DEF 14A of American Water Works Company, Inc., Mar 26, 2024

DEF 14A of American Water Works Company, Inc.

Filed Mar 26, 2024 · FY20230001193125-24-077207

Open on EDGAR

  1. DIRECTOR NOMINEES

    DIRECTOR NOMINEES The following table presents summary information about each of our nine (9) director nominees, as well as their standing committee memberships and positions as of the date of this proxy statement. The table below also discloses the Board’s determination as to the independence of each nominee under the listing standards of the New York Stock Exchange, or the NYSE, relevant rules of the Securities and Exchange Commission, or the SEC, and the Board’s categorical standards for director independence. Each director is elected annually.

  2. DIRECTOR NOMINEES

    | Name | Age | Director Since | Occupation | Independent? | Standing Committee Memberships/Position | | Jeffrey N. Edwards | 63 | 2018 | Vice Chairman, New Vernon Capital (non-executive officer role) | Yes | · Audit, Finance and Risk (Chair) · Nominating/Corporate Governance | | Martha Clark Goss | 74 | 2003 | Retired Chief Operating Officer and Chief Financial Officer of Amwell Holdings/Hopewell Holdings LLC | Yes | · Audit, Finance and Risk · Executive Development and Compensation | | M. Susan Hardwick | 61 | 2022 | President and Chief Executive Officer of American Water (our principal executive officer) | No | None | | Kimberly J. Harris | 59 | 2019 | Retired President and Chief Executive Officer of Puget Energy, Inc. and Puget Sound Energy, Inc. | Yes | · Nominating/Corporate Governance (Chair) · Executive Development and Compensation · SETO | | Laurie P. Havanec | 63 | 2022 | Executive Vice President and Chief People Officer of CVS Health Corporation | Yes | · Executive Development and Compensation · SETO | | Julia L. Johnson | 61 | 2008 | President of Net Communications, LLC | Yes | · Executive Development and Compensation · Nominating/Corporate Governance | | Patricia L. Kampling | 64 | 2019 | Retired Chairman and Chief Executive Officer of Alliant Energy Corporation | Yes | · Executive Development and Compensation (Chair) · Audit, Finance and Risk · SETO | | Karl F. Kurz | 62 | 2015 | Private investor and Retired Chief Operating Officer, Anadarko Petroleum Corporation | Yes | Non-Executive Board Chair | | Michael L. Marberry | 65 | 2022 | Retired President and Chief Executive Officer of J.M. Huber Corporation | Yes | · SETO (Chair) · Audit, Finance and Risk · Nominating/Corporate Governance |

  3. DIRECTOR NOMINEES

    | AMERICAN WATER | 2024 PROXY STATEMENT | | iii |

  4. BOARD OF DIRECTORS HIGHLIGHTS - BY THE NUMBERS

    BOARD OF DIRECTORS HIGHLIGHTS - BY THE NUMBERS Presented below are certain key metrics about our director nominees:

  5. DIRECTOR NOMINEE QUALIFICATIONS, EXPERIENCE AND DIVERSITY

    DIRECTOR NOMINEE QUALIFICATIONS, EXPERIENCE AND DIVERSITY The following matrix highlights the key skills, qualifications and experiences, as well as diversity characteristics, of our director nominees. Diversity information is based upon voluntary self-identification.

  6. DIRECTOR NOMINEE QUALIFICATIONS, EXPERIENCE AND DIVERSITY

    | iv | | AMERICAN WATER | 2024 PROXY STATEMENT |

  7. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  8. DIRECTOR NOMINEES

    DIRECTOR NOMINEES We have provided below for each of our nine director nominees a summary of biographical and committee information as of the date of this proxy statement.

  9. DIRECTOR NOMINEES

    | JEFFREY N. EDWARDS Independent Director Age 63 Director Since 2018 Committees Audit, Finance and Risk (Chair) Nominating | Other Current Public Company Boards: · AAR CORP. (NYSE: AIR), a diversified worldwide provider of aviation and defense products and services, since March 19, 2024 · Raymond James Financial, Inc. (NYSE: RJF), a diversified financial services company, since 2014 (serving as Lead Independent Director since 2023) Business Experience: · Vice Chairman, New Vernon Capital, since March 8, 2024, and Chief Operating Officer, New Vernon Capital, from 2009 to March 7, 2024 · Various senior executive positions held during 22 years at Merrill Lynch & Co., including Vice Chairman, Chief Financial Officer and Head of Global Capital Markets · Director, Medusind Solutions India Private Limited and Medusind Solutions, Inc., from 2012 to 2019 Experience and Qualifications to Serve on the Board: · Mr. Edwards’ current executive leadership position with an investment advisory firm demonstrates focus on growth and strategic planning. · Longstanding executive experience with a leading global capital markets and financial services firm provides Mr. Edwards with a substantive understanding of many issues confronting our business, including capital markets needs, strategic planning, growth opportunities and a variety of operational matters. |

  10. DIRECTOR NOMINEES

    | MARTHA CLARK GOSS Independent Director Age 74 Director Since 2003 Committees Audit, Finance and Risk ED&CC | Other Current Public Company Boards: · Neuberger Berman Mutual Funds, since 2007 Past Public Company Boards: · Allianz Life Insurance Company of New York, from 2005 to 2023 Business Experience: · Chief Operating Officer and Chief Financial Officer of Amwell Holdings/Hopewell Holdings LLC, a holding company and investment vehicle for investments in healthcare related companies, from 2003 until 2014 · Chief Financial Officer of The Capital Markets Company, from 1999 until 2001 · Chief Financial Officer of Booz Allen Hamilton Holding Corporation (formerly Booz Allen Hamilton Inc.), a consulting firm, from 1995 to 1999 · Various senior executive positions at Prudential Insurance Company, or Prudential, from 1981 to 1995, including President of Prudential Power Funding Associates, the investment arm of Prudential responsible for electric and gas utilities and alternative energy projects, and Senior Vice President, Enterprise Risk Management Experience and Qualifications to Serve on the Board: · Ms. Goss’ extensive financial, investment, and governance experience provides valuable insights to the Board and its committees. · Experience as President of an investment subsidiary of Prudential, responsible for substantial investments in electric and gas public utilities and alternative energy projects, provides her with considerable knowledge regarding public utilities. · Experience as Senior Vice President, Enterprise Risk Management, at Prudential enables Ms. Goss to provide the Board with expertise in risk management. |

  11. DIRECTOR NOMINEES

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 19 |

  12. DIRECTOR NOMINEES

    | M. SUSAN HARDWICK President and Chief Executive Officer, and Director Age 61 Director Since 2022 | Other Current Public Company Boards: · New Jersey Resources Corporation (NYSE: NJR), a diversified energy services company, since 2020 Business Experience: · President and Chief Executive Officer since February 2022 · Chief Financial Officer, from July 2019 to May 2022; joined the Company in June 2019 as Vice President—Finance · Held various senior executive positions with Vectren Corporation, including Executive Vice President and Chief Financial Officer, Senior Vice President, Finance, and Vice President, Controller and Assistant Treasurer, from January 2000 until its sale to CenterPoint Energy, Inc. in February 2019 Experience and Qualifications to Serve on the Board: · Ms. Hardwick’s extensive knowledge regarding our business and industry, by virtue of her service as our principal executive officer, and previously as our principal financial officer, enables her to provide valuable insights regarding our strategies, operations, finance, liquidity, business development, investor relations, capital resources and administration. · Her approximately 24 years of service in various senior executive positions with regulated, investor-owned utilities, coupled with her public accounting background, gives her an intimate knowledge of regulated utility operational, financial and accounting matters. |

  13. DIRECTOR NOMINEES

    | KIMBERLY J. HARRIS Independent Director Age 59 Director Since 2019 Committees Nominating (Chair) ED&CC SETO | Other Current Public Company Boards: · U.S. Bancorp (NYSE: USB), a bank holding company, since 2014 · Ameren Corp. (NYSE: AEE), a public utility holding company, since January 1, 2024 Past Public Company Boards: · Puget Energy, Inc. and Puget Sound Energy, Inc. (“Puget Energy”), Washington state’s largest utility, from 2011 to 2020 Business Experience: · Chief Executive Officer of Puget Energy, from March 2011 until January 2020. At Puget Energy, Ms. Harris held various other senior executive positions, including: § President, from July 2010 to August 2019 § Executive Vice President and Chief Resource Officer, from May 2007 until July 2010 § Senior Vice President Regulatory Policy and Energy Efficiency, from 2005 to May 2007 Experience and Qualifications to Serve on the Board: · Ms. Harris’ significant background and experience as a chief executive officer provides valuable leadership perspective to our Board. · Ms. Harris’ focus on safety in her executive leadership role corresponds with our zero incidents and injuries safety program goal. · Ms. Harris’ leadership role in the day-to-day operations of a regulated utility provides critical oversight and experience relevant to our regulated operations. · Ms. Harris’ experience in environmental stewardship and customer perspectives focused on the utility industry provides the Board with valuable expertise in these core strategic areas. |

  14. DIRECTOR NOMINEES

    | 20 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  15. DIRECTOR NOMINEES

    | LAURIE P. HAVANEC Independent Director Age 63 Director Since 2022 Committees ED&CC SETO | Business Experience: · Executive Vice President, Chief People Officer, CVS Health Corporation, since February 2021 · Executive Vice President, Chief People Officer, Otis Worldwide Corporation, from 2019 to February 2021 · Vice President, Talent, United Technologies Corporation, from 2017 to 2019 · Vice President, Human Resources-Institution Business, Aetna Inc., from 2013 to 2017 · Vice President, Talent Management and Human Resources, Aetna International Business, Aetna Inc., from 2012 to 2013 Experience and Qualifications to Serve on the Board: · Ms. Havanec’s current executive leadership position with a Fortune 10 health services company demonstrates experience with issues involving human resources, talent acquisition and development, change management, ESG and culture. · Her longstanding executive and human resources experience across various public companies provides Ms. Havanec with deep substantive understanding on a wide range of issues confronting our business, including, for example: talent development; ID&E; compensation and benefits; executive succession planning; ESG; and labor and employee relations. |

  16. DIRECTOR NOMINEES

    | JULIA L. JOHNSON Independent Director Age 61 Director Since 2008 Committees ED&CC Nominating | Other Current Public Company Boards: · MasTec, Inc. (NYSE: MTZ), a utility infrastructure contractor, since 2002 Past Public Company Boards: · FirstEnergy Corp., a transporter and producer of energy, from 2011 to 2022 · NorthWestern Corporation, a transporter and producer of energy, from 2004 to 2021 Business Experience: · President of Net Communications, LLC, a strategy consulting firm specializing in the communications, energy and information technology public policy arenas, since 2001 Experience and Qualifications to Serve on the Board: · Ms. Johnson’s service on a state public service commission with regulatory oversight over Florida’s electric, telecommunications and water and wastewater industries, as well as her current leadership of a firm specializing in regulatory analysis and legal strategy, enables her to provide valuable perspectives on regulatory and public policy matters affecting our operations. · Ms. Johnson’s current and past public company board experience enables her to share with the Board relevant and experiential insights on a variety of public company matters. |

