<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CALIFORNIA WATER SERVICE COMPANY
(Name of Registrant as Specified in Its Charter)
CALIFORNIA WATER SERVICE COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
CALIFORNIA WATER SERVICE COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS -- APRIL 17, 1996
To the Shareholders:
The annual meeting of the shareholders of California Water Service Company,
a California corporation, will be held, as provided in the By-Laws, on
Wednesday, April 17, 1996, at 10 o'clock in the morning at the principal
executive offices of the Company, 1720 North First Street, San Jose, California
95112, for the following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To consider and act upon ratification of the appointment of independent
auditors; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors' nominees for directors are set forth in the
enclosed proxy statement.
In accordance with the By-Laws of the Company, only shareholders of record
at the close of business on Tuesday, February 20, 1996, will be entitled to vote
at this meeting.
IF YOU ARE UNABLE TO BE PRESENT, PLEASE DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN S. SIMPSON, Acting Secretary
San Jose, California
March 13, 1996
<PAGE> 3
PROXY STATEMENT
SOLICITATION OF PROXY AND REVOCABILITY,
VOTING SECURITIES
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of California Water Service Company, a California corporation (the
"Company"), for use at the annual meeting of shareholders to be held at the
principal executive offices of the Company, 1720 North First Street, San Jose,
California 95112, on April 17, 1996, at 10 o'clock in the morning at which
shareholders of record at the close of business on February 20, 1996 will be
entitled to vote. This statement and the enclosed proxy are being sent to
shareholders on or about March 13, 1996. On February 20, 1996, the Company had
issued and outstanding 6,279,597 shares of Common Stock and 139,000 shares of
Cumulative Preferred Stock, Series C.
Each share of Common Stock is entitled to one vote and each share of
Preferred Stock to eight votes. All shareholders, or their proxies, entitled to
vote upon the election of directors may cumulate their votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which their shares are entitled, or
distribute their votes on the same principle among as many candidates as they
think fit. No shareholder or proxy, however, will be entitled to cumulate votes
unless such candidate or candidates have been placed in nomination prior to the
voting and the shareholder has given notice at the meeting prior to the voting
of the shareholder's intention to cumulate the shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. The Board is soliciting discretionary authority to
cumulate votes if cumulative voting rights are exercised. The nine nominees
receiving the highest number of votes at the meeting will be elected as
directors. All other matters to come before the meeting shall be determined,
assuming a quorum is present, by a vote of a majority of the votes entitled to
be cast by shares represented at the meeting and entitled to vote on such
matters. A quorum for the purpose of conducting business at the meeting exists
when there are present in person or by proxy at the meeting persons entitled to
cast a majority of the votes entitled to be cast at the meeting by the holders
of the outstanding voting shares of the Company. Broker non-votes and
abstentions will not be counted, except for quorum purposes, and will have no
effect on the election of the directors. In determining whether the requisite
shareholder approval has been received on the other matters, broker non-votes
will not be counted, while abstentions will be counted and will therefore have
the same effect as a vote against the matter.
<PAGE> 4
The shares represented by the proxies received will be voted at the meeting
or any adjournment thereof. However, you may revoke your proxy at any time prior
to its use by filing with the Company a written notice revoking it, or by the
presentation at the meeting of a proxy bearing a later date. It may also be
revoked by attending the meeting and voting in person.
The shares represented by duly executed proxies will be voted in accordance
with the directions given by the shareholders by means of the ballot on the
proxy. If no instructions are given, the shares will be voted FOR the election
of the Board's nominees for directors and FOR the ratification of the
appointment of independent auditors. If, for any unforeseen reason, any of said
nominees should not be available as a candidate for director, the proxies will
be voted for substitute nominees selected by the Board. Shares for which duly
executed proxies are received will be voted according to the Board's best
judgment upon such other matters as may properly come before the meeting or any
adjournment thereof.
