SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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American Water Works Company, Inc.
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
[LOGO] AMERICAN WATER WORKS COMPANY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1999
TO THE HOLDERS OF:
COMMON STOCK
CUMULATIVE PREFERRED STOCK, 5% SERIES
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of American
Water Works Company, Inc. will be held at The Mansion on Main Street, Kresson &
Evesham Roads, Voorhees, New Jersey, on Thursday, May 6, 1999, at 10:00 A.M.
EDST, for the following purposes:
1. To vote on a proposal to amend the Company's Restated Certificate of
Incorporation, as amended, to establish a classified Board of Directors;
2. To elect 13 directors; if Proposal No. 1 is approved, five will be
elected to serve for a one-year term, four to serve for a two-year term and
four to serve for a three-year term; if Proposal No. 1 is not approved, all
will serve for a one-year term;
3. To vote to ratify or reject the appointment of independent
accountants made by the Board of Directors to audit the books and accounts
of the Company at the close of the current fiscal year; and
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only holders of voting stock of record at the close of business on March 8,
1999 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
W. TIMOTHY POHL, General Counsel and Secretary
Voorhees, New Jersey
March 26, 1999
YOUR VOTE IS IMPORTANT!
USING THE INTERNET OR TELEPHONE, YOU CAN VOTE ANYTIME, 24 HOURS A DAY, UP
UNTIL 5:00 P.M. EDST ON WEDNESDAY, MAY 5, 1999. OR IF YOU PREFER, YOU CAN
RETURN THE ENCLOSED PAPER PROXY IN THE ENVELOPE PROVIDED (TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES). PLEASE DO NOT
RETURN THE ENCLOSED PAPER PROXY IF YOU ARE VOTING USING THE INTERNET OR
TELEPHONE.
<PAGE>
AMERICAN WATER WORKS COMPANY, INC.
1025 LAUREL OAK ROAD
VOORHEES, NEW JERSEY 08043
609-346-8200
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of American Water Works Company, Inc.
(hereinafter called the "Company") to be used at the annual meeting of
shareholders of the Company on Thursday, May 6, 1999, and at any adjournment
thereof. Shares represented by properly executed proxies received by the Company
will be voted at the meeting. Where a choice is specified by the shareholder,
the proxy will be voted in accordance with such choice. If no choice is
specified, the proxy will be voted in accordance with the recommendations of the
Board of Directors. Any proxy may be revoked at any time insofar as it has not
been exercised. Shareholders may revoke proxies by written notice to the
Company, or by delivery of a proxy bearing a later date, or by personally
appearing at the meeting and casting a vote. Shareholders may also vote
electronically or telephonically by following the instructions on the enclosed
form of proxy. BankBoston, the Company's stock agent, is tabulating the votes
cast for the meeting and will count the last vote received from a shareholder,
whether by telephone, proxy, ballot or electronically through the Internet. This
notice of meeting and proxy statement and the enclosed form of proxy are being
mailed beginning March 26, 1999 to the holders of all voting securities.
The presence in person or representation by proxy of shareholders entitled
to cast a majority of votes on a particular matter to be voted upon shall
constitute a quorum for the purpose of considering such matter. A proxy marked
"withheld" in the election of directors or "abstain" on any other matter to be
voted upon, will be considered to be represented at the meeting. A proxy marked
"withheld" in the election of directors will be considered as not being voted
and, therefore, will have no effect inasmuch as directors are elected by a
plurality of votes cast in the election. A proxy marked "abstain" on any other
matter to be voted upon at the meeting and broker non-votes will have the effect
of an "against" vote inasmuch as the affirmative vote of a majority of the votes
entitled to be cast on the matter is necessary for approval of the matter.
The close of business on March 8, 1999 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
annual meeting and any adjournment thereof. On the record date, there were
outstanding and entitled to vote 81,021,992 shares of Common Stock (one vote per
share) and 101,777 shares of Cumulative Preferred Stock, 5% Series (one-tenth of
a vote per share).
<PAGE>
PROPOSAL NO. 1
AMENDMENT OF THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED, TO PROVIDE FOR THE CLASSIFICATION
OF THE BOARD OF DIRECTORS INTO THREE SEPARATE CLASSES
The Board of Directors has adopted a resolution proposing an amendment to
the Company's Restated Certificate of Incorporation, as amended, to provide for
the classification of the Board of Directors into three classes (the "Classified
Board Amendment"). At present, the Company's Board of Directors is comprised of
a single class of thirteen directors, all of whom are elected at each annual
meeting of shareholders. The Classified Board Amendment would provide for the
classification of the Board of Directors into three separate classes as nearly
equal in number as possible, with one class being elected each year to serve a
staggered three-year term. Members in each class would be elected at the May 6,
1999 annual meeting. Directors initially elected in Class I, i.e., William O.
Albertini, Rhoda W. Cobb, Ray J. Groves, Ross A. Webber and Horace Wilkins, Jr.,
would serve until the annual meeting of shareholders in 2000; directors
initially elected in Class II, i.e., Henry G. Hager, Gerald C. Smith, Anthony P.
Terracciano and Marilyn Ware, and Class III, i.e., J. James Barr, Elizabeth H.
Gemmill, Nancy Ware Wainwright and Paul W. Ware, would serve until the annual
meetings of shareholders in 2001 and 2002, respectively. Beginning with the
election of directors to be held at the year 2000 annual meeting, each class of
directors would be elected for a three-year term.
The Board of Directors believes that classification of the Board would
promote continuity of membership and stability of management and policies.
Although the Board of Directors is not aware of, and has not encountered,
difficulties in the past with respect to continuity and stability, the Board of
Directors believes a classified board would decrease the likelihood of such
difficulties in the future. Absent the removal or resignation of directors, two
annual elections would be required to replace a majority of directors on the
classified Board and effect a forced change in the business and affairs of the
Company. The Classified Board Amendment may, therefore, discourage an individual
or entity from acquiring a significant position in the stock of the Company with
the intention of obtaining immediate control of the Board of Directors. The
acquiror, however, could immediately effect a change of control by amending the
Restated Certificate of Incorporation, as amended, to eliminate classification
of the Board of Directors with the vote of a majority of all the outstanding
shares entitled to vote.
