are subject to vesting based on attainment of financial and market-based performance goals over a three-year performance period;

• 20 percent of the 2017 equity awards granted to our other named executive officers are subject to vesting based on multi-year financial performance goals and 30 percent of the 2017 equity awards are subject to short-term financial performance goals;

• We retain an independent compensation consultant to advise the Committee;

• We regularly evaluate our peer group and pay positioning;

• Our performance-based equity awards are subject to clawback;

• We prohibit hedging and or pledging of our common stock;

• We do not pay dividends on unearned equity awards or unearned performance-based equity awards unless and until the awards vest;

• We do not provide tax gross-ups for any imputed income in connection with perquisites;

• The change-in-control protections in the Executive Severance Plan are double trigger;

• We maintain executive stock ownership guidelines that require our executives to hold stock equal to a specified multiple of base salary. The ownership levels are two times base salary for our CEO and one times base salary for our other executive officers; and

• We annually assess whether our compensation programs have risks that are reasonably likely to have a material adverse effect on the Corporation.

Impact of 2017 “Say-on-Pay” Vote and “Say-on-Pay” Frequency Vote

We held our last “say-on-pay” vote in 2017 and approximately 96.5 percent of the votes cast on such proposal were in favor of the compensation of the named executive officers. In 2017, our stockholders voted in favor of holding a “say-on-pay” vote once every year. Therefore, based on the voting preference of our stockholders, the frequency of future “say-on-pay” votes will be annual.

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The Committee will continue to take into account future stockholder advisory votes on executive compensation and other relevant market developments affecting executive officer compensation in order to determine whether any subsequent changes to our programs and policies are warranted to reflect stockholder concerns or to address market developments.

Compensation Objectives and Philosophy

The Committee seeks to maintain an overarching pay-for-performance compensation philosophy through the use of compensation programs for the Corporation’s executive officers that are designed to attain the following objectives:

• Recruit, motivate and retain executives capable of meeting the Corporation’s strategic objectives;

• Provide incentives to achieve superior executive performance and successful operation and financial results for the Corporation; and

• Align the interests of executives with the long-term interests of stockholders.

The Committee seeks to achieve these objectives by:

• Establishing a compensation structure that is both market competitive and internally fair;

• Linking a substantial portion of compensation to the Corporation’s operational and financial performance and the individual’s contribution to that performance;

• Maintaining a compensation structure that is designed to provide below-target compensation for underachievement and upward leverage for exceptional performance; and

• Providing long-term equity-based incentives and encouraging direct stock ownership by executive officers.

The Committee is not authorized to delegate any of its authority with respect to executive officer compensation, other than with respect to routine administrative functions. However, the Committee may from time to time consult with other independent Board members regarding executive compensation matters and is authorized to hire independent compensation consultants and other professionals to assist in the design, formulation, analysis and implementation of compensation programs for the Corporation’s executive officers and other key employees.

Setting Executive Compensation for 2017

The principal factors that the Committee considered when setting the 2017 fiscal year compensation levels for the named executive officers were as follows:

• Competitive benchmarking;

• Long-term retention;

• Management’s recommendations;

• Advice from the Committee’s independent compensation consultant and other compensation advisors;

• Results of the last “say-on-pay” proposal;

• Feedback from stockholders and stockholder advisory groups;

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• Comparison of the Corporation’s performance against certain operational and qualitative goals identified in our strategic plan;

• Individual performance as assessed by the Committee, with input from the CEO as to the named executive officers other than himself;

• The cost of living and cost of labor in the San Francisco Bay Area; and

• Tenure, future potential and internal pay equity.

Major compensation decisions for each fiscal year, including base salary adjustments, the determination of target annual incentive cash compensation opportunities and the determination of the size of long-term equity incentive awards, are generally made by the Committee during the last quarter of the prior year or during the first quarter of the current year.

Benchmarking: The Committee made a number of decisions regarding 2017 fiscal year compensation for the named executive officers (other than for Messrs. Roth and Thornburg) on the basis of the executive compensation benchmarking report prepared by Mercer (US), Inc. (“Mercer”) in October 2016. The report benchmarked the compensation paid by the peer group (as described below) to their executive officers. The compensation data was based on 2016 proxy disclosures aged forward for compensation planning purposes, reflecting the historic nature of the collected data.

In determining compensation for Mr. Thornburg, the Committee used compensation benchmarking reports prepared by Mercer and by Pearl Meyer in September 2017. The compensation data in these reports was based on 2017 proxy disclosures for the revised peer group as described below.

Peer Group: Based on recommendations from Mercer in October 2016, the peer group approved by the Committee for 2017 executive compensation was the same as for 2016. The peer group is comprised of companies that are U.S. publicly traded utility companies of similar size and companies that are identified externally as the Corporation’s peers. The Committee believed that all of the peer companies continued to represent primary competitors for executive talent and investment capital. The peer group was comprised of the following companies:

Peer Group
American States Water	American Water Works	Artesian Resources	Aqua America
California Water Service Group	Chesapeake Utilities	Connecticut Water Service	El Paso Electric
Empire District Electric	Gas Natural	MGE Energy	Middlesex Water
Northwest Natural Gas	South Jersey Industries	Unitil	York Water

In 2017, Mercer assessed the peer group for ongoing appropriateness. Based on recommendations from Mercer, the Committee approved changes to the peer group to be used for Mr. Thornburg’s 2017 compensation and for all the executive officers’ 2018 compensation. The following changes were made to the peer group: (i) Empire District Electric Company was removed since it was acquired in 2017, and (ii) American Water Works Company, Inc. and Gas Natural, Inc. were removed and Avista Corp. and PNM Resources Inc. were added in light of their company sizes.

Target Pay Positioning: For the 2017 fiscal year, the Committee targeted total annual direct compensation between the median and the 75^th percentile of the peer group in light of the highly competitive San Francisco Bay Area talent market and the higher cost of living and cost of labor for the Corporation as compared to its peers. Individual positioning relative to market data also gives consideration to tenure, performance, potential and internal equity. In 2017, in response to feedback from stockholder advisory groups, the Committee reviewed the target pay positioning policy described above. Mercer provided the Committee with an analysis of the cost of living and cost of labor for peer companies based on their corporate headquarters location, with the cost of labor focused on positions with compensation levels in a similar range to the Corporation’s executive officers. Based on the findings of this analysis, the Committee decided to continue to target compensation for executive officers between the median and the 75^th percentile, subject to additional considerations of tenure, potential and internal equity.

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The table below shows the market positioning of the executive officer target total direct compensation relative to the peer group based on data as was provided by Mercer to the Committee. For Mr. Thornburg, this reflects fiscal 2018 target compensation as compared to the market data prepared by Mercer in September 2017 incorporating the revised peer group discussed above. For all other executive officers, this reflects fiscal 2017 target compensation as compared to the peer group market data as prepared by Mercer in October 2016.

Name	Title	Percentile Level of Total Target Direct Compensation for 2017 Fiscal Year
Eric W. Thornburg	President and Chief Executive Officer		48th	(1)
W. Richard Roth	Former President, Chief Executive Officer and Chief Executive Emeritus		56th	(2)
Andrew R. Gere	President and Chief Operating Officer of SJWC		81st
Palle L. Jensen	Executive Vice President of SJWC		67th
James P. Lynch	Chief Financial Officer and Treasurer		66th
Suzy Papazian	General Counsel and Corporate Secretary		49th

(1) This reflects positioning of Mr. Thornburg’s 2018 target compensation, excluding the sign-on cash bonus paid in 2018 and the special equity award granted in November 2017.

(2) For purposes of such calculation, the grant-date fair values of equity awards provided to Mr. Roth under the amended employment agreement were annualized over the respective vesting periods.

Role of External Advisors: The Committee engaged Mercer, a global human resource consulting firm with extensive expertise and experience providing executive compensation consulting services, to serve as the Committee’s independent compensation consultant. Mercer provided the following services:

• Advised the Committee in selecting a peer group to be used for benchmarking compensation;

• Conducted a competitive review of officer compensation levels and practices relative to the peer group;

• Advised the Committee in determining the appropriate base salary, annual incentive and equity compensation terms for the named executive officers, including Mr. Thornburg, and other officers;

• Advised the Committee regarding short and long-term incentive compensation design changes; and

• Confirmed the competitiveness of director compensation relative to the peer group.

Representatives of Mercer attended certain Committee meetings and provided guidance and expertise on competitive pay practices and plan designs consistent with our key objectives.

The Committee also engaged Pearl Meyer, a leading executive compensation advisor, to assist in connection with the negotiation of Mr. Thornburg’s employment agreement and his compensation package.

The Committee determined that Pearl Meyer and Mercer were each independent and that their work did not raise any conflict of interest. The Committee made such determinations primarily on the basis of the six factors for assessing independence and identifying potential conflicts of interest that are set forth in Rule 10C-1(b)(4) under the Securities

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Exchange Act of 1934. The Committee will apply the same factors, together with any factors identified by the New York Stock Exchange and any other factors the Committee may deem relevant under the circumstances, in determining whether any other persons from whom the Committee seeks advice relating to executive compensation matters is independent or whether any potential conflicts exist.

Role of Management: Mr. Roth provided the Committee with recommendations regarding 2017 fiscal year compensation levels for each of the named executive officers other than himself. Such recommendations included base salary adjustments, target annual incentive cash compensation opportunities and payout levels, and the size of long-term incentive awards. Messrs. Roth and Thornburg each provided the Committee with their assessment of the individual performance of each of the other named executive officers during 2017.

CEO Employment Agreements

As indicated above, Mr. Roth served as the President and CEO of the Corporation until November 5, 2017 and as the Chief Executive Emeritus of the Corporation until December 31, 2017. Mr. Thornburg has been serving as the President and CEO of the Corporation since November 6, 2017.

Employment Agreement with Mr. Roth: In July 2014, the Committee negotiated a new compensation package with Mr. Roth and amended his employment agreement. The primary objective of the amended agreement was to retain Mr. Roth’s services and his leadership and direction in the achievement of the Corporation’s strategic business objectives through the end of the 2017 fiscal year. Therefore, the new compensation package utilized a multi-year equity award structure in lieu of a series of annual grants, and a combination of performance-vesting requirements and service-vesting requirements on the equity awards that were intended to enhance stockholder value, promote the retention of his services, and provide a competitively positioned annualized total direct compensation package over the extended contract term. The Corporation entered into a Transition Agreement with Mr. Roth in September 2017 setting forth the services to be provided by Mr. Roth during his remaining employment period (from November 6, 2017 until December 31, 2017). Mr. Roth continued to receive the same base salary, benefits, and compensation during the transition period as those set forth in his existing employment agreement.

In accordance with the terms of his employment agreement, Mr. Roth’s annual base salary for the 2017 was increased by four percent to $767,936 and his target annual incentive cash compensation remained at 25 percent of his base salary.

Employment Agreement with Mr. Thornburg: In September 2017, the Committee negotiated an employment agreement and compensation package with Mr. Thornburg. The primary objective of the employment agreement was to retain Mr. Thornburg’s services and his leadership and direction in the achievement of the Corporation’s strategic business objectives in light of Mr. Roth’s upcoming retirement. Therefore, the compensation package utilizes a multi-year equity award structure, and a combination of performance-vesting requirements and service-vesting requirements on the equity awards that are intended to enhance stockholder value, promote the retention of his services, and provide a competitively positioned annualized total direct compensation package.

The principal terms of the employment agreement are summarized in the section entitled “Employment Agreements, Termination of Employment and Change in Control Arrangements” that appears later in this proxy statement. However, for purposes of this discussion, it is important to note the following key points regarding the employment agreement:

• Mr. Thornburg’s annual base salary for the 2017 and 2018 calendar years is $700,000.

• Mr. Thornburg’s target annual incentive cash compensation is 50 percent of his base salary starting with the 2018 fiscal year.

• Mr. Thornburg received a sign-on cash bonus in the amount of $310,000 in the first quarter of 2018. This bonus was intended in part to offset the 2017 cash incentive award forfeited by Mr. Thornburg in light of his move to the Corporation.

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• 70 percent of Mr. Thornburg’s target equity awards are in the form of performance-based RSUs which are based on a three-year performance period.

• Mr. Thornburg is eligible to receive enhanced severance benefits under the Executive Severance Plan (but not a tax gross-up) and enhanced retirement benefits under the Cash Balance Executive Supplemental Retirement Plan.

• Mr. Thornburg is entitled to certain severance benefits (under certain circumstances where he is not eligible for benefits under the Executive Severance Plan).

• The target total direct compensation package for Mr. Thornburg for 2018, excluding the sign-on cash bonus paid in 2018 and the special equity award granted in November 2017, is at approximately the 48th percentile of the 2018 peer group.

• Mr. Thornburg’s compensation is subject to clawback in accordance with applicable laws and regulations.

The Committee believes that Mr. Thornburg’s employment package is competitive with the market and is aligned with the Corporation’s pay for performance principles.

Components of Compensation

For the 2017 fiscal year, the principal components of the Corporation’s executive compensation program were as follows:

• Base salary;

• Annual short-term cash incentives;

• Long-term equity incentive awards; and

• Retirement benefit accruals.

In setting the 2017 compensation of the executive officers (other than the CEOs), the Committee intended to: (i) provide a consistent mix of fixed (salary) and variable (STI) cash compensation by defining the target STI as 25 percent of salary for each executive officer, and (ii) provide a LTI grant value calculated as a consistent percentage (31 percent) of base salary resulting in a consistent target pay mix for such executive officers. However, there is no policy for the allocation of compensation between cash and non-cash (equity) components or between short-term and long-term components, and there are no pre-established ratios between the CEO’s compensation and that of the other named executive officers. The Committee determines the total direct compensation of each named executive officer based on its review of competitive market data for his or her position and its subjective analysis of that individual’s performance and contribution to the Corporation’s financial performance. The Committee may also take into account internal pay equity considerations based on the individual’s relative duties and responsibilities within the organization. The named executive officers are also provided with market competitive benefits and perquisites and are entitled to certain severance benefits in the event their employment terminates under certain defined circumstances, as more fully set forth below in this section and in the section entitled “Employment Agreements, Termination of Employment and Change in Control Arrangements” that appears later in this proxy statement.

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Base Salary

It is the Committee’s objective to set a competitive annual rate of base salary for each executive officer. The Committee believes that such competitive base salaries are necessary to attract and retain top quality executives, since it is common practice for public companies to provide their executive officers with an annual component of compensation that provides a level of economic security and continuity from year to year, without substantial adjustments to reflect the Corporation’s performance.

CEO Base Salary: Pursuant to Mr. Roth’s amended employment agreement, his base salary for calendar year 2017 was set at $767,936 which represented a four percent increase over his base salary for calendar year 2016. The Committee believed that this salary appropriately reflects the tenure, experience and performance of Mr. Roth within the context of the overall compensation philosophy.

Pursuant to Mr. Thornburg’s employment agreement, his base salary for calendar years 2017 and 2018 was set at $700,000. The Committee believes that this salary similarly appropriately reflects the performance and experience of Mr. Thornburg within the context of the overall compensation philosophy.