The Company will bear the entire cost of preparing, assembling, printing
and mailing these proxy statements, the proxies and any additional materials
which may be furnished by the Board to shareholders. The solicitation of proxies
will be made by the use of the U.S. postal service and may also be made by
telephone, telegraph, or personally, by directors, officers and regular
employees of the Company who will receive no extra compensation for such
services. In addition, the Company has retained Morrow & Co., a proxy
distribution and solicitation firm, to assist in the distribution and
solicitation of proxies for shares held in the names of brokers, banks and other
nominees, for a fee of $5,000 plus reimbursement of reasonable out-of-pocket
expenses.
2
<PAGE> 5
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The directors of the Company are elected annually. The following table sets
forth the name of each of the nominees for director, his/her age, the year in
which he/she was first elected a director, the number of shares of the Company's
Common Stock and Preferred Stock beneficially owned by him/her on January 1,
1996, a brief description of his/her principal occupation and business
experience during the last five years, all directorships of publicly held
companies presently held by each nominee, and certain other information. All
nominees are presently directors of the Company. The term of office for all
directors elected at the 1996 annual meeting will expire at the time of the 1997
annual meeting. No nominee has any family relationship with any other nominee or
with any executive officer.
<TABLE>
<CAPTION>
SERVICE AMOUNT AND
AS NATURE OF
DIRECTOR BENEFICIAL PERCENT OF
NOMINEE AGE INFORMATION ABOUT NOMINEE(1) SINCE OWNERSHIP(2) CLASS
- --------------------------------- --- ----------------------------------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
William E. Ayer(3)(4)............ 74 Venture Investor. Also a director 1973 5,281 Less than
of Tab Products Co. and a director 1%
(emeritus) of Technology for
Communications International.
Formerly a member of the Stanford
University Board of Trustees.
Robert W. Foy(5)(6).............. 59 Chairman of the Board since January 1977 1,609 Less than
1, 1996. Formerly President and 1%
Chief Executive Officer, Pacific
Storage Company, Stockton, Modesto,
Sacramento, and San Jose,
California (moving and storage
company).
Edward D. Harris Jr., M.D.(4)(5).. 58 George DeForest Barnett Professor 1993 468 Less than
of Medicine, Stanford University 1%
Medical Center.
Robert K. Jaedicke(3)(4)......... 67 Professor (Emeritus) of Accounting 1974 951 Less than
and Former Dean, Stanford 1%
University Graduate School of
Business. Also a director of Boise
Cascade Corporation, Enron Corp.,
Homestake Mining Company, GenCorp.,
Inc., Wells Fargo Bank and State
Farm Insurance Companies.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
SERVICE AMOUNT AND
AS NATURE OF
DIRECTOR BENEFICIAL PERCENT OF
NOMINEE AGE INFORMATION ABOUT NOMINEE(1) SINCE OWNERSHIP(2) CLASS
- --------------------------------- --- ----------------------------------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Linda R. Meier(3)................ 55 Chairperson, Stanford University 1994 500 Less than
Hospital Board of Directors (1992- 1%
present). Also a director of
Comerica Bank, University Bank &
Trust Co. and Stanford Health
Services. Member, California
Academy of Sciences Advisory Board.
Formerly Vice President, Stanford
University Board of Trustees
(1988-1994).
Peter C. Nelson(5)(7)............ 48 President and Chief Executive 1996 950 Less than
Officer since February 1, 1996. 1%
Formerly Vice President, Division
Operations (1994-1995) and Region
Vice President (1989-1994), Pacific
Gas & Electric Company (gas and
electric public utility).
