CALIFORNIA WATER SERVICE GROUP

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(1)

Company-funded capital expenditure was $470 million. The Group’s 2025 achieved capital expenditure was $517 million as reported in Item 7 of the Group’s Form 10-K for the year ended December 31, 2025 as filed with the SEC. Excluding developer-funded expenditures of $28 million and including an increase in accounts payable accrual of $10 million for capital project spend, the Group spent $488 million on company-funded capital expenditures for the 2025 performance period.

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The table below summarizes the total performance-based short-term at-risk compensation earned by our officers for the fiscal year ended December 31, 2025.

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(1)

The short-term at-risk compensation is paid annually following certification of the prior year’s results by the Committee.

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2025 Long-Term Performance and Time-Based Equity Compensation

The purpose of our long-term equity compensation is to align executive compensation with the long-term interests of both stockholders and customers, to create incentives for officer recruiting and retention, to encourage long-term performance by our officers, and to promote stock ownership. Risk is taken into account in determining the aggregate amount of at-risk compensation and performance criteria, including assessment of risk management and risk mitigation.

As with target short-term at-risk compensation, the Committee reviewed the competitive range of long-term equity compensation and total direct compensation for similar positions within the competitive market in making decisions regarding long-term equity compensation awards for 2025. The Committee also believes that, in the interest of strengthening and rewarding teamwork and collaboration within the officer team, the annual equity awards granted to each of our officers should be based on the same objectives and methodology.

As in prior years, the long‑term performance‑based equity program continues to be heavily weighted toward financial performance. For the 2025–2027 performance period, the financial component consists of a single overarching stockholder return metric, measured through three elements: the three‑year compound annual growth rate of dividends, the three‑year compound annual growth rate of capital expenditures, and adjusted ROE. The second performance metric is PFAS Investment and Recovery, which reflects both the Group’s investment in PFAS water monitoring and treatment infrastructure and efforts to recover PFAS‑related water contamination costs through litigation and resulting settlements or judgments against PFAS manufacturers.

These long‑term performance metrics are especially important for a regulated utility because they reinforce disciplined capital investment, financial strength, and responsible stewardship of customer resources. Measures such as dividend and capital expenditure growth and adjusted ROE help ensure that the Company is deploying capital efficiently, maintaining reliable infrastructure, and generating sustainable returns for stockholders. Likewise, the PFAS Investment and Recovery metric reflects the Company’s commitment to protecting water quality, investing in necessary treatment technologies, and pursuing cost recovery on behalf of customers and stockholders. Together, these measures reinforce prudent long-term planning, support reliable and affordable service for customers, and align executive incentives with the durable value creation that is fundamental to a utility’s long-term strategic objectives.

Targets for each performance metric were designed to be rigorous and closely aligned with how we operate as a public utility committed to serving our customers, communities, and stockholders. In setting these long-term goals, targets were grounded in Group’s multi-year strategic plan, evaluated historical performance trends, and benchmarked against peer practices to ensure they are both challenging and competitive. In addition, the regulatory environment, external economic conditions, and the extent to which executives can reasonably influence outcomes over the performance period were considered. As a result, the targets are objective, measurable, and aligned with the long-term interests of stockholders and customers, while encouraging responsible risk-taking and sustained value creation.

Each performance‑based RSU metric includes defined threshold, target, and maximum performance levels. If threshold performance is achieved for a metric, the payout is 50% of the target opportunity; if maximum performance is achieved, the payout is capped at 200% of target. No payout is earned for any metric if threshold performance is not met. For the performance metrics applicable to the 2025 performance-based RSU award, the Committee will certify the level of achievement at the end of the three-year performance period. The number of shares awarded at the end of the three-year performance period is based on the extent the performance criteria is met over such time and subject to the officer’s continued employment through such date.

Based on the methodology described above, the Committee set the total target value for the long-term at-risk (LT-ARP) equity compensation awards for 2025 as follows:

The 2025 performance-based RSUs are subject to the following performance measures, goals, and related payout levels for the three-year period ending on December 31, 2027.

For more information regarding the setting of Mr. Kropelnicki’s 2025 long-term performance and time-based equity compensation, see “CEO Pay Overview” in this Proxy Statement.