AMERICAN STATES WATER COMPANY

2020 SHORT-TERM INCENTIVE PROGRAM

1.
Purpose of 2020 Short-Term Incentive Program

American States Water Company, a California corporation, (the “Corporation”) has
adopted the American States Water Company Performance Incentive Plan (the
“Plan”) to promote the success of the Corporation by (a) motivating executives
selected to participate in the Plan to maximize the performance of the
Corporation both from a financial perspective and in serving its customers and
(b) rewarding them with cash Objective Bonuses directly related to such
performance. The Corporation’s board of directors recognizes that the ability of
the Corporation and its subsidiaries to attract capital at a low cost is based
on its financial performance and that the Corporation’s customers benefit
through its ability to attract low cost capital. This 2020 Short-Term Incentive
Program (the “2020 STIP”) sets forth the names of the individuals selected to be
Participants who are eligible to earn Objective Bonuses under the Plan for the
2020 calendar year and the applicable Business Criteria, Additional Objective
Criteria, Performance Targets, and Payout Percentages for the 2020 calendar
year. The 2020 STIP also provides for Discretionary Bonuses, which when added to
the Objective Bonuses under the Plan, equal the Aggregate Bonuses payable under
the 2020 STIP for the 2020 calendar year.
2.
Term of 2020 STIP

The Performance Period covered by the 2020 STIP (the “Term”) began on January 1,
2020 and will end on December 31, 2020.
3.
Relationship to American States Water Company Performance Incentive Plan

The Objective Bonuses based on the Business Criteria payable under Awards
granted under the 2020 STIP are granted under the authority of the Plan and are
subject to all of the terms and conditions of the Plan, as it may be amended
from time to time, and any rules adopted by the Committee in accordance with the
terms of the Plan, as such rules are in effect from time to time. The
Discretionary Bonuses and the Objectives Bonuses based solely on the
satisfaction of the Additional Objective Criteria are granted under the general
authority of the Compensation Committee to determine the compensation payable to
Executives.
4.
Definitions

Capitalized terms used and not otherwise defined herein have the meanings set
forth in the Plan. In addition, the following phrases shall have the meanings
specified below:
“Additional Objective Criteria” means Direct Operating Margin - ASUS.
“Adjusted EPS - ASUS” means the EPS of ASUS for 2020 adjusted to remove 1) the
general office allocation to ASUS related to any transaction fees and/or gain or
loss on sale recognized in

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the financial statements in 2020 associated with a sale of any of the
Corporation’s business units or the acquisition of any new businesses, 2) the
general office allocation to ASUS related to new business development at
Regulated Utilities, and 3) the impact of the Coronavirus (COVID-19) on the EPS
of ASUS for 2020 as an extraordinary or non-recurring item determined in
accordance with generally accepted accounting principles or another objective
method of measurement.
“Adjusted EPS - AWR Consolidated” means the Corporation’s EPS for 2020 adjusted
to remove 1) any write-offs associated with the CPUC’s 2020 procurement audit of
GSWC arising out of the settlement of claims approved by the CPUC in December
2011 related to the capital projects contracting matter, 2) any transaction fees
and/or gain or loss on sale recognized in the financial statements in 2020
associated with a sale or restructuring of any of the Corporation’s business
units or the acquisition of any new businesses, 3) expenses associated with new
business development at Regulated Utilities, 4) the performance of the Rabbi
Trust assets to support retirement benefits, and 5) the impact of the
Coronavirus (COVID-19) on the EPS of AWR Consolidated for 2020 as an
extraordinary or nonrecurring item determined in accordance with generally
accepted accounting principles or another objective method of measurement.
“Adjusted EPS - Regulated Utilities” means the sum of the EPS of each of the
Regulated Utilities for 2020 adjusted to remove 1) any write-offs associated
with the CPUC’s 2020 procurement audit of GSWC arising out of the settlement of
claims approved by the CPUC in December 2011 related to the capital projects
contracting matter, 2) any transaction fees and/or gain or loss on sale
recognized in the financial statements in 2020 associated with a sale or
restructuring of any of the Corporation’s business units or the acquisition of
any new businesses, 3) expenses associated with new business development, 4) the
performance of the Rabbi Trust assets to support retirement benefits, and 5) the
impact of the Coronavirus (COVID-19) on the EPS of Regulated Utilities for 2020
as an extraordinary or nonrecurring item determined in accordance with generally
accepted accounting principles or another objective method of measurement.
“Adjusted EPS - Regulated Water Utilities” means the EPS of Regulated Water
Utilities for 2020 adjusted to remove 1) any write-offs associated with the
CPUC’s 2020 procurement audit of GSWC arising out of the settlement of claims
approved by the CPUC in December 2011 related to the capital projects
contracting matter, 2) any transaction fees and/or gain or loss on sale
recognized in the financial statements in 2020 associated with a sale or
restructuring of any of the Corporation’s business units or the acquisition of
any new businesses, 3) expenses associated with new business development, 4) the
performance of the Rabbi Trust assets to support retirement benefits, and 5) the
impact of the Coronavirus (COVID-19) on the EPS of Regulated Water Utilities for
2020 as an extraordinary or nonrecurring item determined in accordance with
generally accepted accounting principles or another objective method of
measurement.

