2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 186 ALASKA AIR GROUP AMERICAN AIRLINES GROUP AMERICAN WATER WORKS COMPANY AMGEN The Company believes that its leadership structure, discussed in detail in the Board Leadership section in this Proxy Statement, supports the risk oversight function of the Board for the same reasons that it believes the leadership structure is most effective for the Company, namely that, while facilitating open discussion and communication from independent members of the Board, it ensures that strategic discussions are led by an individual with a deep understanding of the highly technical and complex nature of the airline business. Code of Conduct and Ethics The Company has adopted a Code of Conduct and Ethics that applies to all company employees, including its CEO, CFO, principal accounting officer and persons performing similar functions, and its Board of Directors. The Code of Conduct and Ethics may be found on the Company’s website at www.alaskaair.com. Information on the Company’s website, however, does not form a part of this Proxy Statement. The Company intends to disclose on the Company’s website any amendments (other than technical, administrative or non-substantive amendments) to, and any waivers from, a provision of the Code of Conduct and Ethics for directors or executive officers. Environmental and Social Highlights One of the Company’s core values, “Do the right thing” – for employees, communities, and the environment – helps the Company achieve its strategic goals, including employee engagement, high customer satisfaction and loyalty, and operational efficiency, all of which contribute to a successful bottom line, and in turn increase stockholder value. Environmental and social highlights from 2017 include: ‰ Alaska was ranked as the top U.S. airline in the Dow Jones Sustainability Index (DJSI), receiving perfect scores for “efficiency” and “reliability”. ‰ Alaska was recognized as No. 1 in fuel efficiency for U.S. airlines by the International Council on Clean Transportation for the seventh consecutive year. ‰ The Company donated over $14 million and contributed more than 32,000 volunteer hours to support nonprofits in our local communities, focusing on youth and education, medical (research/ transportation) and community outreach. ‰ Alaska was ranked among Forbes’ 2017 “America’s Best Employers” for a third year in a row. ‰ Alaska received a perfect score of 100% and Virgin America received a score of 95% for workplace equality on the 2018 Corporate Equality Index (CEI). ‰ The Company maintains a Supplier Code of Conduct, holding suppliers accountable for complying with certain labor practices, safety and health standards, ethical business practices and social responsibility commitments. ‰ The Company has reached more than 69,000 youth and members of the workforce since 2014 with educational initiatives to enhance opportunity and expand career choices. ‰ Collected 1,963 tons of recyclables; recycling 82% of all recyclable materials used on board and reducing inflight waste to landfills by 36% since 2010. Additional information on the Company’s environmental, social and sustainability initiatives may be found in the Company’s Sustainability Report accessible online at www.alaskaair.com at About us. Information on the Company’s website, however, does not form a part of this Proxy Statement. 13 TheEnvironment. Asaglobalairline,webelieveitisourresponsibilitytomanagetheimpactthatouroperationshason theenvironment.Wehavetakenanumberofactionsthatreduceourenvironmentalfootprint,suchas: • Withourindustryleadingfleetrenewalprogram,wecontinuetoaggressivelyretireolderaircraftandreplacethem withnew,morefuel-efficientaircraft.Byyear-end2017,wehadintroduced496newaircraftintothefleetsinceour merger,andretired469olderaircraft,givingustheyoungestfleetamongstthelargestairlines.Newaircraftentering American’sfleet,liketheBoeing737MAX,improveperseatfuelefficiencybyupto40%andthusdramatically reduceemissionsoversimilarlysizedolderaircraftthatareretiring. • For2017,Americanachieveda2.5%improvementinfuelefficiencyanditisnow5.4%moreefficientthanitwasin 