ARTESIAN RESOURCES CORP

COMPENSATION DISCUSSION AND ANALYSIS

This discussion describes the Company's compensation program for its named executive officers listed in the Summary Compensation Table that immediately follows this discussion. The named executive officers for 2025 are: Nicholle R. Taylor, current President, Chief Executive Officer and Board Chair since February 2025; Dian C. Taylor, former President and Chief Executive Officer until February 2025 who remains a member of the Board; David B. Spacht, Chief Financial Officer; Joseph A. DiNunzio, Executive Vice President & Secretary; John M. Thaeder, Senior Vice President; and Jennifer L. Finch, Corporate Treasurer and Senior Vice President of Finance.

Objectives of the Company’s Compensation Program

The Compensation Committee believes that the compensation for the Company’s executives should serve to attract, motivate and retain seasoned and talented executives responsible for successfully guiding and implementing the Company's strategy. Our strategy is to increase our customer base, revenues, earnings and dividends by expanding our services across the Delmarva Peninsula, thereby providing our stockholders with a long-term, satisfactory return on their investment.

To implement our strategy, it is critical that our executives remain focused on:

• ensuring superior customer service;

• continuously improving our efficiency and performance;

• managing risk appropriately;

• expanding our franchised service territory and customer base at a consistent and sustainable rate - including by acquisitions - where growth is strong and demand is increasing;

• identifying and developing dependable sources of supply;

• constructing and maintaining reliable treatment facilities and water delivery and wastewater collection systems;

• developing and continuing positive relationships with regulators, municipalities, developers and customers in both existing and prospective service areas; and

• developing a skilled and motivated work force that is adaptive to change.

To accomplish our strategy, our compensation program's objectives are to:

• provide compensation levels that are competitive with those provided by other companies with which we may compete for executive talent;

• motivate and reward contributions and performance aligned with the Company's objectives;

• attract and retain qualified, seasoned executives; and

• ensure the Company maintains a pay-for-performance executive compensation program.

The compensation program rewards overall qualitative contributions and performance of each individual towards the Company's strategy. In reviewing the Company's overall compensation program in the context of the risks identified in the Company's risk management processes, the Compensation Committee does not believe that the risks the Company faces are correlated with the Company's compensation programs. Therefore, the Compensation Committee believes that there is an appropriate level of risk in the Company’s compensation program design and does not believe that its approach to the design and administration of its incentive programs needs to change in order to mitigate compensation risk.

Elements of the Company’s Compensation Program

The elements of the Company’s compensation program include:

• Base Salary

• Cash Bonus Award

• Equity Compensation as may be awarded under the 2025 Equity Compensation Plan

• Employee Benefits

The Company's executive compensation program does not provide for:

• Severance or post-termination agreements

• Post-retirement benefits

• Defined benefit pension benefits or any supplemental executive retirement plan benefits

• Non-qualified deferred compensation

• Change-in-Control agreements

Compensation Process

The Compensation Committee relies on various factors in determining executive compensation, including the overall financial performance of the Company, combined with an executive officer's individual performance, progress in meeting strategic corporate objectives, and changes in responsibilities, as well as the consideration of elements of compensation not provided for by the Company in comparison to its peers. The Compensation Committee generally exercises broad discretion in setting the compensation of the Chief Executive Officer and other executives and primarily considers the performance of the management team as a group, the Chief Executive Officer's assessment of other executives' performance and compensation recommendations with respect to the other executive officers as part of its process.

The Compensation Committee engaged Pearl Meyer & Partners as a compensation consultant during the years 2022 and 2023 to provide it with independent advice on executive compensation matters. The following peer group was utilized: American States Water Company; Chesapeake Utilities Corporation; Consolidated Water Company Ltd.; Fluence Corporation Limited; Global Water Resources, Inc.; Middlesex Water Company; RGC Resources Incorporated; SJW Group; The York Water Company; urban-gro, Incorporated; Williams Industrial Services Group; American Water Works Company, Inc.; California Water Service Group; and Essential Utilities, Inc.