C.H. Stump(3)(5)................. 70 Formerly Chairman of the Board 1976 6,410(8) Less than
(1991-1996). Formerly President 1%
(1981-1991) and Chief Executive
Officer (1986-1992). 400(9) Less than
1%
Edwin E. van Bronkhorst(4)....... 72 Financial consultant. Trustee and 1985 2,000 Less than
Treasurer of The David & Lucile 1%
Packard Foundation. Formerly Senior
Vice President, Treasurer and Chief
Financial Officer, Hewlett-Packard
Company. Also a director of Mid-
Peninsula Bank and Nellcor Puritan-
Bennett.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
SERVICE AMOUNT AND
AS NATURE OF
DIRECTOR BENEFICIAL PERCENT OF
NOMINEE AGE INFORMATION ABOUT NOMINEE(1) SINCE OWNERSHIP(2) CLASS
- --------------------------------- --- ----------------------------------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
J.W. Weinhardt(4)(5)............. 64 President and Chief Executive 1994 0%(10) Not
Officer, SJW Corp. (holding applicable
company) and Chairman of the Board
and Chief Executive Officer of its
subsidiary San Jose Water Company
(public water utility). Also a
director of SJW Land Company, SJNB
Financial Corp. and its subsidiary
San Jose National Bank.
All directors and executive officers as a group............................. 29,084(11) Less than
1%
400(9) Less than
1%
</TABLE>
- ---------------
(1) No corporation or other organization by which any nominee is employed is a
parent, subsidiary or other affiliate of the Company.
(2) Except for Mr. Stump (see note 9), no nominee or officer owns any shares of
the Company's Preferred Stock. Directors Ayer, Foy, Harris, Nelson,
Jaedicke, Meier, Stump and van Bronkhorst have sole voting and sole
investment power with respect to the shares owned by them (or share such
powers with their spouses).
(3) Member of Compensation Committee.
(4) Member of Audit Committee.
(5) Member of Executive Committee.
(6) Director Foy was elected Chairman of the Board as of January 1, 1996,
replacing former Chairman C.H. Stump, who retired as Chairman on that date.
(footnotes continued on next page)
5
<PAGE> 8
(7) Mr. Nelson was elected as President, Chief Executive Officer and a director
of the Company as of February 1, 1996, replacing former President, Chief
Executive Officer and Director Donald L. Houck, who retired on that date.
(8) Common Stock. Includes 5,396 shares held in the Company's Salaried
Employees' Savings Plan (the "Savings Plan").
(9) Preferred Stock, Series C.
(10) Does not include 549,976 shares beneficially owned by SJW Corp., of which
Mr. Weinhardt is President and Chief Executive Officer and a director. Mr.
Weinhardt disclaims beneficial ownership of all the shares owned by SJW
Corp.
(11) Common Stock. Includes 8,596 shares held in the Savings Plan for the
benefit of executive officers who are not included as directors in the
preceding table and 2,319 other shares owned beneficially but not of record
by such executive officers.
In 1995, Directors Ayer, Foy, Harris, Jaedicke, Meier, van Bronkhorst and
Weinhardt were paid an annual retainer of $12,900. The current annual retainer
fee for directors is $13,200. Director Emeritus Ralph D. Lindberg, who is
expected to retire in May 1996, is paid a monthly consulting retainer of $2,667.
Effective January 1, 1996, Director Stump is paid a monthly consulting fee of
$2,500. Chairman Foy and Director Nelson receive no annual retainer. All
directors, including Director Emeritus Lindberg, are paid $650 for each Board or
Committee meeting attended, except that (i) Committee Chairmen are paid $1,300
for each Committee meeting attended, and (ii) Chairman Foy and Director Nelson
are paid $650 for each Board meeting attended and are not paid for attending any
Committee meeting.
The Company established, effective January 1, 1988, a Directors Deferred
Compensation Plan which is an unfunded deferred compensation program for certain
directors. Each member of the Board who is not an employee of the Company is
eligible to participate. Each participant may elect to defer annually at least
$5,000 of the director's monthly retainer fees. The maximum amount which may be
deferred is 100% of the director's monthly retainer fees. Amounts deferred are
fully vested, recorded by the Company and adjusted as if invested in an
investment selected by the participant. Distribution is made at the earlier of
(1) the time selected by the participant (subject to a minimum length of
deferral), or (2) when the participant ceases to be a director (unless he/she
then becomes an employee of the Company, in which case, distribution will be
made upon termination of employment). Distributions are also available upon a
showing of hardship. Amounts remaining
6
<PAGE> 9
undistributed at death are distributed to a designated beneficiary or
beneficiaries. The Company is under no obligation to make any investment or
otherwise fund the Plan. Participants are general, unsecured creditors of the
Company.
