2018 Guide to Effective Proxies

2.3 Table of contents | 49 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES AMERICAN TOWER CORPORATION AMERICAN WATER WORKS COMPANY AMGEN ANADARKO PETROLEUM CORPORATION Table of Contents PROXYSTATEMENTSUMMARY ................. 1 CORPORATEGOVERNANCE ..................... 8 General .......................................8 BoardofDirectors ...............................8 BoardLeadershipStructure ......................... 8 SelectionofDirectorsandBoardRefreshment .......... 8 BoardMeetings ................................. 10 DirectorSkillsandQualificationsCriteria ............. 11 DirectorOnboardingandContinuingEducation ....... 11 DirectorIndependence ........................... 12 BoardCommittees .............................. 13 AnnualEvaluation ............................... 15 DirectorCompensation ........................... 15 RiskOversight ................................17 StockOwnershipGuidelines ......................19 ExecutiveSuccessionPlanning.....................19 CommunicationsfromStockholders andOtherInterestedParties ......................19 ApprovalofRelatedPartyTransactions ..............20 SecurityOwnershipofCertainBeneficialOwnersand Management ..................................21 AuditCommitteeReport .........................23 IndependentAuditorFeesandOtherMatters .........24 COMPENSATIONANDOTHERINFORMATION CONCERNINGDIRECTORSANDOFFICERS ........ 25 CompensationDiscussionandAnalysis ..............25 ExecutiveSummary .............................. 25 OverviewofOurCompensationProgram ............ 33 GoalSettingandPerformanceEvaluationProcess ...... 35 CompensationDeterminationsfor2017 ............. 36 OtherCompensationandGovernancePracticesand Policies ........................................ 49 CompensationCommitteeReport ..................52 ExecutiveCompensation .........................53 CEOPayRatio .................................59 EmploymentandSeveranceArrangements ...........60 SecuritiesAuthorizedforIssuanceunderEquity CompensationPlans ............................63 PROPOSAL1-ELECTIONOFDIRECTORS .......... 64 PROPOSAL2-RATIFICATIONOFSELECTION OFINDEPENDENTREGISTEREDPUBLIC ACCOUNTINGFIRM ........................... 71 PROPOSAL3-ADVISORYVOTEONEXECUTIVE COMPENSATION ............................. 72 QUESTIONS&ANSWERS ...................... 74 ADDITIONALINFORMATION ................... 77 Section16(a)BeneficialOwnership ReportingCompliance ...........................77 ProposalsofStockholders ........................77 ProxyAccess ..................................78 HouseholdingofAnnualMeetingMaterials ...........78 AnnualReportonForm10-K ......................78 APPENDIXA ................................ A-1 American Water Works Company, Inc. 2018 Proxy Statement Table of Contents PROXY STATEMENT SUMMARY i THE AMERICAN WATER ANNUAL MEETING 1 InformationaboutthisProxyStatement 1 LocationandTimeoftheAnnualMeeting 1 SharesEntitledtoVote 1 MatterstobeVotedonattheAnnualMeeting 2 HowtoVoteSharesRegisteredinYour OwnName 3 HowtoVoteSharesHeldin“StreetName” 4 RevokingorChangingaProxy 4 AttendingtheAnnualMeetinginPerson 5 BOARD OF DIRECTORS AND CORPORATE GOVERNANCE 6 TheBoardofDirectors 6 BoardCommittees 6 BoardReviewofRelatedPerson Transactions 9 BoardLeadershipStructure 10 BoardRoleinRiskOversight 10 BoardRoleinSuccessionPlanning 12 BoardRefreshmentandDirectorTenure 13 StockholderOutreach 13 GovernancePoliciesandProcedures 14 PROPOSAL1:ELECTIONOF DIRECTORS 15 ExplanationoftheProposal 15 DirectorNominees 16 DirectorIndependence 24 DirectorCriteria,Qualifications,Experience andDiversity 26 DirectorEvaluationsandAssessments 27 DirectorCompensation 28 DirectorCompensationTable 29 DirectorStockOwnershipRequirements 30 RecommendationoftheBoard 30 PROPOSAL 2: VOTE TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS 31 COMPENSATIONCOMMITTEEREPORT 32 COMPENSATION DISCUSSION AND ANALYSIS 33 