The Classified Board Amendment is intended to encourage persons seeking to
acquire control of the Company to initiate such an acquisition through
arms-length negotiations with the Company's management and Board of Directors.
If adopted, the Classified Board Amendment also could have the effect of
discouraging a third party from making a tender offer or otherwise attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its shareholders. In addition, the Classified Board Amendment
could discourage accumulations of large blocks of the Company's stock and
fluctuations in the market price of the Company's stock caused by such
accumulations; as a consequence, shareholders could be deprived of certain
opportunities to sell their shares at temporarily higher prices.
2
<PAGE>
The Classified Board Amendment would make more difficult or discourage a
proxy contest or the assumption of control of the Company by a holder of a
substantial block of the Company's outstanding shares or the removal of
incumbent directors or the change of control of the Board of Directors and could
thus have the effect of entrenching incumbent management. At the same time, the
Classified Board Amendment would ensure that the Board of Directors and
management, if confronted by a surprise proposal from a third party who had
acquired a block of the Company's stock, would have time to review the proposal
and appropriate alternatives to the proposal and possibly to attempt to
negotiate a better transaction. The Board of Directors believes the Classified
Board Amendment would reduce the possibility that a third party could effect a
sudden or surprise change in control of the Board of Directors without the
support of the then incumbent Board of Directors. The Board of Directors is
asking shareholders to consider and adopt the Classified Board Amendment to
encourage any person intending to attempt such a takeover or restructuring to
try first to negotiate with the Board and management of the Company. In this
way, the Board of Directors and management would be better able to protect the
interests of all shareholders by ensuring that the best price is obtained in any
transaction involving the Company.
The foregoing summary description of the Classified Board Amendment is not
intended to be complete and is qualified in its entirety by reference to
Appendix A, which contains the complete text of the Classified Board Amendment.
The affirmative vote of a majority of the votes entitled to be cast by all
outstanding stock of the Company having general voting rights, including a
majority of the Common Stock, is necessary to adopt the Classified Board
Amendment.
The Board of Directors recommends that the shareholders vote "FOR" the
proposed amendment to the Restated Certificate of Incorporation, as amended, as
set forth in Appendix A. The persons named in the enclosed proxy intend to vote
"FOR" adoption of the amendment unless otherwise directed.
3
<PAGE>
PROPOSAL NO. 2
ELECTION OF DIRECTORS
Thirteen directors are to be elected at the annual meeting. All nominees
have consented to be named and to serve if elected. All of the nominees, except
Rhoda W. Cobb, are currently directors of the Company. William R. Cobb, who is
currently a director of the Company, is not standing for reelection. Mr. Cobb
has been a director of the Company for the past six years.
It is the intention of the persons named in the accompanying form of proxy
to vote all shares they are empowered to vote for the election of as many as
possible of the nominees. In the event any nominee withdraws or is otherwise
unable to serve, which is not anticipated, the persons named in the proxy may
vote for another person of their choice.
As set forth above (see Proposal No. 1), the Board of Directors also is
proposing to stagger the terms of directors of the Company by classifying the
Board into three separate classes. If Proposal No. 1 is approved, the Board of
Directors will be divided into three separate classes as nearly equal in number
as possible, with one class being elected each year to serve a staggered
three-year term. Vacancies on the Board of Directors may be filled by persons
elected by a majority of the total number of directors then in office. A
director elected by the Board of Directors to fill a vacancy (including a
vacancy created by an increase in the number of directors) will serve for the
remainder of the term of the class of directors in which the vacancy occurred
and until such director's successor is elected and qualified.
If Proposal No. 1 is approved, the Board of Directors intends to place five
directors, William O. Albertini, Rhoda W. Cobb, Ray J. Groves, Ross A. Webber
and Horace Wilkins, Jr., in the class whose term of office will expire in 2000,
four directors, Henry G. Hager, Gerald C. Smith, Anthony P. Terracciano and
Marilyn Ware, in the class whose term of office will expire in 2001 and four
directors, J. James Barr, Elizabeth H. Gemmill, Nancy Ware Wainwright and Paul
W. Ware, in the class whose term of office will expire in 2002.
If Proposal No. 1 is not approved, the thirteen directors to be elected at
the annual meeting will hold office until the next annual meeting and until
their successors have been elected and qualified.
Shareholders are entitled to cumulative voting rights in the election of
directors. Each holder of Common Stock is entitled to one vote per share, and
each holder of Cumulative Preferred Stock, 5% Series, is entitled to one-tenth
of a vote per share. Each shareholder may cast as many votes as such
shareholder's number of shares shall entitle him or her to vote in the election
of directors multiplied by the number of directors to be elected and such
shareholder may cast all of such votes for a single director or distribute them
among all of the directors to be voted for, or any two or more of them. A
shareholder wishing to exercise his or her cumulative voting rights should give
instructions on the enclosed form of proxy as to how such shareholder's votes
are to be cumulated.
Unless a shareholder specifically exercises his or her cumulative voting
rights, such shareholder's votes may be distributed among the nominees (other
than those from whom the shareholder withholds his or her vote) by the persons
named in the proxy to elect as many as possible of the nominees. Such persons
may vote cumulatively for such of the nominees (in some circumstances, less than
all) as they in their discretion determine if in their judgment such action is
necessary to elect as many of the nominees as possible.
Based on information as of March 8, 1999, the following describes the age,
position with the Company, principal occupation and business experience during
the past five years, and other directorships of each nominee.
4
<PAGE>
NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR A TERM EXPIRING IN 2000
[PHOTO WILLIAM O. ALBERTINI, age 55, became a director of the
ALBERTINI] Company in 1990. He is a member of the Audit, Compensation
and Management Development and Finance Committees. He has
been Executive Vice President and Chief Financial Officer
since August, 1997 of Bell Atlantic Global Wireless, Inc., a
provider of wireless communication services. He was
Executive Vice President and Chief Financial Officer from
February, 1995 to August, 1997 and Vice President and Chief
Financial Officer from February, 1991 to February, 1995 of
Bell Atlantic Corporation, a provider of telecommunication
services. Mr. Albertini is a director of Grupo Iusacell,
S.A. de C.V. and BlackRock Funds.
