Exhibit 10.1
    

    

    

    

    

    
      AMERICAN STATES WATER
      COMPANY
    

    
      2010 SHORT-TERM INCENTIVE
      PROGRAM 
    

    

    

    
      1.        Purpose
      of 2010 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 2010 Short-Term Incentive Program (the “2010
      STIP”) sets forth
      the names of the individuals selected to be Participants who are
      eligible to earn Objective Bonuses under the Plan for the 2010 calendar
      year and the applicable Business Criteria, Performance Targets, and
      Payout Percentages for the 2010 calendar year.  The 2010 STIP also
      provides for Discretionary Bonuses, which when added to the Objective
      Bonuses under the Plan, equal the Aggregate Bonuses payable under the
      2010 STIP for the 2010 calendar year.
    

    
      2.       
      Term of 2010 STIP
    

    
      The Performance Period
      covered by the 2010 STIP (the “Term”)
      began on January 1, 2010 and will end on December 31, 2010.
    

    
      3.       
      Relationship to
      American States Water Company Performance Incentive Plan
    

    
      The Objective Bonuses payable
      under Awards granted under the 2010 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 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:
    

    
      “Adjusted
      EPS-ASUS” means
      the EPS of ASUS for 2010 adjusted to remove the general office
      allocation to ASUS related to (a) settlement charges and outside
      expenses associated with the CPUC subpoena regarding the capital
      projects contracting matter and (b) any transaction fees and/or gain or
      loss on sale recognized in the financial statements in 2010 associated
      with a sale of any of the Corporation’s business units.
    

    
      
        

        

      

      
        
          1
        

        
          


        

      

      
        

        

      

    

    
      “Adjusted
      EPS-AWR Consolidated”
      means the Corporation’s EPS for 2010 adjusted to remove (a) settlement
      charges and outside expenses associated with the CPUC subpoena regarding
      the capital projects contracting matter and (b) any transaction fees
      and/or gain or loss on sale recognized in the financial statements in
      2010 associated with a sale of any of the Corporation’s business units.
    

    
      “Adjusted
      EPS-Regulated Utilities”
      means the sum of the EPS of each of the Regulated Utilities for 2010
      adjusted to remove (a) the portion of the settlement charges and outside
      expenses associated with the CPUC subpoena regarding the capital
      projects contracting matter and (b) any transaction fees and/or gain or
      loss on sale recognized in the financial statements in 2010 associated
      with a sale of any of the Corporation’s business units.
    

    
      “Aggregate
      Bonus” means the
      combination of a Participant’s Objective Bonus and his or her
      Discretionary Bonus.  
    

    
      “Andrews
      Price Redetermination”
      means the execution, during calendar year 2010, of an agreement with the
      U.S. government that provides for an interim or permanent increase in
      the monthly fees payable to Terrapin Utility Services, Inc. of at least
      16% for operations and maintenance with respect to its operations at
      Andrews AFB.  
    

    
      “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 2010 STIP.  
    

    
      “Base
      Salary” means the
      Participant’s rate of annual base pay on the date the Committee approves
      the Business Criteria and Performance Targets.  
    

    
      “Board
      of Directors”
      means the Corporation’s board of directors.
    

    
      “Budget”
      or “Budgeted”
      means (a) in the case of Adjusted EPS for the Corporation, the Regulated
      Utilities or ASUS, as the case may be, the projected Adjusted EPS for
      2010 as set forth in the Operating Budget, and (b) in the case of
      Capital Expenditures, the projected capital expenditures as set forth in
      the Capital Budget.
    

    
      “Business
      Criteria” means
      Adjusted EPS-AWR Consolidated, Adjusted EPS- Regulated Utilities,
      Adjusted EPS-ASUS, Relative Stock Price, Customer Complaints to DPH,
      Customer Complaint Standards, Capital Expenditures, SOX
      Deficiencies-Regulated Utilities, SOX Deficiencies-ASUS, Andrews Price
      Redetermination, Fort Bragg ICU Contract Modification, Fort Jackson
      Equitable Adjustment, Customer Satisfaction and Virginia Bases Price
      Redetermination.
    

    
      “CAB”
      means the CPUC Consumer Affairs Branch.
    

    
      Capital Budget
      means the Company’s capital budget for 2010 as approved by the Audit and
      Finance Committee of the Board of Directors at its meeting on
      October 26, 2009.  The Capital Budget excludes those items footnoted as
      “Project is being litigated with DRA.”
    

