8-KLeadership ChangesExhibits & Filings

American Water Works Company, Inc. 8-K Report, Executive Changes (Aug 17, 2010)

Filed August 17, 2010For Securities:AWK

Summary

This Form 8-K filing by American Water Works Company, Inc. (AWK) on August 17, 2010, announces a significant leadership change. The company has appointed Jeffry E. Sterba as its new President and Chief Executive Officer, effective August 15, 2010, and has also added him to its Board of Directors. Mr. Sterba's compensation package includes a base salary, eligibility for annual and long-term incentive plans, a signing bonus, and stock options. His employment agreement also outlines provisions for vesting and termination under specific circumstances. Concurrently, the filing details the resignation of Donald L. Correll from his roles as President, CEO, and a director of the company and its subsidiaries. Mr. Correll has entered into a separation agreement that includes continued base salary payments, severance, a pro-rated annual incentive award, accelerated vesting and extended termination dates for stock options, accelerated vesting of restricted stock units, and continued defined employer contributions under the company's deferred compensation plan. Both agreements include mutual releases and confidentiality/non-disparagement provisions.

Key Highlights

  • 1Jeffry E. Sterba appointed as new President and CEO and Director, effective August 15, 2010.
  • 2Sterba's compensation includes $675,000 base salary, target 100% AIP, target 200% LTIP, $200,000 signing bonus, and 25,000 stock options.
  • 3Donald L. Correll resigns as President, CEO, and Director.
  • 4Correll's separation agreement includes continued salary until February 16, 2011, followed by 18 months of severance.
  • 5Correll to receive a pro-rated 2010 Annual Incentive Plan award.
  • 6Accelerated vesting and extended termination dates for Correll's stock options and restricted stock units.
  • 7Both Sterba's employment and Correll's separation agreements include provisions for performance-based incentives and termination clauses.

Frequently Asked Questions

The main purpose of this 8-K filing is to announce a significant leadership transition at American Water Works Company, Inc., specifically the appointment of a new CEO and the departure of the previous one.

Mr. Sterba's employment agreement includes an annual base salary of $675,000, eligibility for annual and long-term incentive plans, a $200,000 signing bonus, and a grant of 25,000 stock options. The agreement also details specific provisions regarding vesting and termination of equity awards.

Mr. Correll will continue to receive his base salary until February 16, 2011, followed by 18 months of severance payments. He will also receive a pro-rated 2010 annual incentive award and benefits related to his stock options and restricted stock units, including accelerated vesting and extended termination dates. Furthermore, he will continue to receive defined employer contributions to his deferred compensation plan.

Yes, both agreements contain clauses related to performance and termination. Mr. Sterba's agreement includes provisions for full vesting of certain equity awards in case of termination without cause or a succession termination, and extended option exercise periods. Mr. Correll's agreement also details the treatment of his incentive awards and equity based on performance and his separation.