  17. DIRECTOR NOMINEES

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 21 |

  18. DIRECTOR NOMINEES

    | PATRICIA L. KAMPLING Independent Director Age 64 Director Since 2019 Committees ED&CC (Chair) Audit, Finance and Risk SETO | Other Current Public Company Boards: · Xcel Energy Inc. (Nasdaq: XEL), a utility holding company since 2020 · Board of Trustees, Fidelity’s Equity and High Income Funds, since May 2020, and Advisory Board Member, from February 2020 to May 2020 Past Public Company Boards: · Briggs and Stratton Corporation, a producer of gasoline engines for outdoor power equipment, from 2011 to 2021 · Alliant Energy Corporation, an investor-owned public utility holding company, from 2012 to 2019 Business Experience: · Chief Executive Officer and Chairman of the Board, Alliant Energy Corporation, from April 2012 to June 2019 · Board Member, American Transmission Company, a privately held electricity transmission and distribution utility company, from June 2011 to June 2019 Experience and Qualifications to Serve on the Board: · Ms. Kampling’s experience in strategic leadership, operations, customer perspective, legal and regulatory, human resources/executive compensation, risk management and environmental and safety matters allows her to contribute significantly to the Board’s oversight on these core strategic functions. · Ms. Kampling’s advocacy for workforce development, diversity and community vitality provides the Board with valuable insights on our focus on people, social responsibility and operational excellence. |

  19. DIRECTOR NOMINEES

    | KARL F. KURZ Board Chair Independent Director Age 62 Director Since 2015 Board Chair Since 2018 | Other Current Public Company Boards: · Royal Helium Ltd. (TSX-V: RHC), a company focused on the exploration and development of primary helium in southern Saskatchewan, since May 2023 · Devon Energy Corporation (NYSE: DVN), a U.S. energy producer, since 2021 · Texas Pacific Land Corporation (NYSE: TPL), an owner of land in the State of Texas, since 2022 Past Public Company Boards: · WPX Energy, Inc., from 2014 until its merger of equals with Devon Energy Corporation in 2021 · SemGroup Corporation, from 2009 to 2019 Business Experience: · Mr. Kurz is a private investor in the energy industry · Various executive and management positions with Anadarko Petroleum Corporation, Vastar Resources, Inc. and ARCO Oil and Gas Company Experience and Qualifications to Serve on the Board: · Mr. Kurz’s long history of working in the oil and gas industry is invaluable with respect to the national water-energy nexus discussion, smart water grid development and water supply issues. · His experience in finance and capital markets brings additional insights to us and the Board regarding our operations, including with respect to liquidity and capital resources. |

  20. DIRECTOR NOMINEES

    | 22 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  21. DIRECTOR NOMINEES

    | MICHAEL L. MARBERRY Independent Director Age 65 Director Since 2022 Committees SETO (Chair) Audit, Finance and Risk Nominating | Past Public Company Boards: · AdvanSix Inc., a manufacturer of nylon resin and other related chemical intermediates, from October 2016 to June 2023 · Sigma-Aldrich Corporation, a global life sciences and biotechnology company, from 2012 to 2015 Business Experience: · Various senior executive positions over 25 years at J.M. Huber Corporation, a global, family-owned, specialty engineered materials manufacturing company, including: § President and Chief Executive Officer, from 2009 to 2022 § President, Huber Engineered Materials, from 2006 to 2009 § Chief Financial Officer, from 2002 to 2006 § Senior Vice President, Corporate Strategy and Development, from 1997 to 2002 Experience and Qualifications to Serve on the Board: · Mr. Marberry’s long history of executive experience in the chemical manufacturing industry provides invaluable insights to the Board with respect to technology and water infrastructure and supply issues. · His experience in finance and capital markets, occupational and safety processes, environmental management, and business development brings additional insights regarding safety, growth, ESG and operational excellence, among other areas. |

  22. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION As described in the table below, during 2023, our non-employee directors received annual cash retainers, paid in quarterly installments, for their service on the Board. Additionally, each non-employee director received an annual grant of approximately $155,000 in equity compensation ($250,000 for the Board Chair). Our President and Chief Executive Officer did not receive any additional compensation for serving as a director. Our non-employee director cash compensation as of the date of this proxy statement is as follows:

  23. DIRECTOR COMPENSATION

    | Director | Annual Cash Retainer | | Board Chair | $200,000 | | Audit, Finance and Risk Committee Chair | $145,000 | | ED&CC, Nominating Committee and SETO Committee Chairs | $140,000 | | Other Non-Employee Directors | $120,000 |

  24. DIRECTOR COMPENSATION

    We do not pay our directors a separate fee for attendance at Board or committee meetings. For calendar year 2023, Semler Brossy Consulting Group LLC, or Semler Brossy, the ED&CC’s then independent compensation consultant, reviewed American Water’s non-employee director pay program for market competitiveness. The review determined that the cash and equity compensation paid to our non-employee directors was positioned at the median of our 2023 peer group (as defined below in “Compensation Discussion and Analysis—Compensation Determinations and Pay Competitiveness in 2023” beginning on page 33 of

  25. DIRECTOR COMPENSATION

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 25 |

  26. DIRECTOR COMPENSATION

    this proxy statement), and that our Board Chair’s total compensation was also positioned at the median for non-executive chairpersons among the companies in our 2023 peer group with a non-executive chairperson. As a result of the review, and based on, among other things, data and analyses provided by Semler Brossy, the ED&CC recommended, and the independent members of the Board approved, modest increases in the base elements of our director compensation, which brought each element to approximately the 75th percentile of the compensation peer group, including:

  27. DIRECTOR COMPENSATION

    | · | an increase in the director annual base cash compensation from $115,000 to $120,000; and |

  28. DIRECTOR COMPENSATION

    | · | an increase in the director annual base equity compensation from $150,000 to $155,000. |

  29. DIRECTOR COMPENSATION

    Each of these compensation decisions were effective as of May 10, 2023. No changes were made to the premiums paid to our non-executive Board Chair or the committee chairs. Equity compensation for our non-employee directors is paid in the form of stock units under our 2017 Omnibus Plan. The actual number of stock units granted is based on the closing price of our common stock on the date of grant, which is typically the date the director is elected to the Board. The stock units vest on the date of grant and the shares underlying the stock units are distributed to the directors approximately 15 months after the date of grant, subject to earlier distribution in the event of a change of control or the termination of the director’s service on the Board. To the extent that a dividend is paid on our common stock prior to the time that shares of common stock may be distributed, the value of the dividend that would have been paid if the stock units had been outstanding shares of common stock is credited to an account for the director. Such dividend equivalents are payable to the director in a lump sum, in cash and without interest, and are paid when shares of common stock underlying the stock units are distributed to the director. Non-employee directors are reimbursed for expenses incurred in attending Board and committee meetings or other Company-related functions, and expenses incurred for attending up to one director continuing education program each year.

  30. DIRECTOR COMPENSATION TABLE

    DIRECTOR COMPENSATION TABLE The following table presents information regarding compensation earned or paid in 2023 as to each person who served as a non-employee member of the Board during that year. George MacKenzie, who did not wish to stand for re-election in 2023, served on the Board until May 10, 2023. Admiral Stavridis served as a member of the Board until his resignation effective February 12, 2024. Admiral Stavridis resigned from the Board to focus on all of his professional and personal obligations. There were no disagreements with the Company on any matter relating to its operations, policies or practices. The Company and the Board wish to thank Admiral Stavridis for his many years of service as a director. The table does not include amounts paid for reimbursement of travel expenses related to attending Board and committee meetings or other Company related functions, or any reimbursement of director educational expenses, and does not include compensation earned or paid as to the CEO. See “Executive Compensation” beginning on page 45 of this proxy statement for information relating to the CEO’s compensation.

  31. DIRECTOR COMPENSATION TABLE

    | Name | Fee Earned or Paid in Cash ($) | Stock Unit Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Jeffrey N. Edwards | $143,212 | $154,981 | $4,200 | $302,393 | | Martha Clark Goss | $118,212 | $154,981 | $4,200 | $277,393 | | Kimberly J. Harris | $138,212 | $154,981 | $4,200 | $297,393 | | Laurie P. Havanec | $118,212 | $154,981 | $855 | $274,048 | | Julia L. Johnson | $118,212 | $154,981 | $4,200 | $277,393 | | Patricia L. Kampling | $138,212 | $154,981 | $4,200 | $297,393 |

  32. DIRECTOR COMPENSATION TABLE

    | 26 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  33. DIRECTOR COMPENSATION TABLE

    | Name | Fee Earned or Paid in Cash ($) | Stock Unit Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Karl F. Kurz | $198,212(3) | $250,066 | $6,864 | $455,142 | | George MacKenzie | $57,500 | $— | $2,727 | $60,227 | | Michael L. Marberry | $118,212(4) | $154,981 | $855 | $274,048 | | James G. Stavridis | $138,212 | $154,981 | $4,200 | $297,393 |

  34. DIRECTOR COMPENSATION TABLE

    | (1) The amounts shown in this column reflect the grant date fair value of the stock units granted to the directors as part of their annual retainer. The grant date fair value was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, or ASC 718. See Note 10—Stock Based Compensation, in the Notes to Consolidated Financial Statements included in the 2023 Form 10-K for the assumptions used in determining grant date fair value. |

  35. DIRECTOR COMPENSATION TABLE

    | (2) Represents dividend equivalents paid in cash in 2023 at the time of the distribution of shares underlying stock unit awards. |

  36. DIRECTOR COMPENSATION TABLE

    | (3) Mr. Kurz elected to defer the receipt of 100 percent of his 2023 annual cash retainer fees. |

  37. DIRECTOR COMPENSATION TABLE

    | (4) Mr. Marberry elected to defer the receipt of 50 percent of his 2023 annual cash retainer fees. |

  38. DIRECTOR COMPENSATION TABLE

    The following table shows the aggregate number of stock units held by each person who served as a non-employee director as of December 31, 2023:

  39. DIRECTOR COMPENSATION TABLE

    | Name | Stock Units (#) | | Jeffrey N. Edwards | 1,035 | | Martha Clark Goss | 2,411 | | Kimberly J. Harris | 1,035 | | Laurie P. Havanec | 1,035 | | Julia L. Johnson | 7,678 | | Patricia L. Kampling | 1,035 | | Karl F. Kurz | 1,670 | | Michael L. Marberry | 1,035 | | James G. Stavridis | 1,035 |

  40. DIRECTOR COMPENSATION TABLE

    We did not grant stock options to non-employee directors in 2023 and none of the non-employee directors held any Company stock options as of December 31, 2023.