[PHOTO RHODA W. COBB, age 59, served as a director of the Company
COBB] from 1976 to 1993. She is a homemaker and President of the
Cobb Foundation.
[PHOTO RAY J. GROVES, age 63, became a director of the Company in
GROVES] 1998. He is a member of the Audit and Finance Committees. He
has been Chairman of Legg Mason Merchant Banking, Inc. since
March, 1995. Prior to his retirement in September, 1994, he
was Chairman of Ernst & Young. Mr. Groves is a director of
Allegheny Teledyne Incorporated, Consolidated National Gas
Company, Electronic Data Systems Corporation, LAI Worldwide,
Inc., Marsh & McLennan Companies, Inc. and RJR Nabisco, Inc.
[PHOTO ROSS A. WEBBER, age 64, became a director of the Company in
WEBBER] 1986. He is a member of the Audit and Compensation and
Management Development Committees. He is Professor of
Management at The Wharton School at the University of
Pennsylvania and a private consultant on general management
development. Mr. Webber is a director of Arcadis, N.V.
[PHOTO HORACE WILKINS, JR., age 48, became a director of the
WILKINS] Company in 1996. He is a member of the Audit and Corporate
Governance Committees. He has been President-Special Markets
since October, 1998 of SBC Telecommunications, Inc., a
provider of telecommunication services. He was Regional
President-South Texas from August, 1996 to October, 1998 and
was President-Missouri from December, 1992 to August, 1996
of Southwestern Bell Telephone Company, a provider of
telephone services. Mr. Wilkins is a director of Cullen
Frost National Bank.
5
<PAGE>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS FOR A TERM EXPIRING IN 2001
[PHOTO HENRY G. HAGER, age 64, became a director of the Company in
HAGER] 1986. He is a member of the Executive and Corporate
Governance Committees. He has been President of Insurance
Federation of Pennsylvania, Inc. since January, 1985 and a
partner in the law firm of Stradley, Ronon, Stevens & Young
since November, 1993. Mr. Hager is a director of Provident
American Corporation.
[PHOTO GERALD C. SMITH, age 64, became a director of the Company in
SMITH] 1998. He has been a Vice President of the Company since May,
1991. In addition, he was Senior Vice President-Operations
from July, 1991 to February, 1999 of American Water Works
Service Company, Inc., the service subsidiary of the
Company.
[PHOTO ANTHONY P. TERRACCIANO, age 60, became a director of the
TERRACCIANO] Company in 1997 and has been Vice Chairman of the Board of
Directors of the Company since May, 1998. He is a member of
the Executive, Corporate Governance and Finance Commitees.
Prior to his retirement in January, 1998, he was President
of First Union Corporation from January, 1996 to January,
1998. Mr. Terracciano was Chairman of the Board, President
and Chief Executive Officer of First Fidelity Bancorporation
from February, 1990 to January, 1996.
[PHOTO MARILYN WARE, age 55, became a director of the Company in
M. WARE] 1982 and has been Chairman of the Board of Directors of the
Company since May, 1988. She is a member of the Executive,
Audit, Compensation and Management Development, Corporate
Governance and Finance Committees. She also serves as Chief
Executive Officer of the Ware Family Offices. Ms. Ware is a
director of CIGNA Corporation and PP&L Resources, Inc.
6
<PAGE>
NOMINEES FOR ELECTION AS CLASS III DIRECTORS FOR A TERM EXPIRING IN 2002
[PHOTO J. JAMES BARR, age 57, became a director of the Company in
BARR] 1997. He is a member of the Executive Committee. He has been
President and Chief Executive Officer of the Company since
March, 1998 and was Acting President and Chief Executive
Officer of the Company from November, 1997 to March, 1998.
He was Vice President and Treasurer of the Company prior
thereto. In addition, he has been Chairman of the Board of
Directors and President since March, 1998 of American Water
Works Service Company, Inc., the service subsidiary of the
Company. He was Senior Vice President-Financial Services of
American Water Works Service Company, Inc. prior thereto.
[PHOTO ELIZABETH H. GEMMILL, age 53, became a director of the
GEMMILL] Company in 1983. She is a member of the Compensation and
Management Development and Corporate Governance Committees.
She is the Managing Trustee of the Warwick Foundation. She
was Vice President and Secretary of Tasty Baking Company
from February, 1988 to March, 1999. Ms. Gemmill is also a
director of Universal Display Corporation.
[PHOTO NANCY WARE WAINWRIGHT, age 62, became a director of the
WAINWRIGHT] Company in 1984. She is a member of the Executive and
Corporate Governance Committees. Prior to her retirement in
July, 1994, Mrs. Wainwright was Vice President of United
Propane, Inc., a gas distributor.
[PHOTO PAUL W. WARE, age 52, became a director of the Company in
P. WARE] 1990. He also served as a director of the Company from 1982
to 1986. He is a member of the Compensation and Management
Development and Finance Committees. Prior to his retirement
in August, 1998, Mr. Ware was Chairman of Penn Fuel Gas,
Inc., a gas distribution company. Mr. Ware is a director of
The York Water Company.
Marilyn Ware and Paul W. Ware are the daughter and son of Marian S. Ware,
who beneficially owns more than 5% of the Company's Common Stock. Rhoda W. Cobb
and Nancy Ware Wainwright are sisters and are cousins of Marilyn Ware and Paul
W. Ware. Rhoda W. Cobb is the spouse of William R. Cobb, who is retiring as a
director of the Company at the end of his term.
The Board recommends a vote FOR the election of five (5) nominees as Class I
Directors of the Company, four (4) nominees as Class II Directors of the Company
and four (4) nominees as Class III Directors of the Company.
7
<PAGE>
MEETINGS OF THE BOARD AND ITS COMMITTEES
Attendance at meetings of the Board of Directors and committees of the
Board by directors averaged 92% during 1998. All incumbent nominees attended 80%
or more of their scheduled meetings of the Board of Directors and committees of
the Board of which they were members. There were 11 meetings of the Board of
Directors during 1998.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation and Management Development Committee, a Corporate Governance
Committee and a Finance Committee. Membership of the committees as of the record
date of March 8, 1999 is listed at the beginning of the description of each
committee.