“Aggregate Bonus” means the combination of a Participant’s Objective Bonus and
his or her Discretionary Bonus.
“ASUS” means American States Utility Services, Inc., a California corporation,
and wholly owned subsidiary of the Corporation, and its wholly owned
subsidiaries.

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“Award Agreement” means a written agreement setting forth the material terms and
conditions of the Award as determined by the Committee consistent with the
express limitations of the Plan and the 2020 STIP.
“Base Salary” means the Participant’s rate of annual base pay on the date the
Committee approves the Business Criteria, the Additional Objective Criteria and
the Performance Targets.
“BVES” means Bear Valley Electric Service, Inc., a California corporation and
wholly owned subsidiary of the Corporation.
“Board of Directors” means the Corporation’s board of directors.
“Budget” or “Budgeted” means, in the case of Adjusted EPS for the Corporation,
the Regulated Utilities, Regulated Water Utilities or ASUS, as the case may be,
the projected Adjusted EPS for 2020 as set forth in the Operating Budget and for
Expense Optimization – ASUS, Direct Construction Margin – ASUS and Direct
Operating Margin – ASUS, the amounts included for these metrics in the Operating
Budget.
“Business Criteria” means Adjusted EPS - AWR Consolidated, Adjusted EPS -
Regulated Utilities, Adjusted EPS - Regulated Water Utilities, Adjusted EPS -
ASUS, Customer Complaints - RWU, Direct Construction Margin - ASUS, Expense
Optimization - ASUS, SOX Deficiencies -RU, SOX Deficiencies - ASUS, Safety -
Recordable Work Incidents - ASUS, Safety - Recordable Work Incidents - RWU,
Supplier Diversity - RU and Supplier Diversity - RWU.
“Committee” means the Compensation Committee of the Board of Directors.
“CPUC” means the California Public Utilities Commission.
“Customer Complaints - RWU” means the number of water quality, pressure, and
leak complaints received from water customers by GSWC divided by the average
number of water customers served by GSWC during 2020.
“Direct Construction Margin – ASUS” means a percentage determined by dividing
total construction revenues less ASUS construction costs (reported as expenses
in the Corporation’s Form 10-K for 2020 filed with the Securities and Exchange
Commission) by total construction revenues. Construction revenues and
construction costs for this purpose shall exclude (i) the construction revenues
and construction costs of any new base, and (ii) the impact of the Coronavirus
(COVID-19) on the Direct Construction Margin as an extraordinary or nonrecurring
item determined in accordance with generally accepted accounting principles or
another objective method of measurement.
“Direct Operating Margin – ASUS” means a percentage determined by dividing total
operations and maintenance revenues less direct operations expense by total
operations and maintenance revenues as recorded in the Corporation’s Form 10-K.
Total operations and maintenance revenues for this purpose shall exclude
revenues of any new base awards received in 2020 and exclude revenues and
expenses in connection with managing additional assets if the asset