ExecutiveSummary 33 StockholderAdvisoryVotes 37 CompensationDeterminationsandPay Competitivenessin2017 38 2017Compensation 39 StockOptionGrantPractices 46 ExecutiveStockOwnershipGuidelinesand StockRetentionRequirements 46 PoliciesProhibitingHedging,Pledging, MarginingandShortSelling 47 OngoingandPost-Employment ArrangementsandBenefitPlans 48 ChangeinControlProvisionsinEquityPlans 51 RecoveryofIncentiveCompensation 51 TaxandAccountingConsiderations 51 EXECUTIVE COMPENSATION 53 2017SummaryCompensationTable 53 2017GrantsofPlan-BasedAwards 57 OutstandingEquityAwardsat2017Fiscal Year-End 58 2017OptionExercisesandStockVested 59 PensionBenefitsatDecember31,2017 60 DescriptionofPensionandOther RetirementPlans 61 2017NonqualifiedDeferredCompensation 62 DescriptionoftheEmployeeDeferred CompensationPlan 62 PotentialPaymentsonTerminationor ChangeinControl 63 CEOPayRatio 69 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 71 EQUITY COMPENSATION PLAN INFORMATION 71 AUDIT COMMITTEEREPORT 72 Total of 02 pages in section Table of Contents PROXYSUMMARY .............................. 2 CORPORATEGOVERNANCEHIGHLIGHTS ......... 5 ANADARKOBOARDOFDIRECTORS .............. 7 ITEM1—ElectionofDirectors .................... 7 CORPORATEGOVERNANCE ..................... 13 BoardandCommitteeGovernance ................ 13 BoardLeadershipStructure ...................... 13 TheBoard’sRoleinRiskOversight ................ 14 CorporateResponsibility,Environmentaland SustainabilityMatters ......................... 14 CompensationCommitteeRiskAssessment ......... 15 CommitteesoftheBoard ......................... 16 BoardofDirectors .............................. 18 DirectorIndependence ......................... 18 DirectorNomineeSelectionProcess ............. 18 AnnualBoardEvaluationProcess ................ 20 DirectorContinuingEducation ................... 20 CommunicationwithDirectorsoftheCompany ..... 20 StockholderParticipationintheSelectionofDirector Nominees ................................. 20 CompensationandBenefitsCommitteeInterlocks andInsiderParticipation ...................... 21 DirectorCompensation ........................ 21 DirectorCompensationTablefor2017.............. 23 SECURITYOWNERSHIPOFCERTAINBENEFICIAL OWNERSANDMANAGEMENT .................. 25 Directors,DirectorNomineesandExecutive Officers ..................................... 25 CertainBeneficialOwners ........................ 27 SECTION16(A)BENEFICIALOWNERSHIP REPORTINGCOMPLIANCE ..................... 28 AUDITCOMMITTEEREPORT ...................... 29 COMPENSATIONANDBENEFITSCOMMITTEE REPORTON2017EXECUTIVECOMPENSATION .. 30 LETTERFROMTHECHAIROFTHECOMPENSATION ANDBENEFITSCOMMITTEE .................... 31 COMPENSATIONDISCUSSIONANDANALYSIS ..... 32 ExecutiveSummary ............................. 32 2017CompensationFrameworkEmphasizes Performance-BasedPay ....................... 38 2017CompensationStructureandDecisionsLink DirectCompensationElementstoStrategyand Outcomes .................................. 39 BaseSalary ................................. 39 Performance-BasedAnnualIncentiveProgram (AIP) ..................................... 39 EquityCompensation ......................... 42 HowWeMakeCompensationDecisions ........... 45 IndirectCompensationElements.................. 47 AgreementswithExecutiveOfficers ............... 50 StockOwnershipRequirements .................. 51 ClawbackPolicy ............................... 51 RegulatoryRequirements ....................... 51 Conclusion.................................... 52 EXECUTIVECOMPENSATION .................... 53 SummaryCompensationTable ................... 53 AllOtherCompensationTablefor2017 ............ 54 GrantsofPlan-BasedAwardsin2017 ............. 55 OutstandingEquityAwardsatFiscalYear-End 2017 ....................................... 57 OptionExercisesandStockVestedin2017 ........ 58 PensionBenefitsfor2017 ....................... 