Exhibit 10.9
December 9, 2008
W. Richard Roth
C/o SJW Corp.
110 W. Taylor Street
San Jose, CA 95110
Dear Rich:
It gives me great pleasure to
present you with this amended and restated agreement concerning
your continued employment with SJW Corp. (“SJW”) and
its three majority-owned subsidiaries, San Jose Water Company, SJW
Land Company and SJWTX, Inc. (the four entities collectively
referred to as the “Company”). This new agreement will
replace your existing employment agreement with the Company which
was effective as of January 1, 2003. This new agreement is
effective retroactive to January 1, 2008.
1. Positions and Duties . You
will continue in the positions of President and Chief Executive
Officer of SJW, San Jose Water Company, SJW Land Company and SJWTX,
Inc. and will report directly to Board of Directors of SJW (the
“Board”). Your duties and responsibilities will be
those assigned from time to time by the Board and will be
commensurate with your positions. You will be expected to perform
all such assigned duties and responsibilities, to devote
substantially all of your time, attention and effort to the
business and affairs of the Company, and to use your reasonable
best efforts to promote the best interests of the Company. Your
principal place of employment will be the Company’s corporate
offices in San Jose, California, subject to travel associated with
your duties. During your period of continued employment with the
Company, you must not render any services for any other person,
firm or entity that represents a conflict of interest with the
business of the Company. SJW hereby agrees to continue, for so long
as you remain Chief Executive Officer, to nominate you as a member
of the Board at each meeting of the SJW shareholders at which Board
members are to be elected. You shall serve in such capacity at no
additional compensation.
2. Term . The initial term of
this amended and restated agreement shall commence on
January 1, 2008 and end on the second business day of January,
2010. At the end of each calendar year within such term, the term
shall automatically be extended for an additional one-year period,
unless the Company gives prior written notice of non-renewal no
later than November 30, 2008 or November 30th of each
successive year thereafter; provided, however, that the term of
this agreement shall in no event extend beyond November 16,
2017.
3. At-Will Employment .
Although this agreement has a term as set forth above, your
employment with the Company may be terminated by you or by the
Company at any time during or after the term of the agreement, for
any reason, with or without notice, subject to the payment of any
benefits which may be owed you hereunder based on the circumstances
of such termination. The at-will nature of your employment
relationship with the Company, as described immediately above, may
only be changed by express written approval of a disinterested
majority of the Board.
4. Salary and Bonus
.
(a) Your base salary will be at a
rate of $455,000 per year, effective January 1, 2008, to be
paid according to the Company’s standard payroll practices
for salaried employees. Your base salary will be reviewed
periodically as set forth below, and your annual rate of base
salary as in effect from time to time during the term of this
agreement will be referred to as “Base
Salary.”
(b) You will also be entitled to an
annual bonus (“Annual Bonus”) for each fiscal year of
the Company based on achievement of reasonable Company and
individual performance goals established for each such fiscal year
by the Executive Compensation Committee of the Board after
consultation with you. Effective January 1, 2008, your
targeted Annual Bonus will be twenty-five percent (25%) of
your Base Salary, but your actual Annual Bonus for any fiscal year
within the term of this agreement may range from 0 to 150% of such
target, based on the Executive Compensation Committee’s
determination of the level of achievement of the applicable
performance goals for the year. Your target Annual Bonus will be
reviewed periodically as set forth below. The actual Annual Bonus
you earn for each fiscal year will be paid as soon as practicable
after the end of that fiscal year, recognizing a reasonable time to
calculate performance for the measurement period, but in no event
later than March 15 of the fiscal year immediately succeeding
the fiscal year for which that Annual Bonus is earned. In no event
shall the Annual Bonus you earn for any fiscal year be paid to you
at any time during that year.
(c) Payment of your Base Salary and
Annual Bonus will be subject to all applicable withholdings and
deductions, and you will only receive the amount remaining after
such withholdings and deductions have been made.
5. Annual Review .
(a) The Executive Compensation
Committee of the Board will review annually your performance. Your
performance will be evaluated based upon mutually approved written
criteria to be developed jointly by the Executive Compensation
Committee and you. In connection with that review, the Executive
Compensation Committee shall also review and consider appropriate
adjustments to your Base Salary, target Annual Bonus, long-term
incentives and other compensation in order to further the objective
of maintaining your total compensation at a competitive level and
may, as part of that process, retain the services of a professional
compensation consultant. However, neither your Base Salary nor the
sum of your Base Salary
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and target Annual Bonus will
decrease from any previous level in effect under this agreement,
except for a reduction of not more than fifteen percent
(15%) effected as part of, and consistent with, any
across-the-board reduction in the salaries or target annual bonuses
of senior officers of the Company to which you and the Executive
Compensation Committee have mutually agreed and which occurs prior
to a change in control of the Company.
(b) Unless you expressly agree
otherwise, you will be eligible to participate in the
Company’s current long-term incentive programs, including the
Company’s Long-Term Incentive Plan, as amended from time to
time (the “Long-Term Incentive Plan), and any other cash or
equity incentive programs hereafter established for senior officers
of the Company (subject to such modifications to such programs as
the Executive Compensation Committee shall determine to be
necessary and appropriate to preserve the income tax deductibility
of the compensation paid under those programs) at participation
levels determined each fiscal year in connection with your annual
performance review.
6. Initial Stock Options and
DERs .