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transfers as Budgeted for these additional assets are not approved by the
government in 2020. Direct operations expense for this purpose shall include
other operation, administration and general, depreciation and amortization, and
property and other taxes as reflected in the Corporation’s Form 10-K, but shall
exclude (i) expenses of any new base awarded during 2020, (ii) expenses of ASUS
administration and centralized functions, (iii) general office expenses of GSWC
approved by the CPUC to be allocated to ASUS, (iv) property and other taxes
allocable to construction activities, (v) direct maintenance expenses, (vi)
pre-contract expenses associated with construction activities, and (vii) the
impact of the Coronavirus (COVID-19) on the Direct Operating Margin as an
extraordinary or nonrecurring item determined in accordance with generally
accepted accounting principles or another objective method of measurement.
“Discretionary Bonus” means a bonus payable to a Participant based on that
Participant’s Individual Performance Measures.
“EPS” means fully diluted earnings per share as reported in the Corporation’s
consolidated financial statements for 2020.
“Expense Optimization – ASUS” means the sum of other operations, and
administrative and general expenses of ASUS in 2020 (as reflected in the
Corporation’s 10-K) excluding (i) expenses of ASUS incurred in connection with
any new base awards during 2020, (ii) general office expenses of GSWC approved
by the CPUC to be allocated to ASUS, (iii) expenses incurred in connection with
ASUS’s new business development cost center, (iv) expenses included in the
Corporation’s Form 10-K for awards recorded under the Plan and the 2016 Stock
Incentive Plan, (v) expenses in connection with managing additional assets if
the asset transfers as Budgeted for these additional assets are not approved by
the government in 2020, and (vi) expenses related to the impact of the
Coronavirus (COVID-19) as an extraordinary or nonrecurring item determined in
accordance with generally accepted accounting principles or another objective
method of measurement.
“GSWC” means Golden State Water Company, a California corporation and wholly
owned subsidiary of the Corporation.
“Individual Performance Measures” means the criteria or goals utilized to
determine the amounts of each Participant’s Discretionary Bonus.
“Objective Bonus” means a bonus based on the degree of achievement of the
Performance Targets for the Business Criteria and the Additional Objective
Criteria.
“Operating Budget” means the Company’s operating budget for 2020 as presented to
the Board of Directors at its January 28, 2020 meeting as adjusted for the
impact of decisions of the CPUC and other adjustments required to be made under
Section 4.6 of the Plan.
“OSHA Violation” means an intentional or willful violation of the rules and
regulations of the Occupational Health and Safety Administration which results
in a serious injury, serious illness or death and arises out of a situation that
the employer knew or should have known could result in

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serious injury, serious illness or death, provided that the situation could have
reasonably been remedied by the employer.
“Payout Percentage” means the percentage of a Participant’s Target Aggregate
Bonus that is payable based on the degree of satisfaction of a Performance
Target or the Individual Performance Measures.
“Performance Measures” means the Business Criteria, the Additional Objective
Criteria and Individual Performance Measures.
“Performance Target” means a specific goal established by the Committee with
respect to the Business Criteria or the Additional Objective Criteria as set
forth in Section 6.
“Regulated Utilities (RU)” means GSWC, BVES and any other utility that becomes a
direct or indirect subsidiary of the Corporation, which is designated a
“regulated utility” by the Committee.
“Regulated Water Utilities (RWU)” means GSWC’s water operations and any other
water utility that becomes a direct or indirect subsidiary of the Corporation,
which is designated a “regulated water utility” by the Committee.
“Safety-Recordable Work Incidents – ASUS” means the number of work-related
injuries and illnesses as reported on the OSHA Form 300s for ASUS other than for
(i) new bases awarded in 2020, and (ii) work-related injuries and illnesses
related to the Coronavirus (COVID-19).
“Safety-Recordable Work Incidents - RWU” means the number of work-related
injuries and illnesses as reported on the OSHA Form 300 for GSWC’s water
operations other than work-related injuries and illnesses related to the
Coronavirus (COVID-19).
“SOX” means the Sarbanes-Oxley Act of 2002.
“SOX Deficiencies - ASUS” means the number of “control deficiencies” (each a
“CD”), “significant deficiencies” (each an “SD”) and “material weaknesses” (each
a “MW”) reported for ASUS in the independent auditor’s report for 2020 pursuant
to Section 404 of SOX.
“SOX Deficiencies - RU” means the number of CDs, SDs and MWs reported for the
Regulated Utilities in the independent auditor’s report for 2020 pursuant to
Section 404 of SOX.
“Supplier Diversity - RU” means the percentage reported by the Regulated
Utilities to the CPUC annually by March 1 in its General Order 156 Compliance
Filing.  The percentage is calculated by taking the Regulated Utilities’ total
procurement dollars for the reporting period with CPUC qualified women-owned,
minority-owned, disabled veteran-owned, and lesbian, gay, bisexual and
transgender-owned business enterprises divided by the Regulated Utilities’ total
procurement dollars (net of exclusions allowed under the General Order 156
Compliance Filing for the reporting period, such as payments for purchased
water, purchased power, pump taxes, income taxes, franchise fees, and postage). 

