James Lynch
CALIFORNIA WATER SERVICEAbout James Lynch
James P. Lynch is Senior Vice President, Chief Financial Officer & Treasurer of California Water Service Group (CWT), appointed January 3, 2024; he is a Certified Public Accountant with a B.S. in Commerce (Accounting) from Santa Clara University and is currently age 65 . In 2024, during his first year as CFO, CWT delivered net income of $190.8 million and cumulative TSR equivalent to $97.46 on a $100 base vs. peer group $92.93; executives’ short‑term at‑risk program paid at 178% of target reflecting record capex execution and EPS performance . The company invested a record $471 million in water system improvements in 2024, underpinning regulated growth drivers .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| SJW Group | Chief Financial Officer & Treasurer | 2010–2022 | Senior finance leadership at a regulated water utility |
| SJW Group | Chief Accounting Officer | 2022–2023 | Oversight of accounting and reporting at peer water utility |
| KPMG LLP | Audit Partner | 1997–2010 | Led audits for public and private companies, including water utilities |
| KPMG LLP | Various roles | 1984–1997 | Progressive assurance roles prior to partnership |
| California Water Service Group | Manager of Special Projects | 2023 | Project-focused finance role prior to CFO appointment |
External Roles
| Organization | Role | Years |
|---|---|---|
| Santa Clara University Accounting Advisory Board | Member | Not disclosed |
| Children’s Health Council | Board of Directors | Current |
Fixed Compensation
| Metric | FY 2024 |
|---|---|
| Annualized Base Salary ($) | 470,000 |
| Base Salary Earned ($) | 463,076 |
| Target Bonus % (ARP) | 40% |
| All Other Compensation ($) | 40,436 |
Performance Compensation
Short‑Term At‑Risk (Annual Incentive) – FY 2024
| Metric | Weight | Target | Actual/Payout | Vesting/Payment |
|---|---|---|---|---|
| Water Quality & Public Health | 20% | Compliance/KPI targets (company standard) | 200% of target (40% contribution) | Paid annually post Committee certification |
| Customer Service & Support | 20% | KPI targets (service metrics) | 175% of target (35% contribution) | Paid annually post Committee certification |
| Infrastructure Improvement & Utility Plant Investment | 20% | $360M target; max $400M; threshold $330M | $451M company‑funded achieved ⇒ 200% payout (40% contribution) | Paid annually post Committee certification |
| Budget to Actual Performance (EPS) | 20% | Target −2.5% to +2.5% variance; max >10%; threshold −5.1% to −7.5% | Achieved 200% payout (40% contribution) | Paid annually post Committee certification |
| Emergency Preparedness & Safety | 20% | KPI targets (safety metrics) | 115% of target (23% contribution) | Paid annually post Committee certification |
| Final Achievement | — | — | 178% of target | Paid annually post Committee certification |
| CFO ARP Target ($) | — | 188,000 | — | — |
| CFO ARP Earned ($) | — | — | 334,640 | Paid in 2025 for 2024 performance |
Long‑Term Equity – Grants in FY 2024
| Award Type | Grant Date | Threshold | Target | Maximum | Grant Date FV ($) | Vesting |
|---|---|---|---|---|---|---|
| Performance RSUs (2024–2026) | 6/5/2024 | 1,146 units | 3,016 units | 6,032 units | 149,654 | Cliff vest after 3‑year period; pay‑for‑performance with ESG metric included in program design |
| Time‑Based RSAs | 6/5/2024 | — | 1,616 shares | — | 80,186 | 1/3 vests 3/3/2025; remaining vests in equal quarterly installments thereafter |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (common shares) | 4,085 as of April 16, 2025 |
| Unvested RSAs (Dec 31, 2024) | 1,616 shares; market value $73,253 (at $45.33 close) |
| Unearned RSUs (Dec 31, 2024) | 3,016 units; market value $136,715 (at $45.33 close) |
| Stock Ownership Guidelines | Senior VPs/Vice Presidents must hold 1.5× annual base salary; officers must retain 50% of net after‑tax shares until compliant; all officers in compliance |