    
      
        

        

      

      
        
          2
        

        
          


        

      

      
        

        

      

    

    
      “Capital
      Expenditures”
      means the dollar amount of capital expenditures for 2010 for the
      Regulated Utilities.
    

    
      “Compensation
      Committee” means
      the Compensation Committee of the Board of Directors.  
    

    
      “CPUC”
      means the California Public Utilities Commission.
    

    
      “Customer
      Complaint Standards”
      means the number of complaints on all matters on Golden State Water
      Company received by CAB in 2010 divided by the average number of
      customers served by Golden State Water Company during 2010.
    

    
      “Customer
      Complaints to DPH”
      means the number of water quality, pressure and service complaints
      received from customers by Golden State Water Company (GSWC) during 2010
      that are reported to the California Department of Public Health by GSWC.
    

    
      “Customer
      Satisfaction”
      means meeting the small business utilization targets in four of the six
      categories for the commercial subcontracting plan.  The six categories
      include 1) Service Disabled Veteran-owned, Small Business, 2)
      Veteran-owned Small Business, 3) Historically Underutilized Business
      Zones, 4) Women-owned small business, 5) Small Disadvantaged Business
      and 6) Small Business.
    

    
      “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 2010.
    

    
       “Fort
      Bragg ICU Contract Modification”
      means the execution, during calendar year 2010, of a modification of the
      contract at Fort Bragg to better the prospects of earnings as a result
      of changes to the schedule and work plans for the original Initial
      Capital Upgrade projects.
    

    
      “Fort
      Jackson Equitable Adjustment”
      means the execution, during calendar year 2010, of an agreement with the
      U.S. government that provides funding of at least $650,000 for the
      Longstreet sewer system overflow at Fort Jackson that occurred in 2008.
    

    
      “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.  
    

    
      “Operating
      Budget” means the
      Company’s operating budget for 2010 as presented to the Board of
      Directors in October 2009 and February 2010 and finalized through an
      email by Robert Sprowls to the Board of Directors on March 17, 2010.
    

    
      
        

        

      

      
        
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      “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 and Individual Performance Measures.  
    

    
      “Performance
      Target” means a
      specific goal established by the Committee with respect to the Business
      Criteria as set forth in Section 6.
    

    
      “Relative
      Stock Price” means
      the Corporation’s total shareholder return as compared to the total
      shareholder return of each of the following 12 companies for 2010:  UIL
      Holdings, South Jersey Industries, Aqua America, MGE Energy, Empire
      District Electric, ITC Holdings, California Water Service, Central
      Vermont Public Service, Unitil, Chesapeake Utilities, Southwest Water
      and SJW Corp.  For this purpose, total shareholder return for the
      Corporation and each of the other 12 companies shall be calculated using
      the Securities and Exchange Commission guidelines for reporting
      financial performance.  If the stock of any of the 12 companies is no
      longer traded or is suspended from trading as of December 31, 2010, that
      company shall not be included in the calculation of Relative Stock
      Price, but the exclusion of such company shall not affect the
      Performance Targets for Relative Stock Price set forth in Section A of
      Exhibit A.
    

    
      “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 2010 pursuant
      to Section 404 of SOX.
    

    
      “SOX
      Deficiencies-Regulated Utilities”
      means the number of CDs, SDs and MWs reported for the Regulated
      Utilities in the independent auditor’s report for 2010 pursuant to
      Section 404 of SOX.
    

    
      “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.
    

    
      “Virginia
      Bases Price Redetermination”
      means the execution, during calendar year 2010, of an agreement with the
      U.S. government that provides for a permanent increase in the monthly
      fees payable to the Company of at least 16% for operations and
      maintenance with respect to its operations under Old Dominion Utility
      Services (Forts Lee, Story, Eustis and Monroe).  
    