The Company's directors are covered by a retirement plan. Any director who
retires after having served on the Board for five or more years will receive a
benefit equal to the annual retainer paid to the Company's non-employee
directors at the time of his/her retirement. This benefit will be paid annually
for the number of years the director served on the Board up to a maximum of ten
years.
The Board has established Audit, Compensation and Executive Committees. The
full Board generally acts as the Nominating Committee. The Nominating Committee
will consider nominees recommended by shareholders if the name and
qualifications of each nominee are submitted to the Company in a letter
addressed to the Secretary of the Company prior to November 13, 1996. The Audit
Committee reviews with the auditors the scope and results of the audit, Company
financial statements and internal accounting control procedures. It also
recommends the selection of auditors to the Company's Board. The Compensation
Committee makes recommendations to the Board with respect to officer
compensation.
During 1995, there were 13 regular meetings of the Board, three meetings of
the Compensation Committee and two meetings of the Audit Committee. All
directors attended an average of 90% of all of the Board and applicable
Committee meetings and each director attended at least 80% of these meetings.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file certain reports
regarding ownership of, and transactions in, the Company's securities with the
Securities and Exchange Commission (the "SEC") and with the New York Stock
Exchange ("NYSE"). Such officers, directors and ten percent stockholders are
also required by SEC rules to furnish the Company with copies of all Section
16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that for the year ended December 31, 1995, its officers, directors and ten
percent stockholders complied with all Section 16(a) filing requirements.
7
<PAGE> 10
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY CARD)
Proxies in the accompanying form will be voted if so authorized, or if no
instructions are given by the shareholder, for ratification of the selection of
KPMG Peat Marwick LLP, certified public accountants, to audit the books, records
and accounts of the Company for the year ending December 31, 1996. KPMG Peat
Marwick LLP has acted as auditors for the Company since 1939 and the Board,
pursuant to the recommendation of the Audit Committee, recommends their services
be continued. Representatives of KPMG Peat Marwick LLP are expected to be
present at the meeting to respond to appropriate questions and to make a
statement if they desire to do so. The Board recommends a vote FOR adoption of
this proposal. If the shareholders do not ratify the appointment of KPMG Peat
Marwick LLP, the selection of certified public accountants will be reconsidered
by the Board.
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's
President and Chief Executive Officer and the other four most highly paid
executive officers of the Company for the three fiscal years ended December 31,
1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
ALL OTHER
COMPENSATION(1)
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)
- --------------------------------------------------- ---- --------- ---------------
<S> <C> <C> <C>
Donald L. Houck(2)................................. 1995 $ 262,066 $12,636
President and CEO 1994 250,057 12,538
1993 237,554 11,997
Gerald F. Feeney................................... 1995 139,612 4,631
Vice President, Chief Financial Officer and 1994 120,213 4,016
Treasurer 1993 111,752 3,601
Francis S. Ferraro................................. 1995 135,650 4,836
Vice President, Regulatory Matters 1994 130,291 4,838
1993 125,806 4,689
Raymond H. Taylor.................................. 1995 131,052 4,346
Vice President, Operations 1994 112,039 3,808
1993 107,314 3,601
C.H. Stump(3)...................................... 1995 115,612 11,786
Chairman of the Board 1994 110,212 11,646
1993 106,409 10,840
</TABLE>
- ---------------
(1) The amounts listed in the column entitled "All Other Compensation" include
the following amounts for 1995: (a) Company 401(k) contributions for Mr.
Houck -- $4,500; Mr. Feeney -- $4,294; Mr. Ferraro -- $4,500; Mr. Taylor --
$4,010; and Mr. Stump -- $3,651, (b) annual life insurance premiums paid by
the Company of $336 per officer, and (c) director fees for Mr. Houck and
Mr. Stump of $7,800 each.
(2) Effective as of February 1, 1996, Mr. Houck retired as President and CEO. He
was succeeded by Peter C. Nelson.