58 Non-QualifiedDeferredCompensationfor2017 ..... 61 PotentialPaymentsUponTerminationorChangeof Control ..................................... 64 PAYRATIO .................................... 70 TRANSACTIONSWITHRELATEDPERSONS ....... 71 INDEPENDENTAUDITOR ........................ 72 ITEM2—RatificationoftheAppointmentofthe IndependentAuditor .......................... 72 ADVISORYVOTETOAPPROVEEXECUTIVE COMPENSATION ............................. 73 ITEM3—AdvisoryVotetoApprovetheCompany’s NamedExecutiveOfficerCompensation ......... 73 STOCKHOLDERPROPOSAL ..................... 74 ITEM4—StockholderProposal—ClimateChange RiskAnalysis ................................ 74 GENERALINFORMATION ........................ 76 QuestionsandAnswersabouttheAnnualMeeting ... 76 APPENDIXA ................................... A-1 TableofContents Table of Contents ProxyStatementSummary 1 Item1—ElectionofDirectors 7 CorporateGovernance 16 BoardofDirectorsCorporateGovernanceHighlights ... 16 LeadershipStructure ............................... 17 TheBoard’sRoleinRiskOversight .................... 18 BoardMeetings .................................... 19 CommunicationWiththeBoard...................... 19 BoardCommitteesandCharters ..................... 20 GovernanceandNominatingCommittee ............. 20 DirectorQualificationsandReviewofBoardDiversity .. 20 RegularBoardandCommitteeEvaluations ............ 21 DirectorIndependence ............................. 21 GovernanceCommitteeProcessesandProceduresfor ConsideringandDeterminingDirector Compensation ..................................... 22 AuditCommittee ................................... 22 CorporateResponsibilityandCompliance Committee ........................................ 23 AboutOurComplianceProgram ..................... 23 CodesofEthicsandBusinessConduct ................ 23 OurEnvironmentalSustainabilityandSocial ResponsibilityEfforts ............................... 24 CompensationandManagementDevelopment Committee ........................................ 24 CompensationCommitteeProcessesandProcedures forConsideringandDeterminingExecutive Compensationin2017 .............................. 25 PayRatio .......................................... 25 CompensationRiskManagement .................... 26 CompensationCommitteeReport.................... 26 Item2—AdvisoryVotetoApproveOurExecutive Compensation 27 ExecutiveCompensation 32 CompensationDiscussionandAnalysis ................ 32 OurNamedExecutiveOfficers ....................... 32 OurStrategy ...................................... 33 AligningPayWithPerformanceandExecutionofOur StrategicPriorities ................................. 34 Positive2017SayonPayVoteOutcomeand EngagementWithOurStockholders ................. 38 LTIEquityAwardDesignChangesin2017 ............ 39 Our2017CompensationProgramHighlightsand Objectives ........................................ 40 OurCompensationandGovernanceBestPractices .... 42 HowCompensationDecisionsAreMadeForOur NamedExecutiveOfficers .......................... 43 ElementsofCompensationandSpecific CompensationDecisions ........................... 46 CompensationPoliciesandPractices ................ 59 Non-DirectCompensationandPayoutsinCertain Circumstances .................................... 61 TaxesandAccountingStandards .................... 62 ExecutiveCompensationTables ...................... 64 DirectorCompensation .............................. 79 SecurityOwnershipofDirectorsandExecutiveOfficers 83 SecurityOwnershipofCertainBeneficialOwners 85 Item3—RatificationofSelectionofIndependent RegisteredPublicAccountants 86 AuditMatters 87 AnnualReportonForm10-K 88 Item4—StockholderProposal 88 CertainRelationshipsandRelatedTransactions 91 InformationConcerningVotingandSolicitation 92 OtherMatters 96 AppendixA:AmgenInc.BoardofDirectorsGuidelines forDirectorQualificationsandEvaluations A-1 AppendixB:ReconciliationsofGAAPtoNon-GAAP Measures B-1 ⎪ 2018 Proxy Statement