  41. Compensation Program Overview

    | · | our Long-Term Performance Plan, or LTPP, which is our long-term equity compensation program. |

  42. Summary of Executive Compensation Practices

    | | | | We do: | We do not: | | · Tie a considerable portion of executive pay to company performance · Weight equity compensation heavily towards performance stock units · Utilize an independent compensation consultant · Require executives to abide by stock ownership guidelines and stock retention requirements · Subject all NEO incentive-based compensation to clawback provisions · Complete an annual compensation program risk assessment, overseen by the ED&CC · Utilize double-trigger vesting of equity awards upon a change in control · Provide reasonable and customary severance arrangements to NEOs | · Provide excise tax gross-ups in our change in control arrangements · Provide employment agreements to our executives, other than customary employment offer letters · Allow hedging, pledging or short selling of our common stock by employees or directors · Allow buying of our common stock on margin by employees or directors · Provide excessive perquisites for executives · Distribute dividend equivalents on equity awards before they vest · Allow executives to sell or transfer stock if not in compliance with stock ownership guidelines, subject to exceptions · Provide for a supplemental executive retirement plan open to new participants |

  43. COMPENSATION DETERMINATIONS AND PAY COMPETITIVENESS IN 2023

    COMPENSATION DETERMINATIONS AND PAY COMPETITIVENESS IN 2023 For 2023, the ED&CC reviewed and approved all compensation paid to our NEOs, and made recommendations to the independent members of the Board with respect to compensation paid to the CEO, which the independent members of the Board approved. The CEO did not participate in the ED&CC’s recommendations regarding the CEO’s compensation and was excused from those portions of the ED&CC and Board meetings during which the CEO’s compensation was deliberated upon and approved. The ED&CC considered the CEO’s assessments of the performance of the other NEOs, as well as the CEO’s compensation recommendations regarding each such NEO’s base salary and their APP and LTPP target award opportunities. The ED&CC, with the CEO’s participation, discussed the performance of each NEO other than the CEO, and, after discussion and deliberation held in executive session, approved compensation determinations for such NEOs. The ED&CC engaged Semler Brossy as its independent compensation consultant through May 31, 2023. Beginning June 1, 2023, the ED&CC engaged Aon Human Capital Solutions, or Aon, as the independent compensation consultant after the completion of a request for proposal process. The Aon team was selected primarily because of its experience within the utility industry. The ED&CC assessed the independence of Semler Brossy and Aon and concluded that both were independent as determined under SEC and NYSE rules. Through its review of relevant benchmarking data and executive compensation trends presented by its independent compensation consultants, the ED&CC is able to assess competitive market compensation practices. Two of the primary ways the ED&CC evaluates and benchmarks our executive compensation arrangements and practices is to review them against market data in a Willis Towers Watson study comprised of 60 percent weighting on publicly traded utilities and 40 percent weighting on general industry companies, as well as to similar data on companies in our compensation peer group, as described below. The market survey of utility and energy industry companies includes only public utilities, which more closely resemble our business and operations. The ED&CC believes there is a strong likelihood that an executive officer’s skills will be transferable among these companies, and thus we would expect to compete with these companies and others for executive officer talent. The ED&CC referred to all of this benchmarking data as part of its review of general compensation practices and trends of the utility industry and our compensation peer group. In October 2022, the composition of our compensation peer group was reviewed by the independent compensation consultant and was reassessed by the ED&CC as part of its annual review to consider structural and methodology changes, as well as corporate transactions or other events that may affect the comparability of one or more of the constituent companies. In reviewing the appropriateness of our peer group companies, the ED&CC considers factors that most reflect our primary business of owning water and wastewater utilities subject to economic regulation by state utility commissions or similar entities, including, in decreasing order of relevance, consolidated total assets, market capitalization and consolidated revenues of companies that primarily operate (greater than 75 percent of revenue) as a regulated utility. After consideration of these factors, only companies that primarily operate as a regulated utility were selected as peer companies. In connection with this review, the ED&CC approved the removal of UGI Corporation from, and the addition of Public Service Enterprise Group, Inc. to, our 2023 compensation peer group. Throughout 2023, compensation benchmarking decisions and grants of PSU awards based upon relative TSR were made using the 2023 peer group of the companies listed in the table below. In December 2023, based on a review of our peer group’s pay practices and in consultation with Aon, the ED&CC approved changes to the 2024 APP. To align with our peer group, the ED&CC approved removing the provision that no payouts would be earned under the APP if the EPS performance measure was less than

  44. COMPENSATION DETERMINATIONS AND PAY COMPETITIVENESS IN 2023

    90 percent of target and also approved increasing the maximum payout to 200 percent for the non-financial APP measures. The ED&CC also approved including a return on equity, or ROE, performance measure to the 2024 LTPP. This additional LTPP financial measure aligns with our business strategy and is a key performance indicator in the utility industry. The 2024 LTPP awards are weighted 30 percent to time-based RSUs and 70 percent to PSUs, with the PSU component consisting of three performance measures including compounded EPS growth weighted at 35 percent, relative TSR weighted at 20 percent, and ROE weighted at 15 percent of the total LTPP award.

  45. COMPENSATION DETERMINATIONS AND PAY COMPETITIVENESS IN 2023

    | 2023 American Water Works Company, Inc. Compensation Peer Group | | | | Alliant Energy Corporation | Entergy Corporation | OGE Energy Corp. | | Ameren Corporation | Essential Utilities, Inc. | Pinnacle West Capital Corporation | | Atmos Energy Corporation | Evergy, Inc. | PPL Corporation | | CenterPoint Energy, Inc. | Eversource Energy | Public Service Enterprise Group, Inc. | | CMS Energy Corporation | NiSource Inc. | WEC Energy Group, Inc. |

  46. Compensation Philosophy and Objectives

    | · | focus pay on an appropriate mix of short- and long-term performance, with a proportionately greater emphasis on long-term compensation; |

  47. Compensation Philosophy and Objectives

    | · | build long-term, sustainable value for shareholders by emphasizing long-term performance- and equity-based compensation, and de-emphasizing short-term, cash-based compensation; |

  48. Compensation Philosophy and Objectives

    | · | align our core strategies of safety, customers, people, operational excellence and growth with our short-term APP performance measures; |

  49. 2023 Annual Performance Plan

    2023 Annual Performance Plan The APP is designed to provide a portion of a NEO’s at-risk compensation to be paid upon the achievement of our annual business objectives. The APP provides an opportunity for NEOs to earn cash payouts tied to the satisfaction of annual corporate performance goals. The 2023 target award opportunity for each NEO was equal to a percentage of each NEO’s base salary, based on the individual’s position with American Water. An APP award target is set by the ED&CC, together with the NEO’s other elements of compensation, in an effort to align the NEO’s annual total direct compensation generally with market pay for their position. For 2023, Ms. Hardwick’s APP target was increased from 110 percent to 120 percent of her base salary to maintain her total direct compensation within the competitive range of the benchmarking data. Information used to calculate the 2023 APP award payouts for each NEO is included in the table below.

  50. 2023 Annual Performance Plan

    | Named Executive Officer | Percentage of Base Salary | 2023 APP Target (1) | 2023 APP Payout Percentage | 2023 APP Award | | M. Susan Hardwick | 120% | $1,269,271 | 132.25% | $1,678,611 | | John C. Griffith | 100% | $748,989 | 132.25% | $990,538 | | Cheryl Norton | 75% | $494,560 | 132.25% | $654,055 | | James H. Gallegos | 75% | $464,890 | 132.25% | $614,817 | | Melanie M. Kennedy | 65% | $294,120 | 132.25% | $388,974 |

  51. 2023 Annual Performance Plan

    | (1) Target amounts are based on the prorated base salaries earned in 2023. |

  52. 2023 Annual Performance Plan

    The APP performance measures selected for 2023 align with our core business strategies of growth, customers, safety, operational excellence (in this case, environmental leadership) and people. The following table provides details on each performance measure.

  53. 2023 Annual Performance Plan

    | Strategy | Performance Measure | How We Calculate the Measure | Why We Use this Measure | | Growth | Adjusted Earnings Per Share (Adjusted EPS) | Adjusted EPS is a non-GAAP measure which is calculated as diluted EPS calculated in accordance with GAAP as reported in the Company’s audited consolidated financial statements, adjusted to eliminate the impact of the items shown in Part A of Appendix A. | Adjusted EPS is a key measure of our financial and operational success, and achieving our earnings and strategic goals creates long-term shareholder value, provides greater total return to our shareholders, and benefits customers by contributing to strong credit metrics to provide for cost-effective financing of necessary capital and operational investments. | | Customers | Customer Satisfaction | A quarterly survey is conducted by a third-party firm of random regulated water and wastewater customers, and the results are aggregated and weighted for each individual state. | We are committed to delivering the best customer experience, setting our goal to achieve top-quartile customer satisfaction. Our service quality and ability to satisfy our customers are closely tied to the trust our customers extend to us each day. | | Safety | OSHA Recordable Injury Rate (ORIR) | ORIR is a measure of injuries and illnesses requiring treatment beyond first aid for every 200,000 hours worked. | ORIR allows us to continue our momentum toward becoming an industry leader with respect to the safety and well-being of our workforce. | | | Days Away, Restricted and Transfer (DART) severity rate | DART injury rate measures the number of OSHA defined recordable injuries that resulted in days away from work, work restrictions, or job duty/position transfers in the calendar year per 100 employees. | DART reflects serious incidents that result in the employee being placed in restricted duty or time away from work. This aligns with both our safety and people strategies as we believe that our employees should return home in the same or better condition than when they arrived to work. |

  54. 2023 Annual Performance Plan

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 35 |

  55. 2023 Annual Performance Plan

    | Strategy | Performance Measure | How We Calculate the Measure | Why We Use this Measure | | Environmental Leadership | Drinking Water Compliance Notice of Violation (NOV) | This metric is determined by counting the overall number of drinking water notices of violation, or NOVs, received by the Company in accordance with internally established procedures, which may exclude NOVs for newly acquired systems and third-party violations, among others. | As part of our sustainability initiatives, we are committed to protecting the environment and maintaining our history of materially complying with, and in many cases, surpassing, minimum standards required by applicable laws and regulations. | | | Drinking Water Quality NOV | This metric is determined by counting the overall number of drinking water NOVs for maximum contaminant level exceedances received by the Company in accordance with internally established procedures, which may exclude NOVs related to newly acquired systems and associated with third-party violations, among others. | We are committed to excellent water quality and maintaining our history of materially complying with, and in many cases, surpassing, minimum standards required by applicable laws and regulations. | | People | Women Representation | This people metric is determined by dividing the number of employees who self-identify as female by the total employee headcount. | We are committed to closing the gender gap and maintaining a culture of inclusion. We recognize the benefits of increasing the percentage of women in our workforce to better reflect the customers and communities in which we serve. | | | Ethnic and Racial Diversity Representation | This people metric is determined by dividing the number of employees who self-identify as a member of a diverse racial or ethnic group by the total employee headcount. | We are committed to hiring diverse talent and believe that diversity creates stronger teams, better ideas, innovative ways of working, long-term sustainability and, ultimately, an organization that reflects the customers and communities in which we serve. |

  56. 2023 Annual Performance Plan

    For 2023, the maximum payout for each of the performance measures was set at 150 percent of target, except for the Adjusted EPS performance measure, which was set at 200 percent of target to reflect the rigor of this goal and to recognize the difficulty in achieving earnings growth significantly above our plan. No payouts would have been earned under the 2023 APP if EPS was less than 90 percent of target. The ED&CC determines the APP payout percentage, using the actual performance of each measure, as soon as reasonably practicable after the end of the year. The APP payout percentage is then computed by adding the weighted results achieved for each performance measure. The ED&CC has adopted guidelines to permit management to make adjustments to EPS for purposes of computing APP performance goals based on Adjusted EPS, to the extent greater than $0.02 per share. Please see Part A of Appendix A for details on Adjusted EPS. The ED&CC retains authority to approve other adjustments not covered by this authorization. The following table presents information regarding each of the performance measures used to determine the APP payout percentage, including the threshold, target and maximum performance levels for each measure, as well as the weighting assigned to each measure. If the threshold performance level for a performance measure is not met, there is no payout for that measure.