| Hedging/Pledging | Prohibited for directors and officers per Insider Trading Policy |
| Options | Company historically does not grant stock options; equity mix is RSAs and RSUs |
Employment Terms
| Term | Provision |
|---|---|
| Employment Status | At‑will; standard indemnification agreement intended |
| Start Date & Role | Appointed SVP, CFO & Treasurer on January 3, 2024 |
| Compensation Program Eligibility | ARP (short‑term) and LTI (RSAs/RSUs), Executive Severance Plan, SERP participation |
| SERP Update | Unreduced retirement age increased from 60 to 65 (plan amended); general program oversight described |
| Severance (Executive Severance Plan) | Double‑trigger CIC; cash equal to 3× base salary, paid in three annual installments; Section 4999 excise tax gross‑up; conditioned on release and non‑solicit/confidentiality compliance |
| Illustrative Payments (as of 12/31/2024) | Termination (no CIC): $242,231 total; Retirement: $287,833 total; CIC + termination: $1,862,199 total; includes cash severance ($54,231 or $1,464,231), ARP at target ($188,000), RSUs/RSA valued at market |
| Related Party Transactions | None required to be disclosed under Item 404(a) |
Performance & Track Record
- Pay Versus Performance: 2024 “compensation actually paid” to non‑CEO NEOs averaged $859,492; cumulative TSR value‑of‑$100 was $97.46 vs. peer $92.93; net income $190.8 million; budget‑to‑actual EPS performance 53.0% noted in PvP context .
- Strategic Execution: Record infrastructure investment of $471 million in 2024 supports long‑term rate base growth; interim rate relief also contributed to revenue and net income .
- Say‑on‑Pay: 96% approval at the 2024 Annual Meeting; ongoing investor engagement on compensation and governance .
Compensation Peer Group (Benchmarking)
- Peer group (approved October 29, 2024): Allete, American States Water, Avista, Black Hills, Chesapeake Utilities, Essential Utilities, IDACORP, MGE Energy, Northwest Natural Gas, NorthWestern, Otter Tail, PNM Resources, San Jose Water Group, Unitil .
- Positioning: Committee targets total compensation within a “competitive range” defined as ±20% around median, reflecting regulated utility context; Meridian engaged as independent consultant .
- Program governance: Clawback policy aligned with NYSE/Rule 10D‑1; anti‑hedging/anti‑pledging; limited perquisites (company vehicle) .
Compensation Structure Analysis
- 2024 cash vs. equity mix for Lynch: Base $463,076, ARP earned $334,640, long‑term equity grant date FV $229,840; total direct $1,027,556 (single‑year view as 2024 appointment) .
- Shift to performance‑based equity: Majority of LTI allocated to performance RSUs over 3 years; ESG metric integrated into long‑term program .
- Risk mitigants: Caps on payouts; minimum standards; stock ownership requirements; clawback; anti‑hedging/pledging .
Risk Indicators & Red Flags
- Excise Tax Gross‑Up: Executive Severance Plan provides Section 4999 excise tax gross‑up on CIC severance—shareholder‑unfriendly feature retained since 1998 .
- Hedging/Pledging: Prohibited for officers and directors, mitigating misalignment risks .
- Governance & Investor Feedback: Multiple program improvements (SERP age, ESG integration, peer review); strong Say‑on‑Pay support (96%) .
Investment Implications
- Alignment: Lynch’s at‑risk pay tied to core utility drivers—capex, EPS discipline, water quality and safety—supports regulated rate‑base growth and service reliability; stock ownership requirements and anti‑hedging/pledging strengthen alignment .
- Retention/Transition Risk: At‑will status with robust CIC severance (3× salary) and long‑term RSU cliff vesting through 2026 reduce turnover risk but create potential change‑of‑control cost overhang; quarterly RSA vesting beginning March 3, 2025 may contribute to periodic selling pressure .
- Governance Signal: Presence of tax gross‑up in CIC plan is a negative governance marker; offset by clawback, program caps, and high investor support for pay design .