DEF 14A of Consolidated Water Co. Ltd., Apr 22, 2026

DEF 14A of Consolidated Water Co. Ltd.

Filed Apr 22, 2026 · FY20250001104659-26-046528

Open on EDGAR

  1. Election of Directors

    Election of Directors The shareholders of the Company will vote on the election of nine directors at the Annual General Meeting. Each nominee listed below has consented to being named a nominee in this Proxy Statement and has agreed to serve as a director if elected at the Annual General Meeting. If, prior to the Annual General Meeting, a nominee should become unavailable to serve, the proxies in such nominee’s favor will be void. The Board of Directors knows of no reason to anticipate that this will occur. Nine of the 11 directors will stand for reelection at the 2026 Annual General Meeting, with Mr. Pergande and Mr. Butler deciding not to stand for reelection.

  2. Required Vote

    Required Vote The affirmative vote of the holders of a majority of the Shares cast is required to elect each director.

  3. Recommendation of the Board of Directors

    Recommendation of the Board of Directors THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR ALL” IN THE ELECTION OF THE NOMINEES LISTED BELOW.

  4. Biographies of Directors Standing for Reelection

    Biographies of Directors Standing for Reelection Kimberly Anne Adamson, age 58, has been a director of our Company since October 2025. Since September 2024, Ms. Adamson has served as Senior Director, Integrated Project Delivery at Brown and Caldwell, an engineering consulting firm specializing in water and environmental infrastructure, where she leads major alternative delivery and collaborative infrastructure programs for public sector clients. From July 2022 to September 2024, she served as Vice President, Business Line Manager for Kiewit Corporation’s water market, where she was responsible for strategy and development of complex design and build water and wastewater infrastructure projects. From November 2018 to June 2022, she served as Director of Utility Planning and Business Development and Director of Business Development at Liberty Utilities, a subsidiary of Algonquin Power & Utilities Corp., where she oversaw utility consolidations and acquisitions and developed unregulated water infrastructure business lines. Prior to Liberty Utilities, she was General Manager and Partner at DeepWater Desal, LLC, where she was responsible for all aspects of permitting a large drinking water desalination facility on California’s central coast. Ms. Adamson spent nearly a decade in General Manager roles in public water and wastewater utilities in Washington State and California. Earlier in her career, she worked as a consulting engineer on commercial and institutional projects, specializing in HVAC, plumbing, and piping systems. Ms. Adamson received a Bachelor of Science degree in Mechanical Engineering from Saint Martin’s College in 1997 and a Master of Public Administration with a focus on Collaborative Governance from Portland State University in 2012. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Ms. Adamson continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Ms. Adamson was selected to serve as a member of our Board of Directors because of her more than 35 years of executive leadership experience in the water and wastewater industry, her expertise in strategic planning and regulatory compliance, her technical engineering background, and her track record in developing and managing complex water infrastructure projects. Linda Beidler-D’Aguilar, age 63, has been a director of our Company since November 2018. Ms. Beidler-D’Aguilar retired from the active practice of law in April 2023; she has lived and worked in The Bahamas since 1991. From July 2015 to April 2023, she was a partner and head of the financial services practice at Glinton Sweeting O’Brien, a full-service boutique law firm located in Nassau, Bahamas, which specializes in financial services, corporate advisory services, securitization, real estate and resort development, and commercial litigation. From January 2005 to July 2015, Ms. Beidler-D’Aguilar was a partner at Graham Thompson, a law firm located in The Bahamas and Turks & Caicos specializing in trust and estate planning, commercial matters, corporate advisory services, civil litigation, family law, securitization, employment and immigration matters. Prior to joining Graham Thompson, Ms. Beidler-D’Aguilar worked briefly at another local law firm, before which she served as Vice President — Legal & Trademark, overseeing global intellectual property and domestic legal matters at Bacardi & Company Limited for almost nine years. Previously she was employed by two major trust companies in The Bahamas. Before moving to The Bahamas, Ms. Beidler-D’Aguilar practiced law in the United States. Upon her retirement, Ms. Beidler-D’Aguilar was given a Lifetime Achievement Award by the Bahamas Financial Services Board in recognition of her many years of dedicated support of the financial services industry in The Bahamas, including legislative drafting, public speaking and authorship of numerous articles for publication around the world. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Ms. Beidler-D’Aguilar continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Ms. Beidler-D’Aguilar was selected to serve as a member of our Board of Directors because of her nearly 30 years of experience as an attorney, her legal, business and financial knowledge acquired during that period and her knowledge of, and business contacts in, the Caribbean. Carson K. Ebanks, age 70, became the Cayman Islands government-nominated director of our Company in May 2001. Mr. Ebanks was the Director of Planning for the Cayman Islands from 1991 to 1997. He served the Cayman Islands Government as a Chief Officer beginning in 1997, and, when he retired in November 2011, he was Chief Officer for the Ministry of Finance, Tourism and Development. Mr. Ebanks is a Justice of the Peace, a Fellow of the Royal Geographic Society and a member of the Most Excellent Order of the British Empire. He holds a Bachelor of Environmental Studies (Hons. Urban and Regional Planning — Peace and Conflict Studies Minor) from the University of Waterloo and a Master of Arts — Planning in Community and Regional Planning from the University of British Columbia. He is a trustee of the National Gallery of the Cayman Islands and the President of the Cayman Islands National Karate-Do Association. Mr. Ebanks has served on the Boards of the Trustee of Cayman Islands National Museum, the Cayman Islands Airports Authority, the Cayman Islands Port Authority, Cayman Islands Turtle Farm, Cayman Airways, the Cayman Islands Civil Service Co-operative Credit Union, the Housing Development Corporation, the Water Authority — Cayman and the National Roads Authority. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Mr. Ebanks continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Mr. Ebanks, who was nominated to serve on our Board of Directors by the Cayman Islands government, was selected to serve as a member of our Board of Directors because of his knowledge of government affairs, his contacts within the Cayman Islands government and his experience in the water industry. Clarence B. Flowers, Jr., age 70, has been a director of our Company since 1991. Mr. Flowers is, and has been since 1985, the principal of Orchid Development Company, a real estate developer in the Cayman Islands. Mr. Flowers also serves as a director of C.L. Flowers & Sons, which is the largest manufacturer of wall systems in the Cayman Islands, and Cayman National Bank, a retail bank. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Mr. Flowers continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors.

  5. Biographies of Directors Standing for Reelection

    Mr. Flowers was selected to serve as a member of our Board of Directors because of his more than 40 years of experience in the construction industry as a real estate developer in the Cayman Islands. Maria Elena Giner, age 59, has been a director of our Company since October 2025. Dr. Giner’s career spans public and private sector roles focused on integrated water resource planning, project delivery, regulatory strategy, and the operation and maintenance of major water and wastewater systems. Since November 2025, she has served as Water Resources and Community Planning Portfolio Leader for Black & Veatch Corporation, a global engineering, procurement, consulting and construction company specializing in infrastructure development. From August 2021 to April 2025, Dr. Giner served as U.S. Commissioner of the International Boundary and Water Commission, an international body the mission of which is to protect Americans from exposure to Mexican sewage, ensure fair allocation of water from the Colorado and Rio Grande Rivers, maintain and operate critical flood infrastructure efficiently and effectively, and reduce flood hazards along the U.S.-Mexico border. From October 2017 to August 2021, Dr. Giner was a Ph.D. student and research assistant at the University of Texas at Austin and a part-time senior consultant at Parsons Corporation. From October 2010 to October 2017, Dr. Giner held the position of General Manager of the Border Environment Cooperation Commission (the “BECC”), a binational organization created to assist U.S.-Mexico border communities in the development and certification of high priority environmental infrastructure projects by providing technical assistance services such as engineering analysis, project development and design, financial feasibility studies, community participation, environmental assessment and sustainable development. While with the BECC, Dr. Giner oversaw the development and financing of approximately $9 billion in environmental infrastructure projects benefiting about 100 communities and over 10 million residents. Previously, she held senior engineering, operations, and policy roles with Carollo Engineers; Metropolitan Water District of Southern California; Los Angeles Department of Water and Power; and state and local agencies. Dr. Giner received a Ph.D. in Public Policy from the University of Texas at Austin in 2021, an MBA from the University of Texas at El Paso in 2014, and a B.S. in Civil Engineering from Loyola Marymount University in 1990, and is a Registered Professional Engineer in Texas. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Dr. Giner continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Dr. Giner was selected to serve as a member of our Board of Directors because of her leadership in large-scale environmental and infrastructure programs, her ability to navigate multi-jurisdictional regulatory and treaty frameworks, her technical engineering and public policy expertise, and her credibility with government, local community and cross-border stakeholders. Gerónimo Gutiérrez Fernández, age 55, has been a director of our Company since October 2025. After a 20-year career in senior government positions, his professional work now focuses on infrastructure development and financing and providing strategic advice to global firms with operations throughout the Americas. Since January 2019, Mr. Gutiérrez Fernández has served as Managing Partner at Beel Infrastructure Partners, a financial advisory and asset management firm focused on the infrastructure sector in Latin America that is based in Mexico City, Mexico. Since May 2020, he has served as a Senior Advisor at Covington & Burling LLP. Also, since January 2021, he has been an independent board member of Seguros Monterrey New York Life and chair of its audit committee. Mr. Gutiérrez Fernández served as Mexican Ambassador to the United States in 2017 and in 2018, during which time he was extensively involved in the negotiations of the United States-Mexico-Canada Agreement. Additionally, Mr. Gutiérrez Fernández was the Managing Director of the North American Development Bank, headquartered in San Antonio, Texas, from 2010 to 2016, where he oversaw the expansion and management of cross-border infrastructure financing, strategic planning, project development, and growth of the bank’s loan portfolio. Previously, he held senior government leadership positions in Mexico, including Deputy Secretary for Governance and Homeland Security; Under-Secretary for Latin America & the Caribbean; Under-Secretary for North America; as well as roles in the Ministry of Economy, the Treasury, the Office of the President, and Banobras. He holds a master’s degree in public administration from Harvard’s John F. Kennedy School of Government and a Bachelor of Arts degree in Economics from the Instituto Tecnológico Autónomo de México. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Mr. Gutiérrez Fernández continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Mr. Gutiérrez Fernández was selected to serve on our Board of Directors because of his deep experience in infrastructure finance, diplomacy, and trade negotiations; his proven capabilities in managing large cross-border and multijurisdictional issues; his policy and regulatory expertise; and his experience working with both governmental entities and private sector/international stakeholders. Frederick W. McTaggart, age 63, has been a director of our Company since 1998, the Company’s President since October 2000 and its Chief Executive Officer since January 1, 2004. Mr. McTaggart served as Chief Financial Officer of the Company from February 2001 to January 1, 2004. From April 1994 to October 2000, Mr. McTaggart was the Managing Director of the Water Authority — Cayman, the government-owned water utility serving certain areas of the Cayman Islands. From March 1987 to April 1994, he held the positions of Deputy Director and Operations Engineer with the Water Authority — Cayman. He received his B.S. degree in Building Construction from the Georgia Institute of Technology in 1985. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Mr. McTaggart continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Mr. McTaggart was selected to serve as a member of our Board of Directors because of his extensive technical and managerial experience in the water industry, and his knowledge and managerial experience within both public and private sector water utilities.