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“Supplier Diversity - RWU” means the percentage reported by the Regulated Water
Utilities to the CPUC annually by March 1 in its General Order 156 Compliance
Filing.  The percentage is calculated by taking the Regulated Water Utilities’
total procurement dollars for the reporting period with CPUC qualified
women-owned, minority-owned, disabled veteran-owned, and lesbian, gay, bisexual
and transgender-owned business enterprises divided by the Regulated Water
Utilities’ total procurement dollars (net of exclusions allowed under the
General Order 156 Compliance Filing for the reporting period, such as payments
for purchased water, purchased power for pumping, pump taxes, income taxes,
franchise fees, and postage). 
“Target Aggregate Bonus” means the amount of bonus that would be payable if each
of the Performance Targets were met at the targeted level and the Participant’s
Individual Performance Measures were met at the targeted level.

5.
Participation and Individual Awards

The individuals who have been selected as Participants in the 2020 STIP are set
forth below together with the amount of their Target Aggregate Bonuses as a
percentage of Base Salary:
 
Participant
Target
Aggregate Bonus
GSWC Officers
Administrative and General
Robert J. Sprowls
90.00%
Eva G. Tang
33.50%
Gladys M. Farrow
27.60%
Operations
Denise L. Kruger
33.50%
Paul J. Rowley
27.60%
Sunil K. Pillai
25.30%
Bryan K. Switzer (Keith)
27.60%
ASUS Officers
Vice President - Operations
Granville R. Hodges, Jr. (Rusty)*
27.60%
Acting Senior Vice President
40.00%
 
Gabriel G. Willis
27.60%

*Target Aggregate Bonus Percentage for the 2020 STIP will be pro-rated based on
time spent during 2020 in each position.
For purposes of this 2020 STIP, the GSWC officers will be divided into (1)
Administrative and General Officers and (2) Operations Officers.
The Corporation will enter into an Award Agreement with each Participant that
(a) describes his or her Individual Performance Measures and sets forth his or
her Target Aggregate Bonus, (b) sets forth his or her threshold, target and
maximum Performance Targets and (c) incorporates the terms and conditions of the
Plan and this 2020 STIP by reference. The Target Aggregate Bonus amount set
forth above shall represent the aggregate amount of up to three separate
bonuses: an Objective

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Bonus under the Plan, an Objective Bonus based solely on satisfaction of the
Additional Objective Criteria and a Discretionary Bonus.
6.
Performance Targets for Objective Bonuses

The threshold, target and maximum Performance Targets for the 2020 STIP are set
forth in Exhibit A to this 2020 STIP.
7.
Determination of Participants’ Aggregate Bonuses

