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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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California Water Service Group
California Water Service Company, Hawaii Water Service Company,
New Mexico Water Service Company, Washington Water Service Company,
CWS Utility Services, and HWS Utility Services

1720 North First Street
San Jose, CA 95112-4508
(408) 367-8200

April 17, 2019

Dear Fellow Stockholder:

You are cordially invited to attend our Annual Meeting of Stockholders at 9:30 a.m. on May 29, 2019, at the executive offices of California Water Service Group, located at 1720 North First Street in San Jose, California.

Enclosed please find a notice of matters to be voted on at the meeting, our Proxy Statement, a proxy card, and our 2018 Annual Report.

Whether or not you plan to attend, your vote is important. Please vote your shares as soon as possible in one of three ways: by Internet, by telephone, or by mail. Instructions regarding how to vote are included on the proxy card or voting instruction card.

In a continuing effort to conserve natural resources and reduce costs, we produced a summary annual report again this year, opting not to duplicate the financial information that continues to be provided in our Form 10-K filed with the Securities and Exchange Commission. Your perspectives on the annual report are valuable to us. Please send your feedback to annualreport@calwater.com.

Thank you for your investment in the California Water Service Group.

Sincerely,

/s/ PETER C. NELSON

Peter C. Nelson
Chairman of the Board

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For directions to the Annual Meeting, please refer to page 61 of this Proxy Statement.

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Notice of Annual Meeting of Stockholders

The 2019 Annual Meeting of Stockholders (Annual Meeting) of California Water Service Group (Group) will be held on Wednesday, May 29, 2019, at 9:30 a.m., at the executive offices of California Water Service Group, located at 1720 North First Street, San Jose, California 95112. At the Annual Meeting, stockholders will consider and vote on the following matters:

1.

Election of the ten directors named in the Proxy Statement;

2.

An advisory vote to approve executive compensation;

3.

Ratification of the selection of Deloitte & Touche LLP as the Group's independent registered public accounting firm for 2019; and

4.

Such other business as may properly come before the Annual Meeting.

The Board of Directors has fixed the close of business on April 2, 2019 as the record date for the determination of holders of common stock entitled to notice of, and to vote at, the Annual Meeting.

Please submit a proxy as soon as possible so that your shares can be voted at the Annual Meeting in accordance with your instructions. You may submit your proxy: (a) by Internet, (b) by telephone, or (c) by U.S. Postal Service mail. You may revoke your proxy at any time prior to the vote at the Annual Meeting. Of course, in lieu of submitting a proxy, you may vote in person at the Annual Meeting; provided, however, that if you hold your shares in street name, you must request a legal proxy from your stockbroker in order to do so. For specific instructions, please refer to "Questions and Answers about the Proxy Materials and the Annual Meeting" in this Proxy Statement and the instructions on the proxy card.

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 29, 2019:Electronic copies of the Group's Form 10-K, including exhibits, and this Proxy Statement will be available at www.proxyvote.com.

By Order of the Board of Directors

/s/ MICHELLE R. MORTENSEN

MICHELLE R. MORTENSEN
Corporate Secretary
April 17, 2019

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PROXY STATEMENT

This Proxy Statement, dated April 17, 2019, relates to the solicitation of proxies by the Board of Directors of California Water Service Group (Group) for use at our 2019 Annual Meeting of Stockholders, which is scheduled to be held on May 29, 2019, at 9:30 a.m., at the executive offices of California Water Service Group, located at 1720 North First Street, San Jose, California 95112. We expect to begin mailing this Proxy Statement to stockholders on or about April 17, 2019.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

What am I voting on?

•

Election of the ten directors named in the Proxy Statement to serve until the 2020 Annual Meeting;

•

An advisory vote to approve executive compensation; and

•

Ratification of the selection of Deloitte & Touche LLP as the Group's independent registered public accounting firm for 2019.

Who may attend the Annual Meeting?

Any stockholders of the Group may attend.

Who is entitled to vote?

Stockholders of record on the record date are entitled to vote. The Board has fixed the close of business on April 2, 2019 as the record date (Record Date) for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting.

How many votes do I get?

Each share of common stock is entitled to one vote.

What constitutes a quorum?

A majority of the outstanding shares – present at the Annual Meeting or represented by persons holding valid proxies – constitutes a quorum. If you submit a valid proxy card, your shares will be considered in determining whether a quorum is present.

Without a quorum, no business may be transacted at the Annual Meeting. However, whether or not a quorum exists, a majority of the voting power of those present at the Annual Meeting may adjourn the Annual Meeting to another date, time, and place.

At the Record Date, there were 1,901 stockholders of record. There were 48,133,750 shares of our common stock outstanding and entitled to vote at the Annual Meeting.

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How are the directors elected?

Our bylaws provide for a majority voting standard for the election of directors in uncontested elections. Under this majority voting standard, each director must be elected by the affirmative vote of a majority of the votes cast with respect to the director. A majority of the votes cast means that the number of votes cast "FOR" a nominee for director exceeds the number of votes cast "AGAINST" that nominee for director. As a result, abstentions will not be counted in determining which nominees receive a majority of votes cast since abstentions do not represent votes cast for or against a nominee. If you hold your shares through a stockbroker (or other nominee), the stockbroker does not have authority to vote your shares in the election of directors without instructions from you. Shares that your stockbroker does not vote ("broker non-votes") are not considered votes cast for or against a nominee, and they will not be counted in determining which nominees receive a majority of votes cast. In accordance with our director resignation policy, the Nominating/Corporate Governance Committee has established procedures that require an incumbent nominee for director who does not receive the required votes for re-election to tender his or her resignation offer to the Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee will recommend to the Board whether to accept or reject the offer, or whether other action should be taken. The Board will act on the Nominating/Corporate Governance Committee's recommendation within 90 days after certification of the election results. We will promptly publicly disclose the Board's decision regarding the resignation offer, including the rationale for rejecting the resignation offer, if applicable.

Who are the Board's nominees?

The nominees are Gregory E. Aliff, Terry P. Bayer, Shelly M. Esque, Edwin A. Guiles, Martin A. Kropelnicki, Thomas M. Krummel, M.D., Richard P. Magnuson, Peter C. Nelson, Carol M. Pottenger, and Lester A. Snow. All of the nominees are current Board members. See "Proposal No. 1 – Election of Directors" for biographical information and qualifications.

What are the Board's voting recommendations?

"FOR" each of the nominees to the Board (Proposal No. 1);

"FOR" the proposal regarding an advisory vote to approve executive compensation (Proposal No. 2); and

"FOR" the ratification of the selection of Deloitte & Touche LLP as the Group's independent registered public accounting firm for 2019 (Proposal No. 3).

How do I vote?

If you are a stockholder of record (that is, you hold your shares in your own name), you may vote by Internet, by telephone, by mail, or in person at the Annual Meeting. Different rules apply if your stockbroker or another nominee holds your shares for you (see below).

 You may vote by Internet.

You do this by following the "Vote by Internet" instructions on the proxy card. If you vote by Internet, you do not have to mail in your proxy card.

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 You may vote by telephone.

You do this by following the "Vote by Phone" instructions on the proxy card. If you vote by telephone, you do not have to mail in your proxy card. You must have a touch-tone phone to vote by telephone.

 You may vote by mail.

You do this by signing the proxy card and mailing it in the enclosed, prepaid, and addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct.

If you return a signed card but do not provide voting instructions, your shares will be voted:

•

For the ten named director nominees;

•

For the advisory vote to approve executive compensation; and

•

For the ratification of the selection of Deloitte & Touche LLP as the Group's independent registered public accounting firm for 2019.

You may vote in person at the Annual Meeting.

We will distribute written ballots to anyone who wants to vote at the Annual Meeting. If you hold your shares in street name, you must request a legal proxy from your stockbroker in order to vote at the Annual Meeting.

What if I change my mind after I return my proxy?

You may revoke your proxy and/or change your vote at any time before the polls close at the Annual Meeting. You may do this by:

•

Signing another proxy with a later date;

•

Voting by Internet or by telephone (your latest Internet or telephone proxy is counted);

•

Voting again at the Annual Meeting; or

•

Notifying the Corporate Secretary, in writing, that you wish to revoke your previous proxy. We must receive your notice prior to the vote at the Annual Meeting.

Will my shares be voted if I do not return my proxy?

If you are a stockholder of record, and you do not return your proxy, your shares will not be voted unless you attend the Annual Meeting and vote in person.

What happens if my shares are held by my stockbroker (or other nominee)?

If your shares are held by a stockbroker (or other nominee), you will receive a voting instruction card so that you can instruct your stockbroker on how to vote your shares. If you do not return your voting instruction card, then your stockbroker, under certain circumstances, may vote your shares.

Specifically, stockbrokers have authority under exchange regulations to vote your uninstructed shares on certain "routine" matters. For "non-routine" matters, no votes will be cast on your behalf if you do not instruct your stockbroker on how to vote. If you wish to change the voting instructions that you gave to your stockbroker, you must ask your stockbroker how to do so.

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If you do not give your stockbroker voting instructions, your stockbroker may either:

•

Proceed to vote your shares on routine matters and refrain from voting on non-routine matters; or

•

Leave your shares entirely unvoted.

