Summary
This Form 8-K filed by American Water Works Company, Inc. on March 10, 2015, announces the adoption of the Annual Incentive Plan (the "Incentive Plan") effective January 1, 2015. This plan allows for the award of cash incentives to eligible employees, including officers, based on the achievement of preset performance objectives over the fiscal year. A key element is the plan's provision for awards to qualify as "qualified performance-based compensation" under Section 162(m) of the Internal Revenue Code, which requires stockholder approval of the material terms of the performance goals at the upcoming 2015 Annual Meeting of Stockholders. The filing also details the potential incentive payouts for named executive officers, the executive group, and the non-executive officer employee group for the 2015 fiscal year. These potential payouts are contingent on both the achievement of performance goals and the aforementioned stockholder approval. Investors should note the maximum annual award payable to any participant is capped at $3,000,000. The plan's administrator is the compensation committee, with provisions for delegation and amendments, subject to certain limitations.
Key Highlights
- 1American Water Works adopted an Annual Incentive Plan effective January 1, 2015.
- 2The plan provides for cash incentives to employees based on annual performance objectives.
- 3A critical component is the ability for awards to qualify as performance-based compensation under Section 162(m) of the IRS code, requiring stockholder approval.
- 4Stockholders will vote on the material terms of performance goals at the 2015 Annual Meeting.
- 5Potential incentive payouts for 2015 for named executive officers, executive group, and non-executive employees are detailed, contingent on stockholder approval and performance achievement.
- 6The maximum award payable to any single participant in a fiscal year is capped at $3,000,000.
- 7The compensation committee administers the plan, with flexibility for amendments and terminations.