(3) Effective as of January 1, 1996, Mr. Stump retired as Chairman. He was
succeeded by Robert W. Foy.
9
<PAGE> 12
PENSION PLANS
The table that follows shows the estimated annual benefits payable upon
retirement to Company employees under the California Water Service Company
Pension Plan and the California Water Service Company Supplemental Executive
Retirement Plan.
<TABLE>
<CAPTION>
THREE HIGHEST YEARS OF SERVICE
CONSECUTIVE -------------------------------------------------
YEARS AVERAGE 30 OR MORE
COMPENSATION 15 YEARS 20 YEARS 25 YEARS YEARS
- ------------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$100,000.................................... $ 30,000 $ 40,000 $ 45,000 $ 50,000
$125,000.................................... 37,500 50,000 56,250 62,500
$150,000.................................... 45,000 60,000 67,500 75,000
$175,000.................................... 52,500 70,000 78,750 87,500
$200,000.................................... 60,000 80,000 90,000 100,000
$225,000.................................... 67,500 90,000 101,250 112,500
$250,000.................................... 75,000 100,000 112,500 125,000
$275,000.................................... 82,500 110,000 123,750 137,500
</TABLE>
The compensation covered by the above plans is the annual earnings reported
on an employee's W-2 form, including amounts deferred under the Savings Plan, a
401(k) plan, and compensation associated with the non-business use of a Company
automobile. The compensation reported in the "Salary" column of the Summary
Compensation Table is the amount of an employee's annual salary, including
amounts deferred under the Savings Plan. The pension table above sets forth
estimated annual retirement benefits, payable as a straight life annuity,
assuming retirement at age 62, using the normal form of benefit under the above
plans; the benefits listed are not subject to any deduction for social security
or other offset amounts.
The number of years of credited service at December 31, 1995 for officers
named in the Summary Compensation Table is as follows: Mr. Houck, 19; Mr.
Ferraro, 6; Mr. Feeney, 19 and Mr. Taylor, 13. Effective May 1, 1992, Mr. Stump
retired as President with 41 years of credited service, at which time his rights
under the above plans became fixed.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE FOLLOWING REPORT AND PERFORMANCE GRAPH SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
10
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee consists of directors who are not current
employees of the Company. In 1995, the Committee was composed of Mr. Ayer, Mr.
Foy and Mr. Jaedicke. Mr. Foy resigned from the Committee in January 1996 when
he became Chairman of the Board. The Committee is currently composed of Mr.
Ayer, Mr. Jaedicke, Ms. Meier and Mr. Stump.
The Committee is responsible for establishing and implementing policies and
programs to compensate the Company's executives. Each February, the Committee
reviews and sets the compensation for all executive officers for the
twelve-month period beginning March 1 and then submits its recommendations for
approval by the entire Board of Directors. In 1995, the Board of Directors
adopted the Committee's recommendations without modification.
The primary objectives of the Committee are to establish compensation
policies and implement a compensation program which will (i) attract, retain and
motivate talented and experienced executives, (ii) reward excellent job
performance and ability and (iii) provide fair and reasonable compensation. The
Committee believes that compensating executives on this basis leads to
excellence in performance which benefits shareholders and ratepayers alike. In
making its recommendations, the Committee takes into account the fact that the
Company's compensation decisions are regularly reviewed for reasonableness by
the California Public Utilities Commission. Further, in light of the fact that
the Company is a regulated utility whose financial performance is to a large
extent dependent upon and constrained by the ratemaking decisions of the
California Public Utilities Commission and other factors beyond the Company's
control (such as weather), the Committee's decisions are largely determined by
factors other than the Company's recent financial performance.
It has been the Company's practice to compensate the Company's officers
primarily through their salaries and not to use a wide variety of compensation
schemes. The Company has not historically paid any bonuses or other incentive
compensation, provides comparatively few perquisites to its officers and does
not have a stock option or restricted stock plan. Thus, the principal vehicle
for compensating the Company's officers has been salary. This is a flexible
compensation vehicle that allows for annual adjustment and is not likely to
result in wide fluctuations in compensation from year to year.