Shares that your stockbroker does not vote ("broker non-votes") will count towards the quorum only. We encourage you to provide your voting instructions to your stockbroker. This ensures that your shares will be voted at the Annual Meeting.

As to my stockbroker voting, which proposals are considered "routine" or "non-routine"?

The ratification of the selection of Deloitte & Touche LLP as the Group's independent registered public accounting firm for 2019 (Proposal No. 3) is routine. A stockbroker may generally vote on routine matters if the stockbroker has not received voting instructions from you with respect to such matters.

The election of directors (Proposal No. 1) and the advisory vote to approve executive compensation (Proposal No. 2) are matters considered "non-routine" under applicable rules. A stockbroker cannot vote without your instructions on non-routine matters.

What is the voting requirement to approve each of the proposals?

How are broker non-votes and abstentions treated?

Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Only "FOR" and "AGAINST" votes are counted for purposes of determining the votes received in connection with the proposal relating to the election of directors (Proposal No. 1), and therefore broker non-votes and abstentions have no effect on that proposal. Stockbrokers may not vote your shares on Proposal No. 1 without instructions from you. The affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve Proposal No. 2 and Proposal No. 3. Proposal No. 2 is advisory, meaning that it is not binding on the Board, although the Board will consider the outcome of the vote on this proposal. Abstentions have the effect of a vote "AGAINST" Proposal No. 2 and Proposal No. 3. Stockbrokers may vote your shares on Proposal No. 3 (but not on Proposal No. 2) without instructions from you. Shares resulting in broker non-votes, if any, are not entitled to vote and will have no effect on the outcome of these proposals.

Who will count the vote?

Representatives of Broadridge Financial Services, Proxy Services, will serve as the inspector of elections and count the votes.

What does it mean if I receive more than one proxy card?

It means that you have multiple accounts at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to ensure that all your shares are voted.

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What percentage of stock do the directors and executive officers own?

Together, directors and executive officers own approximately 1.0% of our common stock. See "Stock Ownership of Management and Certain Beneficial Owners" for more details elsewhere in this Proxy Statement.

Who are the largest common stockholders?

As of December 31, 2018, the largest stockholders were:

•

BlackRock, Inc. beneficially owned 7,470,871 shares of common stock, representing 15.5% of our aggregate outstanding stock as of such date;

•

The Vanguard Group, Inc. beneficially owned 5,478,254 shares of common stock, representing 11.39% of our aggregate outstanding stock as of such date;

•

State Street Corporation, beneficially owned 3,219,281 shares of common stock, representing 6.7% of our aggregate outstanding stock as of such date; and

•

T. Rowe Price Associates, Inc. beneficially owned 3,110,975 shares of common stock, representing 6.4% of our aggregate outstanding stock as of such date.

*

To the best of our knowledge, no other stockholders held more than 5% of our common shares as of such date.

What is the deadline for submitting stockholder proposals for the Group's proxy materials for next year's Annual Meeting?

Any proposals that stockholders intend to submit for inclusion in next year's Group proxy materials must be received by the Corporate Secretary of the Group by December 19, 2019. A proposal, together with any supporting statement, may not exceed 500 words and must comply with other requirements of Rule 14a-8 under the Securities Exchange Act of 1934. Please submit the proposal to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508.

How can a stockholder propose a nominee for the Board or other business for consideration at a stockholders' meeting?

Stockholders who are entitled to vote at a stockholders' meeting may propose a nominee for the Board or other business for consideration at a meeting without seeking to have the matter included in the proxy materials for the Annual Meeting pursuant to Rule 14a-8. The bylaws contain the requirements for doing so. The bylaws are posted on the Group's website at http://www.calwatergroup.com. Physical copies of these documents are also available upon request to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, CA 95112-4508. Briefly, a stockholder must give timely prior notice of the matter to the Group. The notice must be received by the Corporate Secretary at the Group's principal place of business by the 150th day before the first anniversary of the prior year's Annual Meeting. For the 2020 Annual Meeting, to be timely, notice must be received by the Corporate Secretary not later than the close of business on December 31, 2019. If we change the date of the Annual Meeting by more than thirty days before or more than sixty days after the date of the previous meeting, notice is due not later than the close of business on the later of the 150th day before the Annual Meeting or the 10th day after we publicly announce the holding of the Annual Meeting. If the Group's Corporate Secretary receives notice of a matter after the applicable deadline, the notice will be considered untimely. In that case, or where notice is timely but the stockholder fails to satisfy the requirements of Rule 14a-4 under the Securities

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Exchange of 1934, the persons named as proxies may exercise their discretion in voting with respect to the matter when and if it is raised at the Annual Meeting.

The bylaws specify what the notice must contain. Stockholders must comply with applicable law with respect to matters submitted in accordance with the bylaws. The bylaws do not affect any stockholder's right to request inclusion of proposals in the Group's Proxy Statement under Rule 14a-8.

How can a stockholder or other interested parties contact the independent directors, the director who chairs the Board's executive sessions, or the full Board?

Stockholders or other interested parties may address inquiries to any of the Group's directors, to the lead director (who chairs the Board's executive sessions), or to the full Board, by email to stockholdercommunication@calwater.com or by writing to them in care of the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508. All such communications are sent directly to the intended recipient(s).

Can I make comments and/or ask questions during the Annual Meeting?

Yes. Stockholders wishing to address the Annual Meeting are welcome to do so by adhering to the following guidelines:

1.

Stockholders may address the Annual Meeting when recognized by the Chairman or President & Chief Executive Officer (CEO);

2.

Each stockholder, when recognized, should stand and identify himself or herself; and

3.

Stockholder remarks must be limited to matters before the Annual Meeting and may not exceed two minutes in duration per speaker.

No cameras, video, or recording equipment will be permitted at the Annual Meeting. Many cellular phones have built-in digital cameras, and while these phones may be brought into the Annual Meeting, the camera function may not be used at any time.

Where and when will I be able to find the results of the voting?

Preliminary results will be announced at the Annual Meeting. We will publish the final results in a current report on Form 8-K to be filed with the Securities and Exchange Commission ("SEC") within four business days of the Annual Meeting.

BOARD STRUCTURE

This section briefly describes the structure of the Board and the functions of the principal committees of the Board. The Board has adopted Corporate Governance Guidelines that, along with the charters of the Board committees, provide a framework for the governance of the Group. The Corporate Governance Guidelines and the current charters for the Audit, Organization and Compensation, Finance and Capital Investment, Nominating/Corporate Governance, and Enterprise Risk Management, Safety and Security committees are posted on the Group's website at http://www.calwatergroup.com. Physical copies of these documents are also available upon request to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508.

The Group's policy is that all directors must be able to devote the required time to carry out director responsibilities and should attend all meetings of the Board and of committees on which they sit.

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Leadership Structure

Peter C. Nelson has served as Chairman of the Board since 2012. The roles of Chairman of the Board and CEO are separate. The Board believes that separating these roles is the most appropriate leadership structure for the Group, based on numerous factors, including the Board's historical practice (which has predominantly been to separate the roles), its assessment of the Group's leadership, and the Group's current and anticipated needs. The Board attributes a portion of the historical success of its leadership model to the Chairman of the Board's 17-plus years of service as the former President & CEO of the Group. The Board believes that Mr. Nelson, who retired from the Group in 2013, brings significant experience in the water and public utility industries making him best positioned to lead the Board as it oversees and monitors implementation of the Group's business strategy, considers risks related to strategy and business decisions, and performs its oversight function with respect to the Group's operations.

The Board also has established the position of lead director because it supports having an independent director in a Board leadership position at all times. The lead director is an independent director who is elected by the independent directors to serve for a period of at least one year. Richard P. Magnuson currently serves as lead director. As set forth in the Corporate Governance Guidelines, the lead director's responsibilities and authority include:

•

Presiding over executive sessions of the non-management and independent directors and having the authority to call executive sessions;

•

Presiding at meetings of the Board in the absence of the Chairman of the Board;

•

Recommending to the Chairman of the Board items for consideration on the Board meeting agendas and schedules;

•

Serving as liaison between the Chairman of the Board and the independent directors; and

•

Being available for consultation and communication with major stockholders upon request.

Risk Oversight

Under the Corporate Governance Guidelines, the full Board oversees the Group's processes for assessing and managing risk. The Board does not view risk in isolation, but considers risk as part of its regular consideration of business decisions and business strategy. The Board exercises its risk oversight function through the Board as a whole and through its committees. Each of the Board committees considers the risks within its areas of responsibility and identified in its charter. The Enterprise Risk Management, Safety and Security Committee, founded in 2019, reviews the Group's major risk exposures and the steps management has taken or proposes to take to mitigate, monitor, or control such risks. The Audit Committee reviews with management risks related to financial reporting and internal controls. At least annually, the Enterprise Risk Management, Safety and Security Committee discusses the Group's risk assessment and risk management plans with the Audit Committee. The Finance and Capital Investment Committee discusses with management the policies and procedures with respect to major risk exposures and the steps management has taken and/or proposes to take to monitor, mitigate, and control such exposures within the capital investment programs. The Organization and Compensation Committee reviews enterprise risks to ensure that our compensation plans and programs do not encourage management to take unreasonable risks relating to our business. The Nominating/Corporate Governance Committee oversees risks related to matters of corporate governance, including director independence and Board performance, as well as risks related to environmental, social responsibility, and sustainability matters. The Enterprise Risk

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Management, Safety and Security Committee also oversees the Group's physical and cyber risk management program.

