Michael Luu
CALIFORNIA WATER SERVICEAbout Michael Luu
Senior Vice President, Corporate Services & Chief Risk Officer at California Water Service Group (CWT). Promoted on June 1, 2023, he oversees business development, IT, engineering, water quality and environmental assurance, and emergency preparedness, safety, and security; he joined the company’s IT department in 1999 and previously served as Director of IT, Interim District Manager, VP IT & Customer Service, and VP IT & Chief Risk Officer . He holds an MBA and a BA in Management Information Systems from San Jose State University . Company performance in 2024 included $1.04B in revenue and EPS of $3.25, with record net income and capital investments of $471M; total shareholder return (TSR) was below the peer median for the year .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| California Water Service Group | Senior Vice President, Corporate Services & Chief Risk Officer | Jun 1, 2023 – Present | Leads cyber development, ERM, emergency preparedness/response; oversight of BD, IT, engineering, water quality, and safety/security |
| California Water Service Group | Vice President, IT & Chief Risk Officer | Not disclosed | Key role in cybersecurity development, ERM, and emergency preparedness |
| California Water Service Group | Vice President, IT & Customer Service | Not disclosed | Led technology-enabled customer service initiatives |
| California Water Service Group | Director of Information Technology | Not disclosed | Advanced IT capabilities supporting operations |
| California Water Service Group | Interim District Manager | Not disclosed | Operational leadership at district level |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $377,234 | $415,021 | $449,016 |
Performance Compensation
2024 Annual Short-Term At-Risk Compensation (ARP) Framework and Outcomes
| Metric | Weight | Target | Actual Achievement | Payout (% of target) |
|---|---|---|---|---|
| Water Quality & Public Health | 20% | 0 primary; ≤2 secondary; ≤4 procedural violations | 0 primary; 0 secondary; 0 procedural violations | 200% |
| Customer Service & Support | 20% | 94.1% of max annual metric | 100% of max annual metric; −7% collections; +4% e-billing | 175% |
| Infrastructure Improvement & Utility Plant Investment | 20% | $360M capex | $450.5M company-funded capex | 200% |
| Budget to Actual (EPS) | 20% | −2.5% to +2.5% vs budget | +53% vs budget (EPS) | 200% |
| Emergency Preparedness & Safety | 20% | Multi-component targets (EOC trainings 15; training 90%; TCIR 3.40; PVAs 41; 400 audits) | 23 EOC trainings; 100% training; TCIR 88% of target; PVAs +2% vs target; 453 audits | 115% |
| Executive | 2024 ARP Earned ($) |
|---|---|
| Michael B. Luu | $319,973 |
2024 Long-Term Equity Awards (Grant Values and Constructs)
| Component | SVP Weighting | Grant Date | Grant Fair Value ($) | Design |
|---|---|---|---|---|
| Performance RSUs (2024–2026) | 65% of LT equity for SVPs | Jun 5, 2024 | $149,654 at target; $299,308 at max | 3-year performance period; vest 0–200% based on ROE (40%), Growth in Stockholders’ Equity (40%), Grant Funding for Infrastructure (20%) |
| Time-based RSAs | 35% of LT equity for SVPs | Jun 5, 2024 | $80,186 | Vests 33.3% at year 1, remaining quarterly over next 24 months |
| 2022–2024 Performance RSU Outcome | Metric Weight | Threshold/Target/Max | Result | Payout |
|---|---|---|---|---|
| Return on Equity | 40% | Threshold: 8.70%/9.07%/9.77% by year; Target: CPUC authorized ROE; Max: 9.70%/10.07%/10.77% | GAAP ROE: 7.70% (2022), 3.73% (2023), 12.44% (2024) | 80% |
| Growth in Stockholders’ Equity | 40% | $575M / $650M / $750M | $655M | 100% |
| ESG Leadership | 20% | Achieve 3/4 goals (target); 4/4 goals (max) | All 4 goals achieved | 200% |
| Total 2022–2024 Payout | — | — | — | 112% |
| Michael B. Luu Shares Earned (2022–2024) | — | — | — | 1,814 shares |
Equity Ownership & Alignment
- Beneficial ownership: 22,775 common shares, sole or shared voting/investment power .
- Stock ownership guidelines: SVPs must hold stock equal to 1.5x annual base salary; officers must retain 50% of net after-tax shares until compliant; all officers are in compliance .
- Anti-hedging and anti-pledging: Directors and officers are prohibited from hedging and pledging CWT stock .