Base Salary of the Other Named Executive Officers: In setting the 2017 fiscal year base salaries for the other named executive officers, the Committee considered each executive officer’s tenure and responsibilities with the Corporation, competitive market data for his or her position, the high cost of living in the San Francisco Bay Area, internal pay equity considerations, and the other components of the officer’s total direct compensation for the year. The Committee approved market-based salary adjustments and merit-based increases that ranged from 4.4 to 22.7 percent increases for the below-listed named executive officers. Accordingly, the base salary levels in effect for the 2016 and 2017 fiscal years for each named executive officer and the applicable percentage increases for the 2017 fiscal year are as follows:

Name	Title	2016 Salary		2017 Salary		% Increase
Eric W. Thornburg	President and Chief Executive Officer		N/A	$	700,000		N/A	(1)
W. Richard Roth	Former President, Chief Executive Officer and Chief Executive Emeritus	$	738,400	$	767,936		4.0	% (2)
Andrew R. Gere	President and Chief Operating Officer of SJWC	$	365,000	$	448,000		22.7	% (3)
Palle L. Jensen	Executive Vice President of SJWC	$	344,000	$	378,000		9.9	% (4)
James P. Lynch	Chief Financial Officer and Treasurer	$	410,000	$	428,000		4.4	%
Suzy Papazian	General Counsel and Corporate Secretary		N/A	$	362,000		N/A	(1)

(1) Mr. Thornburg and Ms. Papazian were not named executive officers prior to the 2017 fiscal year.

(2) Mr. Roth’s 2017 salary was set forth under his amended employment agreement.

(3) Mr. Gere’s 2017 salary was increased to be internally equitable.

(4) Mr. Jensen’s 2017 salary was increased in an effort to bring his total compensation in line with the competitive market.

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Annual Cash Incentive Compensation

As part of their total compensation package, the Corporation’s executive officers have the opportunity to earn an annual cash incentive award. The cash incentive awards are designed to reward superior corporate and executive performance while reinforcing the Corporation’s short-term strategic operating goals. The potential cash incentive awards for the executive officers for the 2017 fiscal year were tied to the Corporation’s attainment of the following performance goals: (i) capital additions; (ii) water quality compliance; and (iii) several key operational goals. The operational goals represent a mix of quantitative goals covering key business objectives used to manage the business that are critical to achieving and maintaining superior performance in the public utilities industry. The operational goals are critical to measuring the successful operation of the business. All financial and non-financial goals are quantitative goals set by the Committee at the start of the fiscal year. The potential cash incentive awards for the named executive officers other than the CEOs were also tied to individual performance goals established by the Committee.

Each year, the Committee establishes target annual incentive cash compensation for each named executive officer (tied to either a percentage of base salary or a specific dollar amount). The total target annual cash incentive compensation opportunities for 2017 were adjusted to ensure more consistent executive officer pay mix (target annual cash incentive opportunity of 25 percent of salary for all executive officers). The target annual cash incentive compensation levels in effect for the 2016 and 2017 fiscal years for each named executive officer and the applicable percentage increases for the 2017 fiscal year are as follows:

		Annual Incentive Cash Compensation
Name	Title	2016 Target ($)		2017 Target ($)		% Increase
Eric W. Thornburg	President and Chief Executive Officer		N/A		N/A		N/A	(1)
W. Richard Roth	Former President, Chief Executive Officer and Chief Executive Emeritus	$	184,600	$	191,984		4.0	% (2)
Andrew R. Gere	President and Chief Operating Officer of SJWC	$	90,000	$	112,000		24.4	% (3)
Palle L. Jensen	Executive Vice President of SJWC	$	106,000	$	95,000		(10.4	)% (4)
James P. Lynch	Chief Financial Officer and Treasurer	$	100,000	$	107,000		7.0	% (3)
Suzy Papazian	General Counsel and Corporate Secretary		N/A	$	91,000		N/A	(1)

(1) Mr. Thornburg and Ms. Papazian were not a named executive officer prior to the 2017 fiscal year. Mr. Thornburg is not eligible to receive incentive cash compensation for 2017.

(2) Mr. Roth’s target annual cash incentive compensation was set at 25% of his base salary, the same percentage as for 2016, in accordance with the terms of his employment agreement. The increase in target annual cash incentive compensation for 2017 is due to the 4% increase in Mr. Roth’s base salary for 2017.

(3) Messrs. Gere’s and Lynch’s 2017 target annual cash incentive compensation were increased to be equal to 25% of their respective 2017 salaries to ensure a more consistent executive officer pay mix.

(4) Mr. Jensen’s target annual cash incentive compensation was decreased in 2017 to be equal to 25% of his 2017 salary.

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The potential payout for each such annual cash incentive compensation award can range from 0 to 150 percent of target for Mr. Roth based on the Corporation’s performance against the pre-established performance goals, and from 0 to 200 percent of target for the other named executive officers, based on the Corporation’s performance against the pre-established performance goals and the Committee’s assessment of the officer’s performance for such year.

CEO’s Annual Cash Incentive Compensation for the 2017 Fiscal Year: Mr. Thornburg was not eligible to receive incentive cash compensation for the 2017 fiscal year. He received a sign-on bonus in the amount of $310,000 in February 2018 in accordance with the terms of his employment agreement.

The actual dollar amount of Mr. Roth’s annual cash incentive compensation for the 2017 fiscal year was tied to the level at which the Corporation attained the corporate performance goals established by the Committee for that year and ranged as follows:

Level of Performance	Below Threshold Performance		Threshold Performance		Target Performance		Maximum Performance
Payout		—		$95,992 (12.5% of base salary)		$191,984 (25% of base salary)		$287,976 (37.5% of base salary)

The actual 2017 annual cash incentive compensation award approved for Mr. Roth was $279,977, or 145.8 percent of his 2017 target annual cash incentive compensation as described further below.

The performance goals set by the Committee for the 2017 fiscal year, together with the portion of Mr. Roth’s target annual cash incentive compensation allocated to each goal and the amount of annual cash incentive compensation earned for each goal, were as set forth below. Each performance goal was attained at the maximum goal except for Workers Compensation Experience Modification Rate which was attained between the threshold and target level.

Performance Criteria	Goals and Minimum and Maximum Thresholds	Allocation of Target Amount ($)(5)	2017 Actual Award ($)
San Jose Water Company 2017 Capital Additions (1)	Target Goal: $121,000,000 Minimum Threshold: $107,600,000 Maximum Goal: $134,500,000 or more	$63,995	$95,992.5 Represents 150% of $63,995
San Jose Water Company Water Quality Compliance (2)	Target Goal: No citations from the California Division of Drinking Water for failure to meet Primary Drinking Water Standards Minimum Threshold: N/A Maximum Goal: No citations from the California Division of Drinking Water for failure to meet Primary Drinking Water Standards and Secondary Maximum Contaminant criteria	$63,995	$95,992.5 Represents 150% of $63,995

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San Jose Water Company Key Operational Goals: (3)
—   No Material Environmental Violations (4)	Target Goal: No violations with fines of $25,000/$100,000 or above Minimum Threshold: No violations with fines of $50,000/$200,000 or above Maximum Goal: No violations with fines of $10,000/$40,000 or above Maximum Goal:	$10,666	$15,999 Represents 150% of $10,666
—   Abandoned Call Rate (Based on % of calls received)	Target Goal: 5% or less Minimum Threshold: 7% or less Maximum Goal: 3% or less	$10,666	$15,999 Represents 150% of $10,666
—   Level One Emergency Response Time (% of responses in 30 minutes or less)	Target Goal: at least 80% Minimum Threshold: at least 70% Maximum Goal: at least 90%	$10,666	$15,999 Represents 150% of $10,666
—   Distribution System Integrity (Main Leaks per 100 Mi.)	Target Goal: 12 or less Minimum Threshold: 16 or less Maximum Goal: 8 or less	$10,666	$15,999 Represents 150% of $10,666
—   Code 3 Emergency Repair Response Time (% responses in 60 minutes or less)	Target Goal: at least 90% Minimum Threshold: at least 80% Maximum Goal: 100%	$10,665	$15,997.5 Represents 150% of $10,665
—   Workers Compensation Experience Modification Rate	Target Goal: 1.0 or less Minimum Threshold: 1.1 or less Maximum Goal: 0.9 or less	$10,665	$7,998.5 Represents 75% of $10,665
	Total 2017 Actual Cash Incentive Compensation Award		$279,977

(1) “San Jose Water Capital Additions” means San Jose Water Company’s capital expenditures made in 2017, including expenditures for improvements to the Montevina Treatment Plant and the cost to retire facilities and excluding expenditures made in connection with IRS bonus depreciation infrastructure reinvestments.

(2) Target is achieved if San Jose Water Company does not receive a citation during the performance period for violating health-related drinking water standards and treatment techniques specified in the U.S. National Primary Drinking Water Regulations and California Code of Regulations Title 22, Chapter 15. The goal does not take into account additional parameters regulated by other states, nor does it include violations of monitoring requirements. Maximum Performance will be achieved if the company does not receive a citation during the performance period for violating health-related drinking water standards and treatment techniques and secondary maximum contaminant criteria. The secondary contaminant criteria are associated with the aesthetic quality of drinking water and do not pose a threat to public health at regulated levels.

(3) San Jose Water Company annually establishes quantitative key operational goals that are designed to align management’s operating objectives with the primary goals of the company’s Strategic Plan. Operational goals are established by the Committee at the start of each fiscal year in terms of specific benchmarks that

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measure San Jose Water Company’s performance. For the 2017 fiscal year, the operational goals were comprised of 6 key performance indicators as outlined in the table. All results of San Jose Water Company’s key operational goals are rounded to the nearest whole number, except for the Worker’s Compensation experience modification rate goal. Compliance with each goal is based on year-end results.

(4) “No material environmental violations” means no violations resulting in fines in excess of criteria set forth below issued by the state or federal environmental regulators in the performance year in connection with environmental violations that occurred during the performance year or in any of the preceding two years. As set forth in the table above, the criteria established at minimum, target, and maximum levels are no violations in one instance or in the aggregate of $50,000/$200,000, $25,000/$100,000, and $10,000/$40,000, respectively.

(5) The actual annual cash incentive compensation attributable to each performance goal could have ranged from 0 to 150% of the portion of the target annual cash incentive compensation amount allocated to that goal. If the actual level of attainment of any such performance goal was between two of the designated levels, then the annual cash incentive compensation potential with respect to that goal would be interpolated on a straight-line basis.

2017 Fiscal Year Cash Incentive Compensation for the Other Named Executive Officers: The actual annual cash incentive compensation amount that any other named executive officer could have earned for the 2017 fiscal year ranged from 0 to 200 percent of his or her target annual cash incentive compensation based on the Corporation’s performance and the Committee’s assessment of the named executive officer’s individual performance for such year. The actual percentage within that range was to be determined as follows: (i) up to 150 percent of the target annual cash incentive compensation could be earned, weighted 75 percent for the Corporation’s performance and 25 percent for individual performance; and (ii) an additional 50 percent could be earned for exceptional individual performance.

The Corporation’s performance was measured in terms of capital additions, water quality compliance and the attainment of certain operational goals, utilizing the same target for each such goal that was in effect for the CEO’s 2017 fiscal year cash incentive compensation, as summarized in the table above. However, the annual cash incentive compensation potential for individual performance goals established for each of the other named executive officer (summarized below) was not pre-allocated in distinct dollar segments among those various individual goals, and the attainment of one or more of those goals did not guarantee that a named executive officer would be awarded any specific cash incentive compensation amount. Rather, the portion of actual cash incentive compensation amount payable for the 2017 fiscal year related to the individual goals for each of the other named executive officers was to be determined solely in the Committee’s discretion based on its assessment of the named executive officer’s individual performance measured against the achievement of specific individual operational goals or completion of specific projects or initiatives.

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The table below summarizes the principal individual goals that the Committee set for the 2017 fiscal year for each of the other named executive officers:

Name	Title	Goals
Andrew R. Gere	President and Chief Operating Officer of SJWC	- Develop and execute operational and financial plan/budgets to achieve targeted results - Successfully complete special projects and process improvement initiatives - Coordinate and timely file required regulatory documents to support operating and financial plans - Ensure compliance with water quality and environmental regulations - Maintain effective relationships with key stakeholders
Palle L. Jensen	Executive Vice President of SJWC	- Optimize regulatory functions, proceedings and outcomes - Ensure timely recovery of necessary operating costs and capital investments - Establish/maintain effective regulatory and government relations - Implement customer communications plan and other strategic customer service initiatives
James P. Lynch	Chief Financial Officer and Treasurer	- Optimize operating company and corporate cost structures - Develop and execute financial plan/budgets to achieve targeted results - Develop technology strategic plan for accounting and other financial functions - Execute investor relations and communications plan - Optimize and execute real estate investment strategy
Suzy Papazian	General Counsel and Corporate Secretary	- Advise senior management on business, operations, regulatory and human resources initiatives - Ensure corporate strategic initiatives and projects are properly designed and executed - Enhance risk assessment and compliance process - Conduct and coordinate timely and effective board and committee communications

In February 2018, the Committee determined, on the basis of the Corporation’s performance in relation to the performance criteria listed above for the Corporation and the executive officer’s individual performance, that the cash incentive compensation for the 2017 fiscal year should be paid to the above-listed named executive officers in amounts ranging from 137 to 181 percent of target based on (i) reaching 145.8 percent of the target allocated to the Corporation’s performance goals, (ii) reaching between 109 and 110 percent of the target allocated to individual performance goals for each of Messrs. Gere, Jensen and Lynch and Ms. Papazian, and (iii) an additional 44 percent of target for Ms. Papazian for exceptional individual performance. The table below sets forth the fiscal year 2017 cash incentive compensation targets and actual cash incentive compensation payout amounts for each of those named executive officers on the basis of the performance criteria listed above:

		Incentive Cash Compensation
Name	Title	2017 Target ($)		2017 Target (% Salary)			2017 Actual ($)		2017 Actual (% Target)
Andrew R. Gere	President and Chief Operating Officer of SJWC	$	112,000		25	%	$	153,001		137	%
Palle L. Jensen	Executive Vice President of SJWC	$	95,000		25	%	$	130,156		137	%
James P. Lynch	Chief Financial Officer and Treasurer	$	107,000		25	%	$	146,281		137	%
Suzy Papazian	General Counsel and Corporate Secretary	$	91,000		25	%	$	164,782		181	%

Equity Compensation

A significant portion of each named executive officer’s compensation is provided in the form of long-term incentive equity awards under the Corporation’s Long-Term Incentive Plan (“LTIP”). Long-term incentive awards are typically made to executive officers in the form of RSUs covering shares of the Corporation’s common stock. The Committee believes that RSUs are important to encourage the retention of the executive officers and will help to advance the stock ownership

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guidelines the Committee has established for the executive officers. RSUs are less dilutive to stockholders than traditional option grants in terms of the number of shares issuable under those RSU awards and provide a more direct correlation between the compensation cost the Corporation must record for financial accounting purposes and the value delivered to the executive officers. In addition, RSUs continue to have value even in periods of declining stock prices and thereby serve as an important retention tool and also provide a less risky equity compensation program than that associated with option grants that only have value to the extent the price of the underlying stock appreciates over the option term.

The RSUs granted to date have vesting schedules that provide a meaningful incentive for the executive officer to remain in the Corporation’s service. In addition, a substantial portion of Mr. Roth’s equity grants historically and the other named executive officers’ equity grants since 2015 have been performance-vesting RSUs in order to link a greater percentage of their compensation to stockholder return. Effective with the equity awards granted to Mr. Roth under his amended employment agreement and the equity awards granted to the other named executive officers since 2015, leveraged RSUs are also used to payout at increasing rates based on the level of attainment of the specified performance goals. None of the RSU awards granted to the named executive officers include dividend equivalent rights.