The Group has a Management Committee (MC) that provides oversight of major risks and risk management reporting. The MC is chaired by the Group's President & CEO and membership is comprised of our Group and subsidiary executives, hereafter collectively known as "executives" and meets monthly. Among other functions, the MC identifies and prioritizes key risks and recommends the implementation of appropriate mitigation measures, as needed. The MC provides reporting to the Audit Committee no less frequently than annually. Further review or reporting on risks is conducted as needed or as requested by the Board or committee. The Enterprise Risk Management Committee regularly briefs the full Board on issues related to the cyber risk management program and related cyber issues.

Committees

There are five committees within our Board of Directors: (1) Audit; (2) Organization and Compensation; (3) Finance and Capital Investment; (4) Nominating/Corporate Governance; (5) and Enterprise Risk Management, Safety and Security. The membership and the function of each of these committees are described below.

AUDIT:    Reviews the Group's auditing, accounting, financial reporting, and internal audit functions. The Audit Committee is also directly responsible for the appointment, compensation, and oversight of the independent registered public accounting firm, although stockholders are asked to ratify the Audit Committee's selection of this firm. All members are independent as defined in the listing standards of the New York Stock Exchange and meet the additional independence requirements for audit committee members imposed by the Sarbanes-Oxley Act and the rules of the SEC thereunder.

The Board has determined that Gregory E. Aliff, chair of the Audit Committee, Terry P. Bayer, and Edwin A. Guiles are audit committee financial experts and are independent under the standards applicable to audit committee members. Designation as an audit committee financial expert means that the Board believes Mr. Aliff, Ms. Bayer, and Mr. Guiles have:

(i)

An understanding of generally accepted accounting principles and financial statements;

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(ii)

The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves;

(iii)

Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Group's financial statements, or experience actively supervising one or more persons engaged in such activities;

(iv)

An understanding of internal controls over financial reporting; and

(v)

An understanding of audit committee functions.

Designation of a person as an audit committee financial expert does not result in the person being deemed an expert for any purpose, including under Section 11 of the Securities Act of 1933. The designation does not impose on the person any duties, obligations, or liability greater than those imposed on any other Audit Committee member or any other director and does not affect the duties, obligations, or liability of any other member of the Audit Committee or Board of Directors.

ORGANIZATION AND COMPENSATION:    Reviews the Group's executive compensation programs, including their establishment, modification, and administration. All members are independent as defined in the listing standards of the New York Stock Exchange, and meet additional independence requirements for compensation committee members applicable under the New York Stock Exchange listing standards. The Organization and Compensation Committee has taken steps to analyze the current risk profile of the Group's executive compensation programs. In its evaluation, the Organization and Compensation Committee review took into account that the Group operates in a highly regulated environment and thus maintains strong internal controls, which factors tend to mitigate against undue risk.

As a result of this evaluation, the Committee does not believe that the Group's compensation practices and programs create risks that are reasonably likely to have a material adverse effect on the Group, nor does it believe that the Group's executive compensation practices and programs are designed to promote risk taking.

Compensation Consultant:    The Organization and Compensation Committee retained Veritas Executive Compensation Consultants (Veritas) to advise it on marketplace trends in executive compensation, management proposals for the 2018 compensation program, and executive officer compensation decisions. Additionally, Veritas generally evaluated the Group's equity compensation programs. Veritas also consulted with the Nominating/Corporate Governance Committee about its recommendations to the Board on director compensation. Veritas has been retained for advice on 2019 executive compensation.

Veritas was directly accountable to the Organization and Compensation Committee. To maintain the independence of their advice, Veritas did not provide any services for the Group other than those described above. In addition, the Organization and Compensation Committee conducted a conflict of interest assessment, considering the following six factors with respect to Veritas: (i) the provision of other services to the Group by Veritas; (ii) the amount of fees received from the Group by Veritas, as a percentage of total revenue of Veritas; (iii) the policies and procedures of Veritas that are designed to prevent conflicts of interest; (iv) any business or personal relationship between the consultants at Veritas with whom the Group work and any members of the Organization and Compensation Committee; (v) any of our stock owned by the Veritas consultants; and (vi) any business or personal relationship of Veritas or the Veritas consultants with any of the Group's executive officers, and no conflict of interest was identified.

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For a description of the processes and procedures used by the Organization and Compensation Committee for the consideration and determination of executive compensation, see "Compensation Discussion and Analysis" elsewhere in this Proxy Statement.

FINANCE AND CAPITAL INVESTMENT:    Assists the Board in reviewing the Group's financial policies, strategies, and capital structure. All members are independent as defined in the listing standards of the New York Stock Exchange.

NOMINATING/CORPORATE GOVERNANCE:    Reviews the Group's director compensation and assists the Board by (i) overseeing director succession planning and recruitment of individuals qualified to become Board members; (ii) overseeing the Group's corporate governance practices; (iii) reviewing the Group's Corporate Governance Guidelines annually and recommending changes to the Board; and (iv) overseeing strategies, policies, and practices relating to environmental and social responsibility, and sustainability (collectively, "ESG Matters") issues and impacts. All members are independent as defined in the listing standards of the New York Stock Exchange.

ENTERPRISE RISK MANAGEMENT, SAFETY AND SECURITY:    Assists the Board in reviewing the Group's enterprise risk management, safety, and security programs, including physical and cyber security.

During 2018, there were twelve meetings of the Board, five meetings of the Audit Committee, three meetings of the Organization and Compensation Committee, three meetings of the Finance and Risk Management Committee, and two meetings of the Nominating/Corporate Governance Committee. The incumbent directors attended at least 75% of all Board and applicable committee meetings in 2018 (held during the period each director served).

Independence of Directors

As discussed in the Group's Corporate Governance Guidelines, a substantial majority of the Board is comprised of independent directors. Currently, the Group's independent directors are Gregory E. Aliff, Terry P. Bayer, Shelly M. Esque, Edwin A. Guiles, Thomas M. Krummel, M.D., Richard P. Magnuson, Carol M. Pottenger, and Lester A. Snow. Under the listing standards of the New York Stock Exchange, a director is independent if he or she has no material relationship, whether commercial, industrial, banking, consulting, accounting, legal, charitable, familial, or otherwise, with the Group, either directly or indirectly as a partner, stockholder, or executive officer of an entity that has a material relationship with the Group. The Board makes an affirmative determination regarding the independence of each director annually, based on the recommendation of the Nominating/Corporate Governance Committee. The Board has adopted standards to assist it in assessing the independence of directors, which are set forth in the Corporate Governance Guidelines, which are posted on the Group's website at http://www.calwatergroup.com. Under these standards, the Board has determined that a director is not independent if:

•

The director is, or has been within the last three years, an employee of any company that comprises the Group or an immediate family member is, or has been within the last three years, an executive officer of any company that comprises the Group;

•

The director has received, or has an immediate family member who has received, during any twelve-month period during the last three years, more than $120,000 in direct compensation from companies that comprise the Group, other than director or committee fees and pension or other forms of deferred compensation for prior service (compensation received by an immediate family member for service as an employee, other than an executive officer, of the Group is not considered for purposes of this standard);

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•

The director, or an immediate family member, is a current partner of the Group's internal or external auditor; the director is a current employee of such a firm; the director's immediate family member is a current employee of such a firm who personally works on the Group's audit, or the director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on the Group's audit within that time;

•

The director, or an immediate family member, is, or has been within the last three years, employed as an executive officer of another company where any of the Group's present executive officers serves or served at the same time on that company's compensation committee;

•

The director is a current employee, or has an immediate family member who is a current executive officer, of a customer or vendor or other party that has made payments to or received payments from companies that comprise the Group for property or services in an amount that, in any of the last three fiscal years, exceeded the greater of $1 million or 2% of the party's consolidated gross revenues; or

•

The director, or the director's spouse, is an executive officer of a non-profit organization to which the Group makes, or in the past three years has made, payments that, in any single fiscal year, exceeded the greater of $1 million or 2% of the non-profit organization's consolidated gross revenues.

In addition, the Board has determined that none of the following relationships, by itself, is a material relationship that would impair a director's independence:

•

Being a residential customer of any subsidiary of the Group;

•

Being a current executive officer or employee of, or being otherwise affiliated with, a commercial customer from which the Group has received payments that, in any of the last three fiscal years, did not exceed the greater of (i) 1% of the Group's consolidated gross revenues for the year; or (ii) $500,000;

•

Being a current executive officer or employee of, or having a 5% or greater ownership or similar financial interest in, a supplier or vendor that has received payments from the Group that, in any of the last three fiscal years, did not exceed the lesser of (i) 1% of the Group's consolidated gross revenues for the year; or (ii) $500,000; or

•

Being a director of any of the Group's subsidiaries.

