SJW Corp. Annual Retainer Fee Deferral Election Program for Non-Employee Directors

Summary

This agreement establishes a program for non-employee members of the SJW Corp. Board to defer all or part of their annual retainer fees. Instead of immediate cash payment, deferred fees are converted into restricted stock awards, which vest over time and are distributed after the director leaves the Board. Participants can choose the deferral amount and payment schedule, but unvested shares are forfeited if service ends early. The program aims to align directors' interests with the company's long-term performance.

EX-10.26 4 exhibit10-26.txt ANNUAL RETAINER FEE DEFERRAL ELECTION PROGRAM Exhibit 10.26 SJW CORP. ANNUAL RETAINER FEE DEFERRAL ELECTION PROGRAM I. PURPOSE. The objective of the Annual Retainer Fee Deferral Program (the "Program") is to promote the long-term success of the SJW Corp. (the "Corporation") by linking incentive opportunities for non- employee members of the Board to the performance of the Corporation. II. ELIGIBILITY. All non-employee members of the Board are eligible to participate in the Program. III. DEFERRAL AWARDS. A. Term of Program. The Program will commence with deferral of the Annual Board Retainer Fee attributable to the period beginning September 1, 2003 and continuing through December 31, 2003 (the "Initial Deferral Period"). The Program will continue on an annual basis from January 1, 2004 on, unless otherwise specified by the Committee. B. Deferral Procedure. A non-employee director (or "Participant") may defer either fifty percent (50%) or one hundred percent (100%) of the annual retainer fee for a period (the "Annual Retainer") by completing and filing with the Corporation a Deferral Election Form. For the Initial Deferral Period, the Corporation must receive such election no later than August 31, 2003. For all other deferral periods, such election must be received by December 31 of the calendar year before the year for which the Annual Retainer is to be paid, unless otherwise specified by the Committee. Each such election shall be irrevocable and cannot be modified for any reason. C. Form of Deferral. The Annual Retainer that is deferred for any year will be paid in the form of a restricted stock award, subject to the terms of this Program. Each restricted stock award attributable to a deferred Annual Retainer for any year shall be made on the first business day of the year for which such Annual Retainer is earned, but will vest in monthly installments, as the Annual Retainer would have been otherwise earned; provided that for the Initial Deferral Period, the deferral elections will be limited to that portion of the 2003 Annual Retainer attributable to Participant's Service after August 31, 2003 and the restricted stock award attributable to such election will be made on September 1, 2003. The number of shares in each Participant's restricted stock award for each year will equal (i) the amount of the Annual Retainer deferred for such year, divided by (ii) the Fair Market Value of one share of the Corporation's Common Stock on the last business day before the date of grant of the award. D. Deferral Restricted Stock Account. Each Deferred Restricted Stock Award will be credited to a "Deferral Restricted Stock Account" established for such Participant. The right to receive shares credited to such account shall be an unfunded and unsecured right of a general creditor. IV. DIVIDEND RIGHTS. A. Dividend Rights Attributable to Restricted Stock Award. Each time a dividend is paid on Common Stock after the restricted stock award is made, the Participant shall be credited with a dollar amount equal to the dividend paid per share multiplied by the number of shares previously credited to Participant's Deferral Restricted Stock Account and not distributed as of the record date for the dividend. As of the first business day in January of each year, the Deferral Restricted Stock Account will be credited with a number of shares equal to (i) the cash dividend equivalent amounts credited to Participant for the immediately preceding year divided by (ii) the average of the fair market value of the Common Stock on each of the dates in the immediately preceding year on which dividends were paid. B. Vesting of Dividend Rights. The shares of Common Stock credited to the Deferral Restricted Stock Account will vest in the same manner as the restricted stock award to which they are attributable. V. PAYMENT OF SHARES. The shares of restricted stock award credited to a Participant's Deferral Restricted Stock Account shall, to the extent vested, be distributed within thirty (30) days following the Participant's termination of Service in the form of shares of Common Stock. Payments shall be made in the form of a single lump sum or in up to ten (10) annual installments, as the Participant may elect in his or her Deferral Election Form. Any shares that had not vested before a participant's termination of Service will be forfeited. VI. DEFINED TERMS. All capitalized terms in this Agreement shall have the meaning assigned to them in the Plan, this document or the Deferral Election Form. VII. MISCELLANEOUS. This Program and the Deferral Restricted Stock Account evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, this Program and the Deferral Election Form.