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                                                                     EXHIBIT 10D



                       AMERICAN WATER WORKS COMPANY, INC.

                                    DIRECTOR
                           DEFERRED COMPENSATION PLAN
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                                TABLE OF CONTENTS

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      ARTICLE I   INTRODUCTION.......................................   1
      1.1.  Name  ...................................................   1
      1.2.  Effective Date...........................................   1
      1.3.  Purpose .................................................   1

      ARTICLE II  DEFINITIONS........................................   1
      2.1.  "Administrator" .........................................   1
      2.2.  "Beneficiary" ...........................................   1
      2.3.  "Board"..................................................   1
      2.4.  "Change in Control"  ....................................   1
      2.5.  "Committee" .............................................   2
      2.6.  "Deferred Compensation Account" .........................   2
      2.7.  "Deferred Compensation Agreement" .......................   2
      2.8.  "Elective Deferred Compensation".........................   2
      2.9.  "Eligible Director"......................................   2
      2.10. "Participant" ...........................................   2
      2.11. "Plan Year" .............................................   2
      2.12. "Stock"..................................................   2
      2.13. "Stock Equivalent Unit...................................   2

      ARTICLE III PARTICIPATION BY ELIGIBLE DIRECTORS ...............   3
      3.1.  Participation ...........................................   3
      3.2.  Continuity of Participation .............................   3

      ARTICLE IV  DEFERRALS AND DEFERRED COMPENSATION ACCOUNTS ......   3
      4.1.  Compensation Eligible for Deferral.......................   3
      4.2.  Irrevocability of Deferral Elections.....................   3
      4.3.  Date of Election ........................................   3
      4.4.  Establishment of Deferred Compensation Accounts..........   4
      4.5.  Hypothetical Investment Vehicles.........................   4
      4.6.  Allocation and Reallocation of Hypothetical Investments..   4
      4.7.  Dividend Equivalents.....................................   4
      4.8.  Restrictions on Participant Direction....................   5


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                                TABLE OF CONTENTS

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      ARTICLE V   DISTRIBUTIONS .....................................   6
      5.1.  Election of Distribution Date ...........................   6
      5.2.  Method of Payment .......................................   6
      5.3.  Special Election for Early Distribution .................   6
      5.4.  Distributions on Death. .................................   6
      5.5.  Valuation of Cash Distributions..........................   7
      5.6.  Financial Emergency and Other Payments...................   7

      ARTICLE VI  FUNDING AND PARTICIPANT"S INTEREST.................   7
      6.1.  Deferred Compensation Plan Unfunded .....................   7
      6.2.  Participant's Interest in Plan ..........................   7

      ARTICLE VII ADMINISTRATION AND INTERPRETATION .................   8
      7.1.  Administration. .........................................   8
      7.2.  Interpretation...........................................   8
      7.3.  Records and Reports .....................................   9
      7.4.  Payment of Expenses .....................................   9
      7.5.  Indemnification for Liability ...........................   9
      7.6.  Claims Procedure.........................................   10
      7.7.  Review Procedure.........................................   10

      ARTICLE VIII AMENDMENT AND TERMINATION ........................   10
      8.1.  Amendment and Termination ...............................   10

      ARTICLE IX  MISCELLANEOUS PROVISIONS...........................   11
      9.1.  Alienation or Assignment of Benefits.....................   11
      9.2.  Right to Withhold .......................................   11
      9.3.  Construction.............................................   11
      9.4.  Headings.................................................   11
      9.5.  Number and Gender .......................................   11


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                                    ARTICLE I

                                  INTRODUCTION

      1.1. NAME. The name of this plan is the American Water Works Company, Inc.
Director Deferred Compensation Plan ("Deferred Compensation Plan").

      1.2. EFFECTIVE DATE. The effective date of this Deferred Compensation Plan
is January 1, 2001.

      1.3. PURPOSE. This Deferred Compensation Plan is established effective
January 1, 2001 by American Water Works Company, Inc. ("American Water Works")
for the purpose of providing deferred compensation benefits for members of
American Water Works" Board of Directors who are not employees of American Water
Works.

                                   ARTICLE II

                                   DEFINITIONS

      Whenever the following initially capitalized words and phrases are used in
this Deferred Compensation Plan, they shall have the meanings specified below
unless the context clearly indicates to the contrary:

      2.1. "ADMINISTRATOR" shall mean the Retirement Committee of American Water
Works or its delegate.

      2.2. "BENEFICIARY" shall mean such person or legal entity as may be
designated by a Participant under Section 5.4 to receive benefits hereunder
after such Participant's death.

      2.3. "BOARD" shall mean the Board of Directors of American Water Works.