  6. Biographies of Directors Standing for Reelection

    Leonard J. Sokolow, age 69, has been a director of our Company since June 1, 2006. Since September 2023, Mr. Sokolow has served as Chief Executive Officer of SKYX Platforms Corp. (Nasdaq: SKYX). He has served as an independent director and Chair of the Audit Committee of SKYX Platforms from 2015 to February 2022 and continues to serve as a board member of that company and a member of its Corporate Development Committee. From 2015 to August 2023, Mr. Sokolow served as Chief Executive Officer and President of Newbridge Financial, Inc., a financial services holding company. From 2015 to July 2022, Mr. Sokolow served as Chairman of Newbridge Securities Corporation, Newbridge Financial, Inc.’s full-service broker-dealer. From August 2022 to August 2023 Mr. Sokolow served as CEO of Newbridge Securities Corporation and Newbridge Financial Services Group, Inc., Newbridge Financial, Inc.’s, full-service registered investment adviser. From November 1999 until July 2008, Mr. Sokolow was the Chief Executive Officer and a member of the Board of Directors, of vFinance Inc., a publicly traded financial services company he co-founded. He also served as its Chairman from January 2007 until July 2008, when it merged into National Holdings Corporation, a publicly traded financial services company. From July 2008 until July 2013, Mr. Sokolow was President of National Holdings Corporation, and from July 2008 until July 2014 he was Vice-Chair of the Board of Directors of National Holdings Corporation. From July 2013 until December 2014, Mr. Sokolow was a consultant and partner at Caribou LLC, a strategic advisory services firm. Mr. Sokolow was a Founder, Chair, and Chief Executive Officer of the Americas Growth Fund, Inc., a closed-end 1940 Act management investment company elected to be treated as a Business Development Company (BDC), from 1994 to 1998. From 1988 until 1993, Mr. Sokolow was an Executive Vice President and the General Counsel of Applica Inc., a publicly traded appliance marketing and distribution company. From 1982 until 1988, Mr. Sokolow practiced corporate, securities, and tax law and was one of the founding attorneys and a partner of an international boutique law firm. From 1980 until 1982, he worked as a Certified Public Accountant for Ernst & Young and KPMG Peat Marwick. Since June 2020, he has served as a member of the Board of Directors of Vivos Therapeutics, Inc. (Nasdaq: VVOS), Chair of its Audit Committee, and a member of its Nominations and Corporate Governance Committee, and from December 2021 until May 2024, Mr. Sokolow had served as a member of the Board of Directors of a company formerly known as Agrify Corporation (Nasdaq: AGFY), where he served as a member of the Audit Committee and the Compensation Committee. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Mr. Sokolow continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. For additional information regarding the Board of Director’s and the Nominations and Corporate Governance Committee’s review of Mr. Sokolow’s commitments and effectiveness, see “Director Commitments and Effectiveness” below. Mr. Sokolow was selected to serve as a member of our Board of Directors because of his experience as a director and principal executive officer, his legal, accounting, auditing and consulting background, and his qualifications to serve as our “audit committee financial expert.” Raymond Whittaker, age 72, has served as a director of our Company since 1988. Mr. Whittaker was the Managing Director of TransOcean Bank & Trust Ltd., a bank and trust company located in the Cayman Islands and a subsidiary of Johnson International Inc., a bank holding company located in Racine, Wisconsin from 1984 to December 2000. He is now the principal of his own company and management firm, FCM Ltd. On August 25, 2014, Mr. Whittaker was recognized as a Governance Fellow by the National Association of Corporate Directors (“NACD”) upon completion of NACD’s Governance Program and in recognition of an ongoing commitment to exemplary board leadership. Mr. Whittaker continues to participate in various NACD programs. Our Board of Directors and the Nominations and Corporate Governance Committee annually evaluate each director’s outside commitments, time availability and effectiveness in connection with the nomination process. Following this review, our Board of Directors and the Nominations and Corporate Governance Committee determined that Mr. Whittaker continues to devote sufficient time and attention to the Company and remains an effective and engaged member of the Board of Directors. Mr. Whittaker was selected to serve as a member of our Board of Directors because of his management, financial and banking experience.

  7. Biographies of Directors Not Standing for Reelection

    Biographies of Directors Not Standing for Reelection Brian E. Butler, age 76, has been a director of our Company since 1983. Mr. Butler, a full-time resident of the Cayman Islands, has since 1977 directed a consortium of property development companies presented under the Butler name specializing in luxury resort projects in the Cayman Islands, the Turks and Caicos Islands, and British Columbia, Canada. Mr. Butler was selected to serve as a member of our Board of Directors because of his more than 55 years of experience as a property developer (over 48 of those years in the Caribbean), his business and financial knowledge acquired during that period and his knowledge of, and business contacts in, the Cayman Islands. After 43 years as a director of our Company, Mr. Butler has decided not to stand for reelection at the Annual General Meeting. Wilmer F. Pergande, age 86, has been a director of our Company since 1978 and Chair since 2009. He has more than 55 years of management, sales, manufacturing and engineering experience in the desalination and chemical processing industries. Mr. Pergande is the principal of WF Pergande Consulting LLC and currently provides consulting engineering services to the marine industry, for metallurgy, fluid dynamics, heat transfer and aqueous chemical solutions separation technologies. He retired in 2006 as the Global Leader for Desalination and Chemical Process Equipment for GE Infrastructure, Water and Process Technologies, which he held since 2002. Mr. Pergande previously held the position of Vice President of Special Projects of Osmonics Inc. and Chief Executive Officer of the desalination subsidiary of Osmonics Inc., a publicly traded water treatment and purification company, until its acquisition by General Electric Co. Before joining Osmonics, Mr. Pergande was the Chief Executive Officer of Licon International Inc., a publicly traded manufacturer of liquid chemical separation, purification and processing equipment. Previously, Mr. Pergande was the President of Mechanical Equipment Company Inc. (MECO) for 14 years and held engineering, sales and executive managerial positions with AquaChem Inc., a subsidiary of Coca Cola Co. at the time, both companies being manufacturers of seawater desalination equipment. He has a bachelor’s degree in mechanical engineering from Marquette University and Post Graduate Studies in Chemical Engineering, Metallurgy, Heat Transfer and Business Management from Marquette University and the University of Wisconsin. Mr. Pergande served three terms as Director of the International Desalination Association, in which he held the positions of Treasurer and Secretary. He is a Member of Five Technical Societies related to the business and has presented numerous technical papers at society meetings. Mr. Pergande was selected to serve as a member of our Board of Directors because of his management and engineering experience in the desalination industry, and for his management, engineering, sales and marketing skills. After 48 years as a director of our Company, Mr. Pergande has decided not to stand for reelection at the Annual General Meeting.

  8. Executive Compensation and Corporate Governance Highlights

    | Executive Compensation | | Corporate Governance Highlights | | | ☒ | Short-term incentive compensation plan that specifies Company and individual performance goals, providing greater transparency for investors | ☒ | Clawback policy that applies to executive incentive awards | | ☒ | Strong relationship between corporate performance and executive compensation through the short-term compensation plan | ☒ | Company stock may not be hedged or pledged by directors or officers | | ☒ | Long-term compensation plan specifies three-year performance goals | ☒ | More than 40% of director compensation is comprised of Company stock | | ☒ | 50% of the target long-term incentive compensation opportunity for the CEO, CFO and COO is based on Company performance | ☒ | Independent Board Chair | | ☒ | Peer group includes companies with similar business models and comparable industries | | |

  9. Overview of 2025 Executive Compensation Program

    | Type | Component | Objective | | Performance-Based Compensation | Long-Term Incentive Awards | • Align the compensation of executives with the annual financial and operational performance of the Company and its achievement of annual revenue, gross profit margin and net income objectives. | | | | • Reward for increases in stock price over the longer term. | | | | • Provide strong retention value to executives in the service of the Company over the longer term and keep executives focused on the delivery of financial and operational performance and increases in shareholder value. |

  10. Overview of 2025 Executive Compensation Program

    | Type | Component | Objective | | | Annual Cash Incentive Awards | • Align the compensation of executives with the financial and operational performance of the Company and the value delivered to shareholders over the longer term. | | Fixed Compensation | Base Salary | • Provide a competitive fixed payment to the executive for their service to the Company, set at a level that allows the Company to attract and retain top talent. | | | Benefits & Perquisites | • Provide benefits that are competitive and enable the Company to attract and retain top executive talent. |

  11. Pay Ratio Disclosure

    Pay Ratio Disclosure The Committee believes that the compensation of our executive officers should be internally consistent and equitable in order to motivate our employees to seek to create value for our shareholders. As required by applicable SEC rules, we calculated the ratio of the median of the annual total compensation of all of our employees, except our principal executive officer, and the annual total compensation of our principal executive officer. To develop this ratio, we first identified all of our employees as of December 31, 2025. This included full-time, part-time, seasonal and temporary employees, but did not include independent contractors or workers who were employed by, and whose compensation was determined by, unaffiliated third parties with whom we contracted for such services. We then prepared a list of all such employees in order of gross compensation, excluding overtime, bonus, car allowance or other incentives to determine our median employee. Once the median employee was identified, we calculated the median employee’s annual total compensation in the same manner as we calculated “Total Compensation” for our named executive officers in the Summary Compensation Table in the “Additional Information Regarding Executive Compensation” section included in this Proxy Statement. We calculated the annual total compensation of our principal executive officer by taking the “Total Compensation” set forth in the Summary Compensation Table for Frederick W. McTaggart, our principal executive officer. Based on these calculations, we estimate that the median of the annual total compensation of all of our employees except our principal executive officer for 2025 was $83,192, and we estimate that our principal executive officer’s annual total compensation for 2025 was $1,222,966. Thus, the ratio of the estimated 2025 annual total compensation of our principal executive officer to the estimated median of the annual total compensation in 2025 of all of our employees other than our principal executive officer was 15:1. We believe this ratio is a reasonable estimate that was calculated in accordance with SEC rules.