The Committee has followed a grant practice of tying regular-cycle equity awards to its annual year-end review of individual performance and its assessment of the Corporation’s performance for that year. Accordingly, equity awards are typically made to the named executive officers on an annual basis with the service-vesting RSUs granted effective the first business day of the fiscal year and the performance-vesting RSUs generally granted during the first month of the fiscal year.

2017 Fiscal Year Grants to CEOs: On January 26, 2017, Mr. Roth was granted an award of RSUs covering 6,639 shares of the Corporation’s common stock in accordance with the terms of his amended employment agreement. The RSUs vested based on the attainment of a performance goal based on return on equity (“ROE”) measured over the 2017 calendar year period and continued service through December 31, 2017. The ROE goal was 9.26 percent. The Committee set the ROE goal at a challenging level that was consistent with the Corporation’s business plan for long-term growth and shareholder return. Based on an ROE of 12.12 percent for the 2017 calendar year, the award vested in full.

On August 4, 2014, Mr. Roth was granted a performance-based RSU award covering 19,917 target shares that vests based on relative total shareholder return measured from August 4, 2014 to December 31, 2017 and a service-based RSU award covering 17,071 shares that vests in equal annual installments over the three-year period measured from January 1, 2015 to December 31, 2017. Based on a shareholder return ranked first relative to the eight water utility peers, his performance-based RSU award vested in 39,834 shares (200 percent of the target number of shares) and he was fully vested in the service-based RSU award on December 31, 2017.

Mr. Thornburg was granted a special grant of RSUs on November 6, 2017 covering 14,552 shares which will vest in three annual equal installments on each of December 31, 2018, December 31, 2019 and December 31, 2020, subject to continued service and accelerated vesting on an involuntary termination or termination by reason of death or disability or termination without good cause or for good reason. This special grant was in recognition of the value of unvested equity awards covering shares of his prior employer that were forfeited by Mr. Thornburg in connection with his termination of employment and his move to the Corporation.

2017 Fiscal Year Grants to the Other Named Executive Officers: On January 3, 2017, Messrs. Gere, Jensen, and Lynch and Ms. Papazian were each granted RSUs covering an aggregate number of shares of the Corporation’s common stock specified below that vest in three equal installments upon completion of each year of service over the three-year period measured from the grant date.

In addition, on January 24, 2017, Messrs. Gere, Jensen and Lynch and Ms. Papazian were each granted two performance-based RSU awards covering the target number of shares specified below. One of the performance- based awards vested based on the level of achievement of a performance goal based on ROE measured over the 2017 calendar year period and continued service through December 31, 2017. The ROE goals for the awards at threshold, target and maximum levels were 8.23 percent, 9.26 percent and 10.28 percent, respectively. The corresponding number of shares

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issuable to an individual under each such ROE performance-based award was 50 percent, 100 percent, and 150 percent of the target number of shares specified for such individual at threshold, target and maximum levels of performance, respectively, and no shares would have been issued if the minimum threshold level of performance had not been attained. The other award was based on earnings per share (“EPS”) for the 2019 fiscal year and continued service through December 31, 2019. The Committee believes the EPS goal for the performance-based RSU award is challenging and difficult to achieve, but attainable with significant skill and effort on the part of our executive team. The number of shares issuable under such EPS awards will range between 0 to 150 percent of the target number of shares based on the level of actual attainment of the specified performance goals.

The chart below indicates the number of shares of the Corporation’s common stock underlying the RSU awards granted to the named executive officers other than our CEOs in January 2017. No other equity awards were granted to them during the 2017 fiscal year:

Name	Title	Number of Shares subject to Service RSU Award (1)		Target Number of Shares for ROE RSU Award (2)		Target Number of Shares for EPS RSU Award (3)
Andrew R. Gere	President and Chief Operating Officer of SJWC		1,424		922		615
Palle L. Jensen	Executive Vice President of SJWC		1,197		775		517
James P. Lynch	Chief Financial Officer and Treasurer		1,370		887		591
Suzy Papazian	General Counsel and Corporate Secretary		1,152		746		497

(1) The aggregate number of shares underlying the service-based RSUs granted to the named executive officers on January 3, 2017 was determined by dividing a designated dollar amount by $55.14, the closing selling price of the Corporation’s common stock on the January 3, 2017 grant date. The designated dollar amount was $78,500 for Mr. Gere, $66,000 for Mr. Jensen, $75,500 for Mr. Lynch, and $63,500 for Ms. Papazian.

(2) The target number of shares underlying the ROE performance-based RSUs granted to the named executive officers on January 24, 2017 was determined by dividing a designated dollar amount by $51.11, the closing selling price of the Corporation’s common stock on the January 24, 2017 grant date. The designated dollar amount was $47,100 for Mr. Gere, $39,600 for Mr. Jensen, $45,300 for Mr. Lynch, and $38,100 for Ms. Papazian. Based on an ROE of 12.12 percent for calendar year 2017, Messrs. Gere, Jensen and Lynch and Ms. Papazian vested in 1,383, 1,162, 1,330 and 1,119 shares of common stock, respectively, under the ROE awards.

(3) The target number of shares underlying the EPS performance-based RSUs granted to the named executive officers on January 24, 2017 was determined by dividing a designated dollar amount by $51.11, the closing selling price of the Corporation’s common stock on the January 24, 2017 grant date. The designated dollar amount was $31,400 for Mr. Gere, $26,400 for Mr. Jensen, $30,200 for Mr. Lynch, and $25,400 for Ms. Papazian.

Executive Benefits and Perquisites

The named executive officers are provided with certain market competitive benefits and perquisites. It is the Committee’s belief that such benefits are necessary for the Corporation to remain competitive and to attract and retain top caliber executive officers, since such benefits are commonly provided by peer group companies.

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Retirement Benefits: Executive officers are eligible to receive retirement benefits under San Jose Water Company’s Retirement Plan, a tax-qualified defined benefit plan covering a broad spectrum of the company’s employees. Executive officers hired before March 31, 2008 are eligible to receive additional retirement benefits under the Executive Supplemental Retirement Plan (“SERP”), and executive officers hired on or after March 31, 2008 are eligible to receive additional retirement benefits under the Cash Balance Executive Supplemental Retirement Plan (“Cash Balance SERP”). Both of those plans are non-qualified plans in which only senior officers and other designated members of management may participate, and such individuals remain general creditors of San Jose Water Company with respect to their accrued benefits under those plans until the benefits are paid. A description of the plans and the benefits payable to each named executive officer upon retirement is set forth in the Pension Benefits table and the accompanying narrative that appears later in this proxy statement.

The pension benefits payable to Messrs. Roth, Gere and Jensen and Ms. Papazian under the SERP increase in correlation with increases in their compensation levels and years of service. However, the present value of each executive officer’s accrued pension benefit under the SERP will not only reflect such increases, but will also fluctuate from year to year based on the mortality tables and the interest rate used to discount anticipated future payments so that when interest rates decrease for example, the present value associated with the underlying benefit may increase.

Messrs. Lynch and Thornburg commenced employment with the Corporation after March 31, 2008 and accordingly participate in the Cash Balance SERP. Under that plan, each participant will receive compensation credits and interest credits on a quarterly basis to the book account maintained for him or her under the plan. The amount of the compensation credit each quarter will be tied to his or her compensation for that quarter and his or her years of credited service, and the percentage of compensation to be credited on such quarterly basis will increase as the participant’s years of credited service increase. For Mr. Thornburg, (i) the percentage of compensation credited to his Cash Balance SERP account each quarter until the quarter he turns 65 will be at 39 percent of his quarterly compensation in lieu of the lower percentage levels in effect for other participants, (ii) the special sign-on bonus specified in his employment agreement will be included in his compensation for the plan quarter in which it is paid, and (iii) he will vest in his accrued benefit under such plan once he turns 65 instead of the regular 10-year vesting schedule in effect for the other participants. For Mr. Lynch, the percentage of compensation credited to his Cash Balance SERP account for the first 20 years of credited service will be at 15 percent of his quarterly compensation in lieu of the lower percentage levels in effect for other participants, and he vested in his accrued benefit under such plan after three years of service. As of December 31, 2017, Mr. Thornburg had not vested in his accrued benefit under such plan.

For further information concerning the SERP and the Cash Balance SERP, please see the section entitled “Pension Benefits” that appears later in this proxy statement.

Broad-Based Employee Benefit Plans: Executive officers are also eligible to participate in San Jose Water Company’s Salary Deferral Plan, a tax-qualified 401(k) defined contribution plan. San Jose Water Company matches up to four percent of each participant’s contributions, subject to certain statutory limits. Such plan is open to all employees and officers under the same terms and conditions.

Elective Deferral: The named executive officers and certain other highly compensated employees may participate in San Jose Water Company’s Special Deferral Election Plan pursuant to which eligible participants may defer up to 50 percent of their base salary and up to 100 percent of their cash incentive compensation. The deferred amounts are credited with a fixed rate of interest, compounded semi-annually and reset at the beginning of each calendar year at the lower of (i) the then current 30-year long-term borrowing cost of funds to San Jose Water Company (or the equivalent thereof), as measured as of the start of such calendar year, or (ii) 120 percent of the long-term Applicable Federal Rate determined as of the start of such calendar year and based on semi-annual compounding. A description of the plan and the amounts deferred thereunder are set forth in the section entitled “Non-Qualified Deferred Compensation,” which appears later in this proxy statement.

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Other Benefits and Perquisites: All administrative employees, including executive officers, are eligible to receive standard health care, disability, life and travel insurance, and professional development benefits. In addition, the Corporation provides certain executives from time to time with (i) vehicles for business use and personal commutes, and (ii) club memberships. The Corporation also purchases season tickets to sporting and cultural events which the CEO and other executive officers and personnel of the Corporation may use for non-business purposes on occasions. Mr. Thornburg is also reimbursed for (i) reasonable relocation expenses in connection with his move to the San Jose area (including temporary housing expenses in the San Jose area for up to 12 months), (ii) medical insurance and expenses during the period he was not eligible to participate in the Corporation’s health plans, and (iii) effective January 1, 2018, reasonable business related personal expenses approved by the Chair of the Committee of up to $40,000 per calendar year. In connection with his retirement as our CEO, Mr. Roth received a retirement gift and the Corporation transferred to him the company vehicle he was using per the terms of his CEO Transition Agreement.

The Corporation does not provide tax gross-ups for any imputed income in connection with providing those particular benefits and perquisites.

Risk Assessment

The Committee, with the input and assistance of the Corporation’s Human Resources Department, reviewed the various compensation programs maintained by the Corporation and its subsidiaries to determine whether any of those programs, including those maintained for the named executive officers, encouraged excess risk taking that would create a material risk to the Corporation’s economic viability. Based on that review and the fact that the Corporation operates in a heavily-regulated environment, the Committee concluded it was not reasonably likely that any of the Corporation’s compensation programs, including the executive officer compensation programs, would have a material adverse effect upon the Corporation. For further information concerning the overall compensation risk assessment process, please see the section to this proxy statement entitled “Executive Compensation and Related Information - Risk Assessment of Compensation Policies and Practices,” which appears later in this proxy statement.

Executive Severance Plan and Severance Programs

Executive Severance Plan: The Corporation maintains an Executive Severance Plan under which Mr. Thornburg and the other named executive officers will become entitled to certain severance benefits on a so-called double trigger basis in the event their employment were to terminate under certain defined circumstances in connection with a change in control of the Corporation. Accordingly, such benefits would be triggered in connection with such a change in control only if the executive officer’s employment is terminated by the Corporation other than for good cause or such executive officer resigns in connection with (i) a significantly adverse change in the nature or the scope of his or her authority or overall working environment, (ii) the assignment of duties materially inconsistent with his or her present duties, responsibilities or status, (iii) a reduction in the sum of his or her base salary and target annual incentive cash compensation, or (iv) a relocation of his or her principal place of employment by 55 miles or more.

The Executive Severance Plan is designed to serve two primary purposes: (i) encourage the executive officers to remain in the Corporation’s employ in the event of an actual or potential change in control transaction; and (ii) align the interests of the Corporation’s executive officers with those of the stockholders by enabling the executive officers to consider transactions that are in the best interests of the stockholders and provide opportunities for the creation of substantial stockholder value without undue concern over whether those transactions may jeopardize their employment or their existing compensation arrangements.

The Executive Severance Plan also allows the Corporation to maintain a standard set of severance benefits for new and existing executive officers and limit the instances where one-off arrangements will be negotiated with individual executive officers.

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Based on the foregoing considerations and the many years of service that most of the executive officers have rendered to the Corporation, the Committee believes that the benefits provided under the Executive Severance Plan, including any tax gross-up payment to cover the parachute payment taxes the executive officers (except for Mr. Thornburg) may incur under the federal tax laws with respect to one or more severance benefits provided under the plan, have been set at a fair and reasonable level and appropriately balance the respective interests of the various stakeholders.

For further information regarding the Executive Severance Plan and the severance benefits provided thereunder, please see the section entitled “Employment Agreements, Termination of Employment and Change in Control Arrangements” that appears later in this proxy statement.

Severance Benefits for Messrs. Thornburg, Roth and Lynch: Pursuant to the terms of his employment Agreement, Mr. Thornburg will become entitled to severance benefits should his employment terminate under certain defined circumstances in the absence of a change in control. Pursuant to the terms of his original employment agreement, Mr. Roth would have been entitled to severance benefits in the event his employment terminated before December 31, 2017 under certain defined circumstances in the absence of a change in control; he did not receive any severance payments in connection with his termination of employment on December 31, 2017. Mr. Lynch will, as part of his negotiated compensation package with the Corporation, become entitled to severance benefits should his employment terminate under certain defined circumstances in the absence of a change of control. The Committee believes that such protections are typical for chief executive officers and chief financial officers in the peer group companies. For further information concerning Messrs. Thornburg’s, Roth’s and Lynch’s potential severance benefits, see the section entitled “Employment Agreements, Termination of Employment and Change in Control Arrangements” that appears later in this proxy statement.

Executive Officer Security Ownership Guidelines

In 2006, the Committee established a policy requiring named executive officers to achieve specific security ownership guidelines within five years. The Committee believes that such a policy is consistent with its philosophy of encouraging executive officer stock ownership and will serve to further align the interests of the executive officers with those of stockholders. Pursuant to the policy, executive officers are expected to own shares of the Corporation’s common stock with an aggregate value equal to two times the annual base salary for the CEO and one times the annual base salary for the other named executive officers. Shares of the Corporation’s common stock owned outright, shares underlying RSUs, and shares underlying deferred stock units, including deferred shares resulting from dividend equivalent rights, all count as shares owned for purposes of the guideline. Until the guideline is met, each executive is required to hold any shares of the Corporation’s common stock issued upon the vesting of RSUs (net of any shares withheld or sold to cover statutory withholding taxes and other applicable taxes). Mr. Thornburg has until November 6, 2022 to comply with this policy. As of December 29, 2017, all the other named executive officers had complied with the policy. The following table shows each named executive officer’s stock ownership as of December 29, 2017:

Name	Title	Security Ownership ($)(1)		Security Ownership Guideline ($)(2)
Eric W. Thornburg	President and Chief Executive Officer	$	928,854	$	1,400,000
W. Richard Roth	Former Chief Executive Officer, President and Chief Executive Emeritus	$	17,800,208	$	767,936
Andrew R. Gere	President and Chief Operating Officer of SJWC	$	1,027,982	$	448,000
Palle L. Jensen	Executive Vice President of SJWC	$	762,896	$	378,000
James P. Lynch	Chief Financial Officer and Treasurer	$	1,486,026	$	428,000
Suzy Papazian	General Counsel and Corporate Secretary	$	739,151	$	362,000

(1) This amount is calculated by multiplying (i) the sum of the shares of the Corporation’s common stock actually owned, the shares underlying RSUs and shares underlying deferred stock units, including deferred shares resulting from dividend equivalent rights, by (ii) $63.83, the closing selling price of the common stock on December 29, 2017.