2014.Overthelast3yearsAmericanemittedapproximately4.9millionmetrictonsofCO2lessthanitwouldhaveif itsfuelefficiencyhadremainedatits2014level. • ReducingfuelconsumptionandemissionsthroughourFuelSmartProgram,whichisateammember-ledeffortto safelyreducefuelconsumption.Initiativesincludereducingusageoftheauxiliarypowerunit,optimizingplanned aircraftarrivalfuel,washingenginecomponentsformaximumefficiencyandreducingaircraftweightbyremoving unnecessaryitems. • Promotingthedevelopmentandadoptionofalternativejetfuelthatcanbesustainablyproducedandthathaslower life-cyclecarbonemissionsthantraditionaljetfuel.AmericanrecentlyannouncedpartnershipswithNesteOil,the leadingproducerofrenewablefuel,andAgrisomaBiosciences,aninnovativeagriculturaltechnologycompany,to exploreproductionpathwaysandfeedstocksthathavethepotentialtoleadtocommerciallyviablesustainable alternativejetfuel. • Replacingolder,inefficientgroundsupportequipmentwithnew,low-emissionsgroundsupportequipment,including alternative-fuelandelectricpoweredequipment.Overthepast3years,Americanhasaddedalternative-fueland electricpoweredequipmentatmorethan60ofourdomesticairportlocations. • Purchasingrenewableenergytominimizeourindirectemissions.Onehundredpercentoftheelectricitypurchased atAmerican’sheadquarterscampusandfacilitiesatDFWAirportisnowfromrenewablesources.Attheend2017, theEnvironmentalProtectionAgencyannouncedAmericanisranked43rdonitsFortune500listofthelargestgreen powerusers. • Supportingsignificantredevelopmentprojectstorenovateolderairportandothercompanyfacilities,andinturn improvetheirenergy-efficiency.Americanworkscloselywithourairportpartnersonmultibillion-dollarcapital programsthatincorporatethelatestenergyenhancements. • SeekingcertificationofourbuildingstotheU.S.GreenBuildingCouncilLeadershipinEnergyandEnvironmental Design(“LEED”)standard,totheextentfeasible.Forexample,ournewheadquartersunderconstructioninFort Worth,Texas,isdesignedtomeetLEEDGoldstandard. • Retrofittinghangarfacilitieswithhigh-efficiencyLEDlightsthatusesignificantlylessenergy.Atthestartof2018,re- lightingprojectshavebeencompletedattwoofsevenhangarfacilities. • Recyclingmillionsofaluminumcansandotherplasticandpaperitemsaspartofourin-flightrecyclingprogram. Americanwasthefirstairlinetobeginanin-flightrecyclingprogramin1989.Revenuegeneratedfromtherecycling programgoestotheWingsFoundation,anonprofitorganizationthatassistsAmericanAirlinesflightattendantsin timesofneed. Wethereforetakesustainabilityseriously.Wehaveateamofhigh-levelmanagersandsubject-matterexpertswhomeet onaregularbasistomonitorglobaltrends,determineourresponsetostakeholderinquiriesandassessrisksand opportunitiesaroundspecificsustainabilityissues,andhelpprepareourannualCorporateResponsibilityReport.This teamwillalsoreviewourpoliciesandreportswith,andmakerecommendationstoourChiefExecutiveOfficerandother seniorleadershipmembersandtotheCorporateGovernanceandNominatingCommittee,whichoverseessustainability mattersfortheBoard. Forfurtherinformationontheseanddozensofothersocialresponsibilityinitiatives,pleaseseeourCorporate ResponsibilityReport,availableonourwebsiteat www.aa.com . 38 2018ProxyStatement | CorporateGovernance CorporateResponsibilityand ComplianceCommittee CurrentMembers: RonaldD.Sugar(Chair) WandaM.Austin(sinceDecember2017) DavidBaltimore FrançoisdeCarbonnel RebeccaM.Henderson CharlesM.Holley,Jr.(sinceFebruary2017) R.SandersWilliams NumberofMeetingsHeldin2017: 5 Each memberhasbeendeterminedby theBoard to be independent under The NASDAQ Stock Market listing standards and the requirements of theSEC. DescriptionandKeyResponsibilities: • Oversees our compliance program and reviewing our programs in a number of areas governingethicalconductincluding: − U.S.Federalhealthcareprogramrequirements; − U.S. Food and Drug Administration requirements and other regulatory agency requirements, including good manufacturing, clinical and laboratory practices, drug safetyandpharmacovigilanceactivities; − interactionswithmembersofthehealthcarecommunity; − theCompany’sCorporateIntegrityAgreement; − anti-bribery/anti-corruptionactivities; − environment,healthandsafety; − informationsecurity,includingcybersecurity;and − humanresourcesandgovernmentaffairs. • Receives regular updates on pricing and access, political, social and environmental trends,andpublicpolicyissuesthatmayaffectourreputation,includingourbusinessor publicimage,andreviewsoursustainability,politicalandphilanthropicactivities. About Our Compliance Program Amgen’s Compliance Programis designed to promoteethical business conduct and ensure compliance with applicable laws and regulations. Thekeyobjectivesofourcomplianceprogramoperationsinclude: • developingpoliciesandprocedures; • providingongoingcompliancetrainingandeducation; • auditingandmonitoringofcompliancerisks; • maintaining and promoting avenues for staff to raise concerns, includinganonymouslythroughabusinessconducthotline; • conductinginvestigations; • respondingappropriatelytoanycomplianceviolations;and • takingappropriatestepstodetectandpreventrecurrence. Our Chief Compliance Officer, who reports to the CEO, oversees the ongoingoperationsofthecomplianceprogram. Codes of Ethics and Business Conduct OurBoardhasadoptedtwocodesofbusinessconductandethics,one that applies to our directors and a second that applies to our directors and all of our staff members, including our executive officers. We also haveacodeofethicsforseniorfinancialofficers.Toviewourcodesof business conduct, please visit our website at www.amgen.com . We intend to disclose any future amendments to certain provisions of our codes of business conduct and ethics, or waivers of such provisions, applicable to our directors and executive officers, at the same location on our website identified above. There were no waivers of any of the codesofbusinessconductorthecodesofethicsin2017. ⎪ 2018 Proxy Statement 23 Total of 02 pages in section Our Commitment to Corporate, Environmental and Social Responsibility We integrate environmentalandsocialpoliciesandpractices into our dailyoperationsby delivering valueto our customers, buildingstrong communities, leveraginginnovationto developour industry and supportingour employees.We derivethis focus from our visionstatement, “cleanwater for life,” and from our core valuesof safety, trust, environmentalleadership,teamwork andhighperformance. Our visionandvaluesinform our company strategy, whichis centered on five themes: Safety Customers Š Our number onefocus is the safety of our employeesandcustomers. Š Our customers are at the center of everythingwedo, helpingus to shapeour strategic priorities. Š Safety is both a valueanda strategy. Š We challengeourselvesso that if our regulatedutilitycustomers hada choiceof providers, wewouldwant them to choose us. Š Benefitsfrom the Tax Cuts andJobs Act go directly to the regulatedutilitycustomers. People TechnologyandOperational Efficiency Š We seek to maintainan environment that is open, diverseandinclusive,andwhereour peoplefeel valued,includedand accountable. Š Our technologyandoperationalefficiency strategy helpsus to continuallyfind better andmore efficient waysto do businessand providethe best services at an affordable cost for our customers. Š We want eachperson to be developedto hisor her fullest potential. Growth Š We believethat whencompaniesgrow, they can invest more increating stablejobs, training, benefits, infrastructure andour communities. Growth, inturn, benefits all stakeholders. In 2017, weissuedour fourth biennialCorporate ResponsibilityReport, coveringour performance from 2015to 2016. Our first report wasissuedin2011, makingus the first largewater services company to measure its performance againstthe GlobalReportingIndex. In addition,our sustainabilitypractices havesupported our inclusioninthe DowJonesSustainabilityNorth America Index in2012, 2013and 2015, andwehavealsomaintainedour positioninthe Euronext Vigeo ® U.S. 50 Index, whichincludes the 50 most advancedcompaniesinthe nationwithrespect to their environmental,socialand governanceperformance, basedon a reviewof hundredsof indicators. ii American Water | 2018Proxy Statement Total of 02 pages in section

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