  12. Compensation Philosophy and Objectives

    Compensation Philosophy and Objectives The Committee believes that compensation paid to our Named Executive Officers should be directly aligned with our performance, and that compensation generally should be structured to ensure that a significant portion of our Named Executives Officers’ compensation opportunities are directly related to achievement of our financial and operational goals. These goals include meeting revenue, and profitability targets, securing new business and keeping current on the industry’s engineering advances in seawater conversion technology, all of which impact shareholder value. The Committee evaluates both performance and compensation to ensure that we maintain our ability to attract and retain highly skilled and motivated employees in key positions and that the compensation provided to key employees remains competitive relative to our Peer Companies (identified later). The Committee believes executives at peer companies typically receive a base salary, an annual bonus and equity-based compensation, with top executives (e.g., chief executive officers, chief financial officers and chief operating officers) also receiving severance payments and, at times, payments upon a change in control. Accordingly, for 2025, the Committee determined that the compensation packages that we provided to our executives, including our Named Executive Officers, should include a mix of base salary and incentive-based cash compensation, and varying levels of severance payments, with our Chief Financial Officer and Chief Operating Officer also receiving severance payments upon a change in control. Additionally, all executive officers are eligible to receive long-term equity compensation consisting of shares of our Ordinary Shares earned over time and earned upon the satisfaction of long-term Company performance goals.

  13. Setting Executive Compensation

    Setting Executive Compensation Based on the foregoing philosophy and objectives, the Committee has structured our Named Executive Officers’ base salary and incentive-based compensation to motivate executives to achieve our business goals and reward them for achieving those goals. In setting the base salaries in the employment agreements of our Named Executive Officers, the Committee determined the approximate total average annual cash compensation paid to executives performing similar functions at our Peer Companies. In determining and considering adjustments to the base salaries in the employment agreements of our Vice Presidents (including our Vice President of Information Technology and our Chief Accounting Officer, who was formerly our Vice President of Finance), our Chief Executive Officer reviewed the average annual salaries paid to executives with similar levels of responsibility within our Peer Companies and gave his recommendation to the Committee. The Committee compared the suggested annual base salary for each of our Vice Presidents to the annual base salaries paid to executives performing similar functions at comparable companies. Given that the suggested annual base salaries for our Vice Presidents were substantially similar to that paid to executives within the Peer Companies, the Committee approved the salaries recommended by our Chief Executive Officer. A significant amount of the total compensation paid to our Named Executive Officers is allocated to incentive- based compensation, as a result of the philosophy and objectives mentioned previously. In 2024, in furtherance of our compensation philosophy and objectives, the Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”), an outside executive compensation consulting firm determined to be independent by the Committee, to conduct a review of, and recommend changes to, our compensation program for our executive officers and directors. FW Cook provided the Committee with assistance and advice in the review of our compensation elements, including base salary, target total cash compensation, long-term incentives, and target total direct compensation, and other related executive and director compensation issues. In addition, FW Cook provided advice regarding the competitiveness and reasonableness of our compensation programs, as well as to update the group of companies that constitute our Peer Companies. FW Cook provided similar services to the Committee in 2023. FW Cook did not provide any services to us in 2024 or 2023 other than its services as the Committee’s independent compensation consultant, and FW Cook did not receive any fees or compensation from us in 2024 or 2023 other than the fee it received as the independent compensation consultant. FW Cook did not provide any services to us in 2025. The Committee confirmed that FW Cook’s work for the Committee did not create any conflicts of interest.

  14. Peer Companies

    Peer Companies In 2024, the Committee, with the assistance of FW Cook, determined our peer group (our “Peer Companies”) to include 12 comparably sized companies identified below. These 12 companies constituted our 2024 peer group. Our Peer Companies generally fall within the following parameters for 2024: • 0.1 times to 4.3 times our revenue; • 0.4 times to 4.3 times our market capitalization; and • 0.2 times to 8.0 times our earnings before interest, taxes, depreciation, and amortization (“EBITDA”).

  15. Peer Companies

    | Peer Companies | | | Artesian Resources Corporation | Caribbean Utilities Company, Ltd. | | Chesapeake Utilities Corp. | Energy Recovery Inc. | | Genie Energy Ltd. | Global Water Resources Inc. | | Middlesex Water Company | Pure Cycle Corporation | | RGC Resources Inc. | SJW Group York Water Company | | Unitil Corp. | York Water Company |

  16. Peer Companies

    The assessment provided by FW Cook included comparative compensation information for executive officers at our Peer Companies that was used for our executive compensation benchmarking and performance benchmarking. We believe that this peer group provides a valid benchmark comparison to our Company.

  17. Peer Companies

    | Metric | Per Median* | CWCO* | CWCO Percentile Rank | | Revenue | $139,500 | $155,000 | 53% | | Market Capitalization | $564,000 | $521,000 | 45% | | EBITDA | $51,000 | $34,000 | 33% |

  18. Peer Companies

    Data as of January 15, 2024 ($ in thousands). Based upon FW Cook’s 2024 report and analysis, our Board of Directors and the Committee have concluded that our compensation plans for 2025 are comparable to the compensation paid by our Peer Companies.

  19. Short-Term Incentive Compensation

    Short-Term Incentive Compensation All of our executive officers were eligible to earn annual incentive compensation in the form of a cash bonus in 2025. The annual incentive compensation is performance based, with payout of these awards tied to the Company’s achievement of specific yearly net income, revenue and gross profit margin performance objectives for continuing operations, as well as individual performance for the year to the extent discussed below. Incentive awards for our executive officers for 2025 were determined using three corporate performance measures and targets established for each measure. Such incentive-based compensation was structured to provide for a range of payouts corresponding to a range of Company performance outcomes against the performance measures. Our executive officers were eligible to earn varying amounts of incentive compensation for 2025 based upon the Company’s achievement of the (1) minimum threshold, (2) target, or (3) upper limit that was set for each of the short-term performance measures. The following table sets forth the range of percentages of base salary each executive officer was eligible to receive as incentive compensation based upon the relative achievement of each of these amounts:

  20. Short-Term Incentive Compensation

    | Name Executive Officer | Below Threshold | Threshold | Target | Maximum | | Frederick W. McTaggart Chief Executive Officer | 0% | 35% | 70% | 110% | | David W. Sasnett Executive VP & Chief Financial Officer | 0% | 15% | 30% | 47% | | Ramjeet Jerrybandan Chief Operating Officer | 0% | 18% | 35% | 57% | | Douglas R. Vizzini Executive VP & Chief Accounting Officer | 0% | 10% | 20% | 31% | | Armando V. Averhoff Vice President of Information Technology | 0% | 8% | 15% | 23% |

  21. Short-Term Incentive Compensation

    The Committee established the 2025 corporate performance measures for the Company based on the 2025 financial performance estimates approved by the Company’s Board and the Company’s historical performance. Setting performance measures involves both selecting the performance metrics that will be used to drive short-term business performance and establishing the performance targets for each of those metrics. The 2025 annual bonus for each Named Executive Officer was calculated by the Board of Directors based upon its assessment of the Company’s performance in the areas set forth in the table below, with a weighting assigned to each factor for each of the Named Executive Officers noted. The Committee set the corporate performance goals at levels it believed require strong performance for a target payout and superior performance for an upper payout. The three corporate performance criteria, and the respective weighting assigned to each for our Named Executive Officers, are set forth in the table below.

  22. Short-Term Incentive Compensation

    | | Weighting of Short-Term Performance Measures | | | | | | Net Income(1) | Revenue(2) | Gross Profit Margin(3) | Individual | | Frederick W. McTaggart Chief Executive Officer | 40% | 35% | 15% | 10% | | David W. Sasnett Executive VP & Chief Financial Officer | 45% | 35% | 10% | 10% | | Ramjeet Jerrybandan Chief Operating Officer | 30% | 20% | 40% | 10% | | Douglas R. Vizzini Executive VP & Chief Accounting Officer | 45% | 35% | 10% | 10% | | Armando V. Averhoff Vice President of Information Technology | 45% | 35% | 10% | 10% |

  23. Short-Term Incentive Compensation

    The net income target was based upon the Company’s projection of net income from continuing operations for 2025 excluding accrued employee bonuses and as adjusted for certain components of net income that are not directly affected by management’s performance. (2) The revenue target was based upon the Company’s projected “adjusted revenue,” defined as projected revenue for 2025 adjusted to exclude pass-through energy charges for 2025. (3) The gross profit margin target was based upon the Company’s projected “gross profit margin” for 2025. Gross profit margin is defined as gross profit divided by revenue. The Committee selected these performance measures to capture the most important aspects of the financial performance of the Company and short-term corporate goals. The Committee sets the relative weighting among the performance measures for each of the Named Executive Officers in accordance with the relative importance of those measures, in the Committee’s view, to the Company’s performance, the strength of the Company’s business and the Named Executive Officers’ ability to drive results with respect to these measures. The relative percentages of the threshold and upper performance amounts to the target amount, the 2025 target amounts, the Company’s 2025 performance and the relative percentage of the Company’s 2025 performance to the target amount with respect to each measure, are set forth in the table below.

  24. Short-Term Incentive Compensation

    | Performance Measure | Threshold Percentage to Target Amount | Target Percentage to Target Amount | Upper Percentage to Target Amount | 2025 Target | Company’s 2025 Results | Company’s 2025 Results Percentage to Target Amount | | Net Income | 75% | 100% | 125% | $16,570,071 | $20,793,393 | 125.49% | | Revenue | 90% | 100% | 110% | $129,173,521 | $114,527,684 | 88.66% | | Gross Profit Margin | 90% | 100% | 110% | 29.38% | 36.63% | 124.68% |

  25. Short-Term Incentive Compensation

    The impact of the Company’s 2025 performance with respect to each of the performance measures on the 2025 short-term incentive bonus for each Named Executive Officer, based upon the relative weightings assigned to these performance measures for each Executive, is as follows:

  26. Short-Term Incentive Compensation

    | Performance Measure | Frederick W. McTaggart | David W. Sasnett | Ramjeet Jerrybandan | Douglas R. Vizzini | Armando V. Averhoff | | Net Income | 60% | 68% | 45% | 68% | 68% | | Revenue | 0% | 0% | 0% | 0% | 0% | | Gross Profit Margin | 26% | 18% | 70% | 18% | 18% | | Individual Goals | 5% | 10% | 0% | 10% | 10% | | Total percentage of target amounts achieved | 91% | 96% | 115% | 96% | 96% | | Incentive compensation payable assuming target amounts were achieved | $393,593 | $137,366 | $160,121 | $61,083 | $37,523 | | Incentive compensation earned for 2025 | $359,153 | $130,498 | $202,139 | $100,029 | $49,647 | | Incentive compensation as a percentage of base salary | 64% | 29% | 44% | 33% | 20% |

  27. Short-Term Incentive Compensation

    The Board has the discretion to pay our Chief Executive Officer a bonus in addition to the bonus amount payable under our short-term incentive compensation plan if it determines the executive’s accomplishments during the year merited such additional compensation. No such additional discretionary bonus was paid for 2025. Our Chief Executive Officer has the discretion to pay our executive officers a bonus in addition to the bonus amount payable under our short-term incentive compensation plan if he determines the executive’s accomplishments during the year merited such additional compensation. Additional discretionary bonuses of $18,000, $42 000 and $14,000 were paid to our Chief Operating Officer, Chief Accounting Officer (formerly Vice President of Finance) and Vice President of Information Technology for 2025, respectively.