Directors inform the Board as to their relationships with the Group and provide other pertinent information pursuant to questionnaires that they complete, sign, and certify on an annual basis. The Board reviews such relationships to identify possible impairments to director independence and in connection with disclosure obligations. For those directors who reside in a service territory of California Water Service Company and are customers, the Board has determined that it is not a material relationship that would impair their independence under the above standards.

Director Qualifications and Diversity

The Board believes that the Board of Directors, as a whole, should possess a combination of skills, professional experience, and diversity of backgrounds necessary to oversee the Group's business. In addition, the Board believes that there are certain attributes that every director should possess, as reflected in the Board's membership criteria. Accordingly, the Board and the Nominating/Corporate Governance Committee consider the qualifications of directors and

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director nominees individually and in the broader context of the Board's overall composition as well as in the Group's current and future business and operations.

The Nominating/Corporate Governance Committee is responsible for developing and recommending Board membership criteria to the Board for approval. The Board and the Nominating/Corporate Governance Committee seek a variety of occupational and personal backgrounds on the Board in order to obtain a range of viewpoints and perspectives and to enhance the diversity of the Board as a group. An annual evaluation of the Board's composition enables the Board and Nominating/Corporate Governance Committee to update the skills and experience they seek in the Board as a whole, and in individual directors, as the Group's needs evolve and change over time and to assess the diversity of the Board as a group. In identifying director nominees from time to time, the Board and the Nominating/Corporate Governance Committee may identify specific skills and experience that it believes the Group should seek in order to constitute a balanced and effective board.

The Group seeks directors having the following specific qualifications:

•

Evidence of leadership in his or her particular field;

•

Broad experience and sound business judgment;

•

Expertise in an area of importance to the Group and its subsidiaries;

•

The ability to work in a collegial Board environment;

•

High personal and professional ethics and integrity;

•

The ability to devote the required time to carry out director responsibilities;

•

The ability and willingness to contribute special competencies to Board activities, including appointment to Board committees;

•

Freedom from conflicts of interest that would interfere with serving and acting in the best interests of the Group and its stockholders; and

•

Evidence of being a high caliber individual who has achieved a level of prominence in his or her career; for example, a CEO or highest level financial officer of a sizeable organization, a director of a major corporation, or a prominent civic or academic leader.

Additionally, Section 2.9 of the Group's bylaws contains requirements that a person must meet to avoid conflicts of interest that would disqualify that person from serving as a director.

Board membership should reflect diversity in its broadest sense. The Group seeks a Board that represents a diversity of backgrounds and experiences that will enhance the quality of the Board's deliberations and decisions. The Board, as a whole, should possess a combination of skills, professional experience, and backgrounds necessary to oversee the Group's business. The Board assesses the diversity of skills, experience, and backgrounds represented on the Board as part of the annual Board self-evaluation process.

Identification of Director Nominees

The Group identifies new director nominees through a variety of sources. The Nominating/Corporate Governance Committee will consider director nominees recommended by stockholders in the same manner it considers other nominees, as described in "Board Structure – Director Qualifications and Diversity" elsewhere in this Proxy Statement. Stockholders seeking to recommend nominees for consideration by the Nominating/Corporate Governance Committee should submit a recommendation in writing describing the nominee's qualifications and other relevant biographical information and provide confirmation of the

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nominee's consent to serve as director. Please submit this information to the Corporate Secretary, California Water Service Group, 1720 North First Street, San Jose, California 95112-4508.

Stockholders may also propose director nominees by adhering to the advance notice procedure described under "Questions and Answers About the Proxy Materials and the Annual Meeting – How can a stockholder propose a nominee for the Board or other business for consideration at a stockholders' meeting?" elsewhere in this Proxy Statement.

Executive Sessions of the Board

Under the Group's Corporate Governance Guidelines, the non-management directors meet at least four times each year in executive session without management present, and the independent directors meet in executive session at least once a year. The lead director, Richard P. Magnuson, chairs these sessions.

Retirement Age of Directors

The Group has established a mandatory retirement age for directors. A director must retire no later than the Annual Meeting that follows the date of the director's 75th birthday. An employee director must retire as an employee no later than the Annual Meeting that follows the date of his or her 70th birthday, but may remain on the Board at the discretion of the Board of Directors.

Annual Meeting Attendance

All directors are expected to attend each Annual Meeting of the Group's stockholders, unless attendance is prevented by an emergency. All of the Group's directors who were directors as of the date of the Group's 2018 Annual Meeting attended the Group's 2018 Annual Meeting.

Other Governance Best Practices

The Group has adopted other practices that we believe reflect our commitment to good corporate governance including:

No Hedging and Pledging Policies

In accordance with our Insider Trading Policy, our directors and executives are prohibited from (i) hedging their ownership of Group stock, including trading in options, puts, calls, or other derivative instruments related to Group stock or debt; and (ii) pledging their ownership of Group stock.

Executive Compensation Recovery ("Clawback") Policy

The Board has adopted an executive compensation recovery, or "clawback," policy requiring the reimbursement of excess incentive-based compensation provided to the executives in the event of certain restatements of the Group's financial statements. A more detailed description of the Executive Compensation Recovery Policy appears in the "Compensation Discussion and Analysis" section of this Proxy Statement.

Stock Ownership Requirements

Our Board has adopted stock ownership requirements for directors and executives. These stock ownership requirements were adopted to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and executives. As of

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April 2, 2019, 17 of our non-employee directors and executives already met or exceeded their ownership requirements. New directors have five years to meet the requirements and executives must retain 50% of the net after-tax shares from equity awards until the relevant ownership requirement is achieved. A complete description of the stock ownership requirements for directors and executives appears in the "Compensation Discussion and Analysis" section of this Proxy Statement.

Our directors as of April 17, 2019, are as follows:

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PROPOSAL NO. 1 – ELECTION OF DIRECTORS

Upon the recommendation of the Nominating/Corporate Governance Committee, the Board has nominated for election at the 2019 Annual Meeting of Stockholders a slate of ten director nominees. All of the nominees, except Ms. Esque, have served as directors since the last Annual Meeting. Ms. Esque was recommended to the Nominating/Corporate Governance Committee by a third-party search firm and elected to the Board effective June 27, 2018. All directors are elected annually to serve until the next Annual Meeting or until their respective successors are elected.

Nominee Qualifications

When an incumbent director is up for re-election, the Nominating/Corporate Governance Committee reviews the performance, skills, and characteristics of such incumbent director before making a determination to recommend that the Board nominate him or her for re-election.

The Nominating/Corporate Governance Committee believes that all of the following ten director nominees listed are highly qualified and have the skills and experience required for membership on our Board. A description of the specific experience, qualifications, attributes and skills that led our Board to conclude that each of the nominees should serve as a director follows the biographical information of each nominee.

Vote Required

Each director must be elected by the affirmative vote of a majority of the votes cast. A majority of the votes cast means that the number of votes cast "FOR" a director nominee exceeds the number of votes cast "AGAINST" that nominee for director.

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Recommendation of the Board

Our Board of Directors unanimously recommends that you vote "FOR" the election of each of the following nominees:

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STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

Ownership of Directors and Executive Officers

The Group's Corporate Governance Guidelines, available on the Group's website at http://www.calwatergroup.com, include the stock ownership requirements for non-employee directors and executive officers. The requirements were adopted to promote a long-term perspective in managing the Group and to help align the interests of our stockholders, directors, and executive officers. A more complete description of the stock ownership requirements appears in the "Compensation Discussion and Analysis" section of this Proxy Statement.

Directors are required to achieve the relevant ownership threshold within five years following adoption of the requirements or five years after commencing service, whichever is later. Executives must retain 50% of the net after-tax shares from equity awards until the relevant ownership requirement is achieved.

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The following table shows the common stock ownership of our directors and executives as of April 2, 2019. All directors and executives have sole voting and investment power over their shares (or share such powers with their spouses).

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Ownership of Largest Stockholders

As of December 31, 2018, the Group's records and other information available from outside sources indicated that the following stockholders were the beneficial owner of more than five percent of the outstanding shares of our common stock.

The information below is as reported in filings made by third parties with the SEC. Based solely on the review of our stockholder records and public filings made by the third parties with the SEC, the Group is not aware of any other beneficial owners of more than five percent of the common stock.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, requires our directors, executive officers, and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership, and changes in ownership of our securities. Based solely on its review of the copies of forms furnished to the Group, or written representations that no annual forms (SEC Form 5) were required, the Group believes that for fiscal year ended December 31, 2018, our directors and executive officers filed all reports on a timely basis with exception of Mr. Nelson who, in receiving his first required minimum distribution from his California Water Service Company 401(k) account, was not made aware that shares of the Group's common stock were liquidated as part of a weighted allocation of the Group's common stock and other non-Group securities liquidated to raise cash for the distribution. Upon discovery of the transaction, Mr. Nelson reporting the sale on a Form 4 filing.

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

This Compensation Discussion and Analysis (CD&A) describes the material elements of our executive compensation program for 2018. This section focuses on the compensation of the our principal executive officer, principal financial officer, and the three other most highly compensated executive officers for 2018 referred to herein as "named executive officers" (NEOs) or "executives."