(2) This amount is equal to two times the base salary in effect for Mr. Thornburg for the 2017 fiscal year and one times the base salary in effect for the other named executive officers for such year.

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Policy Governing Hedging and Pledging of Common Stock

The Corporation has adopted policies that preclude the executive officers and certain employees and other individuals, including family members residing in the same household, from engaging in hedging or monetization transactions in the Corporation’s common stock such as put and call options and short sales and from pledging the Corporation’s common stock or holding such stock in margin accounts. Accordingly, the executive officers bear the full risk of economic loss, like any other stockholder, with respect to their equity holdings, whether in the form of actual shares of the Corporation’s common stock or RSUs that will convert into such shares following the satisfaction of the applicable vesting requirements.

IRC Section 162(m) Compliance

For years prior to 2018, Section 162(m) of the Internal Revenue Code generally disallowed a federal income tax deduction for publicly-traded companies such as the Corporation for compensation paid to the CEO and the three other highest paid executive officers (other than the Chief Financial Officer) to the extent that such compensation exceeded one million dollars per officer in any one year and did not otherwise qualify as performance-based compensation. The Corporation’s LTIP is structured so that compensation deemed paid to an executive officer in connection with the exercise of stock options should qualify as performance-based compensation that is not subject to the one million dollar limitation. In addition, RSUs with performance-vesting goals tied to one or more of the performance criteria approved by the stockholders under the LTIP may also be structured to qualify as performance-based compensation for Section 162(m) purposes. However, RSUs subject only to service-vesting requirements will not qualify as such performance-based compensation. Other awards made under the LTIP may or may not so qualify.

The exemption for qualified performance-based compensation has been repealed and the class of affected executives has been expanded effective for taxable years beginning after December 31, 2017 such that compensation paid to our covered executive officers in excess of one million dollars will not be deductible unless it qualified for transition relief applicable to certain arrangements in place as of November 2, 2017. Because of the uncertainties as to the scope and application of the transition relief, no assurances can be given that compensation intended to satisfy the requirements for exemption under Section 162(m) will in fact be fully deductible.

Summary Compensation Table

The following table provides certain summary information concerning the compensation earned for services rendered in all capacities to the Corporation and its subsidiaries for the fiscal years ended December 31, 2015, December 31, 2016, and December 31, 2017 by each of the two individuals who served as the Corporation’s Chief Executive Officer during 2017, the Corporation’s Chief Financial Officer, and the Corporation’s other three most highly compensated executive officers whose total compensation for the 2017 fiscal year was in excess of $100,000 and who were serving as executive officers at the end of the 2017 fiscal year. No executive officers who would have otherwise been includable in such table on the basis of total compensation for the 2017 fiscal year have been excluded by reason of their termination of employment or change in executive status during that year. The listed individuals are herein referred to as the “named executive officers.”

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Name and Principal Position (1)	Year		Salary ($)(2)		Bonus ($)(2)(3)		Stock Awards ($)(4)		Non-Equity Incentive Plan Compensation ($)(2)(5)		Change in Pension Value ($)			All Other Compensation ($)(8)		Total ($)
Eric W. Thornburg		2017	$	80,769	$	—	$	863,079	$	—	$	41,045	(6)	$	35,120	$	1,020,013
President and Chief Executive Officer of SJW Group
W. Richard Roth		2017	$	767,936	$	—	$	333,543	$	279,977	$	535,773	(6)	$	53,356	$	1,970,585
Former Chief Executive Officer, President and Chief Executive Emeritus of SJW Group		2016	$	738,400	$	—	$	195,585	$	235,365	$	329,818	(7)	$	18,978	$	1,518,146
		2015	$	710,000	$	—	$	228,116	$	230,927	$	380,200	(7)	$	19,883	$	1,569,126
Andrew R. Gere		2017	$	448,000	$	30,500	$	151,073	$	122,501	$	901,230	(6)	$	17,007	$	1,670,311
President and Chief Operating Officer of San Jose Water Company		2016	$	354,212	$	47,500	$	112,280	$	57,353	$	491,113	(7)	$	17,051	$	1,079,509
		2015	$	271,969	$	32,500	$	47,146	$	38,591	$	127,955	(7)	$	18,346	$	536,507
Palle L. Jensen		2017	$	378,000	$	26,250	$	126,992	$	103,906	$	871,934	(6)	$	12,652	$	1,519,734
Executive Vice President of San Jose Water Company		2016	$	344,000	$	82,000	$	112,280	$	67,549	$	478,750	(7)	$	12,431	$	1,097,010
		2015	$	330,000	$	76,700	$	106,825	$	68,177	$	399,781	(7)	$	11,924	$	993,407
James P. Lynch		2017	$	428,000	$	29,250	$	145,310	$	117,031	$	106,420	(6)	$	22,699	$	848,710
Chief Financial Officer and Treasurer of SJW Group		2016	$	410,000	$	102,500	$	119,830	$	63,725	$	108,048	(7)	$	23,052	$	827,155
		2015	$	403,000	$	66,250	$	124,291	$	54,670	$	91,884	(7)	$	23,594	$	763,689
Suzy Papazian		2017	$	362,000	$	65,250	$	122,197	$	99,532	$	371,072	(6)	$	15,522	$	1,035,573
General Counsel and Corporate Secretary of SJW Group

(1) Mr. Thornburg joined the Corporation on November 6, 2017. Ms. Papazian was not a named executive officer prior to the 2017 fiscal year; in accordance with SEC rules, disclosure of her compensation is limited to the 2017 fiscal year.

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(2) Includes amounts deferred under (i) San Jose Water Company’s Special Deferral Election Plan, a non-qualified deferred compensation plan for officers and other select management personnel and (ii) San Jose Water Company’s Salary Deferral Plan, a qualified deferred compensation plan under section 401(k) of the Internal Revenue Code.

(3) Represents the portion of the annual cash incentive compensation paid at the discretion of the Committee based on a subjective assessment of individual performance goals. The amount of the cash incentive compensation payable based on attainment of the corporate performance goals is reported in the Non-Equity Incentive Compensation table. Mr. Thornburg was not eligible to receive incentive cash compensation for 2017.

(4) The dollar amount reported in the Stock Awards column is equal to the aggregate grant-date fair value of the time-based and performance-based restricted stock unit awards made during each reported fiscal year, calculated in accordance with FASB ASC Topic 718, without taking into account any estimated forfeitures related to service-vesting conditions. The assumptions used in the calculation of the FASB ASC Topic 718 grant-date fair value of each such award are set forth in Note 11 to the Corporation’s consolidated financial statements included in its annual report on Form 10-K for the 2017 fiscal year. For time-based restricted stock unit awards, the grant date fair value was determined using the closing share price of the Corporation’s common stock on the date of grant, as appropriately discounted to reflect the lack of dividend equivalent rights. For the performance-based restricted stock unit awards, the total grant-date fair value is calculated using the probable outcome of the attainment of the respective pre-established performance objectives as of the grant date at 100% of target, as appropriately discounted to reflect the lack of dividend equivalent rights. The grant-date fair values of the 2017 performance-based EPS and ROE restricted stock unit awards at target and assuming maximum attainment of the performance goal are as follows:

	Grant Date Fair Value at Target Attainment		Grant Date Fair Value at Maximum Attainment
Eric W. Thornburg	$	—	$	—
W. Richard Roth	$	333,543	$	333,543
Andrew R. Gere	$	76,185	$	114,278
Palle L. Jensen	$	64,042	$	96,063
James P. Lynch	$	73,262	$	109,893
Suzy Papazian	$	61,613	$	92,420

For further information concerning the time-based and performance-based restricted stock unit awards, see the section below entitled “Grants of Plan-Based Awards.” Mr. Roth is credited with shares of deferred stock, and a number of those deferred shares include dividend equivalent rights. The phantom dividends that accumulate each year on those deferred shares pursuant to such dividend equivalent rights are converted into additional deferred shares. However, since the dividend equivalent rights were factored into the original grant-date fair value of Mr. Roth’s deferred shares, no further amounts are reported in this column with respect to the additional deferred shares attributable to the phantom dividends that accumulated during the fiscal year as a result of those dividend equivalent rights. The phantom dividends for the 2017 fiscal year were converted on January 2, 2018 into an additional 2,141 deferred shares for Mr. Roth. Such deferred shares had a fair market value of $136,660 on December 31, 2017 based on the $63.83 closing selling price of the Corporation’s common stock on December 29, 2017, the last trading day in the 2017 fiscal year.

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(5) Represents the portion of the annual cash incentive compensation based on the level of attainment of corporate performance goals.

(6) Consists solely of the change in the actuarial present value of each named executive officer’s accrued pension benefits recorded for the 2017 fiscal year. The present value increased for each of Messrs. Thornburg, Roth, Gere, Jensen, and Lynch and Ms. Papazian above the present value at the close of fiscal year 2016. The present value for each of the accrued pension benefit fluctuates from year-to-year based on additional years of service, changes in compensation and increased age. In addition, such fluctuations may also occur due to the interest rate used to discount anticipated future payments so that when interest rates decrease for example, the present value associated with the underlying benefit may increase. The table below indicates the actuarial present value of the pension benefits accrued as of the close of the 2017 and 2016 fiscal years, respectively, by each named executive officer. For the 2017 fiscal year calculations, the discount rates applied were 3.52% for the Retirement Plan and 3.44% for the Executive Supplemental Retirement Plan (“SERP”) and Cash Balance Executive Supplemental Retirement Plan (“Cash Balance SERP”). For the 2016 fiscal year calculations the discount rates applied were 4.04% for the Retirement Plan and 3.84% for the SERP and Cash Balance SERP. The mortality rate tables used for the 2017 fiscal year are described as follows: the RP-2014 Mortality Table basis adjusted to 2006, published by The Society of Actuaries, with projection scale MP-2017 Mortality Improvement Scale and for the 2016 fiscal year was the RP-2014 Mortality Table basis adjusted to 2006, published by The Society of Actuaries, with projection scale MP-2016 Mortality Improvement Scale. Messrs. Thornburg and Lynch’s Cash Balance SERP benefit is based on a contribution rate of 39% and 15%, respectively, of their quarterly compensation (as defined in the plan), offset by a portion of their accrued benefit under the Retirement Plan.

Actuarial Present Value of Retirement Benefits	Thornburg		Roth		Gere		Jensen		Lynch		Papazian
Accrued as of the close of the 2017 fiscal year	$	41,045	$	8,248,798	$	2,589,932	$	4,035,500	$	675,157	$	1,027,621
Accrued as of the close of the 2016 fiscal year	$	—	$	7,713,025	$	1,688,702	$	3,163,566	$	568,737	$	656,549
Change in Pension Value	$	41,045	$	535,773	$	901,230	$	871,934	$	106,420	$	371,072

(7) Consists solely of the change in the actuarial present value of each named executive officer’s accrued pension benefits recorded for each of the 2016 and 2015 fiscal years. For further information concerning the pension benefits, see the section below entitled “Pension Benefits.”

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(8) Consists of the following benefits: (i) club memberships for Messrs. Roth, Gere and Lynch; (ii) personal use of company vehicle for all named executive officers; (iii) 401(k) employer match made on such individual’s behalf for all named executive officers other than Mr. Thornburg; (iv) relocation expenses including temporary housing, moving expenses and travel paid to Mr. Thornburg in connection with his commencement of employment with the Corporation; (v) attorney and other professional fees paid to Mr. Thornburg in connection with negotiation of his employment agreement; (vi) medical insurance and expenses during the period Mr. Thornburg was not eligible to participate in the Corporation’s health plans; (vii) retirement gift to Mr. Roth; and (viii) transfer of company vehicle to Mr. Roth in connection with his Transition Agreement.

For the Year Ended December 31, 2017

Description	Thornburg		Roth		Gere		Jensen		Lynch		Papazian
Club Memberships	$	—	$	2,813	$	62	$	—	$	8,562	$	—
Personal Use of Company Vehicle	$	204	$	7,344	$	6,145	$	1,852	$	3,337	$	4,722
401(k) Employer Match	$	—	$	10,800	$	10,800	$	10,800	$	10,800	$	10,800
Relocation Expenses including Housing, Moving & Travel Expenses	$	8,816	$	—	$	—	$	—	$	—	$	—
Attorney & Other Professional Fees	$	23,270	$	—	$	—	$	—	$	—	$	—
Medical Insurance & Expenses	$	2,830	$	—	$	—	$	—	$	—	$	—
Retirement Gift	$	—	$	1,495	$	—	$	—	$	—	$	—
Vehicle	$	—	$	30,904	$	—	$	—	$	—	$	—
Total	$	35,120	$	53,356	$	17,007	$	12,652	$	22,699	$	15,522

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Grants of Plan-Based Awards

The following table provides certain summary information concerning each grant of an award made to a named executive officer in the 2017 fiscal year under a compensation plan:

Name			Date of		Potential Payouts Under Non-Equity Incentive Plan Awards (1)						Estimated Future Payouts Under Equity Incentive Plan Awards								All Other Stock Awards: Number of Shares of Stock			Grant Date
	Grant Date		Pre- Authorization		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)			Maximum (#)			or Units (#)(2)			Value (3)
Eric W. Thornburg		11/6/2017		9/26/2017		—		—		—		—		—			—			14,552	(4)	$	863,079
W. Richard Roth		—		—	$	95,992	$	191,984	$	287,976		—		—			—			—			—
		1/24/2017		—		—		—		—		—		6,639	(5)		—			—		$	333,543
Andrew R. Gere		—		—	$	42,000	$	84,000	$	126,000		—		—			—			—			—
		1/3/2017		10/25/2016		—		—		—		—		—			—			1,424	(6)	$	74,888
		1/24/2017		—		—		—		—		461		922			1,383	(7)		—		$	46,321
		1/24/2017		—		—		—		—		307		615			922	(8)		—		$	29,864
Palle L. Jensen		—		—	$	35,625	$	71,250	$	106,875		—		—			—			—			—
		1/3/2017		10/25/2016		—		—		—		—		—			—			1,197	(6)	$	62,950
		1/24/2017		—		—		—		—		387		775			1,162	(7)		—		$	38,936
		1/24/2017		—		—		—		—		258		517			775	(8)		—		$	25,106
James P. Lynch		—		—	$	40,125	$	80,250	$	120,375		—		—			—			—			—
		1/3/2017		10/25/2016		—		—		—		—		—			—			1,370	(6)	$	72,048
		1/24/2017		—		—		—		—		443		887			1,330	(7)		—		$	44,563
		1/24/2017		—		—		—		—		295		591			886	(8)		—		$	28,699
Suzy Papazian		—		—	$	34,125	$	68,250	$	102,375		—		—			—			—			—
		1/3/2017		10/25/2016		—		—		—		—		—			—			1,152	(6)	$	60,584
		1/24/2017		—		—		—		—		373		746			1,119	(7)		—		$	37,479
		1/24/2017		—		—		—		—		248		497			745	(8)		—		$	24,134

(1) Reflects potential payouts under the annual cash incentive compensation program tied to attainment of corporate performance goals; the entire cash incentive compensation for Mr. Roth was tied to the attainment of these goals; a portion of the cash incentive compensation for the other named executive officers was also tied to attainment of individual performance and is not included in this column with the actual amount paid based on individual performance reported in the Bonus column in the Summary Compensation Table. Each potential level of payout based on the corporate performance goals was tied to the level at which San Jose Water Company attained the performance goals for the 2017 fiscal year established by the Executive Compensation Committee. The goals were tied to a capital additions objective, water quality compliance and designated operational goals based on key water industry objectives. The capital additions objective was attained at the maximum level, the water quality compliance goal was attained at the maximum level and the operational goals were attained between the threshold and maximum levels, resulting in an actual cash incentive compensation to Mr. Roth in the

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dollar amount of $279,977 or 145.8% of his target cash incentive compensation for the year and $122,501, $103,906, $117,031, and $99,532 for Messrs. Gere, Jensen, Lynch and Ms. Papazian, respectively, representing 145.8% of their target allocated to the corporate goals. These amounts are reported in the Non-Equity Incentive Compensation column in the Summary Compensation Table.