Members of the Executive Committee: Marilyn Ware (Chairman), J. James
Barr, Henry G. Hager, Anthony P. Terracciano and Nancy Ware Wainwright. The
Executive Committee exercises all the powers of the Board of Directors when the
Board is not in session, except as otherwise provided by Delaware law and the
Company's by-laws. There were seven meetings of the Board's Executive Committee
during 1998.
Members of the Audit Committee: Horace Wilkins, Jr. (Chairman), William
O. Albertini, William R. Cobb, Ray J. Groves, Marilyn Ware and Ross A. Webber.
The Audit Committee recommends to the Board of Directors the independent
accountants to audit the books and accounts of the Company. The Audit Committee
met with the Company's independent accountants and the Company's officers three
times during 1998 to review the scope of the audit to be performed, approve the
fee to be paid for the audit and review the results of the audit of the
financial statements included in the Annual Report and the adequacy of internal
accounting controls and accounting practices.
Members of the Compensation and Management Development Committee: Ross A.
Webber (Chairman), William O. Albertini, Elizabeth H. Gemmill, Marilyn Ware and
Paul W. Ware. The Compensation and Management Development Committee met three
times during 1998 to evaluate and report to the Board of Directors concerning
the Company's compensation practices and benefit programs and to evaluate and
set, subject to the concurrence of the Board of Directors, the compensation to
be paid to the President and Chief Executive Officer.
Members of the Corporate Governance Committee: Henry G. Hager (Chairman),
Elizabeth H. Gemmill, Anthony P. Terracciano, Marilyn Ware, Nancy Ware
Wainwright and Horace Wilkins, Jr. The Corporate Governance Committee recommends
to the Board of Directors the slate of director-nominees to stand for election
each year at the annual meeting of shareholders, and in the event of interim
vacancies, candidates to fill such vacancies on the Board of Directors. The
Corporate Governance Committee also evaluates and reports to the Board of
Directors on the effectiveness of the Board and its committee system and the
compensation and benefit program for directors. The Corporate Governance
Committee met nine times during 1998.
The Corporate Governance Committee will consider nominees for the Board of
Directors suggested by shareholders. Such suggestions for the annual meeting of
shareholders in 2000 must be in writing and delivered to the General Counsel and
Secretary of the Company by November 27, 1999.
8
<PAGE>
Members of the Finance Committee: William O. Albertini (Chairman),
William R. Cobb, Ray J. Groves, Anthony P. Terracciano, Marilyn Ware and Paul W.
Ware. The Finance Committee met four times during 1998 to assist management and
the Board of Directors in evaluating matters such as acquisitions, divestitures,
joint ventures and partnerships, to advise management and make recommendations
to the Board of Directors relative to the various financial policies and
programs of the Company, and to review and monitor the funding, asset allocation
and investment performance of the Company's group benefit and retirement plan
assets.
DIRECTOR REMUNERATION
The amounts paid to directors who are not employees of the Company or one
of its subsidiaries for their services as such and for their participation on
committees of the Board of Directors are as follows: (i) each director receives
a retainer of $30,000 per year plus a fee of $1,500 for each Board meeting
attended, (ii) each member of the Executive Committee receives an additional
retainer of $5,000 per year plus a fee of $1,000 for each Executive Committee
meeting attended and (iii) the Chairmen of the Audit Committee, Compensation and
Management Development Committee, Corporate Governance Committee and Finance
Committee each receive an additional retainer of $1,500 per year, and each
member of these committees receives a fee of $1,000 for each meeting attended.
The Chairman of the Board of Directors receives an additional annual retainer of
$150,000. Directors who are employees of the Company or one of its subsidiaries
do not receive retainers or attendance fees.
A retiring director receives, as a retirement benefit, an annual amount of
$15,500. This payment continues for a period equal to the period the director
served as a member of the Board of Directors, exclusive of any period when the
director was also a salaried employee of the Company or any of its subsidiaries.
In the event the director dies prior to the expiration of such period of time,
the annual benefit will continue to be paid to the person selected by the
director to receive the benefit for the remainder of said period of time or the
death of said selected person, whichever occurs first.
9
<PAGE>
STOCK OWNERSHIP INFORMATION
The following table sets forth information as of March 8, 1999 with respect
to beneficial ownership of Common Stock of the Company by: (i) the nominees,
(ii) the five most highly compensated executive officers and (iii) all nominees
and executive officers of the Company as a group. If a nominee owns less than
one percent of the Company's Common Stock, no percentage is shown under the
heading "Percent of Class." Information for the table was obtained from the
nominees and executive officers. For purposes of the table, a person is a
"beneficial owner" of the Company's Common Stock if that person, directly or
indirectly, has or shares with others (i) the power to vote or direct the voting
of the Common Stock or (ii) investment power with respect to the Common Stock,
which includes the power to dispose or direct the disposition of the Common
Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
-----------------------------
SOLE VOTING SHARED VOTING SHARES OWNED BY
NAME OF INDIVIDUAL OR OR INVESTMENT OR INVESTMENT SPOUSE AND MINOR PERCENT
NUMBER OF PERSONS IN GROUP POWER(1) POWER(2) CHILDREN(2) TOTAL OF CLASS
- -------------------------------------- ------------- ------------- ----------------- ---------- --------
<S> <C> <C> <C> <C> <C>
William O. Albertini.................. 7,824 7,824 *
J. James Barr......................... 739,534 1,018 740,552 *
Rhoda W. Cobb......................... 6,000 455,000 1,000 462,000 *
Elizabeth H. Gemmill.................. 34,613 2,792,159 56,460 2,883,232 3.6%
Ray J. Groves......................... 1,014 1,014 *
Henry G. Hager........................ 8,000 15,195 23,195 *
Gerald C. Smith....................... 31,968 67 32,035 *
Anthony P. Terracciano................ 44,000 44,000 *
Nancy Ware Wainwright................. 6,824 535,205 542,029 *
Marilyn Ware.......................... 4,905,087 4,736,185 9,641,272 11.9%
Paul W. Ware.......................... 20,400 691,376 711,776 *
Ross A. Webber........................ 3,182 3,182 *
Horace Wilkins, Jr.................... 1,577 1,577 *
Joseph F. Hartnett, Jr................ 6,504 6,504 *
W. Timothy Pohl....................... 19,810 19,810 *
Robert D. Sievers..................... 17,561 17,561 *
All nominees and executive
officers as a group
(16 persons)....................... 5,853,898 8,532,549 73,740 14,460,187 17.8%
</TABLE>
- ------------------
* Represents holdings of less than one percent.