•

Compensation philosophy:    We strive to provide compensation that attracts, retains, and motivates talented executives, rewards excellent job performance, overall leadership, and provides for fair, reasonable, and competitive total compensation that aligns executives' interests with the long term interests of our stockholders and customers.

•

Achievement of performance objectives in 2018:    Our executive team's 2018 performance demonstrates our commitment to delivering value to our stockholders and customers, with strong performance on both financial and non-financial measures. This resulted in 130% achievement of target for the short-term incentive compensation plan and performance equity compensation for 2018.

•

Compensation decisions for 2018:    Our compensation decisions for 2018 are outlined below. These were intended to be consistent with our compensation philosophy, and were made with strong consideration for competitive market data and a variety of additional factors, including individual experience, expertise, performance and leadership, Group performance, and internal equity among the executives.

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•

Base salary:    For 2018, as well as 2019, base salaries for NEOs were increased for the cost of living and, in some cases, performance. This is intended to compensate the individuals for job performance and overall leadership while maintaining salaries within the "competitive range" of the market data that is updated annually by the independent compensation consultant retained by the board.

•

Short-term performance incentive award opportunity:    For 2018, the target opportunity for short-term incentives was increased to 100% of salary (from 85% in 2017) for our President & CEO, and 25% of base salary (from 20% in 2017) for all other executives. The payout will range from 0% to 200% of target, based on actual performance.



•

Performance and time-based equity compensation:    Grant values for 2018 were unchanged from 2017 and 2016. For 2018, the Committee set the target total value for the equity compensation awards at $575,000 for our President & CEO, $150,000 for the Group's vice presidents, and $90,000 for all other executives, with 50% in the form of time-based RSAs vesting over three years and 50% in the form of performance-based RSUs with a three-year performance period vesting 0% to 200% based on performance of each metric for each year of the performance period aggregated to attain the three-year performance period's final achievement.

Role of the Organization and Compensation Committee

The Organization and Compensation Committee (Committee), which is comprised entirely of independent outside directors, is responsible for overseeing our compensation programs for executives and executive succession. After a review of compensation levels, the Committee recommends to the Board compensation levels and incentive performance objectives for executives for the 12-month period beginning January 1st of each year. These objectives align with stockholder and customer interests and support our long-term growth and health. The Committee starts its planning and review process in February of each preceding year and typically concludes its process in November. After year-end results are final, the Committee reviews the achieved results for the prior year, certifies the achievement of each goal, approves payment of incentive compensation as certified, and approves the incentive compensation targets for the current year.

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The following is a summary of the key features of our executive compensation program:

Pay for Performance

Our executive compensation program is designed to link executive compensation to our performance (as measured by key operational and financial objectives incorporated in both long-term and short-term performance-based compensation programs), including:

•

Use of a short-term performance-based compensation program in the form of an annual performance-based short-term incentive that supports our long-term growth objectives of the Group;

•

Awarding 50% of long-term equity incentive compensation in the form of restricted stock units (RSUs) subject to performance-based vesting criteria, with the remaining 50% awarded in the form of time-based restricted stock awards (RSAs); and

•

Using a three-year performance period for the performance-based RSUs with vesting based upon achievement of performance targets related to each of the following: water quality, customer service, utility plant investment, return on equity, and safety.

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2018 Say-on-Pay Vote and Stockholder Outreach

From 2013 thru 2017 our executive compensation program received stockholder support averaging 93%. During that time, we received positive feedback from our stockholders and did not make any material changes in design or execution to our executive compensation program.

For fiscal year 2018, we received 75% of the votes cast on the Say-on-Pay advisory vote taken at the 2018 Annual Meeting of Stockholders (Say-on-Pay). While the Committee believes this strong level of support is indicative of the Committee's commitment to maintaining an executive compensation program focused on pay for performance, the Committee engaged in significant outreach to stockholders to understand the cause of the decline from the prior level of support.

The Committee recognizes that best practices in executive compensation continue to evolve and we strongly believe in soliciting feedback from stockholders to better understand their views, to receive their input on our business strategy and execution, and to gather feedback regarding other matters of investor interest.

In 2018 we contacted 14 of our largest stockholders, representing 42.2% of our outstanding shares at that time. Among these, we spoke with stockholders representing 32.2% of our then-outstanding shares. These stockholders shared favorable views of the Group's executive leadership team, including each of the named executive officers, and the alignment between pay and performance. We specifically discussed the change in the value of our CEO's pension benefits as reported in the Summary Compensation Table, which represented a large non-cash portion of the reported total compensation for our CEO. What we heard from stockholders was that they understood the drivers of the non-cash change in pension value and did not see the reported amount as an egregious compensation element or a risk factor that influenced their Say-on-Pay vote. This was true across stockholders with whom we spoke, including those who had voted against the Say-on-Pay proposal at the 2018 Annual Meeting. Instead, stockholders tended to focus on changes in our CEO's pay excluding the actuarial change in pension value. As such, we have added a column to the right of the Summary Compensation Table to show the total compensation of our named executive officers subtracting out the actuarial changes in pension value from the total compensation figure required to be reported.

As part of our stockholder outreach we also solicited feedback from the stockholders with whom we spoke on the short-term and long-term incentive compensation metrics used in 2017 in our executive compensation program. A number of stockholders (including both stockholders who supported the Say-on-Pay resolution and those who voted against it) expressed that they would generally prefer to see less overlap in the performance metrics used in our short-term and long-term incentive compensation programs. Taking this feedback into account, as well as an extensive review of the compensation plans within our proxy peer group, we made a number of changes to the performance criteria used for our 2019 incentive compensation programs. The performance-based RSUs granted to all officers in 2019, as our long-term incentive program, will vest based upon our achievement with respect to three different performance metrics over a three-year period from 2019 to 2021. These performance metrics are based upon three-year return on equity, three-year cumulative growth in stockholder's equity and a third metric tied to the implementation, by the end of the performance period, of certain customer service-related initiatives. In contrast, our 2019 short-term incentive program will continue to be based upon the achievement of performance criteria related to the following, measured over fiscal year 2019: water quality, earnings per share, utility plant investment, emergency preparedness and workplace safety metrics, and customer service metrics (which are different from the customer service-related initiatives on which the performance-based long-term incentive RSUs are measured).

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Recap of 2018 Group Performance

Our executive team's 2018 performance demonstrates our commitment to delivering value to our stockholders and customers.

Financial Results

•

Achieved net income of $65.6 million and diluted earnings per share of $1.36 (each determined in accordance with GAAP);

•

Achieved the majority of its operational goals while keeping controllable costs within budget;

•

Invested $253.0 million of capital, a majority of which was associated with the Group's Infrastructure Improvement Plan;

•

Increased the Group's annual dividend by three cents, or 4.2%, which represents our 52^nd consecutive annual dividend increase;

•

Maintained the Group's strong credit rating of A+ stable and AA– for first mortgage bonds and "exceptional" liquidity rating from Standard & Poor's (one of the only North American utilities to do so); and

•

Achieved consolidated Group earnings per share in 2018 representing a return on equity (determined in accordance with GAAP) of 9.18% as reported in item 7 of the Group's Form 10-K for the year ended December 31, 2018 as filed with the SEC.

On December 15, 2016, the California Public Utilities Commission (CPUC) approved the Group's largest subsidiary, California Water Service Company's (Cal Water), 2015 General Rate Case (GRC) application. The decision authorizes Cal Water to request annual escalation rate increases for 2019 for those districts that passed the earnings test. In November of 2018, Cal Water requested escalation rate increase in all of its regulated districts in California. The annual adopted gross revenue associated with the November 2018 filing was $16.2 million, effective January 1, 2019.

Water Quality and Customer Service Accomplishments

•

Met all state and federal primary water quality standards in all 221 water systems Group operates;

•

Met the new limit of five parts per trillion for 1,2,3-Trichloropropane (TCP) set by the California State Water Resources Control Board in July 2017 by the initial compliance deadline of January 2018;

•

Recognized by the American Society of Civil Engineers and the National Association of Water Companies for Cal Water's TCP treatment and compliance project;

•

Met or exceeded all customer service standards as set by the CPUC; and

•

Implemented "Reliability Runs Deep" campaign to educate our customers on our infrastructure improvement program.

Safety Achievement

•

Partnered with other first responders to activate emergency operations centers and provide the emergency services in our Lucerne, California service area during the Mendocino Complex Fire and our Westlake, California service areas during the Woolsey Fire;

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•

Provided emergency aid to Paradise Irrigation District in an effort to restore water service to the Town of Paradise, neighbor to our Chico service area and home to many of our Chico service area based employees after the Camp Fire;

•

Conducted Emergency Operations Center (EOC) training in all subsidiaries, including eight sessions with local police, fire, and city authorities;

•

Conducted four Critical Incident Response Management Team training summits throughout Cal Water;

•

Reduced Total Case Incident Rate by 25% over 2017 rates; and

•

Implemented an accident reduction program and reduced preventable vehicle accident rate by 28% over 2018 rates.