  28. Long-Term Incentive Compensation

    Long-Term Incentive Compensation All our executive officers are eligible to earn annual incentive compensation in the form of grants of Ordinary Shares that vest in the future. This long-term component of the Company’s incentive compensation program is designed to better align the interests of our executive officers with those of our shareholders. Under the long-term incentive compensation plan, all executive officers participate in the plan with the same measures and weights, but at different levels of opportunity. The plan includes a combination of performance based and time vesting grants of Ordinary Shares. On January 1 of each year all our executive officers are granted rights to receive a number of Ordinary Shares in the future under our long-term incentive compensation plan. The aggregate number of shares each executive is eligible to receive is initially based upon the following formula (the “Long-Term Share Formula”), and subsequently adjusted based upon the Company’s actual performance relative to its long-term performance measures:

  29. Long-Term Incentive Compensation

    | Number of Shares = | Base Salary as of January 1X | Applicable Bonus Percentage | | | Company Share Price as of December 31 of prior year | |

  30. Long-Term Incentive Compensation

    The allocation of shares calculated under the Long-Term Share Formula varies by position. For the Chief Accounting Officer (formerly Vice President of Finance) and the Vice President of Information Technology, 100% of the shares consist of grants that vest in equal 1/3 increments on each January 1 in the three-year period following the grant date, assuming the executive officer remains employed by the Company on the vesting date. For the Chief Executive Officer, the Chief Financial Officer, and the Chief Operating Officer, 50% of the shares calculated under the Long-Term Share Formula consist of grants that vest in equal 1/3 increments on each January 1 in the three-year period following the grant date, assuming the executive officer remains employed by the Company on the vesting date. The remaining 50% of the shares calculated under the Long-Term Share Formula for these officers constitute performance-based grants, as the executive’s receipt of the shares under these grants is dependent upon the Company’s cumulative financial performance over a three-year period relative to various performance measures. The number of performance-based shares each such executive ultimately receives will be equal to 50% of the number of shares calculated under the Long-Term Share Formula applicable to the Chief Executive Officer, the Chief Financial Officer, and the Chief Operating Officer if the Company’s performance equals the target amount for each of the long-term performance measures. Such number of shares will be adjusted downward or upward based upon the achievement of minimum threshold and upper amounts for each performance measure. The following sets forth the number of Ordinary Shares underlying grants made to each named executive officer on January 1, 2025 under the Long-Term Share Formula based upon the closing pricing of $25.89 for the Company’s stock on December 31, 2024.

  31. Long-Term Incentive Compensation

    | | | Number of Shares Granted | | | | Bonus % | Time Vesting(1) | Performance Based(2) | | Frederick W. McTaggart Chief Executive Officer | 50% | 5,430 | 5,430 | | David W. Sasnett Executive VP & Chief Financial Officer | 30% | 2,653 | 2,653 | | Ramjeet Jerrybandan Chief Operating Officer | 35% | 3,093 | 3,093 | | Douglas R. Vizzini Executive VP & Chief Accounting Officer | 10% | 1,180 | ― | | Armando V. Averhoff Vice President of Information Technology | 10% | 967 | ― |

  32. Long-Term Incentive Compensation

    (1) Of these shares, 1/3 vested on December 31, 2025 and the remainder vest in equal increments on December 31, 2026 and 2027. (2) Represents the number of shares that may be earned by the executive assuming achievement of the three-year cumulative financial performance target amounts established by the Board for the three-year period ending December 31, 2027. The actual number of shares earned may equal these amounts, or may be greater or lesser than these amounts, based upon the financial performance of the Company relative to the long-term financial performance measures. The number of shares each executive officer is eligible to receive upon the relative achievement of each of the (1) minimum threshold, (2) target, or (3) upper amount is shown later. The long-term performance measures selected by the Board of Directors and the specific rationale for selecting each measure are set forth below: 1. Three-Year Cumulative Operating Cash Flows — The Board selected this measure because it is important for us to continue to generate positive cash flows to pay dividends and to fund future expansion. 2. Three-Year Cumulative Earnings Per Share — This measure encourages increasing profits on a per-share basis, which reflects an increase in value for our shareholders. Three-Year Cumulative Revenue (excluding pass-through energy charges) — This measure accounts for additions to revenue from the new projects and organic growth from our existing business operations. The respective weightings assigned to each long-term performance measure for our Named Executive Officers, are set forth in the table below.

  33. Long-Term Incentive Compensation

    | | Weighting of Long-Term Performance Measures | | | | | Three-Year Cumulative Operating Cash Flow | Three Year Cumulative Earnings Per Share | Three-Year Cumulative Revenue | | Frederick W. McTaggart Chief Executive Officer | 20% | 40% | 40% | | David W. Sasnett Executive VP & Chief Financial Officer | 20% | 40% | 40% | | Ramjeet Jerrybandan Chief Operating Officer | 20% | 40% | 40% | | Douglas R. Vizzini Executive VP & Chief Accounting Officer | ―% | ―% | ―% | | Armando V. Averhoff Vice President of Information Technology | ―% | ―% | ―% |

  34. Long-Term Incentive Compensation

    Under our long-term incentive compensation plan our executive officers are eligible to earn varying numbers of Ordinary Shares based upon the Company’s achievement of the (1) minimum threshold, (2) target, or (3) upper amount that has been established for each of the long-term performance measures. The following table sets forth the number of shares each executive officer is eligible to receive as incentive compensation based upon the relative achievement of each of these amounts:

  35. Long-Term Incentive Compensation

    | Named Executive Officer | Below Threshold | Threshold | Target | Maximum | | Frederick W. McTaggart Chief Executive Officer | ― | 2,715 | 5,430 | 8,579 | | David W. Sasnett Executive VP & Chief Financial Officer | ― | 1,327 | 2,653 | 4,192 | | Ramjeet Jerrybandan Chief Operating Officer | ― | 1,547 | 3,093 | 4,887 | | Douglas R. Vizzini Executive VP & Chief Accounting Officer | ― | ― | ― | ― | | Armando V. Averhoff Vice President of Information Technology | ― | ― | ― | ― |

  36. Long-Term Incentive Compensation

    Equity Award Grant Practices and Timing As part of our commitment to transparency and sound corporate governance, we disclose below our policies and practices related to the grant of equity awards in proximity to the release of material nonpublic information. Our Board of Directors and the Committee oversee the granting of equity awards to our executive officers. The timing of such awards is determined in accordance with the following policies and practices: • Pre-Determined Grant Schedule: We generally grant equity awards on a predetermined schedule, typically in connection with our annual compensation cycle or as part of an executive’s new hire or promotion package. Consideration of Material Nonpublic Information: The Board of Directors and the Committee consider whether material nonpublic information may be available when granting equity awards. We do not grant equity awards with the intent to take advantage of anticipated movements in stock price due to the release of such information. Disclosure Timing: We do not intentionally time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

  37. Pension Benefits

    Pension Benefits We do not have any defined benefit plans and only offer defined contribution plans.

  38. Severance

    Severance Upon termination of employment, our Named Executive Officers are entitled to receive severance payments under their employment agreements. In determining to approve, and in establishing the terms of, such severance arrangements, the Committee recognizes that executives, especially highly ranked executives, often face challenges securing new employment following termination. These employment agreements provide for a lump sum severance payment equal to 24 months to our Chief Executive Officer, and 12 months to our Chief Financial Officer, Chief Operating Officer, Chief Accounting Officer (formerly Vice President of Finance) and Vice President of Information Technology, of their then current respective base salaries if their employment agreements are not renewed. The Committee negotiated these severance packages to provide them with an amount equal to their base salary for the length of their non-competition arrangements with us. Based upon the data reviewed by the Committee, we believe that such severance packages are generally in line with severance packages offered to executives performing similar functions at comparable companies. Upon a “Change in Control,” as defined below, our Chief Financial Officer may elect to terminate his employment and receive a lump sum payment in an amount equal to 36 months of his then current base salary. If we (or our successor) terminate our Chief Operating Officer’s employment within one year following a Change of Control, we (or our successor) will pay our Chief Operating Officer a lump sum in cash in an amount equal to two times his then-current base salary, plus all other compensation accrued as of the effective date of termination. After reviewing the practices of companies represented in the compensation data we obtained, we believe that our Chief Financial Officer’s and our Chief Operating Officer’s Change in Control arrangements are generally in line with such arrangements offered to chief financial officers and chief operating officers of comparable companies. In determining to approve, and in establishing the terms of such Change in Control arrangements the Committee recognizes the importance to us and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with rumored or actual fundamental corporate changes. A properly arranged Change in Control provision protects shareholder interests by enhancing employee focus during rumored or actual Change in Control activity through: • Incentives to remain with us despite uncertainties while a transaction is under consideration or pending; and • Assurance of compensation for terminated employees after a Change in Control. For the purposes of this discussion, a “Change in Control” occurs when: (i) any person, including a “group” as defined in Section 13(d)(3) of the Exchange Act, publicly announces that such person or group has become the beneficial owner of more than 30% of the combined voting power (“Controlling Voting Power”) of our then outstanding securities that may be cast for the election of directors and (ii) the persons who were our directors before such event shall cease to constitute a majority of our Board of Directors, or any successor, as the direct or indirect result of any person or group acquiring Controlling Voting Power.

  39. Summary Compensation Table

    Summary Compensation Table The following table summarizes the compensation of (1) our Chief Executive Officer, (2) our Chief Financial Officer, and (3) our three other most highly compensated executive officers based upon total compensation (collectively, our “Named Executive Officers”) for the fiscal years ended December 31, 2025, 2024 and 2023.