  57. 2023 Annual Performance Plan

    | 36 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  58. 2023 Annual Performance Plan

    | Performance Measure | Corporate Performance Factor Percentage | Threshold Performance (Weighting) | Target Performance (Weighting) | Maximum Performance (Weighting) | Actual Performance (Percentage Earned) | | Growth: Adjusted EPS (1) | 50.0% | $4.67 (0.0%) | $4.77 (50.0%) | $4.87 (100.0%) | $4.89 (100.0%) | | Customer: Customer Satisfaction | 15.0% | Fourth Quartile (0.0%) | Second Quartile (15.0%) | First Quartile (22.5%) | Second Quartile (16.5%) | | Safety: ORIR (2) | 7.5% | 0.77 (0.0%) | 0.62 (7.5%) | 0.59 (11.25%) | 0.86 (0%) | | Safety: DART Severity Rate (2) | 7.5% | 0.38 (0.0%) | 0.30 (7.5%) | 0.28 (11.25%) | 0.52 (0%) | | Environmental Leadership: Drinking Water Compliance | 7.5% | 12 (0.0%) | 6 (7.5%) | 4 (11.25%) | 9 (3.75%) | | Environmental Leadership: Drinking Water Quality | 7.5% | 4 (0.0%) | 2 (7.5%) | 0 (11.25%) | 0 (11.25%) | | People: Women Representation | 2.5% | 24.0% (0.0%) | 25.0% (2.5%) | 26.0% (3.75%) | 24.1% (0.25%) | | People: Ethnic and Racial Diversity Representation | 2.5% | 20.0% (0.0%) | 21.0% (2.5%) | 22.0% (3.75%) | 20.2% (0.50%) |

  59. 2023 Annual Performance Plan

    | (1) Adjusted EPS is a non-GAAP measure. See Part A of Appendix A for a reconciliation. |

  60. 2023 Annual Performance Plan

    | (2) This goal would not have been earned in the event of a preventable employee fatality during the year. |

  61. 2023 Annual Performance Plan

    Based upon our performance with regard to the financial and non-financial performance measures, the ED&CC certified an APP payout of 132.25 percent. Cash awards under the APP are generally paid to participants by March 15 of the year following the performance year.

  62. 2023 Long-Term Performance Plan

    2023 Long-Term Performance Plan The LTPP is designed to incentivize eligible participants to achieve our long-term business objectives by providing an opportunity to earn equity awards tied to our long-term goals and continued employment with the Company. LTPP awards are generally granted by the ED&CC in February of each year and allocated 30 percent to time-based RSUs and 70 percent to PSUs. PSU awards for 2023 were allocated equally between shares that may be earned based on TSR relative to the companies in the 2023 peer group and shares that may be earned based on the rate of our compounded EPS growth. Stock options were not granted as part of the LTPP. Generally, our RSU awards vest ratably over an approximate three-year period while a participant remains employed with us. PSU awards generally are earned ratably over a three-year performance period while employed, and the vesting of each PSU award is determined by the ED&CC following the end of the three-year performance period based on the satisfaction of pre-determined performance goals. To the extent an RSU award is unvested or a PSU award has not been earned, it is generally forfeited once a participant ceases to be employed with us or if the performance goals are not achieved; however, LTPP awards to certain NEOs may continue to vest after an early or normal retirement. See “—Ongoing and Post-Employment Arrangements and Benefit Plans—Terms of Outstanding Equity Grants” beginning on page 43 of this proxy statement for additional details. The ED&CC has adopted guidelines to permit management to make adjustments for purposes of LTPP performance goals based on EPS, to the extent greater than $0.02 per share. The ED&CC retains authority to approve other adjustments not covered by this authorization.

  63. 2023 Long-Term Performance Plan

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 37 |

  64. 2023 Long-Term Performance Plan

    We based the aggregate target value of LTPP awards on a percentage of each NEO’s salary. The following table presents a summary of the grant date fair value of LTPP target awards granted in 2023 for each NEO. Information regarding the number of shares underlying these awards is found in “Executive Compensation—2023 Grants of Plan-Based Awards” on page 48 of this proxy statement. To keep total targeted compensation in line with the competitive range of the benchmarking data, Ms. Hardwick’s LTPP award target for 2023, as a percentage of her base salary, was increased from 400 percent to 435 percent, and Ms. Norton’s LTPP award target for 2023, as a percentage of her annual base salary, was increased from 175 percent to 200 percent.

  65. 2023 Long-Term Performance Plan

    | Named Executive Officer | LTPP Target Award as a Percentage of Base Salary | Aggregate Grant Date Fair Value of LTPP Target Awards | Aggregate Grant Date Fair Value of RSUs | Aggregate Grant Date Fair Value of PSUs (TSR) | Aggregate Grant Date Fair Value of PSUs (EPS) | | M. Susan Hardwick | 435% | $4,654,564 | $1,396,347 | $1,629,096 | $1,629,121 | | John C. Griffith | 250% | $1,884,974 | $565,437 | $659,736 | $659,801 | | Cheryl Norton | 200% | $1,336,248 | $400,897 | $467,712 | $467,639 | | James H. Gallegos | 160% | $998,341 | $299,516 | $349,440 | $349,385 | | Melanie M. Kennedy | 120% | $546,560 | $163,942 | $191,352 | $191,266 |

  66. 2023 Long-Term Performance Plan

    The following table presents information regarding the performance measures related to the PSUs granted in 2023. Relative TSR is based on American Water’s total shareholder return compared to the total shareholder return performance of the companies in the 2023 peer group, during the three-year performance period from January 1, 2023, through December 31, 2025, assuming reinvestment of dividends during the performance period. The TSR metric enables us to encourage performance that increases shareholder value and also increases it to an extent that compares favorably relative to the companies in our 2023 peer group. Compounded EPS growth is based on the rate of EPS growth, compounded annually over the three-year period from January 1, 2023, through December 31, 2025, over our 2022 EPS. For 2023 LTPP awards, the threshold, target and maximum performance goals related to the compounded EPS growth rate metric for the three-year period from January 1, 2023, through December 31, 2025, compared to our 2022 adjusted EPS, were based on the relevant period of our long-term, five-year financial plan that was reviewed and approved by the Board in the fall of 2022. These goals were set by the ED&CC in December 2022, after review by its independent compensation consultant. These goals reflected the period of that financial plan whereby proceeds from the sales of HOS in December 2021 and New York American Water in January 2022 were to be redeployed over time into the regulated businesses as we transitioned to a substantially regulated business.

  67. 2023 Long-Term Performance Plan

    | 38 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  68. Performance Vesting of PSUs Granted in 2021

    Performance Vesting of PSUs Granted in 2021 In 2021, we granted two equally weighted types of PSUs to our NEOs: one with a three-year performance measure based on total shareholder return relative to companies in our 2021 peer group, and the other with a three-year performance measure based on the annual rate of our compounded adjusted EPS growth. The payouts of the two types of PSUs are summarized in the table below:

  69. Performance Vesting of PSUs Granted in 2021

    | Performance Measure | Threshold Performance (Weighting) | Target Performance (Weighting) | Maximum Performance (Weighting) | Actual Performance | Percentage of Target Award Earned | | Relative Total Shareholder Return | 25th percentile (25%) | 50th percentile (100%) | 90th percentile (200%) | 12th percentile | 0.00% | | Compounded Adjusted EPS Growth Rate | 6.0% (0%) | 8.0% (100%) | 10.0% (200%) | 9.91% (1) | 197.75% |

  70. Performance Vesting of PSUs Granted in 2021

    | (1) See Part B of Appendix A for a calculation of actual performance for this 2021 PSU award. |

  71. Performance Vesting of PSUs Granted in 2021

    Actual performance is based on the rate of EPS growth, compounded annually over the three-year period from January 1, 2021 through December 31, 2023, over our 2020 adjusted EPS. To reflect the sale of HOS in December 2021, in January 2022, the ED&CC approved the amendment and adjustment of the outstanding 2021 PSU awards based on our compounded EPS growth. See “Executive Compensation—2023 Summary Compensation Table—Modification of 2021 PSU Awards During 2022” beginning on page 47 for a discussion of these amendments and adjustments. The ED&CC certified the achievement of the requisite PSU performance measures in February 2024.

  72. Nonqualified Deferred Compensation Plan

    Nonqualified Deferred Compensation Plan The Nonqualified Savings and Deferred Compensation Plan for Employees of American Water Works Company, Inc. and its Designated Subsidiaries, or the Employee Deferred Compensation Plan, enables participants to defer up to 20 percent of their base salary and up to 100 percent of their APP award and provides benefits in excess of the maximum benefits that may be provided under the Savings Plan as a result of limits imposed by the Code. We refer to compensation in excess of those limits as “excess

  73. Nonqualified Deferred Compensation Plan

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 41 |

  74. Nonqualified Deferred Compensation Plan

    compensation.” Each of our NEOs is eligible to participate in the Employee Deferred Compensation Plan. We provide matching contributions on excess compensation using the same matching formulas as described above under the Savings Plan. In addition, for participants rehired or hired on or after January 1, 2006 (for 2023, all NEOs except Ms. Norton), we provide an employer defined contribution that is equal to 5.25 percent of the participant’s APP award plus the participant’s base salary in excess of the compensation limit imposed by the Code. Each participant may allocate amounts credited to their account among several notional investments, and the value of the account will be increased or decreased to reflect returns under the selected notional investments. The participant may elect to receive payment of deferred amounts in a lump sum or in annual installments, on or beginning at separation from service or a specified distribution date. See “Executive Compensation—2023 Nonqualified Deferred Compensation” beginning on page 52 of this proxy statement for additional information.

  75. Executive Severance Policy

    Executive Severance Policy Under our Executive Severance Policy, we provide severance benefits to our NEOs. Our policy is designed to provide a clear statement of the rights of our executives if they are involuntarily terminated without cause (as defined under the policy), except in cases following a change of control, as discussed below. Among other things, the Executive Severance Policy provides for 18 months and 12 months of salary continuation for our CEO and other NEOs, respectively, and a pro rata APP award for the year in which the termination date occurs to the extent a payment is earned under the terms of the APP. In addition, the policy provides for Company-paid welfare benefits for a specified number of weeks based on years of service, up to 12 months of outplacement services, and credit for the severance period for purposes of vesting under any applicable nonqualified deferred compensation or defined benefit retirement plans. See “Executive Compensation—Potential Payments on Termination or Change of Control” beginning on page 53 of this proxy statement for further information.

  76. Change of Control Severance Policy

    Change of Control Severance Policy The Change of Control Severance Policy provides benefits to each of our NEOs, if within 24 months after the consummation of a “change of control,” the NEO’s employment is involuntarily terminated without “cause” or if the NEO resigns from employment for “good reason” (each as defined in this policy). The occurrence or potential occurrence of a change of control transaction often creates uncertainty regarding the continued employment of a company’s executive officers. In order to continue to encourage our NEOs to remain employed with us in connection with such a transaction, or to attract new executives in the midst of such a transaction, we provide our NEOs with specified severance benefits if the NEO’s employment terminates for the reasons described above in connection with a change of control. In the event of a covered termination, the CEO and the other NEOs would be eligible to receive three times and two times, respectively, the sum of (1) such NEO’s annual base salary on the termination date of employment and (2) the greater of the last annual award paid to the NEO under the APP, or the average of the last three such annual APP awards. Each NEO would also receive paid COBRA coverage for health, dental and vision benefits for the maximum statutory period, would continue to be eligible to participate for six months in our Employee Assistance Plan and would receive up to 12 months of outplacement services. The Change of Control Severance Policy also provides that, in the event of a covered termination, each NEO would be entitled to receive unpaid base salary due for periods prior to the termination date, all accrued and unused vacation through the termination date, and reimbursement of all properly documented reasonable and necessary expenses incurred in connection with employment prior to the termination date. In addition, the policy provides that benefits payable to a NEO under the Employee Deferred Compensation Plan shall be fully vested, and the timing of payment of such benefits shall remain subject to the terms of such plan. The benefits and payments provided under this policy are designed to replace and enhance existing benefits payable under the Executive Severance Policy following a change of control. See “Executive Compensation—Potential Payments on Termination or Change of Control” beginning on page 53 of this proxy statement for further information.