CEO Pay Overview

Martin A. Kropelnicki, our CEO since September 1, 2013, made significant contributions managing our performance in 2018. Based on the 2018 performance objectives, the Committee granted Mr. Kropelnicki an equity incentive award with a total value of $575,000 for 2018, consisting of $287,500 in the form of time-based RSAs vesting over three years and $287,500 in the form of performance-based RSUs with a three-year performance period and the opportunity to earn up to 200% of the target performance-based RSU award based on achievement with respect to Committee approved objectives. With a 2018 base salary of $958,000 and $1,245,400 annual performance-based short-term incentive compensation (representing a payout of 130% of target for 2018 and reflecting superior performance during the year as described in more detail below), Mr. Kropelnicki's total direct compensation for 2018 was $2,753,879 (comprised of salary, annual performance based short-term incentive compensation bonus, performance-based restricted stock units, and time-based restricted stock awards).

The main difference between Mr. Kropelnicki's total direct compensation and the amount reported in the 2018 Summary Compensation Table later in this Proxy Statement is the non-cash change in net present value of his pension from 2017 to 2018, a $3.1 million increase in the actuarial estimate of his future potential pension benefits. The change in pension value represents the present value of future retirement benefits and does not represent a cash transaction made to Mr. Kropelnicki. No pension benefit will be paid to Mr. Kropelnicki until after his retirement from the Group. Changes in actuarial assumptions for the pension costs are included in customer rates through a rate recovery mechanism. The net present value of the pension benefit ultimately received by Mr. Kropelnicki will change based on a number of factors, including changes in interest rates, changes in mortality tables, Mr. Kropelnicki's current age, years of service, and age at retirement.

Compensation Philosophy for Executives

Our overall philosophy is to provide compensation that attracts, retains, and motivates talented executives, rewards excellent job performance, overall leadership, and provides for fair, reasonable, and competitive total compensation that aligns executives' interests with the long-term interests of our stockholders and customers.

The Committee believes that a balance of fixed and variable compensation, with short-term and long-term compensation elements, maintains a strong link between the NEOs' compensation and the overall Group's performance, as well as promotes the interests of both customers and stockholders. The Committee annually re-evaluates the mix of fixed and variable compensation, including the proportions of incentive compensation awarded as short-term cash-based and long-term equity-based awards and stockholder feedback. Additionally, the Committee continues to monitor our program on an annual basis to ensure that the structure will not incentivize excessive risk-taking.

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Overall, we believe our executive compensation program is achieving the intended results. We believe our compensation is competitive in the industry and has resulted in the attraction and retention of executives who contribute to the long-term success of the Group. In addition, the program creates a strong linkage between pay and performance through our long-term equity and annual performance-based short-term incentive compensation without encouraging imprudent risk taking by our executives.

Elements of Compensation

The material elements of our executive compensation program for 2018 included:

•

Base Salary;

•

Annual Performance-Based Short-Term Incentive Compensation;

•

Performance and Time-Based Long-Term Equity Compensation;

•

Basic and Supplemental Pension Plan Benefits;

•

Deferred Compensation Plan Benefits; and

•

Limited Perquisites.

In determining compensation, the Committee is mindful that as a holding company for a California regulated utility, the Group's financial performance is substantially dependent upon CPUC regulation plus other factors, which to a large extent are beyond the control of executives. Therefore, the Committee's decisions regarding overall compensation are determined largely by evaluation of factors that are within the executives' control and its comparisons with companies in its peer group. As discussed below, the metrics used to determine our executives' annual short-term performance-based incentive compensation and the vesting of long-term performance-based equity compensation awards are appropriate metrics that will align executive performance in a manner beneficial to both stockholders and customers and not encourage imprudent risk-taking.

Base Salary

The only guaranteed portion of executive total compensation is in the form of base salaries that compensate our executives for performance of primary roles and responsibilities. The Committee reviews base salaries for our executives annually and determines whether or not to recommend adjustments to salaries. To assist the Committee in this review, our President & CEO provides an assessment of each executive's performance and contribution towards the key corporate goals and makes recommendations regarding base salary adjustments to the Committee for each of our executives other than himself based on the competitive data and the other factors described below under "Determining Executive Compensation."

The Committee has and continues to target base salaries for each executive that are appropriate for the performance, skills, capabilities, and individual contributions in his/her position. The base salary levels are established by reference to the competitive data described below.

Consistent with last year's practice, when determining 2018 base salaries, the base salaries for our executives were compared to the base salaries for similar positions within the competitive data. Similarly, the total target cash compensation for our executives (taking into account annual short-term incentive compensation targets) was compared to the competitive market target total cash compensation. Each executive's base salary for 2018 was within the competitive range (defined as plus or minus 20% from the median compensation level, based upon available survey data) of target total cash compensation.

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Each year, our executives, including our NEOs, establish a number of corporate goals and objectives that promote the long-term growth and align the interests of stockholders, customers, and employees. The objectives are communicated internally and monitored quarterly. Changes in base salary levels for our President & CEO and other NEOs are generally based on progress against certain of these key corporate goals and individual executive performance. For 2018, the following corporate goals were used to evaluate 2018 compensation for our current President & CEO and NEOs:

1.     Group Operations Goal – Achieve planned operating results as defined in the 2018 Corporate Goals and Objectives. Our overall goal was to manage the controllable elements of administrative and general, other operations, and maintenance expenses within budget.

Achieved Results for Group Operations – For 2018, the Group achieved the majority of its operational goals while keeping controllable costs within budget. The Group completed key strategic objectives in the year including:

•

Continued enhancement of the Group's safety organization and programs making safety a top priority;

•

Continued focus on advancing the Group's cyber security intrusion prevention system and incidence response program including continued employee training, implementation of a cyber security dashboard, and conducting a cyber security table top exercise with representatives of the Department of Homeland Security and Federal Bureau of Investigation;

•

Implemented a new Enterprise Risk Management tool and dashboard reporting; and

•

Co-hosted Emergency Operation Center exercises with three districts and five communities.

2.     Stockholder Value Goal – Achieve budgeted earnings per share of $1.26, return on equity on invested capital of 9.20%, and company-funded capital expenditures of $210 million.

Achieved Results for Stockholder Value – For 2018, the Group achieved the following result for the major objective in this category:

•

Earnings per share of $1.36 or 108% of target, which represents a return on equity (as determined in accordance with GAAP) of 9.18% as reported in item 7 of the Group's Form 10-K for the year ended December 31, 2018 as filed with the SEC.

•

Company-funded capital expenditures were $253.0 million, exceeding the 2018 Capital program by $43 million or 20%. The Group's 2018 achieved capital expenditures was $271.7 million as reported in item 7 of the Group's Form 10-K for the year ended December 31, 2018 as filed with the SEC. Excluding developer funded expenditures of $16.0 million and excluding a decrease in accounts payable accrual of $2.7 million for capital project spend, the Group spent $253.0 million on company-funded capital expenditures for the 2018 performance period.

3.     Regulatory Goal – Earn authorized annual escalation rate increases for 2019, file the Cal Water GRC; conclude California's Cost of Capital application; conclude the Hawaii Water Service Company's (Hawaii Water) GRC for its Waikoloa Village and Resort Systems; file the Washington Water Service Company (Washington Water) GRC.

Achieved Results for Regulatory – On December 15, 2016, the CPUC voted to approve Cal Water's 2015 GRC settlement agreement. As a part of the decision Cal Water was authorized to request annual escalation rate increases for 2019 for those districts that passed the earnings test. In November of 2018, Cal Water requested escalation rate increases in all of its regulated

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districts increasing adopted gross revenue by $16.2 million. The new rates became effective on January 1, 2019.

On July 2, 2018, Cal Water filed a GRC application with the CPUC proposing $828.5 million of infrastructure improvements. Cal Water has proposed to the CPUC to increase revenues by $51.0 million, or 7.7%, in 2020; $29.8 million, or 4.2%, in 2021; and $31.4 million, or 4.2%, in 2022 as compared to the last authorized revenue. Any changes in customer rates are expected to become effective in 2020.

On March 22, 2018, the CPUC adopted a revised proposed decision in the cost of capital proceeding for Cal Water and three other water utilities for the years 2018-2020, establishing for Cal Water a 9.20% return on equity and a 5.51% cost of debt, with a capital structure of 46.60% long-term debt and 53.40% common equity, and an authorized return on rate base of 7.48%. The adopted capital structure did not change.

In December of 2017, Hawaii Water filed GRC applications requesting additional revenues of $3.8 million on an annual basis for its Waikoloa Village and Resort Systems with the Hawaii Public Utilities Commission (HPUC). On January 1, 2019, the HPUC authorized Waikoloa Village rate increases of $0.8 million for 2019 and $0.1 million for 2020. On January 7, 2019, the HPUC authorized Waikoloa Resort rate increases of $0.8 million for 2019, $0.8 million for 2020, and $0.1 million for 2021.

On July 2, 2018, Washington Water submitted a GRC application to the Washington Utilities and Transportation Commission (UTC) requesting an increase of $1.6 million in annual revenue, which is an increase of 13.8% over 2017 revenue. The application reflected increases in materials, equipment, depreciation expense due to the addition of new facilities, and increases in employee wages and health care costs. The UTC authorized an annual rate increase of $1.1 million on November 1, 2018 and the new rates became effective on December 1, 2018.