  40. Summary Compensation Table

    | Name and Title | Years | Salary ($) | Non-Equity Incentive Plan Compensation ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | | Frederick W. McTaggart Chief Executive Officer | 2025 | 562,275 | 359,153 | 281,138 | 20,400 | 1,222,966 | | | 2024 | 562,275 | 599,245 | 281,138 | 19,800 | 1,462,458 | | | 2023 | 551,250 | 600,000 | 275,625 | 19,200 | 1,446,075 | | David W. Sasnett Executive VP & Chief Financial Officer | 2025 | 457,888 | 130,498 | 137,366 | 20,400 | 746,152 | | | 2024 | 427,535 | 193,673 | 128,261 | 19,800 | 769,269 | | | 2023 | 419,150 | 185,690 | 125,745 | 19,200 | 749,785 | | Ramjeet Jerrybandan Chief Operating Officer | 2025 | 457,489 | 202,139 | 160,121 | 20,400 | 840,149 | | | 2024 | 429,567 | 202,326 | 128,870 | 19,800 | 780,563 | | | 2023 | 409,115 | 199,000 | 122,735 | 19,200 | 750,050 | | Douglas R. Vizzini Executive VP & Chief Accounting Officer | 2025 | 305,415 | 100,029 | 30,542 | 20,400 | 456,386 | | | 2024 | 296,525 | 100,000 | 29,653 | 19,800 | 445,978 | | | 2023 | 263,575 | 79,060 | 26,358 | 19,200 | 388,193 | | Armando V. Averhoff Vice President of Information Technology | 2025 | 250,156 | 49,647 | 25,016 | 14,400 | 339,219 | | | 2024 | 233,355 | 49,355 | 23,336 | 13,800 | 319,846 | | | 2023 | 207,430 | 50,760 | 20,743 | 13,200 | 292,133 |

  41. Summary Compensation Table

    (1) Non-Equity Incentive Plan Compensation amounts have been determined pursuant to the terms outlined in our Named Executive Officers’ respective employment agreements and our short-term incentive compensation plan. (2) Amounts for 2025, 2024 and 2023 represent the value (based upon the share price of our stock on the grant date) of the shares that may be earned by and granted to the executive in future years under stock grant rights provided under our long-term incentive compensation plan. The vesting of shares underlying these stock grant rights varies by position. For the Chief Accounting Officer (formerly Vice President of Finance) and the Vice President of Information Technology, 100% of the underlying shares vest in equal 1/3 increments on December 31 of each year in the three-year period following the January 1 date on which the stock grant right is awarded if the executive is employed by the Company as of the vesting date. For the Chief Executive Officer, the Chief Financial Officer, and the Chief Operating Officer, 50% of the underlying shares vest in equal 1/3 increments on December 31 of each year in the three-year period following the January 1 date on which the stock grant right is awarded if the executive is employed by the Company as of the vesting date. The remaining 50% of the underlying shares associated with these stock grant rights will be earned by and granted to each such the executive if our Company achieves the three-year cumulative financial performance target measures established by the Board for the three-year periods ending December 31, 2027 (for the stock grants awarded in 2025), 2026 (for the stock grants awarded in 2024) and 2025 (for the stock grants awarded in 2023) and the executive is in our employ as of the measurement date. The actual number of shares earned and granted to each such officer under these performance measures may be greater or lesser than the amounts set forth in the table above for each named executive officer (or even zero) based upon the financial performance of the Company relative to the long-term financial performance target measures. Represents car allowances.

  42. Employment Agreements

    Employment Agreements

  43. Frederick W. McTaggart — President and Chief Executive Officer

    Frederick W. McTaggart — President and Chief Executive Officer On January 1, 2004, we entered into a three-year employment agreement with Frederick W. McTaggart, our President and Chief Executive Officer. This agreement is subject to extension each year upon mutual agreement such that the term will be for three years from January 1 of the next following year, which is currently through December 31, 2028. Under the terms of the employment agreement, Mr. McTaggart is entitled to an annual base salary and annual and long-term incentive compensation if certain performance goals are met. If the Company at its discretion elects not to renew Mr. McTaggart’s agreement, such agreement terminates on December 31 of that year, and Mr. McTaggart is entitled to receive a severance payment equal to twice his then annual base salary. The Company’s Compensation Committee establishes Company performance goals and Mr. McTaggart’s individual performance goals. If we terminate Mr. McTaggart without cause, he is entitled to receive the aggregate annual salaries due over the remaining term of his employment agreement. Mr. McTaggart is also entitled to an automobile expense allowance, which amounted to $20,400, $19,800 and $19,200 in 2025, 2024 and 2023, respectively. This allowance increases on January 1 of each year by $50 per month.

  44. Long-Term Incentive Compensation Awards

    Long-Term Incentive Compensation Awards The actual number of shares that may be earned by our Named Executive Officers under our long-term incentive compensation program varies based upon the financial performance of the Company relative to the long-term financial performance target amounts established by the Board for a three-year period. For the three-year period ended December 31, 2025, the relative percentages of the threshold and upper financial performance amounts to the target amount, the target amounts, the Company’s performance and the relative percentage of the Company’s performance to the target amount, are set forth in the table below.

  45. Long-Term Incentive Compensation Awards

    | Cumulative Performance Measure | Threshold Percentage to Target Amount | Target Percentage to Target Amount | Upper Percentage to Target Amount | 2023 – 2025 Target | Company’s 2023 – 2025 Results | Company’s Results Percentage to Target Amount | | Operating Cash Flows | 70% | 100% | 130% | $48,426,582 | $86,199,865 | 178.0% | | Earnings Per Share | 85% | 100% | 140% | $0.87 | $4.88 | 562.9% | | Revenue | 85% | 100% | 115% | $206,393,756 | $390,542,516 | 189.2% |

  46. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information for each of the Named Executive Officers on stock option exercises and shares vested during the year ended December 31, 2025, including the number of shares acquired and the value realized upon exercise and the number of shares acquired and the value realized upon vesting, before payment of any applicable withholding tax and broker commissions.

  47. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Named Executive Officer | Number of shares acquired on exercise | Value realized on exercise | Number of shares acquired on vesting | Value realized on vesting ($) | | Frederick W. McTaggart | — | — | 20,944 | 739,114 | | David W. Sasnett | — | — | 9,616 | 339,349 | | Ramjeet Jerrybandan | — | — | 9,570 | 337,725 | | Douglas R. Vizzini | — | — | 1,265 | 44,642 | | Armando V. Averhoff | — | — | 1,010 | 35,643 |

  48. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table summarizes the outstanding awards under our long-term incentive compensation plan as of December 31, 2025, for each Named Executive Officer.

  49. Outstanding Equity Awards at Fiscal Year-End

    | Named Executive Officer | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market value of unearned shares, units or other rights that have not vested ($) | | Frederick W. McTaggart | 1,315(1) | 46,406(1) | | | 3,949(2) | 139,360(2) | | | 3,620(3) | 127,750(3) | | | 5,430(4) | 191,607(4) | | David W. Sasnett | 600(1) | 21,174(1) | | | 1,802(2) | 63,593(2) | | | 1,768(3) | 62,393(3) | | | 2,653(4) | 93,624(4) | | Ramjeet Jerrybandan | 602(1) | 21,245(1) | | | 1,810(2) | 63,875(2) | | | 2,062(3) | 72,768(3) | | | 3,093(4) | 109,134(4) | | Douglas R. Vizzini | 277(1) | 9,775(1) | | | —(2) | —(2) | | | 786(3) | 27,738(3) | | | —(4) | —(4) | | Armando V. Averhoff | 218(1) | 7,693(1) | | | —(2) | —(2) | | | 644(3) | 22,727(3) | | | —(4) | —(4) |

  50. Outstanding Equity Awards at Fiscal Year-End

    (1) Amounts represent the number and value of shares that vest on December 31, 2026, assuming continued employment. (2) Amounts represent the number and value of shares that may be earned by the executive assuming achievement of the three-year cumulative financial performance target measures established by the Board for the three-year period ending December 31, 2026. The actual number and value of shares earned may be adjusted upward or downward based upon the executive’s continued employment and the financial performance of the Company relative to the long-term financial performance measures. (3) Amounts represent the number and value of shares that vest in equal 1∕2 increments on December 31, 2026 and 2027, assuming continued employment. (4) Amounts represent the number and value of shares that may be earned by the executive assuming achievement of the three-year cumulative financial performance target measures established by the Board for the three-year period ending December 31, 2027. The actual number and value of shares earned may be adjusted upward or downward based upon the executive’s continued employment and the financial performance of the Company relative to the long-term financial performance measures.

  51. Equity Awards Granted in Close Proximity to Material Nonpublic Information Disclosure

    Equity Awards Granted in Close Proximity to Material Nonpublic Information Disclosure During the last fiscal year, we did not grant any equity awards to the Named Executive Officers during the period beginning four business days before and ending one business day after the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a Form 8-K disclosing material nonpublic information. As no such grants occurred during the relevant period, no further disclosure or tabular presentation is necessary.

  52. Pension Benefits

    Pension Benefits We do not have any defined benefit plans and only offer defined contribution plans.

  53. Non-Qualified Deferred Compensation

    Non-Qualified Deferred Compensation We do not have any non-qualified deferred contribution plans or other deferred compensation plans.

  54. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control The section below describes the payments that may be made to the Named Executive Officers upon termination or Change in Control, as defined above, pursuant to individual agreements.

  55. Severance

    Severance The following table sets forth the total amount of severance payments that would be made to Messrs. McTaggart, Sasnett, Jerrybandan, Vizzini and Averhoff if their employment agreements were terminated without cause as of December 31, 2025:

  56. Severance

    | Named | Severance ($) | | Frederick W. McTaggart | 1,686,825 | | David W. Sasnett | 915,776 | | Ramjeet Jerrybandan | 914,978 | | Douglas R. Vizzini | 305,415 | | Armando V. Averhoff | 250,156 |

  57. Severance

    The following table sets forth the total amount of change in control payments that would be made to Messrs. Sasnett and Jerrybandan if their employment agreements were terminated upon a Change in Control as of December 31, 2025:

  58. Severance

    | Named | Change in Control ($) | | David W. Sasnett | 1,373,664 | | Ramjeet Jerrybandan | 914,978 |

  59. Pay versus Performance

    Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information that demonstrates the relationship between executive “Compensation Actually Paid” and the Company’s performance against several specific financial metrics. Pay versus Performance Table: The table below reflects Compensation Actually Paid to the Company’s Principal Executive Officer (“PEO”) and Average Summary Compensation Actually Paid to Non-PEO Named Executive Officers (“NEOs”) during 2025, 2024, 2023, 2022 and 2021.

  60. Pay versus Performance

    | Year | Summary Compensation Table Total for PEO $ | Compensation Actually Paid to PEO(1) $ | Average Summary Compensation Table Total for Non-PEO NEOs $ | Average Compensation Actually Paid to Non-PEO NEOs(1) $ | Value of Initial Fixed $100 Investment Based on: | | Net Income $ | Revenue (excluding pass-through energy charges) $ | | | | | | | Total Shareholder Return(2) $ | Peer Group Total Shareholder Return $ | | | | 2025 | 1,222,966 | 1,503,611 | 595,477 | 672,799 | 325.36 | 101.45 | 18,336,673 | 114,527,684 | | 2024 | 1,462,458 | 1,075,367 | 578,914 | 479,252 | 234.48 | 108.72 | 28,237,554 | 115,370,773 | | 2023 | 1,446,075 | 2,546,547 | 545,040 | 829,551 | 317.75 | 130.66 | 29,585,391 | 160,644,059 | | 2022 | 1,331,100 | 1,547,295 | 501,993 | 557,924 | 129.70 | 116.67 | 5,856,294 | 76,196,354 | | 2021 | 907,150 | 841,379 | 436,382 | 419,583 | 90.83 | 119.55 | 875,579 | 55,182,474 |

  61. Pay versus Performance

    (1) Compensation Actually Paid represents total compensation as reported in the Summary Compensation Table for that year (i) less the grant-date fair value of any stock and option awards granted during that year, (ii) plus the change in fair value of outstanding and unvested stock and option awards during that year, as well as the fair value of new stock and option awards granted during that year as of the end of the year. (2) The Value of Initial Fixed $100 Investment Based on Total Shareholder Return depicts a hypothetical $100 investment in Ordinary Shares on December 31, 2020, and shows the value of that investment over time (assuming the reinvestment of dividends) for each calendar year. Historical stock performance is not necessarily indicative of future stock performance.