  77. Change of Control Severance Policy

    | 42 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  78. Terms of Outstanding Equity Grants

    Terms of Outstanding Equity Grants Acknowledging that executives serving in our CEO, CFO and COO positions consistently make decisions that are both in our short- and long-term interests, the ED&CC has approved the granting of long-term equity awards under the 2017 Omnibus Plan to persons serving in these roles to provide for continued vesting after retirement under certain circumstances as discussed in more detail below. Except as contemplated in these limited circumstances, we do not provide for continued vesting of long-term equity awards granted under the 2017 Omnibus Plan in the event of retirement. For an executive serving in the CEO, CFO or COO role with at least three years of consecutive service in one or more of these positions, an equity award will continue to vest over the normal vesting schedule following a separation of service based upon either normal retirement or early retirement, as follows:

  79. Terms of Outstanding Equity Grants

    | · | in the event of a normal retirement, defined as having attained age 60 and five years of service at American Water, 100 percent of the award will continue to vest; and |

  80. Terms of Outstanding Equity Grants

    | · | in the event of an early retirement, defined as having attained age 55 and five years of service at American Water, 75 percent of the award will continue to vest. |

  81. Terms of Outstanding Equity Grants

    In connection with the foregoing, PSUs will continue to vest and shall be paid at the end of the three-year performance period based on actual performance. Any stock option granted to an executive serving in the CEO, CFO and COO roles will remain exercisable for a period of two years after the retirement date; however, no stock options have been granted to any of our executives in these roles.

  82. CHANGE OF CONTROL PROVISIONS IN EQUITY PLANS

    CHANGE OF CONTROL PROVISIONS IN EQUITY PLANS Most of our compensation plans and policies do not contain change of control provisions affecting the compensation of our NEOs. Upon a change of control in which American Water is not the surviving entity, the 2017 Omnibus Plan requires all unexercised options and other grants of awards thereunder to be assumed by or converted to similar awards of the acquiring company. The vesting of such assumed or converted awards will be accelerated only if the participant’s employment is terminated other than (i) for cause or (ii) due to death or disability, within 12 months after the change of control. To the extent any such awards are not assumed or converted, option awards will become fully exercisable, all restrictions upon awards will lapse and all stock units will fully vest, upon the change of control. See “Executive Compensation—Potential Payments on Termination or Change of Control—Equity Awards” beginning on page 55 of this proxy statement for further information.

  83. Accounting Considerations

    Accounting Considerations RSU and PSU awards are accounted for based on their grant date fair value, as determined under ASC 718, which is recognized over the service or vesting period applicable to the grant. Forfeitures are estimated, and the compensation cost of awards will be reversed if the employee does not remain employed by us throughout the service or vesting period.

  84. 2023 SUMMARY COMPENSATION TABLE

    2023 SUMMARY COMPENSATION TABLE The following table sets forth information regarding the compensation of each of our NEOs for 2023.

  85. 2023 SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (4) | All Other Compensation ($) (5) | Total ($) | | M. Susan Hardwick President and Chief Executive Officer (6) | 2023 | $1,057,880 | $— | $4,654,564 | $1,678,611 | $— | $329,770 | $7,720,825 | | | 2022 | $975,096 | $100,000 | $4,067,077 | $1,335,400 | $— | $243,180 | $6,720,753 | | | 2021 | $616,908 | $— | $1,140,129 | $541,369 | $— | $110,281 | $2,408,687 | | John C. Griffith Executive Vice President and Chief Financial Officer (7) | 2023 | $748,982 | $— | $1,884,974 | $990,538 | $— | $163,754 | $3,788,248 | | | 2022 | $460,099 | $950,000 | $1,812,518 | $554,618 | $— | $234,602 | $4,011,837 | | Cheryl Norton Executive Vice President and Chief Operating Officer (8) | 2023 | $659,678 | $— | $1,336,248 | $654,055 | $2,496,415 | $50,362 | $5,196,758 | | | 2022 | $613,750 | $— | $1,099,808 | $557,974 | $— | $37,887 | $2,309,419 | | | 2021 | $482,204 | $— | $749,840 | $405,013 | $915,883 | $29,121 | $2,582,061 | | James H. Gallegos Executive Vice President and General Counsel (9) | 2023 | $619,846 | $— | $998,341 | $614,817 | $— | $121,195 | $2,354,199 | | | 2022 | $452,305 | $100,000 | $1,960,109 | $411,593 | $— | $643,096 | $3,567,103 | | Melanie M. Kennedy Executive Vice President, Chief Human Resources Officer (10) | 2023 | $452,489 | $— | $546,560 | $388,974 | $— | $108,014 | $1,496,037 | | | 2022 | $435,545 | $— | $536,434 | $343,585 | $— | $101,460 | $1,417,024 | | | 2021 | $412,478 | $— | $459,892 | $265,420 | $— | $91,316 | $1,229,106 |

  86. 2023 SUMMARY COMPENSATION TABLE

    | (1) In 2023, the following NEOs deferred a portion of their base salary under the Employee Deferred Compensation Plan: Ms. Hardwick—$52,827; Mr. Griffith—$37,421; Ms. Norton—$131,715; Mr. Gallegos—$61,938; and Ms. Kennedy—$27,129. |

  87. 2023 SUMMARY COMPENSATION TABLE

    | (2) The amounts shown in this column reflect the aggregate grant date fair value of PSUs and RSUs granted to the NEOs. The grant date fair value of PSUs and RSUs granted in 2023 is as follows: |

  88. 2023 SUMMARY COMPENSATION TABLE

    | Name | PSUs | RSUs | | M. Susan Hardwick | $3,258,217 | $1,396,347 | | John C. Griffith | $1,319,537 | $565,437 | | Cheryl Norton | $935,351 | $400,897 | | James H. Gallegos | $698,825 | $299,516 | | Melanie M. Kennedy | $382,618 | $163,942 |

  89. 2023 SUMMARY COMPENSATION TABLE

    With respect to the PSUs, the amounts disclosed in the table above include the grant date fair value based upon the target outcome of the performance conditions, determined at the grant date in accordance with ASC 718. See Note 10—Stock Based Compensation in the Notes to Consolidated Financial Statements in the 2023 Form 10-K for the assumptions that were made in determining grant date fair values of the PSU and RSU awards.

  90. 2023 SUMMARY COMPENSATION TABLE

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 45 |

  91. 2023 SUMMARY COMPENSATION TABLE

    The following table shows the fair value of the PSU awards at the grant date, assuming the highest level of performance was achieved:

  92. 2023 SUMMARY COMPENSATION TABLE

    | | Grant Date Fair Value | | | | Name | 2023 | 2022 | 2021 | | M. Susan Hardwick | $6,516,434 | $5,734,170 | $1,596,170 | | John C. Griffith | $2,639,074 | $2,537,560 | $— | | Cheryl Norton | $1,870,702 | $1,569,680 | $1,049,830 | | James H. Gallegos | $1,397,650 | $1,344,058 | $— | | Melanie M. Kennedy | $765,236 | $767,000 | $643,820 |

  93. 2023 SUMMARY COMPENSATION TABLE

    | (3) The amounts shown in this column constitute payments under the APP with respect to each performance year, which are generally paid in March of the next calendar year. The following NEOs deferred a portion of their APP payment with respect to 2023 under the Employee Deferred Compensation Plan: Ms. Hardwick—$83,931; Mr. Griffith—$49,527; Ms. Norton—$327,027; Mr. Gallegos—$61,482; and Ms. Kennedy—$23,338. |

  94. 2023 SUMMARY COMPENSATION TABLE

    | (4) The amounts shown in this column reflect the aggregate changes in the actuarial present values of accumulated benefits under our defined benefit pension plans. For further information on these pension plans, see “—Pension Benefits at December 31, 2023.” None of the NEOs received “above-market” or “preferential” earnings (as defined by SEC regulation) under the Employee Deferred Compensation Plan. The change in pension value for 2022 for Ms. Norton was $(159,010), which is not reflected in the Summary Compensation Table in accordance with SEC regulations. |

  95. 2023 SUMMARY COMPENSATION TABLE

    | (5) The totals shown in this column for 2023 consist of: |

  96. 2023 SUMMARY COMPENSATION TABLE

    | Name | Savings Plan Company Match | Savings Plan Company Defined Contribution Account (a) | Company Contributions to Employee Deferred Compensation Plan (b) | Executive Physical | Dividend Equivalents (c) | Company- Paid Life Insurance | Total All Other Compensation | | M. Susan Hardwick | $13,200 | $17,325 | $222,476 | $900 | $75,408 | $461 | $329,770 | | John C. Griffith | $13,200 | $17,325 | $130,329 | $— | $2,439 | $461 | $163,754 | | Cheryl Norton | $8,250 | $— | $8,214 | $1,730 | $31,707 | $461 | $50,362 | | James H. Gallegos | $13,200 | $17,325 | $83,639 | $1,575 | $4,995 | $461 | $121,195 | | Melanie M. Kennedy | $13,200 | $17,325 | $47,279 | $1,730 | $28,019 | $461 | $108,014 |

  97. 2023 SUMMARY COMPENSATION TABLE

    | (a) The Defined Contribution Account is an account in the Savings Plan to which American Water contributes 5.25 percent of each eligible employee’s total cash compensation (which includes annual base salary), subject to Code limits on compensation that may be taken into account. Generally, only employees hired on or after January 1, 2006, are eligible for this contribution. |

  98. 2023 SUMMARY COMPENSATION TABLE

    | (b) The amounts in this column represent matching contributions with respect to 2023 made by the Company to the NEOs’ accounts in the Employee Deferred Compensation Plan. These contributions are generally paid in the second quarter of the next calendar year. For further information on this plan, see “—2023 Nonqualified Deferred Compensation.” |

  99. 2023 SUMMARY COMPENSATION TABLE

    | (c) Dividend equivalents are paid in cash with respect to PSUs and RSUs at such time, if ever, as the PSUs or RSUs are converted to common stock. Amounts in this column reflect PSU and RSU dividend equivalents that were paid out in 2023. |

  100. 2023 SUMMARY COMPENSATION TABLE

    | (6) Ms. Hardwick has served as President and Chief Executive Officer since February 2, 2022. She served as Executive Vice President and Chief Financial Officer from July 1, 2019, until February 2, 2022. From December 7, 2021, until January 31, 2022, Ms. Hardwick also served as our Interim Chief Executive Officer and continued to serve as Chief Financial Officer until May 16, 2022. |

  101. 2023 SUMMARY COMPENSATION TABLE

    | (7) Mr. Griffith joined the Company as Executive Vice President and Chief Financial Officer on May 16, 2022. |

  102. 2023 SUMMARY COMPENSATION TABLE

    | (8) Ms. Norton was promoted to Executive Vice President and Chief Operating Officer effective March 1, 2021. |

  103. 2023 SUMMARY COMPENSATION TABLE

    | 46 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  104. 2023 SUMMARY COMPENSATION TABLE

    | (9) Mr. Gallegos joined the Company as Executive Vice President and General Counsel on April 1, 2022. |

  105. 2023 SUMMARY COMPENSATION TABLE

    | (10) Ms. Kennedy was promoted to Executive Vice President, Chief Human Resources Officer on December 9, 2021. |

  106. 2023 GRANTS OF PLAN-BASED AWARDS

    2023 GRANTS OF PLAN-BASED AWARDS The following table presents certain information regarding plan-based awards granted to our NEOs during the fiscal year ended December 31, 2023.