(2) Reflects grants of restricted stock units under the LTIP as more fully described in the footnotes below. The restricted stock units do not include dividend equivalent rights. A portion of the vested shares which become issuable under the units will be withheld by the Corporation to cover the applicable withholding taxes.

(3) The grant-date value is calculated in accordance with FASB ASC Topic 718, and accordingly determined on the basis of the closing selling price per share of the Corporation’s common stock on the applicable grant date, as appropriately discounted to reflect the lack of dividend equivalent rights. For the performance-based restricted stock unit awards, the total grant-date fair value is calculated using on the probable outcome of the attainment of the pre-established performance objective as of the grant date at 100% of target. The reported grant-date value does not take into account any estimated forfeitures relating to service-vesting conditions.

(4) On November 6, 2017, Mr. Thornburg was granted service-based restricted stock units covering 14,552 shares of the Corporation’s common stock. Each restricted unit entitles Mr. Thornburg to receive one share of the Corporation’s common stock on the applicable vesting date of that unit. The restricted stock units vest in a series of three successive equal annual installments on each of December 31, 2018, December 31, 2019 and December 31, 2020 subject to continued employment through the vesting date. The units will vest in full, and the underlying shares will become immediately issuable, on an accelerated basis if (i) Mr. Thornburg’s service terminates by reason of death or disability or (ii) he is involuntarily terminated other than for good cause, or resigns for good reason. Immediate vesting will also occur in the event there is a change in control of the Corporation in which the units are not assumed or otherwise continued in effect.

(5) On January 24, 2017, Mr. Roth was granted performance-based restricted stock units covering 6,639 shares of the Corporation’s common stock in accordance with the terms of his amended employment agreement. The restricted stock units vest based on the attainment of a performance goal based on return on equity (“ROE”) measured over the 2017 calendar year period and continued service through December 31, 2017. The ROE goal was 9.26% and no shares would have been issued if such ROE goal was not attained. Based on an ROE of 12.12% for the 2017 calendar year, 6,639 shares of the Corporation’s common stock were issued to Mr. Roth on February 28, 2018 (a portion of which were withheld to cover applicable withholding taxes).

(6) On January 3, 2017, Messrs. Gere, Jensen, Lynch and Ms. Papazian were each awarded service-based restricted stock units covering 1,424, 1,197, 1,370, and 1,152 shares of the Corporation’s common stock, respectively. Each restricted unit entitles the officer-recipient to receive one share of the Corporation’s common stock on the applicable vesting date of that unit. The restricted stock units vest in a series of three successive equal annual installments upon the officer’s completion of each year of service with the Corporation over the three-year period measured from the award date (January 3, 2017). The units will vest in full, and the underlying shares will become immediately issuable, on an accelerated basis if (i) the officer’s service terminates by reason of death or disability or (ii) the officer is involuntarily terminated other than for good cause, or resigns for good reason, within 24 months after a change in control. Immediate vesting will also occur in the event there is a change in control of the Corporation in which the units are not assumed or otherwise continued in effect.

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(7) On January 24, 2017, Messrs. Gere, Jensen, Lynch and Ms. Papazian were each granted performance based restricted stock units covering the target number of shares specified in the table. Each such performance based award will vest based on the level of achievement of a performance goal based on ROE measured over the 2017 calendar year period and continued service through December 31, 2017. The ROE goal for the awards at threshold, target, and maximum levels were 8.23%, 9.26% and 10.28%, respectively. The maximum number of shares issuable to an individual under each such performance-based award was 150% of the target number of shares specified for such individual and no shares would have been issued if the minimum threshold level of performance was not attained. Based on an ROE of 12.12% for the 2017 calendar year, the maximum number of shares were issued to each officer on February 28, 2018 (a portion of which were withheld to cover applicable withholding taxes).

(8) On January 24, 2017, Messrs. Gere, Jensen, Lynch and Ms. Papazian were each granted performance based restricted stock units covering the target number of shares specified in the table. Each such performance based award will vest based on the level of achievement of a performance goal based on the EPS for the 2019 fiscal year and continued service through December 31, 2019. The number of shares issuable under such awards will range between 0 to 150 percent of the target number of shares based on the level of actual attainment of the specified performance goals.

2017 Incentive Cash Compensation Program

In January 2017, the Executive Compensation Committee set the cash incentive compensation potential for the named executive officers for the 2017 fiscal year. The dollar amount of that cash incentive compensation for Mr. Roth was tied to the level at which San Jose Water Company attained the performance goals for the 2017 fiscal year established by the Executive Compensation Committee. The goals were tied to a stated capital addition objective, water quality compliance and designated operational objectives based on key water industry objectives. At threshold level attainment, Mr. Roth’s cash incentive compensation potential was set at $95,992 (12.5 percent of base salary); for target level attainment, the cash incentive compensation potential was $191,984 (25 percent of base salary); and at above-target level attainment, the applicable cash incentive compensation potential was $287,976 (37.5 percent of base salary). The actual cash incentive compensation amount could accordingly vary from 0 to 150 percent of the target amount based on the level at which the various performance goals were attained. The actual cash incentive compensation amount that any other named executive officer could have earned for the 2017 fiscal year ranged from 0 to 200 percent of his or her target amount based on the Corporation’s performance and the Committee’s assessment of the named executive officer’s individual performance for such year. The actual percentage within that range was to be determined as follows: (i) up to 150 percent of the target amount could be earned, weighted 75 percent for the Corporation’s performance and 25 percent for individual performance; and (ii) an additional 50 percent could be earned for exceptional individual performance. Mr. Thornburg was not eligible to receive incentive cash compensation for 2017. Further information concerning the cash incentive compensation program established for Mr. Roth and the other named executive officers is set forth in the Compensation Discussion & Analysis that appears earlier in the proxy statement.

Risk Assessment of Compensation Policies and Practices

The Executive Compensation Committee, with input and assistance from the Human Resources Department, undertook a substantial review of the various compensation programs, policies and practices maintained by the Corporation and its subsidiaries for the executive officers and other employees throughout the organization to determine whether any of those programs, policies and practices encouraged excess risk taking that would create a material risk to the Corporation’s economic viability. As part of that process, the Executive Compensation Committee reviewed a detailed

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inventory of the Corporation’s compensation plans and programs prepared by the Human Resources Department in which the principal features of each plan were summarized, the potential risk factors (if any) associated with each plan were identified and the mitigation factors designed to address those risks were described. Based on that review and the fact that as public utilities the Corporation’s wholly-owned subsidiaries, San Jose Water Company and SJWTX, Inc., operate in a heavily-regulated environment, the Executive Compensation Committee concluded it was not reasonably likely that any of the compensation programs, policies and practices of the Corporation or its subsidiaries, whether individually or in the aggregate, would have a material adverse effect upon the Corporation. In reaching such conclusion, the Executive Compensation Committee took into account the following factors, including factors specifically analyzed in terms of the compensation programs, policies and practices for the Corporation’s executive officers:

• The overall compensation structure is applied uniformly throughout the Corporation and its subsidiaries, with the only major exception relating to the equity component of that compensation structure. Equity compensation (other than through participation in the Corporation’s broad-based employee stock purchase plan) has historically been granted only to officers of the Corporation or its subsidiaries and is currently provided in the form of restricted stock units that vest incrementally over their period of continued service or the attainment of specified performance goals over their period of continued service. Neither the Corporation nor its subsidiaries have any material compensation arrangements that are unique to any business unit or that otherwise depart significantly from the general uniformity of the overall compensation structure throughout the organization.

• For most of the employee base, compensation is primarily in the form of base salary. Certain employees, other than the officers, are also eligible to receive cash incentive compensation with target levels tied to a fixed dollar amount generally ranging from $6,500 to $10,000 for the 2017 fiscal year. For such employees, the cash incentive compensation component is tied to both financial and non-financial metrics and individual performance, and the maximum cash incentive compensation that can be earned is capped between 150 to 200 percent of the target cash incentive compensation.

• Under the cash incentive compensation program, the target amount for the named executive officers is 25 percent of base salary for Mr. Roth and the other executive officers for the 2017 fiscal year, with a maximum cash incentive compensation potential set at 150 percent of the target amount for Mr. Roth and 200 percent of the target amount for the other executive officers. One hundred percent of Mr. Roth’s cash incentive compensation for the 2017 fiscal year is tied to performance goals that are intended to sustain stockholder value, such as capital additions, water quality compliance and the attainment of certain operational goals critical to the successful operation of the business, with such cash incentive compensation potential allocated equally among these three sets of goals. For the other named executive officers, they may earn up to 150 percent of their target amount for the 2017 fiscal year weighted as follows: (i) 75 percent tied to the same performance goals as Mr. Roth (also allocated in the same manner); and (ii) 25 percent tied to a subjective assessment of pre-specified individual goals but such amount is not pre-allocated in distinct dollar segments among the various individual goals. The other named executive officers may earn up to an additional 50 percent of their target amount for exceptional individual performance. We believe this structure based on a number of different performance measures mitigates any tendency for an executive to focus exclusively on the specific financial metrics.

• Mr. Thornburg was not eligible to receive any award under the cash incentive program for the 2017 fiscal year. He received a special sign-on bonus in the amount of $310,000 in the first quarter of 2018 which was intended in part to offset the bonus he forfeited upon termination of his employment with his former employer.

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• Accordingly, the overall compensation structure is not overly weighted toward short-term incentives, and by utilizing multiple performance criteria and imposing meaningful caps on the potential pay-outs under each of the short-term cash incentive programs, the Corporation has taken reasonable steps to protect against the potential of disproportionately large short-term incentives that might encourage excessive risk taking. In addition, the Corporation has an internal business risk assessment structure that identifies the major risks to the business of the Corporation and its subsidiaries and implements techniques and processes to control and mitigate those risks. Accordingly, to the extent any of the performance metrics established for the short-term incentive programs might otherwise contribute to any potential risks identified for the business, there are already procedures in place to control and limit those risks.

• Each of the named executive officers receives equity compensation in the form of restricted stock unit awards that derive their value from the market price of the Corporation’s common stock, and the value of those awards increase as the price of the common stock appreciates and stockholder value is thereby created. Accordingly, the equity component is structured to encourage long-term growth and appreciation in the value of the Corporation’s business and stock price.

• The Corporation has transitioned from stock option grants to restricted stock unit awards. This transition has mitigated the potential to encourage risk taking in the short-term due to the fact that stock options have value only if the price of the underlying shares increases and have no limit on the amount that can be realized from such potential appreciation. Restricted stock units, on the other hand, should reduce the incentive for excessive risk taking because they provide varying levels of compensation as the market price of the Corporation’s common stock fluctuates over time. In addition, the service-based restricted stock unit awards vest over a period of years and this vesting element encourages the recipients of those awards to focus on sustaining the Corporation’s long-term performance. Because such awards are made annually, the officers always have unvested awards outstanding that could decrease significantly in value if the business of the Corporation and its subsidiaries is not managed for the long term.

• In connection with the negotiation of his compensation package in 2014, Mr. Roth was granted performance-based restricted stock units in August 2014 tied to the attainment of relative total stockholder return measured over a 41-month period. The payout under this award was capped at 200 percent of the target number of shares subject to the award. The relative nature of the performance goal, the cap on the payout and the multi-year vesting period minimize any potential risk.

• Mr. Roth and the other named executive officers also received performance-based restricted stock units in January 2015, April 2015, January 2016 and January 2017 tied to the attainment of return on equity and continued service over the 2015, 2016 and 2017 fiscal years, respectively. The performance goal under each award is based on the target approved by the Board and that we believe is challenging but attainable without taking excessive risk. The limited number of shares subject to the awards (ranging from 501 to 6,639 shares) and the capped payout (at 100 percent for Mr. Roth and 150 percent for the other named executive officers) together with vesting schedules that overlap with other awards reduce the motivation to take risks in any one year.

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• Mr. Thornburg was granted service-based restricted stock units upon his commencement of employment and in January 2018 which vest over a period of three years of service. In addition, he received performance-based restricted stock units in 2018 that will vest over three-year performance periods. He will also be eligible to receive awards annually. Accordingly, he will hold unvested awards that could decrease significantly in value if the business of the Corporation and its subsidiaries is not managed for the long term and minimizes any motivation to take risks.

• Pursuant to the terms of their respective employment agreements, Mr. Roth’s and Mr. Thornburg’s compensation is subject to recoupment as required under applicable law and regulations. In addition, any shares, cash or other property issued to the other named executive officers pursuant to their performance-based restricted stock unit awards is subject to recoupment as required under applicable laws and regulations.

• The Corporation maintains a tax-qualified retirement plan on an employee-wide basis. The plan is divided into two components: a traditional defined benefit pension formula for employees who commenced employment prior to March 31, 2008 and a cash-balance pension formula for employees who commence employment on or after that date. The retirement benefit formula under such plan is based on cash compensation levels and years of credited service and, for the cash balance component, the applicable quarterly contribution rate. More detailed information concerning the benefit accrual formulas for the two components is set forth in the “Pension Benefits” section that appears later in this proxy statement. The federal tax laws impose a maximum dollar limitation on the annual retirement benefit that can be accrued under such plan and also impose certain funding obligations on the Corporation with respect to the benefits participants accrue under the plan. The Corporation periodically reviews the funding status of the plan to determine whether there would be any material risk posed by those funding obligations in relation to the current assets of the plan or its projected future contribution levels and to consider appropriate action to mitigate any identifiable risks through potential changes in plan structure or investment strategy.

• The Corporation also maintains an Executive Supplemental Retirement Plan for certain officers and other selected executives that supplement their retirement benefits under the tax-qualified plan. The benefit formula is also tied to cash compensation levels and years of service, and the maximum annual retirement benefit that can be accrued under such plan is limited to a maximum benefit equal to 60 percent of the participant’s average annual compensation (determined on the basis of his or her three highest consecutive years of compensation measured in terms of salary and annual cash incentive compensation) less the annual retirement benefit accrued under the tax-qualified plan. Officers, such as Messrs. Lynch, and Thornburg, and other selected individuals who commence employment on or after March 31, 2008 do not participate in the Executive Supplement Retirement Plan and are instead eligible for participation in the Cash Balance Executive Supplemental Retirement Plan. Unlike the qualified retirement plan benefits, participants in these two supplemental retirement plans are only general creditors of the Corporation who would lose substantially all of their accrued benefits under the supplemental plans were the Corporation to become insolvent.