(1) Does not include shares of the Company's Common Stock to be credited during
1999 to the accounts of the executive officers pursuant to the Company's
Employees' Stock Ownership Plan and Savings Plan for Employees.
- ------------------
See footnote (2) on page 11
10
<PAGE>
(2) Cobb Foundation, a charitable trust of which Rhoda W. Cobb is a trustee,
owns 455,000 shares of the Common Stock of the Company. Catlin-Wainwright
Foundation, a charitable trust of which Nancy Ware Wainwright is a trustee,
owns 535,205 shares of the Common Stock of the Company. Oxford Foundation,
Inc., a non-profit corporation of which Marilyn Ware and Paul W. Ware are
directors, owns 677,376 shares of the Common Stock of the Company. Warwick
Foundation, a charitable foundation of which Elizabeth H. Gemmill is the
Managing Trustee, owns 580,000 shares of the Common Stock and 200 shares of
5% Cumulative Preferred Stock of the Company. As the trustees or directors
of these non-profit organizations have voting and investment power, the
shares of the Company's Common Stock held by such non-profit organizations
are shown opposite the name of the nominee or officer, but such shares are
reported only once in the total for nominees and officers as a group. The
nominees deny beneficial ownership of such shares. The nominees also deny
beneficial ownership of shares owned by their spouses and minor children.
None of the nominees has any material interest in any other stock of the
Company or its subsidiaries.
Based upon information available to the Company as of March 8, 1999, the
following persons beneficially own more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
-----------------------------
SOLE VOTING SHARED VOTING
NAME AND ADDRESS OR INVESTMENT OR INVESTMENT PERCENT
OF BENEFICIAL OWNER POWER POWER OF CLASS
------------------- ------------- ------------- --------
<S> <C> <C> <C>
Marian S. Ware.................................... 4,035,029 743,696 5.9%
2 East Main Street
Strasburg, PA 17579
The Bessemer Group, Incorporated.................. 4,944,533 1,769,596 8.3%
100 Woodbridge Center Drive
Woodbridge, NJ 07095
</TABLE>
Based upon filings with the Securities and Exchange Commission, as of
March 8, 1999 there are no persons who own beneficially more than 5% of the
outstanding shares of the Company's Cumulative Preferred Stock, 5% Series.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Nancy Ware Wainwright reported on Form 5 one single sale of 100 shares of
Common Stock that inadvertently was not reported earlier on Form 4.
11
<PAGE>
REPORT OF THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Overview
The Compensation and Management Development Committee of the Board of
Directors (the "Committee") is comprised entirely of independent non-employee
directors. The Committee establishes, subject to the concurrence of the Board of
Directors, the Company's compensation policy and is responsible for
administering the compensation program for the Company's executives.
The Committee endeavors to ensure that the Company's executive compensation
program enables the Company to attract and retain the talented executives it
needs. Consistent with this objective, it is the policy of the Committee that
the total compensation opportunity available to executives should be competitive
with the median remuneration received by those in positions of similar
responsibilities in other comparable companies. To this end, an independent
compensation consultant is retained to assist the Committee by periodically
studying the Company's compensation program for executives, reporting its
findings and making recommendations consistent with the compensation policy.
The compensation program for executives is comprised of base salary, an
annual incentive opportunity and a long-term incentive opportunity. The current
salary ranges, annual incentive targets and long-term incentive targets for
executives were established in 1997 based on a study prepared by the
compensation consultant that year. The surveys utilized by the compensation
consultant for the study included many of the water utilities comprising the Dow
Jones Water Utilities Index, the published industry index shown in the
performance graph.
Salary Compensation
The President and Chief Executive Officer, with the concurrence of the
Committee, annually sets the salary within the designated salary band for each
executive other than himself based on the responsibilities and achievements of
each such executive.
The Committee, with the concurrence of the Board of Directors, sets a
salary within the designated salary band for the President and Chief Executive
Officer on the basis of merit. This evaluation of merit involves an analysis of
(i) the Company's financial performance within the limitations imposed by state
utility regulators and fluctuating and varying weather conditions and (ii) the
performance of the President and Chief Executive Officer in maintaining the
Company as a leader in the water service industry and in expanding the Company's
water service operations consistent with the Company's commitment to quality
water service to customers of its utility subsidiaries.
Inasmuch as water service operations are the Company's principal business,
evaluating the Company's financial performance requires an understanding of (i)
the prevailing regulatory practice in each of the states in which the Company's
utility subsidiaries operate and (ii) the effect varying weather conditions have
on revenues and expenses. Consequently,
12
<PAGE>
the Committee has not adopted a formula relationship between changes in the
Company's financial performance and changes in the level of salary compensation
for the President and Chief Executive Officer. Similarly, because of the varied
subjective considerations involved, the Committee does not evaluate on a formula
basis the performance of the President and Chief Executive Officer in
maintaining the Company as a leader in the water service industry or in
expanding the Company's water service operations.
Annual Incentive Compensation
The Board of Directors, acting on the Committee's recommendation, adopted
in 1996 an annual cash incentive plan. This plan provides an opportunity for
executives and other key employees of the Company and its subsidiaries to earn
an annual cash incentive award for achieving financial, customer service and
operational goals. The financial goals are based on achieving the utility
operating income and return on equity authorized by the various state utility
regulators for the Company's utility subsidiaries. Customer service goals are
premised on delivering at all times high quality water at adequate pressures to
water service customers and responding promptly to customer service and billing
inquiries. The operational goals are based on an evaluation of each
participant's individual performance. The exact amount of an award depends on
the performance of the Company and of the participant.