  107. 2023 GRANTS OF PLAN-BASED AWARDS

    | Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock Awards ($)(4) | | | | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | M. Susan Hardwick | | | | | | | | | | APP | 2/14/2023 | $1,269,271 | $2,538,542 | — | — | — | — | $— | | RSU | 2/14/2023 | $— | $— | — | — | — | 9,352 | $1,396,347 | | PSU | 2/14/2023 | $— | $— | 2,424 | 9,697 | 19,394 | — | $1,629,096 | | PSU | 2/14/2023 | $— | $— | 2,728 | 10,911 | 21,822 | — | $1,629,121 | | John C. Griffith | | | | | | | | | | APP | 2/14/2023 | $748,989 | $1,497,978 | — | — | — | — | $— | | RSU | 2/14/2023 | $— | $— | — | — | — | 3,787 | $565,437 | | PSU | 2/14/2023 | $— | $— | 982 | 3,927 | 7,854 | — | $659,736 | | PSU | 2/14/2023 | $— | $— | 1,105 | 4,419 | 8,838 | — | $659,801 | | Cheryl Norton | | | | | | | | | | APP | 2/14/2023 | $494,560 | $989,120 | — | — | — | — | $— | | RSU | 2/14/2023 | $— | $— | — | — | — | 2,685 | $400,897 | | PSU | 2/14/2023 | $— | $— | 696 | 2,784 | 5,568 | — | $467,712 | | PSU | 2/14/2023 | $— | $— | 783 | 3,132 | 6,264 | — | $467,639 | | James H. Gallegos | | | | | | | | | | APP | 2/14/2023 | $464,890 | $929,780 | — | — | — | — | $— | | RSU | 2/14/2023 | $— | $— | — | — | — | 2,006 | $299,516 | | PSU | 2/14/2023 | $— | $— | 520 | 2,080 | 4,160 | — | $349,440 | | PSU | 2/14/2023 | $— | $— | 585 | 2,340 | 4,680 | — | $349,385 | | Melanie M. Kennedy | | | | | | | | | | APP | 2/14/2023 | $294,120 | $588,240 | — | — | — | — | $— | | RSU | 2/14/2023 | $— | $— | — | — | — | 1,098 | $163,942 | | PSU | 2/14/2023 | $— | $— | 285 | 1,139 | 2,278 | — | $191,352 | | PSU | 2/14/2023 | $— | $— | 320 | 1,281 | 2,562 | — | $191,266 |

  108. 2023 GRANTS OF PLAN-BASED AWARDS

    | (1) These columns represent target and maximum APP payout opportunities. The actual payments that were made under the APP for 2023 performance are shown in the 2023 Summary Compensation Table. There is no specified minimum award for participants in the APP, and therefore we did not include a column in the table for the threshold amount of such award. For further information on the APP, see “Compensation Discussion and Analysis—2023 Compensation—2023 Annual Performance Plan” beginning on page 35 of this proxy statement. |

  109. 2023 GRANTS OF PLAN-BASED AWARDS

    | (2) These columns represent threshold, target and maximum payout opportunities under the LTPP with respect to our PSUs. For further information on the LTPP, under which the PSUs were granted, see “Compensation Discussion and Analysis—2023 Compensation—2023 Long-Term Performance Plan” beginning on page 37 of this proxy statement. |

  110. 2023 GRANTS OF PLAN-BASED AWARDS

    | (3) This column represents grants of RSUs. For further information on the LTPP, under which most of the RSUs were granted, see “Compensation Discussion and Analysis—2023 Compensation—2023 Long-Term Performance Plan” beginning on page 37 of this proxy statement. |

  111. 2023 GRANTS OF PLAN-BASED AWARDS

    | (4) This column represents the grant date fair values of the PSUs and RSUs, determined in accordance with ASC 718. See footnote (2) to the 2023 Summary Compensation Table for additional information. |

  112. 2023 GRANTS OF PLAN-BASED AWARDS

    | 48 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  113. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table presents information regarding equity awards held by our NEOs at December 31, 2023. None of our NEOs held any outstanding stock options as of December 31, 2023; thus, the table below omits all columns pertaining to option awards.

  114. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | M. Susan Hardwick | | | | | | | | 2/16/2021 | 706 | $93,185 | 8,400 | $1,108,716 | | | 2/15/2022 | 5,451 | $719,477 | 46,646 | $6,156,806 | | | 2/14/2023 | 9,352 | $1,234,370 | 41,216 | $5,440,100 | | John C. Griffith | | | | | | | | 5/16/2022 | 2,484 | $327,863 | 26,130 | $3,448,899 | | | 2/14/2023 | 3,787 | $499,846 | 16,692 | $2,203,177 | | Cheryl Norton | | | | | | | | 2/16/2021 | 232 | $30,622 | 2,762 | $364,556 | | | 3/1/2021 | 261 | $34,449 | 3,338 | $440,583 | | | 2/15/2022 | 1,432 | $189,010 | 12,244 | $1,616,086 | | | 2/14/2023 | 2,685 | $354,393 | 11,832 | $1,561,706 | | James H. Gallegos | | | | | | | | 4/1/2022 | 5,087 | $671,433 | 9,342 | $1,233,051 | | | 2/14/2023 | 2,006 | $264,772 | 8,840 | $1,166,792 | | Melanie M. Kennedy | | | | | | | | 2/16/2021 | 285 | $37,617 | 3,388 | $447,182 | | | 2/15/2022 | 695 | $91,733 | 5,946 | $784,813 | | | 2/14/2023 | 1,098 | $144,925 | 4,840 | $638,832 |

  115. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (1) This column reflects RSUs that are not subject to performance conditions and will vest in equal increments on January 31 of each of the three years following the year in which the RSUs were granted, and subject to continued employment through each vesting date. |

  116. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (2) The market value of the RSUs and PSUs is based on the $131.99 closing price of a share of our common stock on December 29, 2023, the last trading day of the year, as reported by the NYSE. |

  117. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (3) This column reflects PSUs that are subject to vesting upon the achievement of stated performance goals over a three-year period and are earned in three equal annual increments on January 31 of each year in such three-year period, subject to continued employment through each such date. In accordance with applicable SEC regulations, the number of shares disclosed in this column represents the number of shares that would vest if maximum performance is achieved. |

  118. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 49 |

  119. 2023 OPTION EXERCISES AND STOCK VESTED

    2023 OPTION EXERCISES AND STOCK VESTED The following table presents information regarding the vesting of RSUs and PSUs held by our NEOs during 2023. None of our NEOs held any stock options during 2023; thus, the table below omits all columns pertaining to the exercise of option awards.

  120. 2023 OPTION EXERCISES AND STOCK VESTED

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | M. Susan Hardwick | 12,609 | $1,912,102 | | John C. Griffith | 1,241 | $194,204 | | Cheryl Norton | 5,086 | $770,118 | | James H. Gallegos | 2,542 | $397,798 | | Melanie M. Kennedy | 4,268 | $643,703 |

  121. 2023 OPTION EXERCISES AND STOCK VESTED

    | (1) Represents the aggregate market value of the shares realized on vesting, calculated by multiplying the vested number of shares by the closing price of a share of common stock on the date the applicable RSUs or PSUs vested (or on the last trading day prior thereto when the vesting occurs on a non-trading day). |

  122. PENSION BENEFITS AT DECEMBER 31, 2023

    PENSION BENEFITS AT DECEMBER 31, 2023 The following table presents certain information regarding pension benefits for each of our NEOs at December 31, 2023.

  123. PENSION BENEFITS AT DECEMBER 31, 2023

    | Name | Plan Name (1) | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | | M. Susan Hardwick | N/A | N/A | N/A | N/A | | John C. Griffith | N/A | N/A | N/A | N/A | | Cheryl Norton (3) | ERP | 35 | $4,668,108 | N/A | | | AWWPP | 35 | $1,772,289 | N/A | | James H. Gallegos | N/A | N/A | N/A | N/A | | Melanie M. Kennedy | N/A | N/A | N/A | N/A |

  124. PENSION BENEFITS AT DECEMBER 31, 2023

    | (1) Since Mses. Hardwick and Kennedy, and Messrs. Griffith and Gallegos, were hired after January 1, 2006, they are not eligible to participate in the AWWPP or the ERP. |

  125. PENSION BENEFITS AT DECEMBER 31, 2023

    | (2) Amounts shown reflect the present value of the accumulated benefit as of December 31, 2023. All amounts for the AWWPP and the ERP were determined using the same interest and mortality assumptions as those used for financial reporting purposes. The following assumptions were used to calculate pension values at the following measurement dates: |

  126. PENSION BENEFITS AT DECEMBER 31, 2023

    | · | In 2023, for discounting annuity payments, we used a discount rate of 5.18 percent and mortality table of Pri-2012 projected forward using generational Scale MP-2021, and for calculating lump sums, we used an interest rate of 5.18 percent and the IRS Prescribed Table for Lump Sums for 2024. |

  127. PENSION BENEFITS AT DECEMBER 31, 2023

    | · | In 2022, for discounting annuity payments, we used a discount rate of 5.58 percent and mortality table of Pri-2012 projected forward using generational Scale MP-2021, and for calculating lump sums, we used an interest rate of 5.58 percent and the IRS Prescribed Table for 2023. |

  128. PENSION BENEFITS AT DECEMBER 31, 2023

    | (3) Ms. Norton is eligible for a subsidized early retirement benefit payable in the form of an annuity under the provisions of the AWWPP and the ERP. |

  129. PENSION BENEFITS AT DECEMBER 31, 2023

    | 50 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  130. PENSION BENEFITS AT DECEMBER 31, 2023

    For further information on American Water’s defined benefit pension plans, see “—Description of Pension and Other Retirement Plans” below and “—Potential Payments on Termination or Change of Control—AWWPP and ERP.”