• The Corporation has also instituted stock ownership guidelines which require the named executive officers to maintain a substantial ownership interest in the Corporation. By requiring that a meaningful amount of their personal wealth be tied to long-term holdings in the Corporation’s common stock, the Corporation has further aligned their interests with those of the stockholders and mitigated the risk of excessive risk taking.

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• Finally, the Corporation has adopted policies that preclude certain employees and other individuals, including officers and family members residing in the same household, from engaging in hedging or monetization transactions in the Corporation’s stock such as put and call options and from pledging the Corporation’s stock or holding such stock in margin accounts. Accordingly, the executive officers bear the full risk of economic loss, like any other stockholder, with respect to their equity holdings, whether in the form of actual shares of the Corporation’s common stock or restricted stock units that will convert into such shares following the satisfaction of the applicable vesting requirements.

For the foregoing reasons, the Executive Compensation Committee concluded that it was not reasonably likely that the overall employee compensation structure of the Corporation and its subsidiaries, when analyzed either in terms of its organization-wide application or its specific application to various major business units, would have any material adverse effect upon the Corporation.

Outstanding Equity Awards at Fiscal Year-End

The following table provides certain summary information concerning outstanding equity awards held by the named executive officers as of December 31, 2017:

Name	Stock Awards
	Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have  Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
Eric W. Thornburg		14,552	(1)	$	928,854		—		$	—
W. Richard Roth		—		$	—		—		$	—
Andrew R. Gere		208	(3)	$	13,277		615	(4)	$	39,255
		167	(5)	$	10,660
		1,906	(6)	$	121,660
		1,424	(7)	$	90,894
Palle L. Jensen		800	(3)	$	51,064		517	(4)	$	33,000
		1,906	(6)	$	121,660
		1,197	(7)	$	76,405
James P. Lynch		930	(3)	$	59,362		591	(4)	$	37,724
		2,032	(6)	$	129,703
		1,370	(7)	$	87,447
Suzy Papazian		260	(3)	$	16,596		497	(4)	$	31,724
		1,588	(6)	$	101,362
		1,152	(7)	$	73,532

(1) Represents restricted stock units granted on November 6, 2017 and covering 14,552 shares. The underlying shares vest and become issuable in three successive equal annual installments on each of December 31, 2018, December 31, 2019, and December 31, 2020. As of December 31, 2017, all of the units were unvested.

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(2) The reported market value of the shares underlying the unvested units is based on the $63.83 closing selling price of the common stock on December 29, 2017, the last trading day in the 2017 fiscal year.

(3) Represents restricted stock units granted on January 2, 2015 and covering: 623 shares for Mr. Gere; 2,397 shares for Mr. Jensen; 2,789 shares for Mr. Lynch; and 779 shares for Ms. Papazian. The underlying shares vest and become issuable in three successive equal annual installments over the three-year period of service measured from the date of grant. As of December 31, 2017, one third of the units were unvested.

(4) Represents performance-vesting restricted stock units granted on January 24, 2017, covering a target number of shares: 615 for Mr. Gere; 517 for Mr. Jensen; 591 for Mr. Lynch; and 497 for Ms. Papazian which vest based on the EPS for the 2019 fiscal year and continued service through December 31, 2019. The number of shares issuable under such awards will range between 0 to 150 percent of the target number of shares based on the level of actual attainment of the specified performance goals. The reported market value of the shares underlying those unvested units assumes attainment at 100% of target.

(5) Represents restricted stock units granted on April 29, 2015 and covering 501 shares. The underlying shares vest and become issuable in three successive equal annual installments over the three-year period of service measured from the date of grant. As of December 31, 2017, one third of the units were unvested.

(6) Represents restricted stock units granted on January 4, 2016 and covering: 2,858 shares for Mr. Gere; 2,858 shares for Mr. Jensen; 3,048 shares for Mr. Lynch; and 2,381 shares for Ms. Papazian. The underlying shares vest and become issuable in three successive equal annual installments over the three-year period of service measured from the date of grant. As of December 31, 2017, two thirds of the units were unvested.

(7) Represents restricted stock units granted on January 3, 2017 and covering: 1,424 shares for Mr. Gere; 1,197 shares for Mr. Jensen; 1,370 shares for Mr. Lynch; and 1,152 shares for Ms. Papazian. The underlying shares vest and become issuable in three successive equal annual installments over the three-year period of service measured from the date of grant. As of December 31, 2017, all of the units were unvested.

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Option Exercises and Stock Vested

The following table sets forth, for each of the named executive officers, the number and value of shares of the Corporation’s common stock subject to each deferred restricted stock or restricted stock unit award that vested during the year ended December 31, 2017. No option or stock appreciation rights were exercised by the named executive officers during the 2017 fiscal year, and none of such officers held any option or stock appreciation rights as of December 31, 2017.

Name	Stock Awards
	Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)(2)
Eric W. Thornburg		—		$	—
W. Richard Roth		2,141	(1)	$	136,660
		3,217		$	180,088
		5,691		$	363,257
		6,639	(3)	$	423,767
		39,834	(4)	$	2,542,604
Andrew R. Gere		230		$	12,875
		208		$	11,644
		167		$	8,156
		952		$	52,646
		1,383	(5)	$	88,277
Palle L. Jensen		1,264		$	70,759
		799		$	44,728
		952		$	52,646
		1,162	(5)	$	74,170
James P. Lynch		1,264		$	70,759
		930		$	52,061
		1,016		$	56,185
		1,330	(5)	$	84,894
Suzy Papazian		230		$	12,875
		260		$	14,555
		793		$	43,853
		1,119	(5)	$	71,426

(1) Represents the phantom cash dividends which accumulated during the 2017 fiscal year on the shares of the Corporation’s common stock underlying deferred restricted stock awards which were converted on January 2, 2018 into additional deferred shares based on the average of the per share market prices of the common stock on each date actual dividends were paid on such common stock during the 2017 fiscal year.

(2) The value realized is determined by multiplying (i) the market price of the common stock on the applicable vesting date by (ii) the number of shares which vested on such date. For the phantom cash dividends which were converted into additional deferred shares on January 2, 2018, the value realized is determined by multiplying (i) the $63.83 closing selling price of the common stock on December 29, 2017, the last trading day in the 2017 fiscal year, by (ii) the number of those additional deferred shares.

(3) Represents shares subject to an award of restricted stock units under the Corporation’s Long-Term Incentive Plan covering 6,639 shares of the Corporation’s Common Stock granted to Mr. Roth on January 24, 2017. The restricted stock units vested based on the attainment of a performance goal based on return on equity (“ROE”) measured over the 2017 calendar year period and continued service through December 31, 2017. The ROE goal was 9.26%. Based on an ROE of 12.12% for the 2017 calendar year and Mr. Roth’s continued service through December 31, 2017, all vesting conditions were met on December 31, 2017 and such award was certified on February 26, 2018.

(4) Represents shares issued to Mr. Roth in connection with the vesting of a performance-based restricted stock units granted on August 4, 2014, covering 19,917 target shares of the Corporation’s common stock. The award vested based on the relative total shareholder return over the period measured from August 4, 2014 to December 31, 2017 (the “TSR Performance Period”) and Mr. Roth’s continued service with the Corporation through the end of the TSR Performance Period. The number of shares issuable under the award ranged from 0% to 200% of the target number of shares based on the Corporation’s total shareholder return ranking relative to eight water utility peer companies. Based on a total shareholder return ranked first relative to the peer companies and Mr. Roth’s service with the Corporation through the end of the TSR Performance Period, Mr. Roth vested in 39,834 shares of common stock or 200% of the target number of shares under such award. Such award was certified on February 26, 2018.

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(5) Represents awards of restricted stock units under the Corporation’s Long-Term Incentive Plan covering 922, 775, 887, and 746 target shares of the Corporation’s Common Stock, respectively, granted to each of Messrs. Gere, Jensen, and Lynch and Ms. Papazian on January 24, 2017. The restricted stock units vested based on the level of achievement of a performance goal based on ROE measured over the 2017 calendar year period and continued service through December 31, 2017. The ROE goal for the awards at threshold, target, and maximum levels were 8.23%, 9.26%, 10.28%, respectively. Based on a ROE of 12.12% for calendar year 2017 and each officer’s continued service through December 31, 2017, all vesting conditions were met at maximum level on December 31, 2017 and such awards were certified on February 26, 2018. Messrs. Gere, Jensen, Lynch and Ms. Papazian therefore vested in 1,383, 1,162, 1,330 and 1,119 shares of common stock, respectively, under such awards.

Pension Benefits

The Corporation maintains three defined benefit plans: San Jose Water Company’s Retirement Plan, a tax-qualified pension plan (the “Retirement Plan”); the Executive Supplemental Retirement Plan, a non-qualified supplemental pension plan (the “SERP”); and the Cash Balance Executive Supplemental Retirement Plan, a non-qualified pension plan for certain individuals who commence employment with San Jose Water Company on or after March 31, 2008 (the “Cash Balance SERP”).

The following table sets forth as of December 31, 2017, for each plan that provides for payments or other benefits in connection with the retirement of each of the named executive officers, the number of years of service credited to the named executive officer under the plan, the actuarial present value of the named executive officer’s accumulated benefit under each applicable plan, and the dollar amount of any payments and benefits paid to the named executive officer during the Corporation’s last completed fiscal year.

Name	Plan Name	Number of Years Credited Service (#) (1)		Present Value of Accumulated Benefit ($) (1)		Payments During Last Fiscal Year ($)
Eric W. Thornburg	San Jose Water Company Retirement Plan		—	$	5,227		—
	San Jose Water Company Cash Balance Executive Supplemental Retirement Plan		—	$	35,818		—
W. Richard Roth	San Jose Water Company Retirement Plan		28	$	1,881,708		—
	San Jose Water Company Executive Supplemental Retirement Plan		28	$	6,367,090		—
Andrew R. Gere	San Jose Water Company Retirement Plan		22	$	1,073,017		—
	San Jose Water Company Executive Supplemental Retirement Plan		22	$	1,516,915		—
Palle L. Jensen	San Jose Water Company Retirement Plan		23	$	1,799,048		—
	San Jose Water Company Executive Supplemental Retirement Plan		23	$	2,236,452		—
James P. Lynch	San Jose Water Company Retirement Plan		7	$	126,693		—
	San Jose Water Company Cash Balance Executive Supplemental Retirement Plan		7	$	548,464		—
Suzy Papazian	San Jose Water Company Retirement Plan		13	$	494,359		—
	San Jose Water Company Executive Supplemental Retirement Plan		13	$	533,262		—

(1) The number of years of credited service has been rounded to the nearest whole number. The present value of accumulated benefits is based on the actual period of service credited.

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The pension benefits payable to the executive officers increase in correlation with increases in salary and years of service. The present value of the accrued pension benefit will also fluctuate from year-to-year based on the age of the participant and the interest rate used to discount anticipated future payments so that when interest rates decrease for example, the present value associated with the underlying benefit may increase.

The actuarial and economic assumptions used above to value the pension plan benefits include the RP-2014 Mortality Table basis adjusted to 2006 published by The Society of Actuaries, with projection scale MP-2017 Mortality Improvement Scale, a 3.52 percent discount rate for San Jose Water Company’s Retirement Plan and a 3.44 percent discount rate for the SERP and Cash Balance SERP (for 2016 a discount rate of 4.04 percent was used for the Retirement Plan and a discount rate of 3.84 percent was used for the SERP and Cash Balance SERP and the RP-2014 Mortality Table basis adjusted to 2006, published by The Society of Actuaries, with projection scale MP-2016 Mortality Improvement Scale was used for such plans). There is no assumption for pre-retirement mortality or cessation of service, and retirement is assumed to occur at the earliest age at which each named executive officer can receive the pension benefits without actuarial reductions. For further information concerning such actuarial assumptions, please see Note 10 to the Corporation’s consolidated financial statements included in its annual report on Form 10-K for the 2017 fiscal year.

Retirement Plan Benefit

Benefit accruals under Retirement Plan differ depending on whether an employee first commenced status as an employee (i) before March 31, 2008 or (ii) on or after March 31, 2008. All the named executive officers, except for James P. Lynch and Eric W. Thornburg, commenced service before March 31, 2008.

The monthly retirement benefit under the Retirement Plan payable at age 65 (the plan’s normal retirement age) to each named executive officer who commenced employee status before March 31, 2008 will be equal to 1.6 percent of his average monthly compensation (as determined in the manner indicated below) for each year of service completed after January 1, 1978. However, the Retirement Plan provides a minimum benefit to each participant with at least 30 years of service equal to 50 percent of his or her average monthly compensation, less 50 percent of his or her monthly old-age insurance benefit under Section 202 of the Social Security Act. For participants with less than 30 years of service, the minimum benefit described in the preceding sentence will be reduced ¹/₃₀ for each year by which their years of service are less than 30 years (adjusted to give credit for partial years of service).

For participants who commenced employee status before March 31, 2008, the Retirement Plan also contains a special benefit calculation when their combined age and service equals or exceeds 75. The combined age and years of service for each named executive officer, except for Mr. Gere and Ms. Papazian, who commenced employee status before March 31, 2008 equals or exceeds 75. Accordingly, the special benefit for each of those named executive officers who commenced

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employee status before March 31, 2008 and completed at least 30 years of service will be equal to 60 percent of his or her average monthly compensation, less 50 percent of his or her monthly old-age insurance benefit under Section 202 of the Social Security Act. For those named executive officers with less than 30 years of service, the special benefit described in the preceding sentence will be reduced ¹/₃₀ for each year by which their years of service are less than 30 years (adjusted to give credit for partial years of service).

For purposes of the applicable benefit calculation under the Retirement Plan, (i) a participant’s average monthly compensation will be determined on the basis of his or her three highest years of compensation (whether or not consecutive) prior to attainment of age 65 (or earlier retirement or termination) and will generally be based upon the amount reported on his or her Form W-2 for federal income tax purposes for each year included in such calculation, plus amounts deferred under the 401(k) plan and certain other limited deferrals, and (ii) the annual compensation taken into account for benefit accrual purposes for each such year may not exceed the annual compensation limit for that year determined in accordance with the Internal Revenue Code. No lump sum payment of accumulated retirement benefits is provided under the Retirement Plan for employees who first commenced status as an employee before March 31, 2008, except that a lump sum distribution may become payable to the surviving beneficiary of a deceased participant under certain circumstances. In-service distributions are allowed for: (i) a participant who has attained age 70  ¹⁄₂; and (ii) a participant who commenced status as an employee before March 31, 2008 if such participant has attained age 65 and his or her age and years of service equal at least 100; provided, if such a participant was not employed by the Company on December 31, 2013 and is subsequently re-hired on or after January 1, 2014, he or she will not be entitled to an in-service distribution.