Awards made to executives under the Annual Incentive Plan for 1998 are
shown in the Summary Compensation Table of this Proxy Statement.
Long-Term Incentive Compensation
At their 1994 annual meeting, shareholders of the Company adopted the
Long-Term Performance-Based Incentive Plan for executives and other key
employees of the Company and its subsidiaries. The exact amount of an award is a
function of the Company attaining its Earnings Per Share Growth and Total Return
to Stockholders Performance Cycle Goals and the individual performance of the
participant. Awards to executives under the plan, if any, are generally paid as
follows: 75% in restricted shares of Common Stock and 25% in cash.
Awards made to executives under the Long-Term Performance-Based Incentive
Plan for the performance cycle that began January 1, 1996 and concluded December
31, 1998 are shown in the Summary Compensation Table of this Proxy Statement.
Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally precludes the
deduction of more than $1 million in compensation paid to the Chief Executive
Officer and any of the four other most highly compensated executives in any one
year, subject to certain specified exceptions. All compensation earned by these
executives in 1998 will be deductible.
AS SUBMITTED BY THE MEMBERS OF THE COMPENSATION
AND MANAGEMENT DEVELOPMENT COMMITTEE:
William O. Albertini Paul W. Ware
Elizabeth H. Gemmill Ross A. Webber
Marilyn Ware
Dated: January 7, 1999
13
<PAGE>
PERFORMANCE GRAPH
The following graph compares the changes over the last five years in the
value of $100 invested in (i) the Company's Common Stock ("American Water
Works"), (ii) the Standard & Poor's 500 Stock Index ("S&P 500") and (iii) the
Dow Jones Water Utilities Index ("DJ Water Utils").
The year-end values of each investment are based on share price
appreciation and the reinvestment of all dividends. The calculations exclude
trading commissions and taxes. Total shareholder returns from each investment,
whether measured in dollars or percent, can be calculated from the year-end
investment values shown beneath the graph.
FIVE-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1993
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts
the following plot points:
Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98
------ ------ ------ ------ ------ ------
American
Water Works $100 $ 94 $140 $148 $211 $268
S&P 500 $100 $101 $139 $171 $229 $294
DJ Water Utils $100 $ 94 $121 $144 $199 $254
14
<PAGE>
MANAGEMENT REMUNERATION
The following table sets forth the annual compensation paid to each of the
Company's five most highly compensated executive officers for services to the
Company and its subsidiaries in all capacities for each of the last three
calendar years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS PAYOUTS
--------- --------
ANNUAL COMPENSATION RESTRICTED
NAME OF EXECUTIVE OFFICER ------------------------------------- STOCK LTIP ALL OTHER
AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) PAYOUTS COMPENSATION(2)
- --------------------------------------- --------- ------------ ------------ ---------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
J. James Barr(3)....................... 1998 $402,917 $144,897 $126,382 $24,012 $6,109
President and Chief 1997 294,333 58,167 194,022 26,775 5,465
Executive Officer of the 1996 270,000 54,257 143,136 26,775 5,462
Company
Gerald C. Smith........................ 1998 291,833 55,924 126,382 24,012 7,338
Vice President of the 1997 279,333 58,167 194,022 26,775 6,605
Company 1996 270,000 54,257 143,136 26,775 6,587
W. Timothy Pohl........................ 1998 188,792 30,839 39,208 7,452 7,338
General Counsel and 1997 183,600 32,772 100,345 13,847 6,725
Secretary of the Company 1996 156,000 25,259 74,016 13,847 6,446
Joseph F. Hartnett, Jr................. 1998 180,000 30,839 32,422 6,160 7,413
Treasurer of the Company 1997 166,900 29,792 44,239 18,315 6,721
1996 0 0 0 0 0
Robert D. Sievers...................... 1998 150,000 30,839 32,422 6,160 6,754
Comptroller of the Company 1997 134,667 22,384 82,955 11,447 6,080
1996 130,000 20,879 61,200 11,447 5,531
</TABLE>
- ------------------
(1) Dollar values of restricted shares of Common Stock awards are based on
market price at the time of grant. The aggregate number of restricted stock
held and their value as of December 31, 1998 for the executives were as
follows: Mr. Barr -- 33,807 shares / $1,140,986; Mr. Smith -- 33,807 shares
/ $1,140,986; Mr. Pohl -- 17,484 shares / $590,085; Mr. Hartnett -- 1,506
shares / $50,827; and Mr. Sievers -- 14,454 shares / $487,822. Dividends
are paid on the restricted shares of Common Stock at the same time and rate
as dividends are paid to holders of unrestricted shares of Common Stock.
- ------------------
See footnotes (2) and (3) on page 16
15
<PAGE>
(2) Dollar values of the shares of the Company's Common Stock purchased with
Company contributions and credited to the account of the named executive
officer under the Employees' Stock Ownership Plan and Savings Plan for
Employees.
(3) On November 6, 1997, J. James Barr was elected as a director and appointed
Acting President and Chief Executive Officer of the Company. Coincident
with his appointment, Mr. Barr was awarded 11,000 Common Stock units of the
Company payable on November 6, 2000 based on the per share closing price of
the Company's Common Stock on that date, subject to certain conditions.
This compensation award was filed with the Securities and Exchange
Commission as an exhibit to the Company's Annual Report on Form 10-K for
1997. The foregoing description is qualified in its entirety by reference
to such exhibit.
The Company has maintained since 1976 an Employees' Stock Ownership Plan
(the "ESOP") which has been amended from time to time, primarily to reflect
changes in federal tax law. All employees of the Company and its subsidiaries
who are not included in a bargaining unit may participate in the ESOP beginning
on January 1 following his or her date of hire. The Company also maintains a
Savings Plan for Employees. The Savings Plan was established in 1993. All
employees of the Company and its subsidiaries who have completed six months of
service may participate in the Savings Plan. As of March 8, 1999, the ESOP and
Savings Plan together held 3.5% of the Company's Common Stock.
16
<PAGE>
PENSION PLAN
The following table shows the approximate annual retirement benefits which
will be payable under the Company's Pension Plan, Supplemental Executive
Retirement Plan and Supplemental Retirement Plan at the normal retirement age of
65 (assuming continuation of the plans) for specified years of service and
levels of average remuneration.