    
      5.        Participation
      and Individual Awards
    

    
      The individuals who have been
      selected as Participants in the 2010 STIP are set forth below together
      with the amount of their Target Aggregate Bonuses as a percentage of
      Base Salary:
    

    
      
        

        

      

      
        
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          Participant
        	
          Target
Aggregate Bonus
        
	
           
        	
          GSWC Officers
        	
           
        
	
          Administrative and General
        	
          Robert J. Sprowls
        	
          30%
        
	
          Eva G. Tang
        	
          20%
        
	
          Gladys M. Farrow
        	
          15%
        
	
          Diane D. Rentfrow
        	
          15%
        
	
          Bryan K. Switzer (Keith)
        	
          15%
        
	
          Operations
        	
          Denise L. Kruger
        	
          20%
        
	
          Patrick R. Scanlon
        	
          15%
        
	
          William C. Gedney
        	
          15%
        
	
          Shengder D. Chang (David)
        	
          15%
        
	
          Roland S. Tanner
        	
          15%
        
	
           
        	
          ASUS Officers
        	
           
        
	
           
        	
          McClellan Harris III (Bud)
        	
          20%
        
	
           
        	
          Granville R. Hodges, Jr. (Rusty)
        	
          15%
        
	
           
        	
          James B. Gallagher
        	
          15%
        
	
           
        	
          Gregory S. Thomas
        	
          15%
        


    

    
      For purposes of this 2010 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 2010 STIP by
      reference.  The Target Aggregate Bonus amount set forth in each
      Participant’s Award Agreement shall represent the aggregate amount of
      two separate bonuses:  an Objective Bonus (under the Plan) and a
      Discretionary Bonus.  
    

    
      6.        Performance
      Targets for Objective Bonuses
    

    
      The threshold, target and maximum Performance Targets for the 2010 STIP
      are set forth in Exhibit A to this 2010 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 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.
    

    
      
        

        

      

      
        
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      As soon as practicable following the end of the Term of the 2010 STIP
      and the completion of the independent auditor’s report for 2010, the
      Committee shall determine the extent to which the Performance Targets
      for the Business 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 other 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,
      2011.
    

    
      Notwithstanding the foregoing, any Objective Bonus otherwise payable to
      any Participant under this 2010 STIP shall be subject to the
      adjustments, limitations (including the dollar limitation under
      Section 4.3 of the Plan), 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 2010 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 bonuses payments under the 2010 STIP are paid to Participants.
    

    
      
        

        

      

      
        
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      10.       Recoupment of Bonuses
    

    
                Any payment of an Objective Bonus, Discretionary Bonus or
      Aggregate Bonus under this 2010 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,
      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 2010 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.
    

    
      

      

      


    

    
      
        

        

      

      
        
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      EXHIBIT A
    

    

    

    
      2010 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
        	
          80% Budget
        	
          100% Budget
        	
          120% Budget
        
	
          Adjusted EPS - ASUS
        	
          80% Budget
        	
          100% Budget
        	
          120% Budget
        
	
          Relative Stock Price
        	
          Equal to or greater than 3 companies
        	
          Equal to or greater than 6 companies
        	
          Equal to or greater than 9 companies
        
	
          Customer Complaints to DPH
        	
          735 or fewer
        	
          677 or fewer
        	
          643 or fewer
        
	
          Customer Complaint Standards
        	
          Rate of Complaints to the CAB ≤ 0.1%;
        	
          Rate of Complaints to the CAB ≤ 0.07%;
        	
          Rate of Complaints to the CAB ≤ 0.05%;
        
	
          Capital Expenditures
        	
          80% Budget
        	
          100% Budget
        	
          120% Budget
        
	
          SOX -- RU
        	
          No MW &

          
            1 SD
          

        	
          No MW &

          
            No SD
          

        	
          No MW,

          
            No SD &
          

          
            No more than
          

          
            11 CDs
          

        
	
          SOX -- ASUS
        	
          No MW &

          
            1 SD
          

        	
          No MW &

          
            No SD
          

        	
          No MW,

          
            No SD &
          

          
            No more than
          

          
            6 CDs
          

        
	
          Andrews Price Redetermination
        	
          N/A
        	
          ≥ 16% increase

          
            in monthly fees
          

        	
          N/A
        
	
          Fort Bragg ICU Contract Modification
        	
          N/A
        	
          Completed
        	
          N/A
        
	
          Fort Jackson Equitable Adjustment
        	
          N/A
        	
          Funding of at least $650,000
        	
          N/A
        
	
          Virginia Bases Price Redetermination
        	
          N/A
        	
          ≥ 16% increase

          
            in monthly fees
          

        	
          N/A
        
	
          Customer Satisfaction
        	
          N/A
        	
          At least 4 categories
        	
          N/A
        


    

    

    

    
      
        

        

      

      
        
          A-1
        

        
          


        