  62. Relationship between Compensation Actually Paid Disclosed in the Pay versus Performance Table and Other Table Elements

    Relationship between Compensation Actually Paid Disclosed in the Pay versus Performance Table and Other Table Elements Compensation Actually Paid to Mr. McTaggart and Average Compensation Actually Paid to Non-PEO NEOs for 2025, 2024 and 2023 were directionally aligned with the cumulative total shareholder return and net income for those years.

  63. Tabular List of the Company’s Most Important Metrics that Link Compensation Actually Paid to the PEO and other NEOs

    Tabular List of the Company’s Most Important Metrics that Link Compensation Actually Paid to the PEO and other NEOs We consider the list below to be the Company’s most important metrics that link compensation paid to our NEOs, as they are the key metrics that determine the payout under our short-term incentive compensation plan and long-term incentive compensation plan. • Revenue (excluding pass-through energy charges) • Net income from continuing operations • Gross margin • Earnings per share • Operating cash flows

  64. Director Compensation

    Director Compensation The following table sets forth a summary of the compensation earned by our non-employee directors and/or paid to certain of our non-employee directors in 2025.

  65. Director Compensation

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Kimberly Adamson* | 8,745 | — | 8,745 | | Linda Beidler-D’Aguilar*(2) | 62,983 | 48,876 | 111,859 | | Brian E. Butler*(3) | 47,223 | 56,628 | 103,851 | | Carson K. Ebanks* | 40,810 | 44,804 | 85,614 | | Clarence B. Flowers, Jr.* | 42,559 | 48,869 | 91,428 | | Maria Elena Giner* | 8,745 | — | 8,745 | | Gerónimo Gutiérrez Fernández* | 8,745 | — | 8,745 | | Wilmer F. Pergande*(4) | 143,676 | 46,158 | 189,834 | | Leonard J. Sokolow* | 45,156 | 49,136 | 94,292 | | Raymond Whittaker* | 53,527 | 50,594 | 104,121 |

  66. Director Compensation

    * The Board of Directors has determined that each of such persons is an “independent director” under the corporate governance rules of NASDAQ. (1) Represents fair value on the date of grant. (2) Of the $111,859 fees earned or paid in cash, $20,000 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary. (3) Mr. Butler has decided not to stand for reelection at the Annual General Meeting. (4) Of the $189,834 fees earned or paid in cash, $27,500 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary. Mr. Pergande has decided not to stand for reelection at the Annual General Meeting, and will concurrently resign from the board of directors of Consolidated Water (Bahamas) Limited.

  67. Director Compensation Policy

    Director Compensation Policy Our Chair of the Board of Directors receives an annual cash retainer of $109,180 and each director who is not an executive officer is entitled to an annual cash retainer of $34,980. In addition, under the non-executive directors share plan, the Chair of the Board of Directors and each director who is not an executive officer receives an annual equity retainer in Ordinary Shares worth $34,450 and $35,139, respectively. A Director who is also an executive officer of our Company (i.e. Mr. McTaggart) is not entitled to an annual retainer of cash or equity. Each director who is a member of the Compensation Committee and the Chair of such committee is entitled to an annual cash retainer of $3,498 and $5,883, respectively. In addition, under the non-executive directors share plan, each committee member and the Chair of the committee receive an annual equity retainer in Ordinary Shares worth $6,185 and $7,934, respectively. Each director who is a member of the Audit Committee and the Chair of such committee is entitled to an annual cash retainer of $4,664 and $7,844, respectively. In addition, under the non-executive directors share plan, each committee member and the Chair of the committee receive an annual equity retainer in Ordinary Shares worth $8,247 and $10,579, respectively. Each director who is a member of the Nominations and Corporate Governance Committee and the Chair of such committee is entitled to an annual cash retainer of $2,332 and $3,922, respectively. In addition, under the non-executive directors share plan, each committee member and the Chair of the committee receive an annual equity retainer in Ordinary Shares worth $4,123 and $5,289, respectively. Each director who is a member of the Environmental and Social Governance Committee and the Chair of such committee is entitled to an annual cash retainer of $2,332 and $3,922, respectively. In addition, under the non-executive directors share plan, each committee member and the Chair of the committee receive an annual equity retainer in Ordinary Shares worth $4,123 and $5,289, respectively. Mr. McTaggart is the Chair of this committee and is not entitled to an annual retainer of cash or equity. The number of Ordinary Shares granted to the directors is calculated by dividing the equity retainers by the prevailing market price on October 1 of the preceding year. The Board of Directors has determined to increase the director compensation described above by 3.5% for 2026.

  68. Stock Performance Graph

    Stock Performance Graph The following graph compares the changes over the last five years in the value of $100 invested in (i) the Company’s Ordinary Shares, (ii) the Standard & Poor’s 500 Stock Index (“S&P 500 Index”) and (iii) ratably in each of the 10 companies that constitute the Company’s peer group index. The peer group consists of Middlesex Water Company, Energy Recovery Inc., Pure Cycle Corporation, Unitil Corp., Global Water Resources Inc., Genie Energy Ltd., Caribbean Utilities Company, Ltd., Artesian Resources Corporation, RGC Resources, Inc., and York Water Company. The year-end values of each investment are based on share price appreciation without consideration of the reinvestment of all dividends. Historical stock price performance shown on the performance graph is not necessarily indicative of future stock price performance.

  69. FIVE-YEAR CUMULATIVE TOTAL RETURNS VALUE OF $100 INVESTED ON DECEMBER 31, 2020

    | | Consolidated Water Co. Ltd. | S&P Index | Peer Group Index | | 2020 | 100.00 | 100.00 | 100.00 | | 2021 | 88.30 | 126.89 | 118.33 | | 2022 | 122.82 | 102.22 | 114.28 | | 2023 | 295.44 | 126.99 | 127.44 | | 2024 | 214.85 | 156.59 | 104.68 | | 2025 | 292.86 | 182.25 | 96.17 |

  70. CONSOLIDATED WATER CO. LTD. 2027 EMPLOYEE STOCK INCENTIVE PLAN

    CONSOLIDATED WATER CO. LTD. 2027 EMPLOYEE STOCK INCENTIVE PLAN

  71. AWARDS

    AWARDS Section 2.1 General. Any Award under the Plan may be granted singularly, or in combination with another Award (or Awards). Each Award under the Plan shall be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations and restrictions provided by the Committee with respect to the Award in an Award Agreement. Every Award under the Plan shall require a written Award Agreement. Subject to the provisions of Section 2.2(d), an Award may be granted as an alternative to or replacement of an existing Award under the Plan or any other plan of the Company or any Subsidiary (provided, however, that no reload Awards shall be granted hereunder) or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or its Subsidiaries, including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under the Plan include: (a) Stock Options. A Stock Option means a grant under Section 2.2 that represents the right to purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option may be either an Incentive Stock Option (an “ISO”) that is intended to satisfy the requirements applicable to an “incentive stock option” described in Code Section 422(b), or a Non-Qualified Stock Option (a “Non-Qualified Option”) that is not intended to be an ISO, provided, however, that no ISOs may be granted: (i) after the ten-year anniversary of the Effective Date or the date the Plan is approved by the Board of Directors, whichever is earlier, or (ii) to a non-employee. Unless otherwise specifically provided by its terms, any Stock Option granted under the Plan to an employee shall be an ISO to the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify the Stock Option from ISO treatment such that it shall become a Non-Qualified Option; provided however, that any modification will be ineffective if it causes the Award to be subject to Code Section 409A (unless, as modified, the Award complies with Code Section 409A). (b) Restricted Stock Awards. A Restricted Stock Award means a grant of shares of Stock under Section 2.3 for no consideration or for such minimum consideration as may be required by applicable law, subject to a time-based vesting schedule or the satisfaction of market conditions or performance conditions. (c) Restricted Stock Units. A Restricted Stock Unit means a grant under Section 2.4 denominated in shares of Stock that is similar to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant of a Restricted Stock Unit. A Restricted Stock Unit is subject to a time-based vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock; provided, however, that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in cash based on the Fair Market Value of a share of Stock multiplied by the number of Restricted Stock Units being settled. (d) Performance Awards. A Performance Award means an Award under Sections 2.2, 2.3 or 2.4 that vests upon the achievement of one or more specified performance measures, as further set forth in Section 8.1 under “Performance Award.” Section 2.2 Stock Options. (a) Grant of Stock Options. Each Stock Option shall be evidenced by an Award Agreement that specifies: (i) the number of Stock Options covered by the Stock Option; (ii) the date of grant of the Stock Option and the Exercise Price; (iii) the vesting period or conditions to vesting; and (iv) such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. Stock Options may be granted as Performance Awards. (b) Terms and Conditions. A Stock Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to an ISO granted to an Employee who is a 10% Stockholder). The “Exercise Price” of each Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock); provided, however, that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of Stock on the date of grant if granted to a 10% Stockholder; further, provided, that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Awards held by an employee or a director of an acquired entity. The payment of the Exercise Price of a Stock Option shall be by cash or, subject to limitations imposed by applicable law, by such other means as the Committee may from time to time permit, including: (i) by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the date of exercise; (ii) by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; (iii) by net settlement of the Stock Option, using a portion of the shares obtained on exercise in payment of the Exercise Price of the Stock Option (and if applicable, tax withholding); (iv) by personal, certified or cashier’s check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with cash-in-lieu paid by the Company, at its discretion, for the value of any fractional share. (c) Prohibition of Cash Buy-Outs of Underwater Stock Options. Under no circumstances will any Stock Option with an Exercise Price as of an applicable date that is greater than the Fair Market Value of a share of Stock as of the same date that was granted under the Plan be bought back by the Company without stockholder approval. (d) Prohibition Against Repricing. Except for adjustments pursuant to Section 3.4 or as otherwise approved by the Company’s stockholders, neither the Committee nor the Board of Directors shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Award’s in-the-money value or in exchange for Stock Options or other Awards), replacement grants, or other means; provided that the foregoing does not apply to cancellation or replacements that occur in connection with a Change in Control of the Company pursuant to the terms of this Plan. (e) Prohibition on Paying Dividends. No dividends shall be paid on Stock Options and no Dividend Equivalent Rights may be granted with respect to Stock Options.