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE -------------------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $ 46,032 $ 61,376 $ 76,720 $ 81,970 $ 87,220 $ 92,470
200,000 62,532 83,376 104,220 111,220 118,220 125,220
250,000 79,032 105,376 131,720 140,470 149,220 157,970
300,000 95,532 127,376 159,220 169,720 180,220 190,720
350,000 112,032 149,376 186,720 198,970 211,220 223,470
400,000 128,532 171,376 214,220 228,220 242,220 256,220
450,000 145,032 193,376 241,720 257,470 273,220 288,970
500,000 161,532 215,376 269,220 286,720 304,220 321,720
550,000 178,032 237,376 296,720 315,970 335,220 354,470
600,000 194,532 259,376 324,220 345,220 366,220 387,220
650,000 211,032 281,376 351,720 374,470 397,220 419,970
</TABLE>
The Company and its subsidiaries have a defined benefit, non-contributory
Pension Plan which covers substantially all employees, including the executive
officers listed in the Summary Compensation Table on page 15. Annual amounts
which are contributed to the plan and charged to expense during the year are
computed on an aggregate actuarial basis and cannot be individually allocated.
The remuneration covered under the plan includes salaries and annual cash
bonuses paid to plan participants. Directors who are not also employees do not
participate in the plan. Benefits under the plan are calculated as a percentage
of the highest average remuneration during those 60 consecutive months of
employment of the final 120 months of employment that yield the highest average.
That percentage depends on the employee's total number of years of service.
Benefits are not subject to reduction for Social Security or other benefits, but
are restricted under federal tax law to a maximum of $130,000 per year. As of
March 8, 1999, Messrs. Barr, Smith, Pohl, Hartnett and Sievers have been
credited with 37, 46, 14, 6 and 22 years of service, respectively, under the
plan.
In 1985, the Company established a Supplemental Executive Retirement Plan
under which it has agreed to provide additional retirement benefits to certain
employees of the Company and its subsidiaries, designated from time to time by
the Board of Directors. Messrs. Barr, Smith, Pohl, Hartnett and Sievers have
been so designated. Benefits under the Supplemental Executive Retirement Plan
are intended to (i) provide the additional retirement benefits that would be
payable under the Company's Pension Plan if federal tax law did not restrict
such benefits as described in the preceding paragraph, (ii) compute the benefits
payable on the basis of the highest average remuneration during 36 consecutive
months rather than 60 consecutive months of employment and (iii) provide
additional years of service to those covered employees hired in mid-career.
In 1989, recognizing that the federal tax law restrictions on benefits
payable under the Pension Plan had begun to affect employees who were not
eligible for the Supplemental Executive Retirement Plan, the Company adopted the
Supplemental Retirement Plan (the "SRP"). The SRP is designed to provide
benefits to certain key employees designated by the Board of Directors, equal to
those that would be provided under the Pension Plan's benefit formula if it were
unaffected by the federal tax law restrictions on benefits. Benefits payable
under the SRP are reduced by any benefit payable to the same individual under
the Supplemental Executive Retirement Plan.
17
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to ratification by shareholders, the Board of Directors, acting
upon the recommendation of the Audit Committee, has appointed
PricewaterhouseCoopers LLP as independent accountants to audit the books and
accounts of the Company at the close of the current fiscal year.
PricewaterhouseCoopers LLP acted as independent accountants for the Company
during 1998. It is intended that, in the absence of contrary direction, the
proxies will be voted for the ratification of PricewaterhouseCoopers LLP as
independent accountants, and the Board of Directors recommends that the
shareholders vote to ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants. In the event the appointment of PricewaterhouseCoopers
LLP is ratified, it is expected that PricewaterhouseCoopers LLP will also audit
the books and accounts of certain subsidiaries of the Company at the close of
their current fiscal years. A representative of PricewaterhouseCoopers LLP,
whose report on the Company's financial statements appears in the 1998 Annual
Report, will be present at the annual meeting and will have the opportunity to
make a statement, if the representative desires to do so, and to respond to
appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters properly come before the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. Proxies may be
solicited by mail, telephone, telegram, facsimile, or in person. The Company may
pay banks, brokers or other nominees who hold stock in their names for their
expenses in sending soliciting material to their principals. Georgeson &
Company, Inc. has been retained to assist in the solicitation of proxies at a
fee of $6,500, plus reasonable out-of-pocket expenses.
18
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder who desires to submit a proposal to be considered for
inclusion in the Company's proxy statement and form of proxy relating to its
annual meeting of shareholders in 2000 must submit such proposal in writing to
the Company by November 27, 1999. Such proposals should be directed to the
General Counsel and Secretary of the Company.
FORM 10-K REPORT
Upon the written request of any person who on the record date was a record
owner of stock of the Company, or who represents in good faith that he or she
was on such date a beneficial owner of such stock, the Company will send to such
person, without charge, a copy of its Annual Report on Form 10-K for 1998,
including financial statements and schedules, as filed with the Securities and
Exchange Commission. Requests for this report should be directed to: W. Timothy
Pohl, General Counsel and Secretary, American Water Works Company, Inc., 1025
Laurel Oak Road, P. O. Box 1770, Voorhees, New Jersey 08043.
By Order of the Board of Directors,
W. TIMOTHY POHL, General Counsel and Secretary
Dated: March 26, 1999
19
<PAGE>
APPENDIX A
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO CLASSIFY THE BOARD OF DIRECTORS
A new Article Twelfth shall be added to the Restated Certificate of
Incorporation, as amended, to read in its entirety as follows:
TWELFTH: The Board of Directors shall be divided into three classes,
designated Classes I, II and III, as nearly equal in number as the then
total number of directors constituting the whole Board of Directors
permits, with the term of office of one class expiring each year. At the
annual meeting of shareholders in 1999, directors of Class I shall be
elected to hold office for a term expiring at the next succeeding annual
meeting, directors of Class II shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of Class III
shall be elected to hold office for a term expiring at the third succeeding
annual meeting. No decrease in the number of directors shall shorten the
term of any incumbent director. Notwithstanding the foregoing, and except
as otherwise required by law, directors, if any, elected by the holders of
any one or more series of Cumulative Preferred Stock, Cumulative Preference
Stock or Cumulative Preferential Stock, voting separately as a class, shall
be elected to the Class with a term expiring at the next following annual
meeting of shareholders, and the number of members of such class shall be
increased accordingly. Subject to the foregoing, at each annual meeting of
shareholders the successors to the class of directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting and until their successors shall be elected and
qualified.