      

      
        

        

      

    

    

    

    
      B.        PAYOUT PERCENTAGES FOR PERFORMANCE MEASURES - GSWC
      ADMINISTRATIVE AND GENERAL OFFICERS
    

    
    	
          Performance 
Measure
        	
          Payout Percentage
        
	
          Threshold
        	
          Target
        	
          Maximum
        
	
          Adjusted EPS - AWR Consolidated
        	
          10%
        	
          20%
        	
          30%
        
	
          Relative Stock Price
        	
          5%
        	
          15%
        	
          20%
        
	
          Adjusted EPS - RU
        	
          7.5%
        	
          15%
        	
          22.5%
        
	
          Customer Complaints to DPH
        	
          1.25%
        	
          2.5%
        	
          3.75%
        
	
          Customer Complaint Standards
        	
          1.25%
        	
          2.5%
        	
          3.75%
        
	
          Capital Expenditures
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          SOX - RU
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          Adjusted EPS-ASUS
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          SOX - ASUS
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          Objective Bonus Total
        	
          35%
        	
          75%
        	
          110%
        
	
          Individual Performance Measure
(Discretionary Bonus)
        	
          15%
        	
          25%
        	
          40%
        
	
          Aggregate Bonus
        	
          50%
        	
          100%
        	
          150%
        


    

    
      
        

        

      

      
        
          A-2
        

        
          


        

      

      
        

        

      

    

    

    

    
      C.        PAYOUT PERCENTAGES FOR PERFORMANCE MEASURES - GSWC
      OPERATIONS OFFICERS
    

    
    	
          Performance 
Measure
        	
          Payout Percentage
        
	
          Threshold
        	
          Target
        	
          Maximum
        
	
          Adjusted EPS - AWR Consolidated
        	
          10%
        	
          20%
        	
          30%
        
	
          Relative Stock Price
        	
          5%
        	
          10%
        	
          15%
        
	
          Adjusted EPS - RU
        	
          10%
        	
          20%
        	
          30%
        
	
          Customer Complaints to DPH
        	
          1.25%
        	
          2.5%
        	
          3.75%
        
	
          Customer Complaint Standards
        	
          1.25%
        	
          2.5%
        	
          3.75%
        
	
          Capital Expenditures
        	
          2.5%
        	
          10%
        	
          12.5%
        
	
          SOX - RU
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          Adjusted EPS-ASUS
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          Objective Bonus Total
        	
          35%
        	
          75%
        	
          110%
        
	
          Individual Performance Measure
(Discretionary Bonus)
        	
          15%
        	
          25%
        	
          40%
        
	
          Aggregate Bonus
        	
          50%
        	
          100%
        	
          150%
        


    

    

    

    

    

    
      
        

        

      

      
        
          A-3
        

        
          


        

      

      
        

        

      

    

    

    

    
      D.        PAYOUT PERCENTAGES FOR PERFORMANCE MEASURES - ASUS
    

    
    	
          Performance 
Measure
        	
          Payout Percentage
        
	
          Threshold
        	
          Target
        	
          Maximum
        
	
          Adjusted EPS - AWR Consolidated
        	
          10%
        	
          20%
        	
          30%
        
	
          Relative Stock Price
        	
          5%
        	
          10%
        	
          15%
        
	
          Adjusted EPS - RU
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          Adjusted EPS - ASUS
        	
          15%
        	
          20%
        	
          35%
        
	
          Andrews Price Redetermination
        	
          N/A
        	
          3%
        	
          3%
        
	
          Fort Bragg ICU Contract Modification
        	
          N/A
        	
          4%
        	
          4%
        
	
          Fort Jackson Equitable Adjustment
        	
          N/A
        	
          3.5%
        	
          3.5%
        
	
          Virginia Bases Price Redetermination
        	
          N/A
        	
          3.5%
        	
          3.5%
        
	
          Customer Satisfaction
        	
          N/A
        	
          1%
        	
          1%
        
	
          SOX - ASUS
        	
          2.5%
        	
          5%
        	
          7.5%
        
	
          Objective Bonus Total
        	
          35%
        	
          75%
        	
          110%
        
	
          Individual Performance Measure
(Discretionary Bonus)
        	
          15%
        	
          25%
        	
          40%
        
	
          Aggregate Bonus
        	
          50%
        	
          100%
        	
          150%
        


    

    

    

    
      A-4