4.     Customer Service and Water Quality Goal – Complete key strategic projects in the areas of customer service and water quality including:

•

Meet or exceed all customer service standards as set by the CPUC;

•

Meet or exceed all water quality standards in every state, every day, with no water quality violations in 2018; and

•

Meet or exceed all wastewater discharge standards in every system, every day, in 2018.

Achieved Results for Customer Service and Water Quality – During 2018, we completed key strategic objectives in the areas of customer service and water quality. Cal Water successfully exceeded the nine CPUC standards which encompass key measurements for telephone responsiveness, service responsiveness, billing accuracy, and general levels of customer complaints. The nine CPUC customer service standards are found in the CPUC's General Order 103-A.

Additional key objectives include:

•

Planned, designed, and constructed treatment to meet the new limit of five parts per trillion for TCP set by the California State Water Resources Control Board in July 2017 by the compliance deadline of January 2018;

•

Met new Environmental Protection Agency (EPA)/State of California guidance on the revised Lead and Copper Rule and completed lead testing in all Kindergarten through grade 12 private and public schools in Cal Water's service areas; and

•

Group maintained an excellent environmental standards record throughout 2018.

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5.     Employee Retention and Development Goal – Implement key strategic projects in the area of employee retention and development.

Achieved Results for Employee Retention and Development – During 2018, we completed key strategic objectives in the area of employee retention and development, including:

•

Implemented the updated and enhanced Continuous Improvement Program throughout all of the Group's subsidiaries;

•

Completed the 2018 succession and employee development plan, including implementation of the Executive Development Program under our leadership strategy;

•

Implemented a Vehicle Accident Reduction Program including revision of our preventable vehicle accident policy and rollout of our driver training program;

•

Continued focus on developing partnerships with local schools and other entities to build interest in individuals wanting a career in the water industry at Cal Water;

•

Received the American Society of Civil Engineers (ASCE) San Joaquin Branch and Los Angeles Section's "Water Project of the Year" award for Cal Water's TCP treatment and compliance project;

•

Received the American Water Works Association's (AWWA) Diversity Award for 2018;

•

Named a "Top 100 Workplace" in the San Francisco Bay Area for the seventh consecutive year; and

•

Received certification as a Great Place to Work® by the Great Place to Work® Institute for the third consecutive year.

Once the Committee assesses the business results for each goal as described above, the Committee then reviews and discusses the overall performance of each executive and the competitive data provided by the independent consultant retained by the Committee. Once reviewed and agreed upon, the Committee recommends to the Board the base salaries for our executives (including the President & CEO).

The increases to salaries are intended to compensate the individuals for job performance and overall leadership while being within the "competitive range" of the market data for target total cash compensation for similar positions ("competitive range" is described in more detail above and below) when taking into account the short-term incentive compensation described below.

Performance-Based Short-Term Incentive Compensation

As strategic goals are long-term in nature, we maintain an annual performance-based short-term incentive compensation program for executives designed to align annual performance and achievement with the long-term strategic goals of the Group. The performance-based short-term incentive compensation is fully at risk with payout dependent upon achievement of certain performance objectives over a one-year performance period.

The Committee considered a number of factors when establishing the 2018 performance metrics including our long-term strategic plan, historical performance, the regulatory environments it operates in, feedback from the independent compensation consultant, stockholder feedback, and management discussions. The performance metrics are intended to foster and enhance cross-functional integration, customer relationships, continuous improvement, and team accountability. Targets for each of the performance metrics were designed to be challenging but achievable with strong management performance.

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As in prior years, the 2018 performance objectives for the annual short-term incentive compensation were selected to match the performance metrics used for the long-term performance-based RSUs eligible to be earned for 2018 performance, which are listed in the table that follows under "Performance and Time-Based Equity Compensation." The Committee feels that the metrics selected are designed to complement both the short-term and long-term goals as well as the strategic plans of the Group. In the short-term, our executives are motivated to execute on strategies and policies while making good operating decisions to maximize performance over the course of the year while simultaneously being motivated to develop strategies and policies to achieve long-term growth and increase the value of the organization over the long-term. By aligning performance metrics between short-term and long-term incentive compensation, our executives are discouraged from short-term risk taking at the expense of the long-term health of our regulated utilities, customers, and operations. The performance metrics selected have previously undergone regulatory review, and as such, compensation payable based upon these metrics are currently included in customer rates through a rate recovery mechanism.

For 2018, the Committee granted the opportunity for our executives (other than our President & CEO) to receive short-term performance incentive awards with a target payout equal to 25% of base salary (up from 20% in 2017) with an actual payout range of 0% to 200% of target, based on performance. For our President & CEO, the Committee granted the opportunity to receive a short-term performance based incentive award in 2018 with a target payout equal to 100% of base salary (up from 85% in 2017), with an actual payout range of 0% to 200% of target, based on performance.

Payment of the short-term performance incentive awards is typically made in March, following the Group's receipt of audited financial statements and the subsequent certification of the Group's performance by the Committee. See below for additional information regarding the performance goals and resulting payouts under the annual short-term incentive program for 2018.

Performance and Time-Based Equity Compensation

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

As with target short-term incentive 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 2018. However, the Committee also believes that, in the interest of strengthening and rewarding teamwork and collaboration within the executive team, the annual equity incentive awards granted to each of our executives (other than our President & CEO) should be based on the same objectives and methodology. The Committee recommended awarding our President & CEO a greater value of equity awards in 2018 than our other executives because of his substantially greater level of responsibility and ability to influence Group's operational results.

Based on the methodology described above, the grant values for 2018 were unchanged from 2017's grant values. For 2018, the Committee set the total value for the equity compensation awards at $575,000 for our President & CEO, $150,000 for the Group's vice presidents, and $90,000 for all other executives, assuming a target level of performance. All equity awards for

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executives were granted 50% in the form of time-based RSAs vesting over three years and 50% in the form of performance-based RSUs with a three-year performance period and the opportunity to earn up to 200% of the target performance-based RSU award based on achievement with respect to Committee-approved objectives.

The performance-based RSUs awarded to our executives provide for a three-year performance period with vesting based solely upon the achievement of objective performance criteria. The Committee certifies and approved the performance of each metric for each year of the performance period. At completion of the three-year performance period, the annual performance is aggregated to attain the three-year performance period's final achievement. 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 executive's continued employment through such date. Each year following the performance period, the Committee establishes performance metrics with respect to each of the performance criteria described below. As noted above, for 2018, the performance criteria for our annual short-term incentive program are the same metrics applicable to the performance-based RSUs for 2018.

The following section provides a more detailed look at each performance metric, along with the maximum, target, and threshold levels for each:

•

Water Quality:    This metric evaluates performance based on number of procedural violations and violations of primary and secondary drinking water standards. The CPUC has authority to set drinking water standards for Cal Water. It has adopted the California State Water Resources Control Board, Division of Drinking Water (DDW) standards, which also incorporate U.S. Environmental Protection Agency (EPA) drinking water standards. Similarly, the Group's subsidiaries in Washington, Hawaii, and New Mexico are regulated by the EPA and their respective state health regulators. For 2018, all state operations are included in the performance metric for primary water quality. The secondary and procedural water quality metrics measure activity in the California subsidiary only.

•

A primary drinking water standard violation is related to public health, either acute or long-term.



•

A secondary drinking water standard violation is related to taste or aesthetics, such as excessive iron and manganese, and can generate customer complaints.



•

A procedural violation is a missed sample or other non-compliance item that is not a violation of a primary or secondary standard.

We make it a priority to meet all water quality standards, every day, in every service area. For this reason, the target performance level was set for no primary water standard violations, two or fewer secondary water standard violations, and no more than four procedural violations.

•

Customer Service:    A combination of nine CPUC standards and one internal Cal Water performance indicator which encompass key measurements for telephone responsiveness, service responsiveness, billing accuracy, and general levels of customer complaints comprises this metric. The nine CPUC customer service standards are found in the CPUC's

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General Order 103-A. This metric is evaluated each quarter for 10 measurements in 20 California service areas for an annual target of 764-771 and a maximum annual metric measurement of 800. For 2018 performance-based short-term incentive compensation and long-term performance-based equity grants, the criteria for each performance level was set above prior year criteria in response to prior year actual results.

•

Utility Plant Investment:    The annual Board-approved capital expenditures budget is the target for this metric. Investment in utility plant, property, and equipment is a driver of stockholder return and a key component of providing reliable, high-quality water service to customers. This metric is updated each year to reflect the annual approved capital program and budget for the Group and its subsidiaries and is tied to regulatory approvals. For 2018, the annual Board-approved capital expenditure budget and target performance level was set at $210 million.

•

Return on Equity (ROE):    The return on equity of 9.2% is the target for this metric. Return on equity is defined using net income divided by average common stockholders' equity. This metric's target is aligned with the authorized ROE for Cal Water as adopted by the CPUC in a revised proposed decision in the cost of capital proceeding for Cal Water for fiscal years 2018 through 2020. The CPUC increases or reduces the amounts Cal Water can collect from customers when it changes the authorized return on equity. Group's actual or recorded ROE may be higher or lower than what the CPUC has authorized, depending on the effectiveness of the Group's financial management and regulatory strategy. This metric provides for a substantial increase in the award for performing above the authorized ROE (20% increase for a 10 basis points increase in ROE) and a more graduated downside measure (20% decrease in award for a 50 bps decrease in ROE) due to the regulatory mechanisms in place which limit the possibility of achieving high returns on equity. For 2018, the ROE authorized by the CPUC was 9.20%.