11
<PAGE> 14
In making individual compensation decisions, the Committee considers each
officer's duties, the quality of his or her performance of those duties and the
contribution the officer has made to the Company's overall performance. The
Committee also considers whether an officer's duties have expanded from the
previous year, the officer's experience and value to the Company, and the extent
and frequency of prior salary adjustments for each officer. In addition, the
Committee evaluates the range of all the officers' salaries by comparing the
salary of each officer with the salaries of the other officers, taking into
account the number of years each officer has been employed by the Company and
the possibility of future promotions. In order to set salaries for the Company's
officers at competitive and reasonable levels, the Committee annually reviews
the salaries of officers of other major water companies located throughout the
United States and other local utility companies, as well as the rate of
inflation. In reviewing the salaries of other companies, the Committee takes
into account the Company's small number of officers compared to many other
companies of comparable size and the Company's limited forms of compensating its
officers.
The Committee has reviewed the Company's compensation structure in light of
Section 162(m) of the Internal Revenue Code, which limits the amount of
compensation that the Company may deduct from its taxable income for any year to
$1,000,000 for any of its five most highly compensated executive officers. In
1995, no executive officer's compensation exceeded the limitation set by Section
162(m).
In February 1995, the Committee reviewed the compensation for Donald L.
Houck, the then President and Chief Executive Officer of the Company. The
Committee set Mr. Houck's compensation by using the same bases and considering
the same factors it used in setting the compensation levels for the Company's
other executive officers. In particular, the Committee considered how well Mr.
Houck performed his duties, which involved overall responsibility for the daily
operations of the Company, including the extent of his contribution to the
overall performance of the Company during the prior year. The Committee also
took into account how the compensation of the President and Chief Executive
Officer compared with the salaries and benefits of chief executive officers at
other
12
<PAGE> 15
major water companies and local utility companies, the salaries of the Company's
other officers, the rate of inflation, the extent and frequency of prior
adjustments that had been made to Mr. Houck's salary and the benefits paid by
the Company.
THE COMPENSATION COMMITTEE
WILLIAM E. AYER
ROBERT K. JAEDICKE
LINDA R. MEIER
C.H. STUMP
13
<PAGE> 16
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company, the S&P 500 Index and the Edward D. Jones & Co. Water
Utility Average of 14 companies.
<TABLE>
<CAPTION>
EDWARD D.
CALIFORNIA JONES & CO.
Measurement Period WATER SERVICE S&P 500 IN- WATER U
(Fiscal Year Covered) COMPANY DEX TILITY
<S> <C> <C> <C>
1990 100 100 100
1991 112 130 143
1992 139 140 158
1993 178 154 180
1994 150 157 168
1995 164 215 211
- -----------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------------------------------
CALIFORNIA WATER SERVICE COMPANY $100 $112 $139 $178 $150 $164
- ------------------------------------------------------------------------------------------------------
S&P 500 INDEX 100 130 140 154 157 215
- ------------------------------------------------------------------------------------------------------
EDWARD D. JONES & CO. WATER UTILITY 100 143 158 180 168 211
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: The stock performance shown on the graph above is not necessarily
indicative of future price performance.
14
<PAGE> 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the beneficial owners of more than five percent
of any class of the Company's voting securities on January 1, 1996:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
TITLE NAME AND ADDRESS OF BENEFICIAL PERCENT
OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------- ------------------------- ----------------- --------
<S> <C> <C> <C>
Common................... SJW Corp.(1) 549,976 Shares 8.8%
374 W. Santa Clara Street
San Jose, CA 95196
Preferred................ First Colony Life 36,610 Shares 26.3%
(Series C) Insurance Company(2)
700 Main Street
Lynchburg, VA 24504
</TABLE>
- ---------------
(1) SJW Corp. has sole voting and investment power with respect to these shares.
Director J.W. Weinhardt is President and Chief Executive Officer, as well
as a director, of SJW Corp. Mr. Weinhardt disclaims beneficial ownership of
all the shares owned by SJW Corp.