The Aggregate Bonus payable to each Participant shall be determined on the basis
of the extent to which the Performance Targets for the Business Criteria, the
Additional Objective Criteria and that Participant’s Individual Performance
Measures are achieved. The amount of Aggregate Bonus payable is equal to the
amount of the Target Aggregate Bonus multiplied by the sum of the Payout
Percentages for each of the Performance Measures as determined pursuant to the
tables in (a) Section B of Exhibit A for Participants that are Administrative
and General Officers employed by GSWC, (b) Section C for Participants that are
Operations Officers employed by GSWC and (c) Section D for Participants employed
by ASUS.
As soon as practicable following the end of the Term of the 2020 STIP and the
completion of the independent auditor’s report for 2020, the Committee shall
determine the extent to which the Performance Targets for the Business Criteria
and the Additional Objective Criteria are achieved and the extent to which the
Individual Performance Measures are achieved, and determine the Payout
Percentage for each of the Performance Measures. In order for a Participant to
receive any payment with respect to the Participant’s Discretionary Bonus, the
Participant must meet the standards established for the Participant’s position,
which standards shall be one of the components of the Participant’s Individual
Performance Measures. The determination of whether the standards established for
the Participant’s position are achieved shall be made by the Committee, which
(other than for the Company’s President and Chief Executive Officer)
determination shall be based on the recommendations of the President and Chief
Executive Officer or another direct supervisor of the Participant.
For levels of achievement between threshold and maximum, the Committee shall
determine the Payout Percentage by interpolation. Subject to Section 8 below,
the Aggregate Bonus for each Participant shall be the sum of the Payout
Percentages determined with respect to each Performance Measure multiplied by
the amount of Participant’s Target Aggregate Bonus.
8.
Payment of Accounts

At the time the Committee makes the determinations described in Section 7, it
shall certify, in accordance with Section 4.8 of the Plan, the amounts of the
Objective Bonuses payable to Participants. The Committee shall, at the same
time, determine the amount of the Discretionary Bonus payable to Participants.
Payment of such bonuses (the Aggregate Bonuses) shall be made as soon as
practicable following the Committee’s determination and certification, but in no
event later than December 31, 2021.

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Notwithstanding the foregoing, any Objective Bonus otherwise payable to any
Participant under this 2020 STIP shall be subject to the adjustments,
limitations (including the dollar limitation under Section 4.3 of the Plan), the
Committee’s discretionary authority to make downward adjustments and other terms
and conditions set forth in the Plan. Any Discretionary Bonus otherwise payable
under this 2020 STIP shall be subject to any adjustments, limitations, upward or
downward adjustments in amounts and any other terms or conditions that the
Committee may impose in its sole discretion.
9.
Effect of Termination of Employment

Except as otherwise provided in an employment agreement, memorandum of
understanding, other contract between a Participant and the Corporation or one
of its Subsidiaries, or by the Committee in its sole discretion, the bonuses
payable under a Participant’s Award will be forfeited, and the Participant will
not be entitled to any bonus payments with respect to such Award if the
Participant ceases to be employed by the Corporation or one of its Subsidiaries
for any reason prior to the date the bonus payments under the 2020 STIP are paid
to Participants.
10.
Recoupment of Bonuses

Any payment of an Objective Bonus, Discretionary Bonus or Aggregate Bonus under
this 2020 STIP is subject to recoupment pursuant to the Corporation’s Policy
Regarding the Recoupment of Certain Performance-Based Compensation Payments as
in effect from time to time, or as otherwise may be required by law and a
Participant shall promptly make any reimbursement requested by the Board of
Directors or the Committee pursuant to such policy with respect to any such
bonuses. Further, each Participant shall agree, by accepting an Award under the
2020 STIP and executing an Award Agreement, that the Corporation and/or any of
its affiliates may deduct from any amounts it may owe the Participant from time
to time (such as wages or other compensation) any and all amounts the
Participant is required to reimburse the Corporation pursuant to such policy
with respect to the Award.

11.
Section 409A of the Code

This 2020 STIP shall be interpreted in a manner such that the payment of an
Objective Bonus, Discretionary Bonus or Aggregate Bonus contemplated hereby will
either (i) comply with Section 409A or (ii) be exempt from the requirements of
Section 409A as a “short-term deferral” under Section 409A, including Treasury
Regulations Section 1.409A-1(b)(4). It is intended that the terms of this 2020
STIP will not result in the imposition of any tax liability pursuant to Section
409A, and shall be construed and interpreted consistent with that intent.
    