The retirement benefits accrued by employees who first commence service on or after March 31, 2008, including Messrs. Lynch and Thornburg, are determined under the cash balance portion of the Retirement Plan and will be based upon the compensation credits and interest credits made to a hypothetical bookkeeping account established for each such participant. Compensation credits will be made on behalf of each participant each plan quarter in which the participant is an eligible employee with at least one hour of service for that quarter. The amount of the compensation credit for that quarter will be based on the compensation paid to the participant for that quarter and his or her years of credited service, as determined in accordance with the following schedule:

Years of Credited Service	Percent of Compensation
Less than 5		5	%
5 but less than 10		6	%
10 but less than 15		7	%
15 but less than 20		9	%
20 or more		11	%

For purposes of determining the amount of each participant’s compensation credit, (i) compensation is generally based upon the amount that would otherwise be reported on the participant’s Form W-2 for federal income tax purposes during the quarter, plus amounts deferred for that quarter under the 401(k) plan and certain other limited deferrals and (ii) the annual compensation taken into account may not exceed the annual compensation limit determined in accordance with the Internal Revenue Code.

Interest credits are also generally made on behalf of each participant each plan quarter. The amount of each interest credit is determined by multiplying the balance of the participant’s account as of the last day of that plan quarter by the lesser of: (i) the greater of one quarter of (a) the minimum three and a quarter percent annual interest rate or (b) the annual yield on 30-year Treasury bonds, determined as of the month of October preceding the first day of the plan year; and (ii) one quarter of the six percent maximum annual interest rate.

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Benefits accrued under the Retirement Plan may be paid as (i) a fixed monthly pension for life, (ii) a reduced monthly benefit payable for life but with a minimum payment period of 10 years for the participant or his or her designated beneficiary or (iii) a reduced joint and survivor annuity for the participant and his or her surviving spouse. For participants who commence employee status on or after March 31, 2008, the accrued benefits may be paid in a lump sum, or pursuant to any of the forms described above, following attainment of the applicable age and service requirements.

Mr. Jensen is currently eligible to receive early retirement benefits under the Retirement Plan in the event of retirement. Mr. Gere and Ms. Papazian are not currently eligible to receive early retirement benefits. Messrs. Lynch and Thornburg joined the Corporation after March 30, 2008 and participate in the cash balance portion of the Retirement Plan which does not provide early retirement benefits.

SERP Benefit

The SERP provides participants with a monthly pension benefit that supplements the pension they earn under the Retirement Plan. Each officer of the Corporation who commenced employee status before March 31, 2008 is eligible for participation under the SERP. Eligible employees selected for SERP participation by the Executive Compensation Committee of the SJW Group Board of Directors (the “Committee”) will become a participant on the first day of the first calendar month next following his or her selection date or such later date as the Committee may specify. All of the named executive officers other than Messrs. Lynch and Thornburg participate in the SERP.

The SERP is designed to supplement the retirement income by providing an additional monthly pension in excess of the pension benefit under the Retirement Plan. Effective as of January 1, 2010, the dollar amount of that monthly pension for each participant credited with an hour of service on or after January 1, 2010 is determined on the basis of the following normal retirement benefit payable as a single-life annuity commencing at age 65: 2.2 percent of final average monthly compensation multiplied by the years of service, up to a total monthly retirement benefit not to exceed 60 percent of final average monthly compensation (as determined in the manner indicated below), less the monthly retirement benefit payable to such individual under the Retirement Plan as a single-life annuity commencing at normal retirement age. Accordingly, the maximum retirement benefit is limited to 60 percent of final average compensation, less a participant’s normal retirement benefit under the Retirement Plan.

For purposes of such calculation, participants receive credit for partial years of service, and each participant’s final average monthly compensation will be his or her average monthly compensation for the consecutive 36-month period within his or her last 10 years of service with the Corporation for which such average monthly compensation is the highest. A participant’s average monthly compensation is calculated on the basis of his or her earned salary for that month and the amount of the annual cash incentive compensation that is actually paid to him or her during that month or that would have been paid at that time in the absence of a deferral election.

The SERP benefit will commence following the later of (i) the participant’s separation from service with the Corporation or (ii) his or her attainment of age 55, unless the participant makes a timely election of a later attained age. SERP benefits which commence prior to the participant’s attainment of age 65 will be subject to actuarial reduction for the early commencement date, except under prescribed circumstances. No lump sum benefit distributions are provided under the SERP.

SERP participants may, for purposes of their benefit calculations, receive special age and service credits under the Executive Severance Plan should their employment terminate under certain circumstances following a change of control. See the discussion of the Executive Severance Plan in the section below entitled “Employment Agreements, Termination of Employment and Change in Control Arrangements” for further information.

The accrued SERP retirement benefit for Messrs. Jensen and Gere and Ms. Papazian will not be reduced for early commencement if such commencement occurs on or after their attainment of (i) age 60 or (ii) a combined age and years of service equal to 85. In computing Mr. Roth’s final average compensation, his annual cash incentive compensation for each year beginning on or after January 1, 2003 is equal to the greater of his actual cash incentive compensation or his target cash incentive compensation for such year.

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A participant will vest in his or her SERP benefit upon completion of 10 years of service or in the event the participant becomes entitled to a severance benefit under the Executive Severance Plan by reason of a qualifying termination. As of December 31, 2017, each of the named executive officers who participates in the SERP is vested in his or her SERP benefit.

Cash Balance SERP Benefit

The Cash Balance SERP is a supplemental retirement benefit plan for executive officers and other key management personnel who commence employment on or after March 31, 2008 and are accordingly ineligible to participate in the SERP. The actual participants are selected from time to time by the Committee.

An account balance will be maintained for each participant in the Cash Balance SERP and will be periodically credited with a percentage of his or her compensation for the applicable period based on his or her years of credited service. Except for Mr. Lynch and Mr. Thornburg, compensation credits are made in accordance with the following formula:

Years of Credited Service	Percent of Compensation
Less than 5		10	%
5 but less than 10		11	%
10 but less than 15		12	%
15 but less than 20		14	%
20 or more		16	%

The account balance will also be credited periodically with interest pursuant to a pre-established formula. The benefit accrued under the Cash Balance SERP will be offset by a portion of the participant’s benefit accrued under the Retirement Plan. Accordingly, at such time as the participant becomes entitled to receive his or her retirement benefit under the Cash Balance SERP, a portion of his or her accrued benefit under the Retirement Plan will be applied as an offset to his or her vested accrued benefit under the Cash Balance SERP.

A participant’s accrued benefit for plan quarters ending before January 1, 2014 and associated interest credits accrued after December 31, 2013 shall be paid in a single lump sum beginning on the first day of the seventh month following the participant’s separation from service. Pursuant to the Cash Balance SERP amended as of October 30, 2013, a participant’s accrued benefit for plan quarters ending after January 1, 2014 and all associated interest credits shall be paid in a single lump sum beginning on the first day of the seventh month following the participant’s separation from service unless a timely election is made by the participant to receive his or her benefit in annual installments over a 10-year period beginning on the first business day of the seventh month following his or her separation from service. Mr. Lynch elected to receive his accrued benefit for plan quarters ending after January 1, 2014 and all associated interest credits in annual installments over a 10-year period.

The Cash Balance SERP also provides a death benefit should the participant die with a vested accrued benefit. The amount of the death benefit will be calculated in the same manner as if the participant had survived and will be payable in a lump sum to his or her beneficiary.

A participant will vest in his or her Cash Balance SERP benefit upon completion of 10 years of service or in the event the participant becomes entitled to a severance benefit under the Executive Severance Plan by reason of a qualifying termination. At the time of Mr. Lynch’s entry into the plan, the plan was amended to provide him with (i) a higher rate of company contributions during his first 20 years of service equal to 15 percent of his quarterly compensation during that period and (ii) full vesting of his accrued benefit under the plan upon completion of three years of service. As of December 31, 2017, Mr. Lynch is vested in his Cash Balance SERP benefit. The plan was also amended effective November 6, 2017 for Mr. Thornburg to provide that (i) the percentage of compensation credited to his Cash Balance SERP account each quarter until the quarter he turns 65 shall be 39 percent of his quarterly compensation, (ii) the special sign-on bonus specified in his employment agreement will be included in his compensation for the plan quarter in which it is paid, and (iii) he will vest in his accrued benefit under such plan once he turns 65. As of December 31, 2017, Mr. Thornburg had not vested in his Cash Balance SERP benefit.

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Non-Qualified Deferred Compensation

The following table shows the deferred compensation activity for each named executive officer during the 2017 fiscal year attributable to his or her participation in the San Jose Water Company Special Deferral Election Plan (the “Deferral Plan”):

Name	Executive Contributions in Last FY ($)(1)		Registrant Contributions in Last FY ($)		Aggregate Earnings in Last FY ($)(2)		Aggregate Withdrawals/ Distribution ($)		Aggregate Balance at Last FYE ($)
Eric W. Thornburg	$	—	$	—	$	—	$	—	$	—
W. Richard Roth	$	—	$	—	$	54,947	$	58,959	$	1,725,247	(3)
Andrew R. Gere	$	—	$	—	$	—	$	—	$	—
Palle L. Jensen	$	—	$	—	$	—	$	—	$	—
James P. Lynch	$	—	$	—	$	—	$	—	$	—
Suzy Papazian	$	—	$	—	$	—	$	—	$	—

(1) Represents the portion of salary and annual cash incentive compensation earned for the 2017 fiscal year and deferred under the Deferral Plan.

(2) Includes the amount of interest that was accrued for the 2017 fiscal year on the named executive officer’s outstanding balance under the Deferral Plan.

(3) Includes (i) $88,000 of salary and/or annual cash incentive compensation earned for the 2007 fiscal year and deferred under the Deferral Plan, (ii) $469,980 of salary and/or annual cash incentive compensation earned for the 2015 fiscal year and deferred under the Deferral Plan, (iii) $205,521 of salary and/or annual cash incentive compensation earned for the 2012 fiscal year and deferred under the Deferral Plan, (iv) $0 of salary and/or annual cash incentive compensation earned for the 2017, 2016, 2014, 2013, 2011, 2010, 2009, and 2008 fiscal years and deferred under the Deferral Plan, and (v) all interest accrued through December 31, 2017. An aggregate of $58,959 was distributed in the 2017 fiscal year in connection with salary and/or bonus earned for the 2012 fiscal year and deferred under the Deferral Plan.

The following table shows the deferred compensation activity for each named executive officer for the 2017 fiscal year attributable to the deferred shares of the Corporation’s common stock awarded or credited during such year:

Name	Executive Contributions in Last FY ($)		Registrant Contributions in Last FY ($)		Aggregate Earnings in Last FY ($)			Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at Last FYE ($)(2)
Eric W. Thornburg	$	—	$	—	$	—		$	—	$	—
W. Richard Roth	$	—	$	—	$	1,112,651	(1)	$	—	$	8,072,644
Andrew R. Gere	$	—	$	—	$	—		$	—	$	—
Palle L. Jensen	$	—	$	—	$	—		$	—	$	—
James P. Lynch	$	—	$	—	$	—		$	—	$	—
Suzy Papazian	$	—	$	—	$	—		$	—	$	—

(1) Represents (i) the $136,660 fair market value as of December 31, 2017 of the additional deferred shares of the Corporation’s common stock credited to the named executive officer for the 2017 fiscal year as a result of the dividend equivalent rights under his restricted stock units and (ii) a $975,991 increase in the fair market value of the accumulated deferred shares that occurred since the start of the 2017 fiscal year.

(2) The reported aggregate balance is based on the $63.83 closing selling price of the common stock on December 29, 2017, the last trading day in the 2017 fiscal year. As of December 31, 2017, Mr. Roth was fully vested in the reported account balance.

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Special Deferral Election Plan

The Special Deferral Election Plan (the “Deferral Plan”) allows certain key employees, including each of the named executive officers, the opportunity to accumulate an additional source of retirement income through the deferral of up to 50 percent of their base salary each year and up to 100 percent of their annual cash incentive compensation or other incentive compensation each year. For the compensation deferred each year, the individual may designate a separate distribution event and form of payment (lump sum or annual installments over a five or 10-year period). Distribution events include separation from service, the expiration of a designated deferral period of at least five years or the occurrence of a change in control. Withdrawals are also permitted in the event of a financial hardship. Each deferred account balance is credited with a rate of interest each year, compounded semi-annually, equal to the lower of (i) the 30-year long-term borrowing cost of funds to San Jose Water Company, as such rate is measured as of the start of each calendar year, or (ii) 120 percent of the applicable federal long-term rate, measured as of the start of each calendar year.

Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer (“CEO”) and President, Eric W. Thornburg.

For 2017, our last completed fiscal year:

• The median of the annual total compensation of all employees of the Corporation (other than our CEO) was $108,366; and

• The annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement and after the certain annualization required under Regulation S-K described in more detailed below, was $1,865,520.

Based on this information, the ratio of the annual total compensation of Mr. Thornburg, our President and CEO, to the median of the annual total compensation of all employees for 2017 was 17 to 1.

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:

• We determined that, as of November 30, 2017, our employee population consisted of approximately 478 individuals with all of these individuals located in the United States. This population consisted of our full-time, part-time, temporary and seasonal employees.

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• We selected November 30, 2017, which is within the last three months of 2017, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner.

• To identify the “median employee” from our employee population, we compared the amount of salary, wages, and tips of our employees as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2017. We excluded equity awards and bonus payments from our compensation measure because we did not widely distribute such awards and bonus to our employees. We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation.

• Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $108,366.

With respect to the annual total compensation of our CEO, we note that the Corporation had two individuals serving as CEO in 2017: W. Richard Roth served until November 5, 2017 when Mr. Thornburg succeeded him. Under applicable SEC rules, we are permitted to select one of the following two methods to calculate the annual total compensation of the CEO:

• Calculate the compensation provided to each person who served as the CEO during the year for the time he served as the CEO and combine those figures; or

• Calculate the compensation of the CEO serving in that position on the date the Corporation selects to identify the median employee and annualize that CEO’s compensation.

The Corporation selected the second method and calculated the annual CEO compensation based on the compensation of Mr. Thornburg, who was serving as the CEO on November 30, 2017, the determination date for identifying our median employee. In calculating the total compensation for Mr. Thornburg, we used the amount reported in the “Total” column (column (j)) of our 2017 Summary Compensation Table included in this Proxy Statement and annualized certain elements of his compensation where appropriate.

Employment Agreements, Termination of Employment and Change in Control Arrangements

Executive Severance Plan: Officers of the Corporation or its subsidiaries who are serving in such capacity at the time of a change in control or ownership of the Corporation may become entitled to severance benefits under the Corporation’s Executive Severance Plan if their employment terminates under certain circumstances in connection with such change. Accordingly, should (a) such officer’s employment be terminated by the Corporation for any reason other than good cause (as defined in the Executive Severance Plan) after the Corporation enters into an agreement to effect the change in control or ownership but before such agreement is terminated or prior to the expiration of a 24-month period following the effective date of the change in control or ownership, or (b) he or she resign for good reason (as defined in such plan) within the 24-month period following the effective date of the change in control or ownership, then (i) such officer will be entitled to a cash severance benefit consisting of three times the annual base salary and target annual cash incentive compensation (as in effect for the fiscal year of such cessation of employee status or, if higher, immediately before the change in control or ownership) or, in the case of Mr. Roth, a severance benefit equal to 3.75 times the annual base salary, generally payable in three successive equal annual installments with a potential for a lump sum payment to Mr. Roth in the event of a termination in connection with certain change in control transactions, (ii) for Mr. Thornburg, an amount equal to the annual

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bonus for the year of termination based on actual performance, pro-rated for the number of days of employment during the year of termination, (iii) his or her outstanding stock options will immediately vest and other equity awards may immediately vest in accordance with the terms of the award agreements, (iv) he or she will be reimbursed for the cost of COBRA continuation coverage under the company’s group health care plans for himself or herself and his or her spouse and eligible dependents until the earlier of (x) the date of the last annual installment of his or her cash severance benefit or (y) the first date on which the officer is covered under another employer’s health benefit program without exclusion for any pre-existing medical condition, and (v) he or she will be deemed to be three years older and be given three additional years of service for purposes of calculating his or her pension benefit under the SERP (the “Enhanced Pension Benefit”).