  72. AWARDS

    (f) Limitation on Incentive Stock Options. Solely for purposes of determining whether shares of Stock are available for the grant of Incentive Stock Options under the Plan, the maximum aggregate number of shares that may be issued pursuant to Incentive Stock Options granted under the Plan shall be 500,000 shares, subject to adjustment as provided in Section 3.4. Section 2.3 Restricted Stock Awards. (a) Grant of Restricted Stock. Each Restricted Stock Award shall be evidenced by an Award Agreement, that specifies: (i) the number of shares of Stock covered by the Restricted Stock Award; (ii) the date of grant of the Restricted Stock Award; (iii) the vesting period or conditions to vesting; and (iv) such other terms and conditions not inconsistent with the Plan, including the effect of termination of Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. Restricted Stock Awards may be granted as Performance Awards. All Restricted Stock Awards shall be in the form of issued and outstanding shares of Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine, including in book entry on the books and records maintained by the transfer agent. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock (including that the Restricted Stock may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of the Plan and Award Agreement) and/or that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock. (b) Terms and Conditions. Each Restricted Stock Award shall be subject to the following terms and conditions: (i) Dividends. No cash dividends shall be paid with respect to any Restricted Stock Awards unless and until the Participant vests in the underlying share(s) of Restricted Stock. Upon the vesting of a Restricted Stock Award, any dividends declared but not paid during the vesting period shall be paid within thirty (30) days following the vesting date. Any stock dividends declared on shares of Stock subject to a Restricted Stock Award shall be subject to the same restrictions and shall vest at the same time as the shares of Restricted Stock from which said dividends were derived. All unvested dividends shall be forfeited by the Participants to the extent their underlying Restricted Stock Awards are forfeited. (ii) Voting Rights. Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Agreement, a Participant shall have voting rights related to unvested, non-forfeited Restricted Stock Awards and the voting rights may be exercised by the Participant in his or her discretion. (iii) Tender Offers and Merger Elections. Each Participant to whom a Restricted Stock Award is granted shall have the right to respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election or other offer made to, or elections made by, the holders of shares of Stock. Section 2.4 Restricted Stock Units. (a) Grant of Restricted Stock Unit Awards. Each Restricted Stock Unit shall be evidenced by an Award Agreement that specifies: (i) the number of Restricted Stock Units covered by the Award; (ii) the date of grant of the Restricted Stock Units; (iii) the Restriction Period; and (iv) such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. (b) Terms and Conditions. Each Restricted Stock Unit Award shall be subject to the following terms and conditions: (i) A Restricted Stock Unit Award shall be similar to a Restricted Stock Award except that no shares of Stock are actually awarded to the recipient on the date of grant. The Committee shall impose such conditions and/or restrictions on any Restricted Stock Unit Award granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit, time-based restrictions and vesting following the attainment of performance measures, restrictions under applicable laws or under the requirements of any Exchange or market upon which shares of Stock may be listed, or holding requirements or sale restrictions placed by the Company upon vesting of the Restricted Stock Units. The Committee may make grants of Restricted Stock Units upon such terms and conditions as it may determine, which may include, but is not limited to, deferring receipt of the underlying shares of Stock provided the deferral complies with Section 409A of the Code and applicable provisions of the Plan. (ii) Restricted Stock Units may be granted as Performance Awards. (iii) Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of grant of a Restricted Stock Unit for which a Participant’s continued Service is required (the “Restriction Period”), and until the later of (A) the expiration of the Restriction Period or (B) the date the applicable performance measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units. (iv) A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. (v) No dividends shall be paid on Restricted Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may be assigned to Restricted Stock Units. A Dividend Equivalent Right, if any, shall be paid at the same time as the shares of Stock or cash subject to the Restricted Stock Unit are distributed to the Participant and is otherwise subject to the same rights and restrictions as the underlying Restricted Stock Unit. Section 2.5 Vesting of Awards. The Committee shall specify the vesting schedule or conditions of each Award. Subject to adjustment as provided in Section 3.4, at least ninety-five percent (95%) of all Awards under the Plan shall be subject to a vesting requirement of at least one year of Service following the grant of the Award (excluding, for this purpose, any (i) Substitute Awards, and (ii) shares of Stock delivered in lieu of fully vested cash Awards); provided, that the foregoing restriction does not apply to the Committee’s discretion to provide for acceleration of exercisability or vesting of any Award, including in cases of the Participant’s death, Disability or in connection with an Involuntary Termination at or following a Change in Control, in the terms of the Award or otherwise.

  73. AWARDS

    Section 2.6 Deferred Compensation. Subject to approval by the Committee before an election is made, an Award of Restricted Stock Units may be deferred pursuant to a valid deferral election made by a Participant. If a deferral election is made by a Participant, the Award Agreement shall specify the terms of the deferral and shall constitute the deferral plan pursuant to the requirements of Code Section 409A. If any Award would be considered “deferred compensation” as defined under Code Section 409A (“Deferred Compensation”), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section 2.6 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A. A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award that is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Unless otherwise provided in a valid election form intended to comply with Code Section 409A, all Awards that are considered Deferred Compensation hereunder shall settle and be paid in no event later than 21∕2 months following the end of the calendar year with respect to which the Award’s substantial risk of forfeiture lapsed. Section 2.7 Effect of Termination of Service on Awards. The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among other things, the reason(s) for the Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth in an Award Agreement or as set forth in any employment or severance agreement entered into by and between the Company and/or a Subsidiary and the Participant, the following provisions shall apply to each Award granted under this Plan: (a) Upon the Participant’s Termination of Service for any reason other than due to Disability, death, Retirement or Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by the Participant at the date of termination, and may be exercised only for a period of three (3) months following termination and any Restricted Stock or Restricted Stock Units that have not vested as of the date of Termination of Service shall expire and be forfeited. (b) In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised (whether or not vested), and all Restricted Stock Awards and Restricted Stock Units that have not vested, shall expire and be forfeited. (c) Upon Termination of Service on account of Disability or death, all Stock Options shall be fully exercisable, whether or not then exercisable, and all Restricted Stock Awards and Restricted Stock Units shall immediately vest as to all shares subject to an outstanding Award at the date of Termination of Service. Unless the Committee specifies otherwise, Stock Options may be exercised for a period of one (1) year following Termination of Service due to death or Disability, or the remaining unexpired term of the Stock Option, if less; provided, however, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee’s death must have occurred while employed or within three (3) months after Termination of Service. In the event of Termination of Service due to Retirement, a Participant’s vested Stock Options shall be exercisable for one (1) year following Termination of Service, provided that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following Termination of Service due to Retirement and all Stock Options, Restricted Stock Awards or Restricted Stock Units that have not vested as of as of the date of Termination of Service due to Retirement shall expire and be forfeited. (d) Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of the Stock Option. (e) Notwithstanding the provisions of this Section 2.7, the effect of a Change in Control on the vesting/ exercisability of Stock Options, Restricted Stock Awards, Restricted Stock Units and Performance Awards is as set forth in Article 4. Section 2.8 Holding Period for Vested Awards. As a condition of receipt of an Award, the Award Agreement may require a Participant to hold a vested Award or shares of Stock received upon exercise of a Stock Option for a period of time specified in the Award Agreement (“Holding Period”). In connection with the foregoing, a Participant may be required to retain direct ownership of such shares until the earlier of (i) the expiration of the Holding Period following the date of vesting or (ii) such person’s Termination of Service with the Company and any Subsidiary. The foregoing limitation, if applicable, shall not apply to the extent that an Award vests due to death, Disability or an Involuntary Termination at or following a Change in Control, or to the extent that (x) a Participant directs the Company to withhold or the Company elects to withhold shares of Stock with respect to the vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the amount required to be withheld or (y) a Participant exercises a Stock Option by a net settlement, and in the case of (x) and (y) herein, only to the extent of the shares are withheld for tax purposes or for purposes of the net settlement.

  74. SHARES SUBJECT TO PLAN

    SHARES SUBJECT TO PLAN Section 3.1 Available Shares. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including shares purchased in the open market or in private transactions. Section 3.2 Share Limitations. (a) Share Reserve. Subject to adjustment under the provisions of this Section 3.2 and Section 3.4, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall be 500,000 shares of Stock. Awards under the Plan may be made in any combination of shares of Restricted Stock Awards, Restricted Stock Units or Stock Options in the discretion of the Committee. . (b) Computation of Shares Available. For purposes of this Section 3.2 and in connection with the granting of an Award, the number of shares of Stock available for the grant shall be reduced by the number of shares previously granted, subject to the following. If any shares subject to an Award are forfeited, an Award expires or otherwise terminates without issuance of shares, or an Award is settled for cash (in whole or in part) or otherwise does not result in the issuance of all or a portion of the shares subject to such Award, such shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, be added to the shares available for grant under the Plan Whether with reference to Awards granted under the Plan, to the extent that: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price; (ii) shares of Stock are withheld to satisfy tax withholding upon exercise or vesting of an Award granted hereunder; or (iii) shares are withheld to satisfy the Exercise Price of Stock Options in a net settlement of Stock Options, then the number of shares of Stock available shall be reduced by the gross number of Stock Options exercised or Stock returned to satisfy tax withholding, rather than by the net number of shares of Stock issued. Section 3.3 Corporate Transactions. (a) General. If the shares of Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, such adjustments and other substitutions shall be made to the Plan and to Awards in a manner the Committee deems equitable or appropriate taking into consideration the accounting and tax consequences, including such adjustments in the aggregate number and kinds of shares for which grants of Awards may be made under the Plan, the maximum number of shares of Stock that may be issued pursuant to Incentive Stock Options and, in the aggregate or to any Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Awards granted under the Plan. Any such adjustment in outstanding Stock Options shall not change the aggregate purchase price payable with respect to shares that are subject to the unexercised portion of the Stock Option outstanding but shall include a corresponding proportionate adjustment in the purchase price per share. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Stock Options, Restricted Stock Awards and Restricted Stock Units (including, without limitation, cancellation of Stock Options, Restricted Stock Awards and Restricted Stock Units in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange of Stock Options, Restricted Stock Awards and Restricted Stock Units using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. (b) Merger in which Company is Not Surviving Entity. In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise set forth in the agreement relating to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the Plan that are outstanding immediately prior to such merger, consolidation or other business combination shall be converted into Stock Options to purchase voting common equity securities of the business entity that survives such merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger. The Committee or the agreement related to such merger, consolidation or other business reorganization may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash (or acquirer stock) payment per share of Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over the Exercise Price of the Stock Option being canceled; provided, further, that in the event the Exercise Price of outstanding Stock Options exceeds the value to be exchanged for an outstanding share of Stock (an “Underwater Stock Option”) in such merger, consolidation or other business reorganization, the Committee may, in its discretion, cancel and terminate such Underwater Stock Options without the consent of the holder of the Stock Option and without any payment to such holder. Section 3.4 Delivery of Shares. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following: (a) Compliance with Applicable Laws. Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any Exchange or similar entity. (b) Certificates. To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be made on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.