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EXHIBIT A

2020 STIP
PERFORMANCE TARGETS AND PAYOUT PERCENTAGES

A.    PERFORMANCE TARGETS FOR OBJECTIVE BONUSES

Performance
Measure
Performance Targets
Threshold
Target
Maximum
Adjusted EPS - AWR Consolidated
80% Budget
100% Budget
120% Budget
Adjusted EPS - Regulated Utilities (RU)
80% Budget
100% Budget
120% Budget
Adjusted EPS - Regulated Water Utilities (RWU)
80% Budget
100% Budget
120% Budget
Adjusted EPS - ASUS
80% Budget
100% Budget
130% Budget
Customer Complaints - RWU
≤ 0.12%
≤ 0.08%
≤ 0.04%
Supplier Diversity - RU
> 15.5%
> 21.5%
> 27.5%
Supplier Diversity - RWU
> 15.5%
> 21.5% 
> 27.5% 
Safety - Recordable Work Incidents - RWU
21
15
11
SOX Deficiencies - RU
No MW, No SD & No more than 4 CDs
No MW, No SD & No more than 2 CDs
No MW, No SD & No CD
SOX Deficiencies - ASUS
No MW, No SD & No more than 1 CD
No MW, No SD & No CD
N/A
Expense Optimization - ASUS
< 100% of Budget
< 98% of Budget
< 96% of Budget
Direct Construction Margin - ASUS
> Budget less 100 basis points
> Budget
> Budget plus 100 basis points
Direct Operating Margin - ASUS
> Budget less 100 basis points
> Budget
> Budget plus 100 basis points
Safety - Recordable Work Incidents - ASUS
15
12
9 and No OSHA Violations

A-1

    

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B.    PAYOUT PERCENTAGES FOR PERFORMANCE MEASURES - GSWC ADMINISTRATIVE AND
GENERAL OFFICERS
Performance
Measure
Payout Percentage
Threshold
Target
Maximum
Adjusted EPS - AWR Consolidated
10.0%
20.0%
35.0%
Adjusted EPS - Regulated Utilities (RU)
11.5%
20.0%
29.0%
Adjusted EPS - ASUS
5.0%
10.0%
20.0%
Customer Complaints - Regulated Water Utilities (RWU)
3.0%
10.0%
15.0%
Supplier Diversity - RU
4.0%
10.0%
13.5%
SOX Deficiencies - RU
2.0%
5.0%
7.5%
SOX Deficiencies - ASUS
2.0%
5.0%
N/A
Objective Bonus Total
37.5%
80.0%
120.0%
Individual Performance Measure 
(Discretionary Bonus)
12.5%
20.0%
35.0%
Aggregate Bonus
50.0%
100.0%
155.0%

A-2

    

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C.    PAYOUT PERCENTAGES FOR PERFORMANCE MEASURES - GSWC OPERATIONS OFFICERS
Performance
Measure
Payout Percentage
Threshold
Target
Maximum
Adjusted EPS - Regulated Water Utilities (RWU)
20.0%
40.0%
60.0%
Customer Complaints - RWU
4.5%
10.0%
15.0%
Supplier Diversity - RWU
4.5%
10.0%
15.0%
Safety - Recordable Work Incidents - RWU
4.5%
10.0%
15.0%
SOX Deficiencies - RU
4.0%
10.0%
10.0%
Objective Bonus Total
37.5%
80.0%
115.0%
Individual Performance Measure
(Discretionary Bonus)
12.5%
20.0%
35.0%
Aggregate Bonus
50.0%
100.0%
150.0%

A-3

    

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D.    PAYOUT PERCENTAGES FOR PERFORMANCE MEASURES - ASUS OFFICERS
Performance
Measure
Payout Percentage
Threshold
Target
Maximum
Adjusted EPS - ASUS
15.0%
40.0%
70.0%
Direct Operating Margin - ASUS
7.0%
12.5%
24.0%
Direct Construction Margin - ASUS
7.0%
12.5%
24.0%
Expense Optimization - ASUS
4.0%
6.0%
12.0%
Safety – Recordable Work Incidents -ASUS
2.5%
4.0%
5.0%
SOX Deficiencies - ASUS
2.0%
5.0%
N/A
Objective Bonus Total
37.5%
80.0%
135.0%
Individual Performance Measure
(Discretionary Bonus)
12.5%
20.0%
35.0%
Aggregate Bonus
50.0%
100.0%
170.0%

A-4