  131. AWWPP

    AWWPP The AWWPP is a qualified pension plan that is generally available to eligible employees who commenced employment with us prior to January 1, 2006. The AWWPP generally provides participants hired prior to July 1, 2001, including Ms. Norton, a grandfathered benefit. For years of service prior to July 1, 2001, the grandfathered benefit is calculated to be:

  132. AWWPP

    | · | 1.85 percent of the final average pay up to the Social Security average wage base multiplied by years of service (up to a maximum of 25 years of service through July 1, 2001), plus |

  133. AWWPP

    | · | 2.1 percent of final average pay in excess of the Social Security average wage base multiplied by years of service (up to a maximum of 25 years of service through July 1, 2001), plus |

  134. AWWPP

    | · | 0.7 percent of final average pay multiplied by years of service in excess of 25 years of service through July 1, 2001. |

  135. AWWPP

    For years of service after July 1, 2001, for participants hired prior to July 1, 2001, the grandfathered benefit is calculated to be:

  136. AWWPP

    | · | 1.6 percent of final average pay up to the Social Security average wage base multiplied by years of service after July 1, 2001 (up to a maximum of 25 years of service prior to July 1, 2001), plus |

  137. AWWPP

    | · | 2.1 percent of final average pay in excess of the Social Security average wage base multiplied by |

  138. AWWPP

    | years of service after July 1, 2001, (up to a maximum of 25 years of service prior to July 1, 2001), plus |

  139. AWWPP

    | · | 1.6 percent of final average pay multiplied by years of service after July 1, 2001, in excess of 25 years of service prior to July 1, 2001. |

  140. AWWPP

    Final average pay is defined for purposes of the plan as the average sum of base pay plus APP payout for the highest 60 consecutive months out of the final 120 months of employment. Normal retirement is defined as age 65, and early retirement eligibility is satisfied when an employee’s age is at least 55 and the employee has attained a service requirement that varies based on whether the employee is in a grandfathered group and, if so, the location of such group. Benefits vest in the AWWPP upon completion of five years of service. Ms. Norton is vested in her pension benefits. The normal form of payment is a single life annuity for single participants and a 50 percent joint and survivor annuity for married participants. The 50 percent joint and survivor annuity benefit amount is determined to be actuarially equivalent to the single life annuity amount. The plan provisions include a reduction in benefits for early retirement for participants other than those who retire at age 62 or older with specified service levels, such as 20 years of service for someone who is age 62.

  141. 2023 NONQUALIFIED DEFERRED COMPENSATION

    2023 NONQUALIFIED DEFERRED COMPENSATION The following table presents certain information regarding the nonqualified deferred compensation benefits of each of our NEOs for 2023.

  142. 2023 NONQUALIFIED DEFERRED COMPENSATION

    | Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($)(2) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions in Last Fiscal Year ($) | Aggregate Balance at Last Fiscal Year-End ($)(3) | | M. Susan Hardwick | $136,758 | $222,476 | $69,851 | $— | $972,134 | | John C. Griffith | $86,948 | $130,329 | $1,607 | $— | $218,884 | | Cheryl Norton | $458,742 | $8,214 | $171,834 | $— | $1,587,433 | | James H. Gallegos | $123,420 | $83,639 | $7,432 | $— | $214,491 | | Melanie M. Kennedy | $50,467 | $47,279 | $48,224 | $(42,996) | $472,039 |

  143. 2023 NONQUALIFIED DEFERRED COMPENSATION

    | (1) The following amounts in this column are also reported as compensation to the NEOs in the 2023 Summary Compensation Table in the columns indicated: |

  144. 2023 NONQUALIFIED DEFERRED COMPENSATION

    | Name | Salary | Non-Equity Incentive Plan Compensation | | M. Susan Hardwick | $52,827 | $83,931 | | John C. Griffith | $37,421 | $49,527 | | Cheryl Norton | $131,715 | $327,027 | | James H. Gallegos | $61,938 | $61,482 | | Melanie M. Kennedy | $27,129 | $23,338 |

  145. 2023 NONQUALIFIED DEFERRED COMPENSATION

    | (2) The amounts in this column are also reported as compensation to the NEOs in the 2023 Summary Compensation Table in the “All Other Compensation” column. |

  146. 2023 NONQUALIFIED DEFERRED COMPENSATION

    | (3) The following amounts were reported in the Summary Compensation Table in previous years as compensation to the listed NEOs: Ms. Hardwick—$565,319, Ms. Norton—$711,762, and Ms. Kennedy—$152,204. |

  147. POTENTIAL PAYMENTS ON TERMINATION OR CHANGE OF CONTROL

    POTENTIAL PAYMENTS ON TERMINATION OR CHANGE OF CONTROL This section describes the plans and arrangements that provide for payments to the NEOs in connection with certain events involving termination of employment, a change of control of American Water or a material change in employment responsibilities.

  148. Quantification of Potential Payments on Termination or Change of Control

    Quantification of Potential Payments on Termination or Change of Control The following tables quantify the potential payments and benefits to which the NEOs would have been entitled to receive if one of several different termination of employment or change of control events occurred on December 31, 2023. The amounts shown in the tables do not include certain payments and benefits to the extent they are provided on a non-discriminatory basis to non-union employees generally upon a termination of employment, including accrued salary and vacation pay, Savings Plan benefits, continued health and welfare coverage following an involuntary termination of employment and coverage under COBRA (other than the payment by the Company of a NEO’s COBRA

  149. Quantification of Potential Payments on Termination or Change of Control

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 55 |

  150. Quantification of Potential Payments on Termination or Change of Control

    premiums). All employees are also entitled to life insurance benefits of up to 1.5 times base salary, up to a maximum amount of $200,000, if death occurs while actively employed, which benefit is also not included in the tables below. The amounts shown in each table for “APP” are based on target performance. The amounts shown in each table below for “Deferred Compensation Benefits” reflect the value of employee and employer contributions in each NEO’s employee deferred compensation plan account as of December 31, 2023, and any acceleration of benefits provided under the terms of the Employee Deferred Compensation Plan, the Executive Severance Policy or the Change of Control Severance Policy. With regard to the portion of RSUs subject to a continuation or acceleration of vesting at December 31, 2023, the assumed values of such awards are shown in the table in the applicable columns. With regard to the portion of PSUs subject to performance-based vesting following the continuation or acceleration of time-based vesting, we have assumed that such shares will be issued in respect of the PSUs based on target performance, and that dividend equivalents will continue to accrue through the duration of the applicable performance period. For RSUs and PSUs, the values shown in the tables are based on the number of RSUs or PSUs multiplied by $131.99, the closing price of our common stock as reported on the NYSE on December 29, 2023, the last trading day of the year. In addition, the value of accumulated dividends (and, for awards that remain subject to performance conditions through the end of the performance period, expected dividends for the remainder of the performance period) is included.

  151. Quantification of Potential Payments on Termination or Change of Control

    | Name | Benefit | Voluntary Termination | Early/ Normal Retirement | Involuntary Termination without Cause | Voluntary Termination for Good Reason | Involuntary Termination for Cause | Involuntary Termination without Cause Following a Change of Control | Disability | Death | | M. Susan Hardwick | Cash Severance | $— | $— | $1,605,000 | $— | $— | $7,216,200 | $— | $— | | | APP | $— | $— | $1,269,271 | $— | $— | $— | $— | $— | | | Outplacement Services | $— | $— | $15,000 | $— | $— | $15,000 | $— | $— | | | Deferred Compensation Benefits | $462,107 | $462,107 | $732,932 | $462,107 | $— | $732,932 | $462,107 | $732,932 | | | COBRA Premiums | $— | $— | $— | $— | $— | $17,012 | $— | $— | | | RSUs and PSUs | $— | $294,332 | $— | $— | $— | $7,216,139 | $— | $— | | | Total | $462,107 | $756,439 | $3,351,378 | $462,107 | $— | $15,197,283 | $462,107 | $732,932 | | Name | Benefit | Voluntary Termination | Early/ Normal Retirement | Involuntary Termination without Cause | Voluntary Termination for Good Reason | Involuntary Termination for Cause | Involuntary Termination without Cause Following a Change of Control | Disability | Death | | John C. Griffith | Cash Severance | $— | $— | $754,000 | $— | $— | $2,617,236 | $— | $— | | | APP | $— | $— | $748,989 | $— | $— | $— | $— | $— | | | Outplacement Services | $— | $— | $15,000 | $— | $— | $15,000 | $— | $— | | | Deferred Compensation Benefits | $39,028 | $39,028 | $39,028 | $39,028 | $— | $39,028 | $39,028 | $39,028 | | | COBRA Premiums | $— | $— | $— | $— | $— | $47,753 | $— | $— | | | RSUs and PSUs | $— | $— | $— | $— | $— | $3,172,599 | $— | $— | | | Total | $39,028 | $39,028 | $1,557,017 | $39,028 | $— | $5,891,616 | $39,028 | $39,028 |

  152. Quantification of Potential Payments on Termination or Change of Control

    | 56 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  153. Quantification of Potential Payments on Termination or Change of Control

    | Name | Benefit | Voluntary Termination | Early/ Normal Retirement | Involuntary Termination without Cause | Voluntary Termination for Good Reason | Involuntary Termination for Cause | Involuntary Termination without Cause Following a Change of Control | Disability | Death | | Cheryl Norton | Cash Severance | $— | $— | $668,088 | $— | $— | $2,452,125 | $— | $— | | | APP | $— | $494,560 | $494,560 | $— | $— | $— | $— | $— | | | Outplacement Services | $— | $— | $15,000 | $— | $— | $15,000 | $— | $— | | | Deferred Compensation Benefits | $1,260,406 | $1,260,406 | $1,260,406 | $1,260,406 | $— | $1,260,406 | $1,260,406 | $1,260,406 | | | Nonqualified Pension Benefits | $5,126,104 | $5,126,104 | $5,126,104 | $5,126,104 | $5,126,104 | $5,126,104 | $5,825,118 | $4,207,968 | | | Qualified Pension Benefits | $2,115,535 | $2,115,535 | $2,115,535 | $2,115,535 | $2,115,535 | $2,115,535 | $2,717,868 | $1,898,636 | | | COBRA Premiums | $— | $— | $— | $— | $— | $35,477 | $— | $— | | | RSUs and PSUs | $— | $— | $— | $— | $— | $2,127,614 | $— | $— | | | Total | $8,502,045 | $9,156,100 | $9,679,693 | $8,502,045 | $7,241,639 | $13,132,261 | $9,803,392 | $7,367,010 | | Name | Benefit | Voluntary Termination | Early/ Normal Retirement | Involuntary Termination without Cause | Voluntary Termination for Good Reason | Involuntary Termination for Cause | Involuntary Termination without Cause Following a Change of Control | Disability | Death | | James H. Gallegos | Cash Severance | $— | $— | $624,000 | $— | $— | $2,071,187 | $— | $— | | | APP | $— | $— | $464,890 | $— | $— | $— | $— | $— | | | Outplacement Services | $— | $— | $15,000 | $— | $— | $15,000 | $— | $— | | | Deferred Compensation Benefits | $69,371 | $69,371 | $69,371 | $69,371 | $— | $69,371 | $69,371 | $69,371 | | | COBRA Premiums | $— | $— | $— | $— | $— | $39,257 | $— | $— | | | RSUs and PSUs | $— | $— | $— | $— | $— | $1,992,439 | $— | $— | | | Total | $69,371 | $69,371 | $1,173,261 | $69,371 | $— | $4,187,254 | $69,371 | $69,371 | | Name | Benefit | Voluntary Termination | Early/ Normal Retirement | Involuntary Termination without Cause | Voluntary Termination for Good Reason | Involuntary Termination for Cause | Involuntary Termination without Cause Following a Change of Control | Disability | Death | | Melanie M. Kennedy | Cash Severance | $— | $— | $455,520 | $— | $— | $1,598,210 | $— | $— | | | APP | $— | $— | $294,120 | $— | $— | $— | $— | $— | | | Outplacement Services | $— | $— | $15,000 | $— | $— | $15,000 | $— | $— | | | Deferred Compensation Benefits | $412,721 | $412,721 | $412,721 | $412,721 | $— | $412,721 | $412,721 | $412,721 | | | COBRA Premiums | $— | $— | $— | $— | $— | $45,178 | $— | $— | | | RSUs and PSUs | $— | $— | $— | $— | $— | $960,634 | $— | $— | | | Total | $412,721 | $412,721 | $1,177,361 | $412,721 | $— | $3,031,743 | $412,721 | $412,721 |

  154. Quantification of Potential Payments on Termination or Change of Control

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 57 |

  155. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE The following table provides information showing the relationship during 2023, 2022, 2021 and 2020 between (1) executive compensation “actually paid” (as defined by SEC rule) to (a) each person serving as CEO and (b) our other NEOs on an average basis, and (2) the Company’s financial performance .