A-1
<PAGE>
1210-PS-99
<PAGE>
DIRECTIONS TO THE 1999 AMERICAN WATER WORKS COMPANY, INC. ANNUAL
MEETING TO BE HELD AT THE MANSION ON MAIN STREET
FROM PHILADELPHIA/CENTER CITY: 30 minutes. Take Ben Franklin Bridge to Route
70 East. Follow Route 70 East to Route 73 South. Follow 73 South to Evesham
Road. Turn right on Evesham Road. Follow 1 1/2 miles, turn left into Main
Street Complex. Entrance is on left.
FROM PHILADELPHIA INTERNATIONAL AIRPORT: 40 minutes. Take Walt Whitman Bridge
to 42 South to 295 North to Route 561 (Voorhees Exit). Follow Route 561 to
Evesham Road. Turn left on Evesham Road. Follow 1 1/2 miles, turn right into
Main Street Complex. Entrance is on left.
FROM NORTHEAST PHILADELPHIA: 30 minutes. Take Tacony Palmyra Bridge to Route
73 South. Turn right on Evesham Road. Follow 1 1/2 miles, turn left into Main
Street Complex. Entrance is on left.
FROM NORTHERN NEW JERSEY/NEW YORK AREA: 1 hour and 15 minutes. Take New Jersey
Turnpike South to Exit 4. Follow to Route 73 South. Turn right on Evesham
Road. Follow 1 1/2 miles, turn left into Main Street Complex. Entrance is on
left.
FROM DELAWARE/BALTIMORE AREA: 60 minutes. Delaware Memorial Bridge to 295
North. Follow to Exit 32 (Haddonfield, Voorhees, Gibbsboro). Turn right on
Route 561. Follow 2 miles to Evesham Road. Turn left onto Evesham Road (Mobil
Station on left). Follow 2 miles, turn right into Main Street Complex.
Entrance is on left.
FROM ATLANTIC CITY: 50 minutes. Take Atlantic City Expressway to Route 73
North Exit (Tacony Palmyra Bridge). Proceed on Route 73 North, around Berlin
Circle, go 2 miles. Turn left on Kresson Road. Follow to second light, Evesham
Road. Turn left on Evesham Road and left into Main Street Complex. Entrance is
on left.
DETACH HERE
- ---------------------------------------------------------------------------
PROXY
AMERICAN WATER WORKS COMPANY, INC.
P
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
R FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 6, 1999
O
The undersigned, hereby revoking any contrary proxy previously
X given, hereby appoints J. James Barr and Marilyn Ware, and each of
them, attorneys and proxies, with full power of substitution and
Y revocation, to vote all of the shares of the undersigned in American
Water Works Company, Inc. (the "Company") entitled to vote at the
annual meeting of shareholders of the Company on May 6, 1999, and at
any adjournment thereof, as indicated on the reverse side and in
accordance with the judgment of said attorneys and proxies on any other
business which may come before the meeting or any such adjournment.
Except as otherwise indicated on the reverse side, the undersigned
authorizes the proxies appointed hereby to vote cumulatively for such
of the nominees (in some circumstances, less than all) as such proxies
in their discretion determine if in their judgment such action is
necessary to elect as many of the nominees as possible.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED BY THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3, WITH THE DISCRETIONARY AUTHORITY
DESCRIBED ABOVE.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
[LOGO] AMERICAN WATER WORKS
COMPANY, INC.
c/o EquiServe, P. O. Box 8040,
Boston, MA 02266-8040
Vote by Telephone Vote by Internet
It's fast, convenient, and It's fast, convenient, and your vote
immediate! Call Toll-Free on is immediately confirmed and posted.
a Touch-Tone Phone 1-877-PRX-VOTE
(1-877-779-8683).
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/awk
For shareholders residing outside
the United States, call 1-201- 3. Enter your 14-digit Control
536-8073 on a touch-tone phone Number located on your Proxy
for a collect call. Card above your name.
3. Enter your 14-digit Control 4. Follow the instructions
Number located on your Proxy provided.
Card above your name.
4. Follow the recorded instructions.
Your vote in important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/awk
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
Please note that all votes cast via the Telephone or Internet must be cast prior
to 5:00 p.m. EDST, May 5, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
DETACH HERE
- ---------------------------------------------------------------------------
[ ] Please mark
votes as in
this example.
1. To amend the Restated Charter to establish a
Classified Board of Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Election of Directors.
Class I Directors: (01) William O. Albertini, (02) Rhoda W. Cobb,
(03) Ray J. Groves, (04) Ross A. Webber, (05) Horace Wilkins, Jr.
Class II Directors: (06) Henry G. Hager, (07) Gerald C. Smith,
(08) Anthony P. Terracciano, (09) Marilyn Ware
Class III Directors: (10) J. James Barr, (11) Elizabeth H. Gemmill,
(12) Nancy Ware Wainwright, (13) Paul W. Ware
FOR WITHHELD
ALL [ ] FROM ALL [ ]
NOMINEES NOMINEES
[ ]___________________________________________________________________
Withhold vote from the nominees that I/We have written on the above
line, or cumulate vote as I/We have instructed on the above line
3. Ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, upon other matters as may properly come
before the meeting.
The Board of Directors recommends a vote "FOR" each proposal.
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE TO LEFT
Please return your signed proxy at once in the enclosed
envelope, which requires no postage if mailed in the United
States, even though you expect to attend the meeting in
person.
Please date and sign below. If a joint account, each owner
should sign. When signing in a representative capacity,
please give title. Please sign here exactly as name is
stenciled hereon.
Signature:________________Date:______ Signature:________________Date:______
