Company: AWK
Filing Date: 2025-03-27
Form Type: DEF 14A
Source: 0001193125-25-064607
Chunk: 21

Company: American Water Works Company, Inc.
Filing Date: 2025-03-27
Form: DEF 14A
Chunk 21
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 reputational risks. Audit, Finance and Risk Committee Role The Audit, Finance and Risk Committee is responsible for assisting the Board in overseeing the Company’s accounting and disclosure controls, the design and performance of the internal audit, ethics and compliance functions, and the enterprise risk management process, including risk assessments and risk management strategy. The Audit, Finance and Risk Committee also has direct authority over the Company’s independent registered public accounting firm. In performing these responsibilities, the Audit, Finance and Risk Committee reviews, at least annually, with management our major financial and operational risk exposures, including any risk concentrations and risk interrelationships, the magnitude and the likelihood of occurrence of risk, and management’s activities to monitor and control these exposures. This committee also reviews our major financial risks, including credit, liquidity, market and funding risks. The Audit, Finance and Risk Committee coordinates oversight of operational risk management, including with respect to cybersecurity risks, with the SETO Committee. The Audit, Finance and Risk Committee also oversees our insurance risk management policies and programs and makes recommendations to the Board regarding the structure and renewal of our directors’ and officers’ liability insurance program.

| 10 |     | AMERICAN WATER | 2025 PROXY STATEMENT |

Executive Development and Compensation Committee Role

The ED&CC assesses potential risks related to our compensation policies and practices. Management conducts and presents to the ED&CC for its review an annual risk assessment of our executive compensation, with a particular focus on performance-based compensation. For 2024, this risk assessment was directly supported by our internal enterprise risk management function and our Enterprise Risk Management Committee, and included an in-depthreview of the risks associated with our compensation and variable pay programs, employing a risk identification methodology that is used throughout the business. In May 2024, an update of this risk assessment for 2023 was reviewed with the ED&CC. This assessment sought to identify whether features of our compensation policies or practices are reasonably likely to have a material adverse effect on the Company. The risk assessment conducted by management found that our existing short-term and long-term compensation is coupled with compensation design elements and other controls that discourage decision-making focused solely on compensatory consequences. These design elements and controls include, among other things:

| · |     | use of both financial and non-financial metrics that avoids over-emphasis on a single metric; |

| · |     | oversight and approval of compensation decisions by the ED&CC and its retention of an independent compensation consultant; |

| · |     | centralized data reporting platforms which permit information