(a) On April 29, 2003 the
Company granted you an option to purchase Seven Thousand Six
Hundred and Four (7,604) shares of the Company’s common
stock (the “Initial Option”) under and subject to the
terms of the Long-Term Incentive Plan. The Initial Option is a
non-statutory stock option with a maximum term of ten
(10) years, subject to earlier termination as set forth below,
and is evidenced by a formal stock option agreement between you and
the Company. The exercise price of the Initial Option was $84.00
per share, the fair market value per share of the Company’s
common stock (the “Common Stock”) on the grant date, as
determined under the Long-Term Incentive Plan. The number of shares
of Common Stock subject to the Initial Option and the exercise
price payable per share as set forth above have each been
subsequently adjusted to reflect stock splits of the outstanding
Common Stock that have been effected to date and will continue to
be adjusted, from time to time, to reflect subsequent splits of the
outstanding Common Stock and other similar changes to the Common
Stock effected without the Company’s receipt of
consideration.
(b) The Initial Option has vested
and become exercisable with respect to all of the shares of Common
Stock for which it was granted. Should your employment terminate by
reason of your death, disability or retirement (i.e., after age
fifty-five (55) and ten (10) years of service), your
Initial Option shall, to the extent outstanding at that time,
remain exercisable until the earlier of (i) the expiration of
the four (4)-year period measured from your termination date or
(ii) the remainder of the initial ten (10) year term.
Otherwise, the Initial Option shall expire ninety (90) days
after your termination date (or immediately upon your termination
if for Good Cause), but in no event will the Initial Option remain
exercisable after the expiration of the ten (10)-year
term.
(c) You were credited with dividend
equivalent rights (“DERs”), awarded under the Long-Term
Incentive Plan, with respect to the shares of Common Stock subject
to the Initial Option. Those DERs terminated upon the earlier of
the quarterly dividend record date sixteen (16) quarters after
the grant date of the Initial Option or the date that
the
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Initial Option was exercised for
such shares. The shares of Common stock attributable to your DERs,
together with any unconverted cash amounts, were distributed to you
in the 2007 calendar year, and you no longer have any further DERs
with respect to your Initial Option.
(d) You have also received other
stock option grants and stock-based awards during your period of
employment with the Company, and those grants and awards, to the
extent outstanding on the date this amended and restated agreement
is executed, will continue in effect in accordance with the
agreements evidencing those grants and awards; provided, however,
that the June 2003 SERP Deferred Restricted Stock Award Agreement
evidencing the establishment of the SERP Deferred Stock Account
referred to in Section 7 below will be replaced by the terms
and provisions set forth in Section 7(c) below and shall cease
to be outstanding, or to have any force or effect, upon the
execution of this amended and restated agreement.
In addition, you shall be eligible
for such other stock option, restricted stock unit and DER awards,
or other forms of equity or equity-like compensation, as the
Executive Compensation Committee may determine each year. The
Committee shall consider your personal performance, competitive
practice for comparable positions outside the Company, grants to
other senior officers of the Company, availability of shares in the
Long-Term Incentive Plan, and other relevant factors.
7. SERP .
(a) You shall continue to
participate in the Company’s Executive Supplemental
Retirement Plan (“SERP”). In consideration, in part, of
your agreement to the amendment made to the SERP on April 29,
2003 to eliminate the minimum benefit equal to 55% of your Final
Average Compensation, you were granted on April 29, 2003 the
right to receive a number of shares of Common Stock, awarded under
the restricted stock unit provisions of the Long-Term Incentive
Plan, determined as follows: a SERP Deferred Stock Account was
established for you and credited on April, 29, 2003 with thirteen
thousand eight hundred ninety (13,890) units, with each unit
representing the right to receive one share of Common Stock. In
addition, each time a cash dividend is paid on the outstanding
Common Stock, you will be credited with a dollar amount equal to
the dividend paid per share multiplied by the number of units
credited, as of the record date for that dividend, to your SERP
Deferred Stock Account (including any additional units resulting
from the annual crediting mechanism set forth in the next
sentence). As of the first business day in January each year, your
SERP Deferred Stock Account will be credited with that number of
additional units determined by dividing (i) the cash dividend
equivalent amounts so credited to you in the previous year by
(ii) the average of the fair market value per share of the
Common Stock on each of the dates in the immediately preceding year
on which dividends were paid.
(b) The units credited to your SERP
Deferred Stock Account vested in thirty-six (36) monthly
installments on the first day of each month over the thirty-six
(36)-month period measured from January 1, 2003 and are now
fully vested. Any units credited to your SERP Deferred Stock
Account on or after January 1, 2006 as a result of the
dividend rights described above will also be fully
vested.
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(c) The units credited to your SERP
Deferred Stock Account in accordance with Paragraph 7(a) were
subsequently adjusted to reflect stock splits of the outstanding
Common Stock effected to date and will continue to be adjusted,
from time to time, to reflect subsequent splits of the outstanding
Common Stock and other similar changes to the Common Stock effected
without the Company’s receipt of consideration. Such units
shall be payable in shares of Common Stock. For those units which
were vested as of December 31, 2004, the distribution will
commence on the later of your termination of employment or
attainment of age 55. For those units which vest after
December 31, 2004, the distribution will be commence on the
later of (i) the date of your Separation from
Service or (ii) your attainment of age 55. You may elect to
receive the shares of Common Stock attributable to your units
either in a single lump sum or in up to ten (10) annual
installments. For those units which were vested as of
December 31, 2004, you may make your election no later than
one (1) year prior to the later of your termination of
employment or attainment