(2) First Colony Life Insurance Company has sole voting and investment power
with respect to these shares.
15
<PAGE> 18
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning beneficial ownership
of shares of the Company's equity securities by Messrs. Feeney, Ferraro, Houck
and Taylor on January 1, 1996:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE NAME AND ADDRESS BENEFICIAL PERCENT
OF CLASS OF BENEFICIAL OWNER(1) OWNERSHIP(2) OF CLASS
-------------------------- ---------------------- ---------------- -------------
<S> <C> <C> <C>
Common.................... Gerald F. Feeney 3,063 Shares(3) Less than 1%
Common.................... Francis S. Ferraro 333 Shares(4) Less than 1%
Common.................... Donald L. Houck 4,590 Shares(5) Less than 1%
Common.................... Raymond H. Taylor 1,044 Shares(4) Less than 1%
</TABLE>
- ---------------
(1) For the directors of the Company and all of the directors and executive
officers of the Company as a group, refer to the table in Election of
Directors for information as to their beneficial ownership of shares of the
Company.
(2) Messrs. Feeney, Ferraro, Houck and Taylor have sole voting and sole
investment power with respect to the shares owned by them (or share such
powers with their spouses).
(3) Includes 1,744 shares held in the Savings Plan.
(4) All of these shares are held in the Savings Plan.
(5) Includes 3,590 shares held in the Savings Plan.
16
<PAGE> 19
GENERAL INFORMATION
The Board is not aware of any matters to come before the meeting other than
the proposals for the election of directors and the ratification of the
selection of independent auditors. If any other matters should be brought before
the meeting, or any adjournment thereof, upon which a vote properly may be
taken, the shares represented by the proxies in the accompanying form will be
voted with respect thereto in accordance with the discretion of the proxy
holders insofar as such proxies are not limited to the contrary.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next annual
meeting of the Company must be received by the Company by November 13, 1996, for
inclusion in the next proxy statement and form of proxy relating to that
meeting. Submission of a proposal does not guarantee its inclusion in a proxy
statement or its presentation at a shareholder meeting. Shareholder proposals
are subject to regulation under federal securities laws.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN S. SIMPSON, Acting Secretary
San Jose, California
March 13, 1996
17
<PAGE> 20
CALIFORNIA WATER SERVICE COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
P
R
O
X
Y
PETER C. NELSON and JOHN S. SIMPSON, and each of them with full power of
substitution, are hereby authorized to vote, as designated on the reverse side,
the stock of the undersigned at the Annual Meeting of Shareholders of California
Water Service Company to be held at 1720 N. First Street, San Jose, California
on Wednesday, April 17, 1996 at 10:00 A.M., or at any adjournment thereof.
PLEASE DATE, SIGN AND MAIL IMMEDIATELY IN THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE SIDE
<PAGE> 21
x Please mark votes as in this example.
- -----
If not otherwise directed, this proxy will be voted FOR the election of
directors and FOR ratification of the appointment of KPMG Peat Marwick LLP as
auditors. The Board of Directors recommends voting in favor of these matters.
1. ELECTION OF DIRECTORS
Nominees: William E. Ayer, Robert W. Foy, Edward D. Harris, Jr., MD., Robert
K. Jaedicke, Linda R. Meier, Peter C. Nelson, C.H. Stump, Edwin E. van
Bronkhorst and J.W. Weinhardt.
FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
- --- ---
For all nominees except as noted above
- ---
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
independent auditors of the Company.
FOR AGAINST ABSTAIN
--- --- ---
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
---
NOTE: Please sign exactly as name appears hereon. If signing as attorney,
executor, administrator, trustee, guardian or the like, please give your full
title as such. If signing for a corporation, please give your title. In the
case of shares standing in the name of two or more persons, California law
permits the voting of such shares under a proxy signed by any one of such
persons if none of the others is present in person or represented by proxy.
PLEASE DATE, SIGN and RETURN PROMPTLY
Signature Date
--------------------- -------------
Signature Date
--------------------- -------------