Base Salary

Base salaries for Company executives are set at levels considered appropriate to attract and retain seasoned and talented personnel. In 2025, the Compensation Committee increased the base salary of Nicholle R. Taylor by 31% for her appointment to Chief Executive Officer. In 2025, the Compensation Committee increased the base salary of the Chief Financial Officer and the Senior Vice President and Treasurer by 3%. Dian C. Taylor no longer received a base salary following her retirement as Chief Executive Officer in February 2025, and the Compensation Committee did not increase the base salary of the other named executive officers.

The Compensation Committee determines actual base salaries for each executive other than the Chief Executive Officer based upon:

• recommendations provided by the Chief Executive Officer;

• internal equity with other executives and Company personnel;

• individual executive performance; and

• individual contributions to the Company's strategic objectives.

The Compensation Committee considers the same factors in determining the base salary of the Chief Executive Officer, without any recommendation by the Chief Executive Officer. The Chief Executive Officer was not present during deliberations on her compensation.

Cash Bonus and Equity Compensation Awards

Annually, the Compensation Committee determines whether any Cash Bonus and/or Equity Compensation Awards should be granted to any of the executives. The Cash Bonus and Equity Compensation Awards are intended to reward executives for their contributions towards meeting the Company's strategic objectives. Cash Bonus and Equity Compensation Awards are entirely discretionary and are based upon a qualitative assessment conducted by the Compensation Committee in the case of the Chief Executive Officer and by the Compensation Committee and the Chief Executive Officer in the case of other executives. Recognizing both the executive team's and each individually named executive officer’s contributions toward meeting the Company's strategic objectives, cash bonuses were awarded to the Chief Executive Officer and named executive officers in 2025, other than Dian C. Taylor.

Other Compensation

Prior to May 2025, both Dian C. Taylor and Nicholle R. Taylor received compensation for their services as Directors, which compensation was equivalent to that provided to all other directors for Stock Awards and less for retainers. See "2025 Non-Employee Director Compensation Table."

The Company’s named executive officers receive a limited number of other benefits as part of a competitive compensation package, which constitutes in the aggregate only a small percentage of their total compensation. As discussed below, these benefits include:

• a Company contribution under our 401(k) Plan;

• participation in our group health plans, which is generally available to all employees, as well as reimbursements for eligible medical expenses not otherwise covered by the Company's medical insurance plan under the Officer's Medical Reimbursement Plan.

Our executive officers do not receive tax reimbursement for imputed income derived from any of these benefits.

All amounts are included in the "All Other Compensation" column in the Summary Compensation Table and the accompanying footnotes to the table.

The Role of Management in the Executive Compensation Process

Our Director of Human Resources typically assists the Compensation Committee by preparing and providing information showing:

• current executive compensation levels;

• executive compensation recommendations made by the Chief Executive Officer;

• salary grade minimum, midpoint and maximums for each executive, based on information provided by the Company's compensation consultant retained in 2023, adjusted annually; and

• actual base salary, cash bonus and equity compensation for each of the prior three years for each executive.

Our Chief Executive Officer meets with the Compensation Committee and provides input regarding the contributions of each executive towards the Company's strategic objectives and each executive's overall performance that formed the basis for her recommendations to the Compensation Committee. The final decisions regarding compensation for each executive are made by the Compensation Committee. Please refer to Compensation Committee Interlocks and Insider Participation section for more information.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company's Annual Report on Form 10-K.

The Compensation Committee,

John R. Eisenbrey, Jr, Chairman

Michael Houghton

Salvatore J Rossi, Jr.