  75. CHANGE IN CONTROL

    CHANGE IN CONTROL Section 4.1 Consequence of a Change in Control. Subject to the provisions of Section 3.3 (relating to the adjustment of shares and cancellation of Stock Options in exchange for a cash or stock payment of the in-the-money value) and except as otherwise provided in the Plan or an Award Agreement and unless the Committee determines otherwise: (a) Upon an Involuntary Termination at or following a Change in Control, all Service-based Stock Options then held by the Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the Stock Option). All Stock Options may be exercised for a period of one (1) year following an Involuntary Termination following a Change in Control, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following a termination of employment. (b) Upon an Involuntary Termination at or within 24 months following a Change in Control, all Service-based Awards of Restricted Stock Awards and Restricted Stock Units, shall be fully earned and vested. (c) Upon an Involuntary Termination at or following a Change in Control, all Performance Awards shall vest at the greater of the target level of performance or actual annualized performance measured as of the most recent completed fiscal quarter. (d) Notwithstanding anything in the Plan to the contrary, in the event of a Change in Control in which the Company is not the surviving entity, any Awards granted under the Plan that are outstanding immediately prior to such Change in Control shall become fully vested in the event the successor entity does not assume the Awards granted under the Plan and Performance Awards shall vest at the rate specified in Section 4.1(c) of the Plan. Section 4.2 Definition of Change in Control. For purposes of the Plan, unless otherwise provided in an Award Agreement, a “Change in Control” shall be deemed to have occurred upon the earliest to occur of the following: (a) Merger: The Company merges into or consolidates with another entity, or merges another or corporation into the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation; (b) Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than a Schedule 13G) required under Sections 13(d) or 14(d) of the Exchange Act, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities; provided, however, this clause (b) shall not apply to beneficial ownership of the Company’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities; (c) Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s board of directors; or (d) Sale of Assets: The Company sells to a third party all or substantially all of its assets. Notwithstanding anything herein to the contrary (including clauses (a) through (d) above), a Change in Control shall not be deemed to occur as a result of, or in connection with, the issuance by the Company of Stock (whether in an original issuance or from treasury shares), or securities convertible into or exercisable for such shares, in one transaction or a series of related transactions, including, without limitation, any issuance occurring in connection with a merger, consolidation, reorganization, recapitalization, business combination or other acquisition transaction, and including any change in beneficial ownership of the Company’s voting securities or any change in the composition of the Board of Directors arising from or related to such issuance. Notwithstanding anything herein to the contrary, this definition of Change in Control will conform to the requirements of Code Section 409A and any provision in this definition inconsistent therewith will be null and void.

  76. COMMITTEE

    COMMITTEE Section 5.1 Administration. The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board of Directors shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members. Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Awards that are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the Exchange Act. The Board of Directors, or if necessary to maintain compliance with the applicable listing standards, those members of the Board of Directors who are “independent directors” under the corporate governance statutes or rules of any Exchange on which the Company lists, or has listed or seeks to list its securities, may, in their discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee. Section 5.2 Powers of Committee. The Committee’s administration of the Plan shall be subject to the following: (a) The Committee will have the authority and discretion to select from among the Company’s and its Subsidiaries’ Employees and Directors those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, features, (including automatic exercise in accordance with Section 7.18) performance criteria, restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards, to cancel or suspend Awards (subject to the restrictions imposed by Article 6) and to reduce, eliminate or accelerate any restrictions applicable to an Award at any time after the grant of the Award, or to extend the time period to exercise a Stock Option, provided that such extension is consistent with Code Section 409A. (b) The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan. (c) The Committee will have the authority to define terms not otherwise defined herein. (d) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the articles of incorporation and bylaws of the Company and applicable state corporate law. (e) The Committee will have the authority to: (i) suspend a Participant’s right to exercise a Stock Option in a particular manner (i.e., such as a “cashless exercise” or “broker-assisted exercise”) during a blackout period (or similar restricted period) (a “Blackout Period”) to the extent that the Committee deems it necessary or in the best interests of the Company in order to comply with the securities laws and regulations issued by the SEC; and (ii) to extend the period to exercise a Stock Option by a period of time equal to the Blackout Period, provided that the extension does not violate Section 409A of the Code, the Incentive Stock Option requirements or applicable laws and regulations. Section 5.3 Delegation by Committee. Except to the extent prohibited by applicable law, the applicable rules of an Exchange upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including (a) delegating to a committee of one or more members of the Board of Directors who are not “Disinterested Board Members,” the authority to grant Awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board of Directors who would be eligible to serve on the Compensation Committee of the Company pursuant to the listing requirements imposed by any Exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant awards under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any awards so granted. Any such allocation or delegation may be revoked by the Committee at any time. Section 5.4 Information to be Furnished to Committee. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with data and information it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee any evidence, data or information as the Committee considers desirable to carry out the terms of the Plan. Section 5.5 Committee Action. The Committee shall hold meetings and may make administrative rules and regulations as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee, including interpretations of provisions of the Plan, shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf.

  77. GENERAL TERMS

    GENERAL TERMS Section 7.1 No Implied Rights. (a) No Rights to Specific Assets. Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property that the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right, evidenced by an Award Agreement, to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. (b) No Contractual Right to Employment or Future Awards. The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless the right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan. (c) No Rights as a Stockholder. Except as otherwise provided in the Plan or in an Award Agreement, no Award shall confer upon the holder thereof any rights as a stockholder of the Company before the date on which the individual fulfills all conditions for receipt of such rights. Section 7.2 Transferability. Except as otherwise so provided by the Committee, Stock Options under the Plan are not transferable except: (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust, or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of this Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of the transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other than ISOs) under the Plan; provided, however, that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of Immediate Family Members or to charitable organizations, and; provided, further, that the transfers are not made for consideration to the Participant. Awards of Restricted Stock shall not be transferable, except in the event of death, before the time that the Awards vest. A Restricted Stock Unit Award is not transferable, except in the event of death, before the time that the Restricted Stock Unit Award vests and property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant’s beneficiary. A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee. Section 7.3 Designation of Beneficiaries. A Participant may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time-to-time revoke or amend the designation. Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order); provided, however, that if the Committee is in doubt as to the entitlement of the beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone. Section 7.4 Non-Exclusivity. Neither the adoption of this Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval (and any subsequent approval by the stockholders of the Company) shall be construed as creating any limitations on the power of the Board of Directors or the Committee to adopt other incentive arrangements as may be deemed desirable, including, without limitation, the granting of Restricted Stock Awards, Restricted Stock Units and/or Stock Options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. Section 7.5 Award Agreement. Each Award granted under the Plan shall be evidenced by an Award Agreement. A copy of the Award Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant, and the Committee may, but need not require, that the Participant sign a copy of the Award Agreement. In the absence of a specific provision in the Award Agreement, the terms of the Plan shall control. In the event of a conflict between the terms of an Award Agreement and the Plan, the terms of the Plan will control. Section 7.6 Form and Time of Elections; Notification Under Code Section 83(b). Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service or as otherwise required by the Committee. This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b). Section 7.7 Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other written information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties. Section 7.8 Tax Withholding. (a) Payment by Participant. Each Participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the Participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any taxes from any payment of any kind otherwise due to the Participant. The Company’s obligation to deliver evidence of stock ownership to any Participant is subject to and conditioned on tax withholding obligations being satisfied by the Participant.

  78. DEFINED TERMS; CONSTRUCTION

    Notwithstanding the foregoing, in order to terminate for Good Reason, a Participant must give sixty (60) days’ notice to the Company or the Subsidiary for whom the Participant is employed of the Good Reason condition following its occurrence and the Company or Subsidiary, as applicable, shall have thirty (30) days to cure the Good Reason condition, with termination occurring within thirty (30) days of the expiration of the cure period. Any distribution of an Award subject to Code Section 409A shall be subject to the distribution timing rules of Code Section 409A, including any delay in the distribution of such Award, which rules shall be set forth in the Award Agreement. “Holding Period” has the meaning ascribed to it in Section 2.8. “Immediate Family Member” means with respect to any Participant: (i) any of the Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (ii) any natural person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant); (iii) a trust in which any combination of the Participant and persons described in section (i) and (ii) above own more than fifty percent (50%) of the beneficial interests; (iv) a foundation in which any combination of the Participant and persons described in sections (i) and (ii) above control management of the assets; or (v) any other corporation, partnership, limited liability company or other entity in which any combination of the Participant and persons described in sections (i) and (ii) above control more than fifty percent (50%) of the voting interests. “Involuntary Termination” means the Termination of Service of a Participant by the Company or Subsidiary, other than a termination for Cause, or termination of employment by an Employee Participant for Good Reason. “Incentive Stock Option” or “ISO” has the meaning ascribed to it in Section 2.1(a). “Non-Qualified Option” means the right to purchase shares of Stock that is either (i) granted to a Participant who is not an Employee, or (ii) granted to an Employee and either is not designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the Code. “Performance Award” means an Award that vests in whole or in part upon the achievement of one or more specified performance measures, as determined by the Committee. Regardless of whether an Award is subject to the attainment of one or more performance measures, the Committee may also condition the vesting thereof upon the continued Service of the Participant. The conditions for grant or vesting and the other provisions of a Performance Award (including without limitation any applicable performance measures) need not be the same with respect to each Participant. A Performance Award shall vest, or as to Restricted Stock Units be settled, after the Committee has determined that the performance goals have been satisfied. Performance measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share; basic cash earnings per share; diluted earnings per share; return on equity; net income or net income before taxes; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average assets ratio; efficiency ratio; financial return ratios; increase in revenue; total stockholder return; net operating income, operating income; net interest margin or net interest rate spread; stock price; assets, growth in assets, loans or deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits, growth of loans, loan production volume, non-performing loans; regulatory compliance or safety and soundness; achievement of balance sheet or income statement objectives or strategic business objectives, or any combination of these or other measures. Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures may result in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the impact of an event or occurrence which the Committee determines should appropriately be excluded, including: (i) extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate. Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee. “Restricted Stock” or “Restricted Stock Award” has the meaning ascribed to it in Sections 2.1(b) and 2.3. “Restricted Stock Unit” has the meaning ascribed to it in Sections 2.1(c) and 2.4. “Restriction Period” has the meaning set forth in Section 2.4(b)(iii). “Retirement” means retirement from employment with the Company or a Subsidiary in accordance with the then current retirement policies of the Company or a Subsidiary, as applicable, or as otherwise set forth in an Award Agreement. “Retirement” with respect to a non-employee Director means the termination of service from the Board(s) of Directors of the Company and any Subsidiary following written notice to such Board(s) of Directors of the non-employee Directors intention to retire, or as otherwise set forth in an Award Agreement. Notwithstanding the foregoing, unless the Committee specifies otherwise at the time of an Award, an Employee who continues to serve on the Board following retirement as a Director or a Director who continues to serve as an advisory board member or director emeritus shall not be deemed to have terminated due to Retirement until both Service as an Employee and Director, or in the latter case, as a Director and advisory board member or director emeritus has terminated. “SEC” means the United States Securities and Exchange Commission.