Andrew Walters

About Andrew Walters

Andrew F. Walters is SJW Group’s Chief Financial Officer and Treasurer since January 26, 2022 and will become Chief Executive Officer effective July 1, 2025; he will also be appointed to SJW’s Board on that date . Walters was 51 years old at the time of his CFO appointment and holds a bachelor’s degree in business administration from Colorado State University . Recent company performance metrics underlying executive pay include cumulative TSR tracking versus peers and adjusted EPS and net income used in pay-versus-performance disclosures; for 2023, the $100 TSR index stood at 99.95, with adjusted diluted EPS of $2.76 and net income of $84,987 thousand . SJW’s compensation governance highlights include a clawback policy effective December 1, 2023 and prohibitions on hedging/pledging by officers and directors .

Past Roles

External Roles

Fixed Compensation

Notes:

• 2023 annual incentive paid at 117.5% of target based on corporate performance (Walters: $247,500 target; $290,813 actual) .

Performance Compensation

Long-Term Incentive Structure and Weighting

Annual Incentive (AIP) Outcomes

PSU Award Outcomes (Completed Cycles)

Key Plan Mechanics

• rTSR PSUs measure against two equally weighted peer sets: water utility peers and S&P small/mid-cap utility index constituents; payouts range 0–200% with three-year performance periods .
• ROE PSUs measure average ROE based on adjusted net income over three years; payouts range 50–150% of target at threshold/target/max .

Equity Ownership & Alignment

Beneficial Ownership

Outstanding Equity Awards (as of Dec 31, 2024)

Ownership Guidelines Compliance

• Hedging and pledging of SJW stock are prohibited for directors and executive officers; none of Walters’ reported shares are pledged .

Employment Terms

Executive Severance and CIC Economics (Assumed CIC on Dec 31, 2024 at $49.22/sh; termination same day)

• CIC vesting: Service RSUs vest in full if not assumed; if assumed, double-trigger vesting during 24 months post-CIC; PSUs vest at target if not assumed, otherwise continue to end of performance period with double-trigger acceleration .
• Executive Severance applies on double-trigger only; Walters is not eligible for cash severance on qualifying termination without a CIC beyond award terms .
• No enhancement to Walters’ benefits under SJWC Cash Balance SERP triggered by CIC .
• Clawback: incentive compensation (including PSUs/stock-based awards) subject to recovery upon financial restatement under policy effective Dec 1, 2023 .

Board Governance

• Board service: Walters will be appointed to the SJW Board effective July 1, 2025, concurrent with becoming CEO .
• Leadership structure post-transition: Eric W. Thornburg will become non-executive Chair; Lead Independent Director Gregory P. Landis continues to preside over executive sessions .
• Committee independence: Audit, Compensation, and Nominating & Governance Committees are composed of directors the Board has determined to be independent per Nasdaq and SEC rules .

Director Compensation (Context)

• Non-employee director retainers and equity grants are disclosed for 2024 and updated for 2025; as an employee-executive, Walters is not eligible for non-employee director fees .

Compensation Structure Analysis

• Mix and weighting: Walters’ LTI skews toward performance-based PSUs (60% of LTI) split evenly between rTSR and ROE, aligning pay with shareholder value and returns on equity .
• Year-over-year: Walters’ salary increased from $495,000 in 2023 to $520,000 in 2024, while stock awards rose modestly (from $342,201 in 2023 to $349,929 in 2024) and annual incentive rose (from $290,813 to $361,768) .
• Governance strengths: Clawback, ownership requirements, prohibition on hedging/pledging, and independent consultant (Mercer) advising Compensation Committee .
• Red flag: Walters’ CIC package includes an excise tax gross-up, unlike the CEO’s package and executives appointed after October 2022; this could face shareholder scrutiny in a sale scenario .

Equity Grants Detail (Recent)

Vesting terms: Service RSUs vest in three equal annual installments; PSUs vest based on 3-year performance with defined ranges and change-in-control acceleration rules .

Say-on-Pay & Shareholder Feedback

• 2023 say-on-pay approval exceeded 94% of votes cast, signaling broad shareholder support for the compensation program .

Expertise & Qualifications

• Education: Bachelor of Business Administration, Colorado State University .
• Professional expertise: Infrastructure investment (J.P. Morgan AM), investment banking (Citigroup), corporate development/integration leadership at SJW—skills aligned with regulated utility growth, capital markets, and M&A execution .

Employment Terms (Appointment Updates)

• CEO appointment effective July 1, 2025 with base salary $685,000, target bonus 95% of base, and target LTI $1,150,000 .
• CFO succession: Ann P. Kelly appointed CFO effective July 1, 2025 .

Investment Implications

• Alignment and retention: Meaningful stock ownership exceeding guidelines and a PSU-heavy LTI design align Walters with shareholder value creation and ROE discipline; three-year PSU cycles support multi-year execution focus .
• Supply/vesting pressure: Multiple tranches of Service RSUs and ongoing PSU cycles create periodic vesting events that may increase sellable share supply; continued prohibition on hedging/pledging mitigates misalignment risk .
• Transaction sensitivity: CIC economics include a substantial cash multiple and excise tax gross-up for Walters, raising potential payout risk in a sale; double-trigger provisions and PSU treatment guard against windfalls absent termination .
• Governance balance: Walters’ dual role (CEO + director) is offset by a non-executive Chair and independent committees; strong say-on-pay results and clawback policy reduce governance risk perceptions .