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•

SAFETY:    This metric is measured annually for Cal Water and is comprised of three of our safety program components. These three components include full attendance at Cal Water mandated safety training for all employees (minimum of five training topics annually), Total Case Incident Rate (TCIR) which represents the average number of work-related injuries incurred by 100 workers during a one-year period as measured against California companies, and the number of preventable vehicle accidents. The three safety components are weighted as follows:

•

Training rate measure – 20%



•

TCIR measure – 40%



•

Preventable vehicle accident measure – 40%

Our executives have been focused on improving its management of the safety program and we have set this metric to improve performance from current conditions towards industry averages, where applicable, and performance expectations.

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Summary of Performance Goal Achievements for 2018

The following chart sets forth the performance goals used for short-term and long-term compensation for 2018, and the achievement of each goal as certified by the committee for 2018. The RSU and cash award component weighting is 20% for each of the five performance goals as follows:

•

Water Quality was above target with no primary or secondary violations and two procedural violations.

•

Customer Service was below target with 762 annual aggregate metrics met.

•

Utility Plant Investment was above target with $253.0 million in company-funded capital expenditures.

•

Return on Equity was below target at 9.18%.

•

Safety was above target at 88% training rate, 2.6 TCIR and 25% reduction in preventable vehicle accidents.

Total 2018 RSU performance achievement for all executives = 130%

Total 2018 short-term incentive award achievement for all executives = 130% (award capped at 200%)

(1)   The Group's 2018 achieved capital expenditures was $271.7 million as reported in item 7 of the Group's Form 10-K for the year ended December 31, 2018, as filed with the SEC. Excluding developer-funded expenditures of $16.0 million and excluding a decrease in accounts payable accrual of $2.7 million for capital project spend, Group spent $253.0 million on company-funded capital expenditures for the 2018 performance period.

(2)   The Group achieved a return on average common equity in 2018 of 9.18%, as reported in item 7 of the Group's Form 10-K for the year ended December 31, 2018, as filed with the SEC.

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The table below summarizes the total performance-based incentive compensation paid or earned by our executives for the fiscal year ended December 31, 2018.

2019 Compensation

Incentive Awards for 2019

The Committee increased the target short-term compensation values from 2018 to 2019 under the annual incentive program. There was no increase to the target value of the equity compensation awards.

The equity awards vest over three years respectively, with 50% subject to the achievement of performance-based metrics and 50% subject to time-based vesting and continued employment.

On March 5, 2019, the following awards were granted:

•

President & CEO – 5,584 shares of RSAs and 5,584 RSUs;

•

Group's Vice Presidents    – 1,457 shares of RSAs and 1,457 RSUs; and

•

Other executives  – 875 shares of RSAs and 875 RSUs.

The RSUs are subject to performance-based vesting.

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The following charts illustrate target variable incentive pay as a percentage of compensation for 2018 and 2019:

Chief Executive Officer 2018-2019 Pay Mix		Other NEOs 2018-2019 Pay Mix

Basic and Supplemental Pension Plan Benefits

In addition to the tax-qualified defined benefit plan that covers all permanent employees, supplemental retirement benefits are provided to our executives under the SERP. The SERP plan is designed primarily to compensate for limitations imposed by the Internal Revenue Code (Code) on allocations and benefits that may be paid to executives under the Group's tax-qualified plan. Because the Code restricts benefits under the tax-qualified plan, our executives otherwise would not be eligible to receive the retirement benefits that are proportional to the benefits received by our employees that generally are based on compensation. The SERP is structured such that benefits are paid to our executives on a "pay as you go" basis. The SERP is an unfunded, unsecured obligation of the Group and is designed to assist in attracting and retaining key executives while providing a competitive, total compensation program. The annual expenses of the pension and SERP have allowable costs recovered in rates through the regulatory process in California and other states.

Deferred Compensation Plan

The Group maintains a deferred compensation plan for its directors, executives, and qualified managers. The plan is intended to promote retention by providing eligible employees, including the executives, with a long-term savings opportunity on an income tax-deferred basis. This plan is voluntary and funded by the individuals who elect to participate in the program. There are no company-matching contributions.

401(k) Plan

All employees satisfying the eligibility requirements are entitled to participate in our 401(k) plan and receive matching contributions from the Group. Pursuant to the plan, all employees, including executives, are entitled to contribute up to the statutory limit set by the Internal Revenue Service (IRS) and the Group matches 75% for each dollar contributed up to eight percent for a maximum company-matching contribution of six percent of employee's base salary.

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Limited Perquisites

As part of the Group's automobile policy, executives have the use of a company-owned automobile, including excess liability insurance. The Committee believes that the use of a company-owned automobile allows our executives to work more efficiently because many of the geographic areas served by the Group are most effectively reached by automobile as opposed to other forms of transportation, such as air travel. Any personal mileage incurred by our executives are taxed as additional compensation in accordance with IRS regulations and paid for by the executives. The Group offers its executives a supplemental medical providing proactive health protection services including executive physicals and emergency travel assistance. Additionally, the Group also has a relocation program assisting employees required to move on behalf of the Group to remain as productive as possible during the relocation transition. Employees who receive relocation assistance are required to sign a repayment agreement. Other than these benefits, the Committee's general philosophy is not to provide perquisites and other personal benefits of substantial value to the executives.

Severance Arrangements

None of our executives are party to an individual employment agreement. Additionally, our executives are not provided with single-trigger change in control benefits.

Consistent with the Group's compensation philosophy, the Committee believes that the interests of stockholders are best served if the interests of senior management are aligned with those of our stockholders. To this end, the Group provides change in control severance benefits to our executives under the Group's Executive Severance Plan to reduce any reluctance of our executives to pursue or support potential change in control transactions that would be beneficial to our stockholders. The Group adopted the plan in 1998, and its purpose is to promote the continued employment and dedication of our executives without distraction in the face of a potential change in control transaction. The Executive Severance Plan provides severance pay equal to three times base salary to each of our executives if their employment is terminated without good cause or they resign for good reason during the two-year period following a change in control. Each executive will also be eligible to receive a gross-up payment if the executive is required to pay an excise tax under Section 4999 of the Internal Revenue Code. This provision for a tax gross-up has been a part of the Executive Severance Plan since its inception in 1998 and has not been modified since then.

In the event of a termination not in connection with a change in control, each executive is covered by the Group's general severance policy which states that each non-union employee of the Group whose employment is terminated without cause is entitled to severance pay of either one week's pay after completing two years of service or two weeks' pay after completing five or more years of service, provided in each case that at least two weeks' notice is given. Under the Group's policies, all executives are entitled to a pay-out of six weeks of vacation time upon termination of employment.

Determining Executive Compensation

Each year the Committee reviews, assesses, and recommends to the Board all compensation for our executives after determining that the compensation for these individuals is competitive relative to companies of comparable size, complexity, location, and business nature (see below for additional discussion of this comparison). In addition, the Committee approves the retention, fees, and termination of any compensation consultant or compensation consulting firm used to assist in the evaluation of executive compensation. With respect to 2018 compensation decisions, the Committee retained the services of an independent compensation consultant, Veritas Executive Compensation Consultants (Veritas), for investigation into and

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advice on compensation for executives. The Committee believes that having an independent evaluation of compensation is a valuable tool for the Committee, the Group, and stockholders. Veritas is not engaged to perform any additional work for the Group. The Committee retained Veritas for several purposes, including:

•

Constructing and reviewing compensation comparisons from readily available published survey and public filings data; and

•

Performing a competitive assessment of the compensation programs, practices, and levels for directors and executives.

The Committee made a number of compensation recommendations, including those pertaining to the executives that were based on the competitive assessments provided by and through consultation with Veritas. The Committee's recommendations were made, however, entirely by the Committee, in its sole discretion.

The total compensation level for each executive is based on one or more of the following factors:

•

The individual's duties and responsibilities within the Group;

•

The individual's experience and expertise;

•

The compensation levels for the individual's peers within the Group;

•

Compensation levels for similar positions based on a review of published compensation surveys; and

•

The levels of compensation necessary to recruit, retain, and motivate executives.

In order to determine competitive compensation practices for 2018, the Committee relied, in part, on published survey compensation data as well as proxy data for individual companies. The individual companies are referred to in this proxy statement as the "Peer Group." The Peer Group includes companies that are generally gas, water, or multi-utility-based organizations with one-half to two times the annual revenue size of the Group.

On November 28, 2018, the Committee approved the following companies for inclusion in the Peer Group for 2018 for determining competitive compensation levels, which were the same as the companies for the Peer Group in 2017:

Veritas utilized the data from these sources (competitive data) to compile the competitive pay information comparing each executive's compensation to market levels for his/her executive position.

After consideration of the competitive data, the Committee makes decisions regarding each individual executive's target total compensation opportunities based on the Group and individual performance and the need to attract, motivate, and retain an experienced and effective management team. The Committee examined the relationship of each executive's

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