- Deferred compensation: 2024 contributions $34,505; aggregate balance $492,904; 2024 aggregate earnings −$28,535 .
- Pension/SERP: Present value of accumulated benefit — Pension Plan $832,830; SERP $1,121,336; credited service 24.60 years (Pension) and 15.00 years (SERP) .
| Outstanding Equity Awards at 12/31/2024 | Shares/Units Unvested | Market Value ($) |
|---|---|---|
| RSAs (Mar 1, 2022 grant cohort) | 106 | $4,805 |
| RSUs (2022–2024 cohort) | 1,619 | $73,389 |
| RSAs (Mar 7, 2023 cohort) | 525 | $23,798 |
| RSUs (2024–2026 cohort, Mar 7, 2023 plan) | 1,955 | $88,620 |
| RSAs (Jun 1, 2023 cohort) | 444 | $20,127 |
| RSAs (Jun 5, 2024 cohort) | 1,616 | $73,253 |
| RSUs (Jun 5, 2024 cohort) | 3,016 | $136,715 |
Employment Terms
- Executive Severance Plan: If within 24 months of a change-in-control, employment is terminated by the company without “good cause” or by the officer for “good reason,” cash severance equals 3x base salary, paid in three annual installments; plan includes excise tax gross-up under IRC §4999; severance conditioned on release and subject to non-solicitation/confidentiality forfeiture .
- Vesting on change-in-control: Equity plan does not require single-trigger vesting acceleration upon a change-in-control; CIC benefits require qualifying termination (double trigger) .
- Clawback policy: Adopted consistent with NYSE and Rule 10D-1; recovery of excess incentive-based compensation in event of certain restatements .
| Potential Payments (as of 12/31/2024) | Termination w/o CIC | Retirement | CIC + Termination |
|---|---|---|---|
| Cash Severance ($) | $69,138 | $69,138 | $1,417,338 |
| ARP ($) | $179,760 | $179,760 | $179,760 |
| RSUs ($) | — | $191,519 | $318,851 |
| RSAs ($) | — | — | $89,481 |
| Accrued Vacation ($) | $91,609 | $91,609 | $91,609 |
| Total ($) | $340,507 | $532,026 | $2,097,039 |
Compensation Structure Details
- Pay mix: For SVPs, long-term equity is weighted 65% performance RSUs and 35% time-based RSAs; all eligible officers share unified annual and long-term incentive programs .
- Governance: Independent Organization & Compensation Committee oversees goals, pay decisions, stock ownership compliance, and clawbacks; Meridian Compensation Partners engaged as independent consultant; target pay set within ±20% of peer median .
- Peer group (2024): Includes American States Water, Essential Utilities, Avista, Black Hills, IDACORP, PNM Resources, NW Natural, MGE Energy, NorthWestern, Otter Tail, Unitil, Chesapeake Utilities, San Jose Water Group, Allete .
| Michael Luu – Summary Compensation ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $377,234 | $415,021 | $449,016 |
| Stock Awards | $163,449 | $204,053 | $229,840 |
| Non-Equity (ARP) | $138,495 | $172,204 | $319,973 |
| Change in Pension Value & Deferred Comp Earnings | — | $210,501 | — |
| All Other Compensation | $48,026 | $49,680 | $50,067 |
| Total | $727,204 | $1,051,459 | $1,048,896 |
Investment Implications
- Alignment and retention: Significant at-risk pay tied to multi-dimensional operational, customer, safety, and financial metrics; performance RSUs over three years and strict ownership/anti-pledging policies support long-term alignment. Pension/SERP present values ($1.95M combined) and deferred comp balances also function as retention anchors .
- Incentive quality: 2024 ARP payout of 178% was driven by measurable achievements (water quality compliance, capex execution, budget outperformance, safety training/audits), not discretionary awards—reduces pay-for-performance risk and supports execution credibility .
- Red flags: CIC severance includes 3x salary and an excise tax gross-up—shareholder-unfriendly feature that could inflate CIC costs; however, equity acceleration is not single-trigger, mitigating windfall risk absent termination .
- Selling pressure: Anti-hedging/pledging reduces forced selling and leverage risk; vesting schedules stagger RSAs over three years and RSUs over performance periods, smoothing supply; no evidence of share pledging and officers are in compliance with ownership rules .
- Performance context: Company delivered record revenue/EPS/capex in 2024, but TSR was below peer median—equity incentives emphasize ROE and equity growth in the LT plan, potentially driving long-term value creation beyond near-term stock performance .