CEO Pay Ratio

The 2025 compensation disclosure ratio of the median annual total compensation of all Company employees to the annual total compensation of Nicholle R. Taylor, the Company’s Chief Executive Officer is as follows:

For simplicity, we identified the median employee by examining the base annual salary for all individuals, excluding our CEO, who were employed by us on October 31, 2025. We included all employees, whether employed on a full-time, part-time, or seasonal basis. We believe that the use of base annual salary compensation, excluding overtime, is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees and believe that it provides a reasonable estimate of the pay ratio calculated in a manner consistent with Item 402(u) of Regulation S-K. After identifying the median employee by examining base annual salary excluding overtime, we calculated annual total compensation, including overtime, for such employee using the same methodology we use for our named executive officers set forth in the 2025 Summary Compensation Table. Dian C. Taylor served as our Chief Executive Officer until February 2025, when she was succeeded by Nicholle R. Taylor. As permitted under Item 402(u) of Regulation S-K, we calculated our CEO Pay Ratio based on the annual total compensation, as reported in the Summary Compensation table, further adjusted by annualizing Nicholle R. Taylor’s salary as Chief Executive Officer and removing her 2025 Board retainer fees, which she no longer receives as an employee-director.

Summary Compensation Table:

(1)

On May 5, 2025, Nicholle R. Taylor and Dian C. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. The award was valued at the fair market value on the date of the award (last reported sale price on the date of award) of $34.27 per share. Subject to continued service the restricted shares vest one year from the date of grant. On May 6, 2024, Dian C. Taylor and Nicholle R.. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. Each award was valued at the fair market value on the date of the award of $37.07 per share. The restricted shares vested one year after the date of grant. On May 9, 2023, Dian C. Taylor and Nicholle R. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. The award was valued at the fair market value on the date of the award of $54.88 per share. The restricted shares vested one year after the date of grant.

(2)

Under the Company’s defined contribution 401(k) Plan, the Company contributes two percent of an eligible employee's gross earnings. The Company also matches 50 percent of the first six percent of the employee's gross earnings that the employee contributes to the 401(k) Plan. In addition, all employees hired before April 26, 1994 and under the age of 60 at that date are eligible for additional contributions to the 401(k) Plan. Employees over the age of 60 at that date receive Company paid medical, dental and life insurance benefits upon retirement. The Company will not provide the additional 401(k) or medical, dental and life insurance benefits to any other current or future employees. In 2025, Company contributions to the 401(k) Plan under terms available to all other employees based upon their years of service and plan eligibility were made in the amounts of:

(3) Included in the "All Other Compensation" column in the table above are amounts received by Nicholle R. Taylor and Dian C. Taylor as compensation for Board retainers in 2025 of $16,750 and $88,000, respectively.

(4) Executive officers are reimbursed for eligible medical expenses not otherwise covered by the Company's medical insurance plan under the Officer's Medical Reimbursement Plan. Amounts reimbursed are included in the "All Other Compensation" column in the table above. In 2025, Joseph A. DiNunzio, John M. Thaeder and Jennifer L. Finch received reimbursements of $4,835, $10,347 and $5,591, respectively.

(5) In February 2025, the Board appointed Nicholle R. Taylor as the Company’s Chair of the Board, President and Chief Executive Officer. Dian C. Taylor remains a member of the Board but is no longer serving as the Company’s President and Chief Executive Officer.

(6) Joseph A. DiNunzio retired effective February 6, 2026 and John M. Thaeder retired effective February 13, 2026.

Grants of Plan-Based Awards Table

On May 5, 2025, Nicholle R. Taylor and Dian C. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock, as noted in the table above. The awards were valued at the fair market value on the date of the award (last reported sale price on the date of award) of $34.27 per share. The restricted stock award vests one year from the date of grant.

On September 16, 2025, David B. Spacht and Jennifer L. Finch each received a restricted stock award of 750 shares of Class A Non-Voting Stock, as noted in the table above. The awards were valued at the fair market value on the date of the award (last reported sale price on the date of award) of $32.08 per share. The restricted stock award vests one year from the date of grant.

Outstanding Equity Awards at Fiscal Year-End Table

Option Exercises and Stock Vested Table

Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

In response to Item 402(x)(1) of Regulation S-K, the Company does not currently grant new awards of stock options, stock appreciation rights, or similar option-like instruments. Accordingly, the Company has no specific policy or practice on the timing of awards of such options in relation to the disclosure of material nonpublic information by the Company. In the event the Company determines to grant new awards of such options, the Board will evaluate the appropriate steps to take in relation to the foregoing.