If an officer qualifies for benefits under the Executive Severance Plan and any payment made in connection with a change in control or the subsequent termination of the officer’s employment becomes subject to an excise tax under Section 4999 of the Code (the “Excise Tax”), then such payment or benefit will be grossed-up (except for Mr. Thornburg) to ensure that such officer does not incur any out-of-pocket cost with respect to such Excise Tax, and such officer will accordingly receive the same net after-tax benefit he or she would have received had no Excise Tax been imposed.

The benefits payable under the Executive Severance Plan are conditioned upon the named executive officer’s execution of a general release of all employment-related claims against the Corporation and a non-solicitation covenant pursuant to which such officer may not induce any representative, agent or employee to terminate his or her employment or service relationship with the Corporation.

In addition to the benefits provided under the Executive Severance Plan, the named executive officer would also be entitled to (i) retirement benefits under the SERP or Cash Balance SERP and the Retirement Plan and (ii) their deferred compensation under the Corporation’s non-qualified deferred compensation plan and their vested-to-date deferred stock awards. The present value of the accumulated pension benefits under the retirement plans as of the close of the 2017 fiscal year (excluding the enhancement of the benefits under the Executive Severance Plan) is set forth in the table above in the section entitled “Pension Benefits.” The value of their accumulated deferred compensation as of December 31, 2017 is set forth in the two tables in the section above entitled “Non-Qualified Deferred Compensation.”

For purposes of the various payments and benefits which may be triggered under the Executive Severance Plan in connection with a change in control, the following transactions will be deemed to constitute a change in control event:

• A merger, consolidation or other reorganization, unless 50 percent or more of the outstanding voting power of the successor entity is owned, in substantially the same proportions, by the persons who were the Corporation’s stockholders immediately prior to the transaction;

• A sale of all or substantially all of the Corporation’s assets, unless 50 percent or more of the outstanding voting power of the acquiring entity or parent thereof is owned, in substantially the same proportions, by the persons who were the Corporation’s stockholders immediately prior to the transaction;

• Certain changes in the composition of the Corporation’s Board of Directors; or

• The acquisition of the Corporation’s outstanding securities by any person so as to make that person the beneficial owner of securities representing 30 percent or more of the total combined voting power of the Corporation’s outstanding securities.

The chart below indicates the potential payments that each named executive officer would receive upon a qualifying termination following a change in control based upon the following assumptions:

(i) His or employment terminated on December 31, 2017 under circumstances entitling him or her to full severance benefits under the Executive Severance Plan; and

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(ii) The change in control is assumed to have occurred on December 31, 2017 and at a price per share payable to the holders of the Corporation’s common stock in an amount equal to $63.83 per share, the closing selling price of such common stock on December 29, 2017, the last trading day in the 2017 fiscal year.

Name	Cash Severance Payment ($)			Present Value of Enhanced Pension Benefit ($)(2)			Estimated Value of Reimbursed COBRA Continuation Health Care Coverage ($)		Value of Accelerated Restricted Stock Unit Awards (3)		Excise Tax Gross-Up ($)(4)		Total
Eric W. Thornburg	$	2,100,000	(1)	$	35,818		$	44,110	$	928,854	$	—	$	3,108,782
W. Richard Roth	$	2,879,760	(5)	$	—		$	44,110	$	—	$	—	$	2,923,870
Andrew R. Gere	$	1,680,000	(1)	$	352,709		$	63,710	$	275,746	$	1,243,571	$	3,615,736
Palle L. Jensen	$	1,419,000	(1)	$	528,010		$	63,710	$	282,129	$	1,046,259	$	3,339,108
James P. Lynch	$	1,605,000	(1)	$	—	(6)	$	58,864	$	314,236	$	780,618	$	2,758,718
Suzy Papazian	$	1,359,000	(1)	$	241,873		$	6,223	$	223,214	$	909,958	$	2,740,268

(1) Represents three times Mr. Thornburg’s annual salary of $700,000, represents three times Mr. Gere’s annual salary of $448,000 plus three times his target annual cash incentive compensation of $112,000, represents three times Mr. Jensen’s annual salary of $378,000 plus three times his target annual cash incentive compensation of $95,000, represents three times Mr. Lynch’s annual salary of $428,000 plus three times his target annual cash incentive compensation of $107,000, and represents three times Ms. Papazian’s annual salary of $362,000 plus three times her target annual cash incentive compensation of $91,000.

(2) The actuarial and economic assumptions used above to value the enhanced pension benefits include the RP-2014 Mortality Table basis adjusted to 2006 published by The Society of Actuaries, with projection scale MP-2017 Mortality Improvement Scale and a 3.44 percent discount rate for the SERP and Cash Balance SERP (for 2016 a discount rate of 3.84 percent was used for the SERP and Cash Balance SERP and the RP-2014 Mortality Table basis adjusted to 2006, published by The Society of Actuaries, with projection scale MP-2016 Mortality Improvement Scale was used for such plans). There is no assumption for pre-retirement mortality or cessation of service, and retirement is assumed to occur at the earliest age at which each named executive officer can receive the pension benefits without actuarial reductions.

(3) The unvested restricted stock units will automatically vest on an accelerated basis at the time of the qualifying termination event. The reported dollar values of these unvested units are based on the $63.83 closing selling price per share of the Corporation’s common stock on December 29, 2017, the last trading day in the 2017 fiscal year.

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(4) Calculated based on (i) W-2 wages for the five-year period 2012 through 2016, (ii) an effective tax rate of 55.25% (Federal, 39.6%; State, 13.3%; and Medicare, 2.35%) and (iii) the vesting of all outstanding unvested stock-based awards on the assumed December 31, 2017 change in control/separation from service date.

(5) Represents 3.75 times Mr. Roth’s annual salary of $767,936.

(6) There would be no enhancement to Mr. Lynch’s benefits under the Cash Balance SERP, whether in the form of additional compensation credits or contributions or additional years of service credit, triggered by the change in control event or the termination of his employment in connection therewith.

Mr. Thornburg’s Employment Agreement: In September 2017, the Corporation entered into an employment agreement pursuant to which Mr. Thornburg agreed to serve as the President and Chief Executive Officer effective November 6, 2017. The material terms of such agreement are summarized below:

• Mr. Thornburg’s annual base salary for the 2017 and 2018 calendar years is $700,000 (which was below the 75th percentile).

• Mr. Thornburg’s target annual incentive cash compensation is 50 percent of his base salary starting with the 2018 fiscal year.

• Mr. Thornburg received a sign-on cash bonus in the amount of $310,000 in the first quarter of 2018. This bonus was intended in part to offset the 2017 cash incentive award forfeited by Mr. Thornburg in light of his move to the Corporation.

• 70 percent of Mr. Thornburg’s target equity awards are in the form of performance based RSUs which are based on a three-year performance period.

• Mr. Thornburg is eligible to receive enhanced severance benefits under the Executive Severance Plan (but not a tax gross-up) and enhanced retirement benefits under the Cash Balance Executive Supplemental Retirement Plan.

• Mr. Thornburg is entitled to certain severance benefits (under certain circumstances where he is not eligible for benefits under the Executive Severance Plan).

• Mr. Thornburg’s compensation is subject to clawback in accordance with applicable laws and regulations.

• Mr. Thornburg will be reimbursed for reasonable temporary housing expenses in the San Jose area (for up to 12 months) and reasonable moving and travel expenses incurred in connection with his relocation to the San Jose area. Mr. Thornburg is also eligible to receive a company-provided motor vehicle and maintenance thereof and the same perquisites as the other senior executive officers of the Corporation. In addition, effective January 1, 2018, the Corporation will reimburse Mr. Thornburg for reasonable business related personal expenses approved by the Chair of the Executive Compensation Committee.

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• Equity awards under the agreement include the following:

• Three initial RSU awards granted in the first quarter of 2018. The first award granted on January 2, 2018, covers 3,545 shares (determined by dividing $225,000 by the closing price per share of the Corporation’s common stock on the grant date) and will vest in three equal installments on each of December 31, 2018, December 31, 2019, and December 31, 2020, subject to continued service and accelerated vesting upon termination by reason of death or disability or an involuntary termination in connection with a change in control. The second and third initial awards were granted on January 30, 2018 and cover an aggregate number of shares determined by dividing $525,000 by the closing price per share of Corporation common stock on the grant date. The second award covers 6,342 target shares based on continued service and total shareholder return (“TSR”) performance relative to the seven water peer companies over the period measured from January 1, 2018 to December 31, 2020 (the “TSR Performance Period”). The number of shares issuable under such award will range between 0 to 200 percent of the target number of shares and will vest based on the level of actual attainment of the specified performance goal. The third initial award covers 2,537 target shares and will vest based on the EPS for the 2020 fiscal year and continued service through December 31, 2020. The number of shares issuable under such award will range between 0 to 150 percent of the target number of shares based on the level of actual attainment of the specified performance goal.

• A special grant of RSUs granted on November 6, 2017 covering 14,552 shares (determined by dividing $900,000 by the closing price per share of the Corporation’s common stock on the grant date) which will vest in three annual equal installments on each of December 31, 2018, December 31, 2019 and December 31, 2020, subject to continued service and accelerated vesting on an involuntary termination or termination by reason of death or disability. This special grant is in recognition of the value of unvested equity awards that were forfeited by Mr. Thornburg in light of his move to the Corporation.

Mr. Roth’s Employment Agreement: The Corporation entered into an amended and restated employment agreement with the CEO effective January 1, 2008. Such amended and restated employment agreement was subsequently amended on December 16, 2009 and January 26, 2010, respectively. In July 2014, the Committee negotiated a new compensation package with the CEO and further amended his employment agreement. Pursuant to the July 30, 2014 amendment, the term of Mr. Roth’s employment under his employment agreement was extended to December 31, 2017. Pursuant to his employment agreement, Mr. Roth’s annual base salary for the 2017 calendar year was increased by four percent per year to $767,936 and his target annual cash incentive compensation remained at 25 percent of his base salary.

In 2017, Mr. Roth continued to be entitled to paid health care coverage for himself and his dependents and certain perquisites which include a Corporation-provided motor vehicle and Corporation-paid club memberships (excluding any country club memberships).

The principal terms of the equity awards provided for under the July 2014 amendment agreement are summarized in the section entitled “Compensation Discussion and Analysis - CEO Employment Agreement” that appears earlier in this proxy statement.

Pursuant to the employment agreement entered into in 2003, Mr. Roth received a deferred restricted stock award covering 83,340 shares. The award is fully vested and continues to include dividend equivalent rights. The phantom cash dividends which accumulate each year pursuant to those dividend equivalent rights are converted on the first business day of January in each succeeding year into additional deferred shares based on the average of the per share market prices of the Corporation’s common stock on each date actual dividends were paid on such common stock during the year.

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If Mr. Roth’s employment had been involuntarily terminated for any reason other than death, disability or good cause (as defined in Mr. Roth’s employment agreement) or his employment had voluntarily terminated for good reason (as defined in such agreement) prior to December 31, 2017 and such termination did not occur under circumstances entitling him to benefits under the Executive Severance Plan, he would have been entitled to receive severance benefits.

Mr. Roth did not receive any severance benefits in connection with his termination of employment on December 31, 2017.

Mr. Roth would be entitled to accumulated retirement benefit with a present value of $8,248,798 as of December 31, 2017 and vested deferred compensation in the amount of $9,797,891 as of that date.

Mr. Lynch’s Offer Letter: Under the terms of his offer letter, Mr. Lynch is entitled to (i) a company car and reimbursement of membership fees for one local health club; and (ii) separation pay in the form of 12 months of salary continuation should his employment be involuntarily terminated without cause. However, should Mr. Lynch’s employment terminate under circumstances that would otherwise entitle him to separation pay and severance benefits under the Executive Severance Plan, there will be no duplication of benefits under the two arrangements, and Mr. Lynch will only receive the severance benefits provided under the Executive Severance Plan. Mr. Lynch’s base salary was $428,000 for the 2017 calendar year.

Had Mr. Lynch’s employment been involuntarily terminated without cause by the Corporation on December 31, 2017 in the absence of a change in control, the salary continuation payment to which he would have been entitled under his offer letter would have been in the aggregate amount of $428,000.

Accelerated Vesting on Change in Control: The service-based restricted stock unit awards granted to the named executive officers vest in full on a change in control if they are not assumed, replaced or otherwise continued. If the awards are assumed, replaced or otherwise continued following a change in control, then the awards will continue to vest over the service period subject to vesting in full on a qualifying termination following the change in control. The performance-based restricted stock unit awards granted to the other named executive officers will vest with respect to the target number of shares on a change in control if the awards are not assumed, replaced or otherwise continued; if the awards are assumed, replaced or otherwise continued following a change in control, then the awards will vest at target level at the end of the performance period or an earlier qualifying termination following the change in control.

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Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of December 31, 2017 with respect to the shares of the Corporation’s common stock that may be issued under the Corporation’s existing equity compensation plans:

	A			B			C
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and  Rights			Weighted Average Exercise Price of Outstanding Options, Warrants and Rights			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Column A)
Equity Compensation Plans Approved by Stockholders (1)		228,885	(3)	$	—	(4)		1,251,294	(5)(6)
Equity Compensation Plans Not Approved by Stockholders (2)		N/A			N/A			N/A
Total		228,885	(3)	$	—	(4)		1,251,294	(5)(6)

(1) Consists of the Corporation’s Long-Term Incentive Plan and 2014 Employee Stock Purchase Plan.

(2) The Corporation does not have any outstanding equity compensation plans which are not approved by stockholders.

(3) Includes 228,885 shares of common stock underlying deferred stock awards and restricted stock units that will entitle each holder to the issuance of one share of common stock for each deferred share or unit that vests following the applicable performance-vesting or service-vesting requirements. Excludes outstanding purchase rights under the 2014 Employee Stock Purchase Plan.

(4) Calculated without taking into account the 228,885 shares of common stock subject to outstanding deferred stock awards or restricted stock units that will become issuable upon or following the vesting of those awards or units, without any cash consideration or other payment required for such shares.

(5) Consists of 942,569 shares of common stock available for issuance under the Long-Term Incentive Plan and 308,725 shares of common stock available for issuance under the 2014 Employee Stock Purchase Plan.

(6) The shares under the Long-Term Incentive Plan may be issued pursuant to stock option grants, stock appreciation rights, restricted stock or restricted stock unit awards, performance shares, dividend equivalent rights, and stock bonuses.

Compensation Committee Interlocks and Insider Participation

No member of the Executive Compensation Committee was at any time during the 2017 fiscal year, or at any other time, an officer or employee of the Corporation or any of its subsidiaries. No executive officer of the Corporation served during the 2017 fiscal year as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of any entity that has one or more executive officers serving as a member of the Corporation’s Board or Executive Compensation Committee. Messrs. Bishop, More and Moskovitz and Ms. Armstrong served on the Executive Compensation Committee during the 2017 fiscal year. None of the Executive Compensation Committee members had a relationship requiring disclosure under Item 404 of Regulation S-K.

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