  156. PAY VERSUS PERFORMANCE

    | | | | | | | | Value of Initial Fixed $100 | | | | | Year | Summary Compensation Table Total for PEO Serving at End of Year | Compensation Actually Paid to PEO Serving at End of Year(1) | Summary Compensation Table Total for Other PEO Serving During Year | Compensation Actually Paid to Other PEO Serving During Year(1) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs(1) | Company TSR | Compen- sation Peer Group TSR (2) | Net Income (in millions) | EPS/ Adjusted EPS(3) | | 2023 | $7,720,825 (4) | $6,663,470 (4) | N/A | N/A | $3,208,811 (5) | $2,296,630 (5) | $88.32 | $94.14 (6) | $944 | $4.89 | | 2022 | $6,720,753 (4) | $6,550,865 (4) | $1,522,833 (7) | $544,611 (7) | $2,826,346 (5) | $2,788,422 (5) | $130.03 | $106.97 (6) | $820 | $4.50 | | 2021 | $7,398,128 (7) | $8,409,238 (7) | N/A | N/A | $1,839,683 (5) | $2,025,485 (5) | $158.36 | $105.88 | $1,263 | $4.27 | | 2020 | $5,675,833 (8) | $7,196,530 (8) | $4,072,322 (8) | $10,040,238 (8) | $1,715,619 (5) | $1,986,287 (5) | $126.88 | $91.15 | $709 | $3.91 |

  157. PAY VERSUS PERFORMANCE

    | (1) The table below sets forth each of the amounts required by SEC rule to be deducted from and added to the amount of total compensation as reflected in the Summary Compensation Table, to calculate executive compensation actually paid. In computing these amounts with respect to PSUs, (i) total fair value (FV) as of year-end is based on the updated expected payout of the PSU using data through year-end (including as estimated through Monte Carlo simulations), and (ii) total FV as of the vesting date is based on the number of shares actually earned based on performance. |

  158. PAY VERSUS PERFORMANCE

    | | 2023 | | 2022 | | | 2021 | | 2020 | | | | Adjustments to Total Compensation, from Summary Compensation Table | PEO at End of Year | All Average NEOs | PEO Serving at End of Year | Other PEO Serving During Year | All Average NEOs | PEO Serving at End of Year | All Average NEOs | PEO Serving at End of Year | Other PEO Serving During Year | All Average NEOs | | Total Compensation, from Summary Compensation Table | $7,720,825 | $3,208,811 | $6,720,753 | $1,522,833 | $2,826,346 | $7,398,128 | $1,839,683 | $5,675,833 | $4,072,322 | $1,715,619 | | Deduct grant date fair value (GDFV) of equity awards granted during the year | $(4,654,564) | $(1,191,531) | $(4,067,077) | $(290,791) | $(1,352,217) | $(3,999,969) | $(689,695) | $(2,543,912) | $(3,499,895) | $(530,355) | | Add year-end FV of equity awards granted during year that are outstanding and unvested as of year-end | $4,312,502 | $1,103,938 | $3,974,063 | $— | $1,315,031 | $4,011,528 | $706,983 | $3,504,752 | $4,633,888 | $632,680 | | Add change in FV as of year-end of equity awards granted in prior years that are outstanding and unvested as of year-end | $(705,528) | $(238,561) | $78,663 | $318,793 | $8,930 | $1,430,514 | $321,927 | $1,334,571 | $4,402,666 | $411,387 | | Add change in FV from end of the prior fiscal year to the vesting date for equity awards granted in prior years that vested during the year | $(9,765) | $870 | $(155,537) | $(461,447) | $(57,025) | $116,792 | $23,821 | $156,075 | $431,257 | $32,566 | | Deduct FV at the end of the prior fiscal year for equity awards granted in prior years that were forfeited during the year | $— | $— | $— | $(1,041,948) | $— | $— | $— | $— | $— | $(92,035) | | Deduct change in actuarial present value for all defined benefit and acturial pension plans | $— | $(624,104) | $— | $— | $— | $(1,017,097) | $(226,613) | $(1,191,466) | $— | $(203,161) | | Add ASC 715 pension service cost attributable to services rendered in the year | $— | $37,207 | $— | $497,171 | $47,357 | $469,342 | $49,379 | $260,677 | $— | $19,586 | | Compensation Actually Paid (as defined by SEC rule) | $6,663,470 | $2,296,630 | $6,550,865 | $544,611 | $2,788,422 | $8,409,238 | $2,025,485 | $7,196,530 | $10,040,238 | $1,986,287 |

  159. PAY VERSUS PERFORMANCE

    | 58 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  160. PAY VERSUS PERFORMANCE

    | (2) The identity of the companies, and the analysis utilized by the ED&CC to review and approve changes, in the peer group for 2023, 2022, 2021 and 2020 are incorporated by reference from the descriptions contained in “—Compensation Discussion and Analysis—Compensation Determinations and Pay Competitiveness” in this proxy statement and in the corresponding sections of our 2022 and 2021 proxy statements. The peer groups for 2021 and 2020 were comprised of the same companies as for 2022, except that MDU Resources Group, Inc. had been included for 2021 and 2020 and was replaced by Essential Utilities, Inc. in 2022. |

  161. PAY VERSUS PERFORMANCE

    | (3) This metric is the Company-Selected Measure, which in our assessment represents the most important financial performance measure we use to link compensation “actually paid” (as defined by SEC rule) in 2023 to our NEOs. Adjusted EPS for 2023, 2022 and 2021 is a non-GAAP measure. See Part A of Appendix A for a reconciliation. |

  162. PAY VERSUS PERFORMANCE

    | (4) Ms. Hardwick has been serving as our CEO effective as of February 2, 2022. |

  163. PAY VERSUS PERFORMANCE

    | (5) The persons included as NEOs in this calculation for each year are: (i) for 2023 and 2022, Mses. Kennedy and Norton, and Messrs. Gallegos and Griffith; (ii) for 2021, Mses. Kennedy, Hardwick and Norton, and Adam Noble and Michael A. Sgro; and (iii) for 2020, Ms. Hardwick, and Brian Chin, Bruce A. Hauk, Mr. Sgro and Loyd A. Warnock. |

  164. PAY VERSUS PERFORMANCE

    | (6) The cumulative TSR reported above for the Company’s peer group for (i) 2023 ($94.14) would have been $92.18 if the companies in the 2022 peer group had been used instead and (ii) 2022 ($106.97) would have been $106.63 if the companies in the 2021 peer group had been used instead. There were no peer group changes that impacted compensation for 2021 or 2020. |

  165. PAY VERSUS PERFORMANCE

    | (7) During 2021, Walter J. Lynch was CEO and served as our principal executive officer until his retirement on February 2, 2022. | | (8) Mr. Lynch was CEO as of December 31, 2020, after succeeding Susan N. Story as our principal executive officer upon her retirement effective April 1, 2020. |

  166. PAY VERSUS PERFORMANCE

    The following is a tabular list of the most important financial and non-financial measures we use to link compensation “actually paid” (as defined by SEC rule and set forth above) to our NEOs during 2023 to our performance. The Company-Selected Measure is denoted with an asterisk.

  167. PAY VERSUS PERFORMANCE

    | Tabular List of Performance Measures | | | Financial | Non-Financial | | EPS* | ORIR | | EPS CAGR | DART | | Relative TSR | Drinking Water Program Compliance Customer Satisfaction |

  168. PAY VERSUS PERFORMANCE

    The following graphs present the relationship during 2023, 2022, 2021 and 2020 between (1) executive compensation “actually paid” (as defined by SEC rule and shown above) to (a) each person serving as CEO and (b) our other NEOs on an average basis, and each of (2) (a) our cumulative TSR for such years, (b) our GAAP net income for such years, and (c) the Company-Selected Measure for such years, and a comparison of the cumulative TSR for such years of us and our peer group.

  169. PAY VERSUS PERFORMANCE

    | AMERICAN WATER | 2024 PROXY STATEMENT | | 59 |

  170. PAY VERSUS PERFORMANCE

    | * 2021, 2022 and 2023 results reflect Adjusted EPS. See Appendix A for a reconciliation of Adjusted EPS. |

  171. PAY VERSUS PERFORMANCE

    Executive compensation “actually paid” (as defined by SEC rule) in the table and graphs above reflects the occurrence of CEO transitions in 2020 and 2022, each of which resulted in the promotion of an existing member of the Company’s executive leadership team. The net income relationship graph above for 2021 also includes the impact of the gain on sale of HOS of $491 million after-tax, reflecting the Company’s 2021 contribution to the AWCF and the revaluation of state net operating losses.

  172. CEO PAY RATIO

    CEO PAY RATIO Pursuant to SEC rules, we are required to disclose in this proxy statement the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees (excluding the CEO). Our identification of our median employee and our CEO to median employee pay ratio were calculated in a manner we believe to be consistent with Item 402(u) of Regulation S-K. In this regard:

  173. CEO PAY RATIO

    | · | We identified the median employee in 2023 by examining the 2023 W-2 earnings for all individuals, excluding Ms. Hardwick, who were employed by us on December 31, 2023. We believe the use of W-2 earnings represents an objective, easily understood and consistently applied measure of compensation paid across our entire employee base. |

  174. CEO PAY RATIO

    | · | We included 6,507 employees located in the United States as of December 31, 2023, which includes full-time, part-time, seasonal and temporary employees. We did not have any employees located outside of the United States as of December 31, 2023. |

  175. CEO PAY RATIO

    | · | We did not include leased employees or independent contractors. |

  176. CEO PAY RATIO

    | · | We did not make any assumptions, adjustments (such as cost-of-living adjustments) or estimates with respect to W-2 income other than annualizing the compensation of permanent employees that were employed as of December 31, 2023 but were employed for less than the full year. |

  177. CEO PAY RATIO

    After identifying the median employee, we calculated that employee’s annual total compensation using the same methodology we use for our NEOs in the 2023 Summary Compensation Table. The annual total compensation for fiscal year 2023 for Ms. Hardwick, determined as described above, and for the median employee was $7,720,825 and $96,531, respectively. The resulting ratio of Ms. Hardwick’s pay to the pay of our median employee for fiscal year 2023 is 80 to 1. As contemplated by Item 402(u) of Regulation S-K and related interpretations, we relied on methods and assumptions that we determined to be reasonable and appropriate for this calculation. Other public companies may use different methods and assumptions. It may therefore be difficult, for this and other reasons, to compare our reported ratio to those reported by other companies.

  178. CEO PAY RATIO

    | 60 | | AMERICAN WATER | 2024 PROXY STATEMENT |

  179. STATUS OF INFORMATION INCLUDED IN THIS PROXY STATEMENT

    | · | the information contained in “Executive Compensation—Pay Versus Performance”; |