8-KLeadership Changes

American Water Works Company, Inc. 8-K Report, Executive Changes (Mar 12, 2014)

Filed March 12, 2014For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced a significant executive transition in an 8-K filing dated March 12, 2014. The key development is the appointment of Linda G. Sullivan as the new Senior Vice President and Chief Financial Officer (CFO), effective May 9, 2014. Ms. Sullivan, who has an extensive background in financial leadership at Southern California Edison, will be instrumental in guiding the company's financial strategy moving forward. This appointment coincides with other leadership changes, as Jeffry E. Sterba will be succeeded as President and CEO by Susan N. Story, the current CFO. Investors should note the compensation package for Ms. Sullivan, which includes a competitive base salary, annual incentive plan target, and a significant long-term equity award designed to align her interests with shareholder value. The performance-based nature of a portion of her equity grant indicates a focus on key financial and operational metrics.

Key Highlights

  • 1Appointment of Linda G. Sullivan as Senior Vice President and Chief Financial Officer, effective May 9, 2014.
  • 2Ms. Sullivan's employment commences on April 28, 2014, providing a transition period.
  • 3Ms. Sullivan's compensation includes an annual base salary of $460,000.
  • 4Target annual incentive payout (AIP) for Ms. Sullivan is 75% of base salary for 2014.
  • 5Target long-term incentive payout (LTIP) for Ms. Sullivan is 125% of base salary for 2014.
  • 6Ms. Sullivan will receive an initial equity award of $500,000, comprising performance share units (PSUs) and restricted stock units (RSUs).
  • 7The PSUs are tied to total stockholder return, operational efficiency, and EPS growth over three years.

Frequently Asked Questions

Linda G. Sullivan has been appointed as the new Senior Vice President and Chief Financial Officer, effective May 9, 2014. She will begin her employment with the company on April 28, 2014.

Ms. Sullivan will receive an annual base salary of $460,000. Her target annual incentive plan (AIP) payout is 75% of her base salary, and her target long-term incentive plan (LTIP) equity award is 125% of her base salary. Additionally, she will receive an initial equity award of $500,000.

The initial $500,000 equity award consists of 70% performance share units (PSUs) and 30% restricted stock units (RSUs). The PSUs are contingent on achieving specific performance metrics over a three-year period, including total stockholder return, operational efficiency, and compounded EPS growth.

The equity award, particularly the performance share units, is designed to align Ms. Sullivan's compensation with the company's long-term performance and shareholder value creation. A portion of the award is intended to replace economic benefits she forfeits from her previous employment.