      2.4. "CHANGE IN CONTROL" shall have the meaning given to such term in the
American Water Works Company, Inc. 2000 Stock Award and Incentive Plan.

      2.5. "COMMITTEE" shall mean the Compensation and Management Development
Committee of the Board.


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      2.6. "DEFERRED COMPENSATION ACCOUNT" shall mean the account or subaccount
established and maintained by the Administrator for specified deferrals by a
Participant, as described in Article IV of this Deferred Compensation Plan.
Deferred Compensation Accounts shall be maintained solely as bookkeeping entries
to evidence unfunded obligations of American Water Works.

      2.7. "DEFERRED COMPENSATION AGREEMENT" shall mean a document (or
documents) as made available from time to time by the Administrator, whereby an
Eligible Director enrolls as a Participant and elects to defer compensation
pursuant to Article IV of this Deferred Compensation Plan.

      2.8. "ELECTIVE DEFERRED COMPENSATION" shall mean that portion of the
Participant's compensation which the Participant elects to defer pursuant to
Article IV of this Deferred Compensation Plan in accordance with the Deferred
Compensation Agreement.

      2.9. "ELIGIBLE DIRECTOR" shall mean any active member of American Water
Works" Board of Directors who is not an employee of American Water Works.

      2.10. "PARTICIPANT" shall mean an Eligible Director who has amounts
standing to his credit under a Deferred Compensation Account.

      2.11. "PLAN YEAR" shall mean the calendar year.

      2.12. "STOCK" shall mean American Water Works" common stock, or any other
equity securities of American Water Works designated by the Administrator.

      2.13. "STOCK EQUIVALENT UNIT" shall mean a bookkeeping entry representing
a hypothetical investment in Stock.


                                   ARTICLE III

                       PARTICIPATION BY ELIGIBLE DIRECTORS

      3.1. PARTICIPATION. Participation in this Deferred Compensation Plan is
limited to Eligible Directors.


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      3.2. CONTINUITY OF PARTICIPATION. A Participant who no longer serves as a
member of the Board of American Water Works will cease active participation
hereunder.

                                   ARTICLE IV

                  DEFERRALS AND DEFERRED COMPENSATION ACCOUNTS

      4.1. COMPENSATION ELIGIBLE FOR DEFERRAL. An Eligible Director may elect to
defer cash compensation payable by American Water Works, including any annual
retainer, meeting fees, committee fees and chair fees. The Committee may impose
limitations on the amounts permitted to be deferred and other terms and
conditions on deferrals under the Deferred Compensation Plan. Any such
limitations, and other terms and conditions of deferral, shall be set forth in
the rules relating to the Deferred Compensation Plan or election forms, other
forms, or instructions published by or at the direction of the Administrator.
The Committee may permit awards and other amounts to be treated as deferrals
under the Deferred Compensation Plan.

      4.2. IRREVOCABILITY OF DEFERRAL ELECTIONS. Once a Deferred Compensation
Agreement, properly completed, is received by the Administrator, the elections
of the Participant shall be irrevocable; provided, however, that the
Administrator may, in its discretion, permit a Participant to elect a further
deferral of amounts credited to a Deferred Compensation Account by filing a
later election form; provided, further, that, unless otherwise approved by the
Administrator, any election to further defer amounts credited to a Deferred
Compensation Account must be made at least six months prior to the date such
amounts would otherwise be payable.

      4.3. DATE OF ELECTION. An election to defer cash compensation hereunder
must be received by the Administrator prior to the date specified by the
Administrator. Under no circumstances may a Participant defer cash compensation
if the Participant has, at the time of deferral, a legally enforceable right to
current receipt of such cash compensation.

      4.4. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS. One or more Deferred
Compensation Accounts will be established for each Participant, as determined by
the Administrator. The amount of cash compensation deferred with respect to each
Deferred Compensation Account will be credited to such Account as of the date on
which such amounts would have been paid to the Participant but for the
Participant's election to defer receipt hereunder, unless otherwise determined
by the Administrator. Unless otherwise determined by the Administrator, amounts
credited to a Deferred Compensation Account shall be deemed invested in a
hypothetical investment as of the date of deferral. The amounts of hypothetical
income and


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appreciation and depreciation in the value of such Account will be credited and
debited to, or otherwise reflected in, such Account from time to time.

      4.5. HYPOTHETICAL INVESTMENT VEHICLES. Subject to the provisions of
Sections 4.6 and 4.8, amounts credited to a Deferred Compensation Account shall
be deemed to be invested, at the Participant's direction, in one or more
investment vehicles as may be specified from time to time by the Administrator.
The Administrator may change or discontinue any hypothetical investment vehicle
available under the Deferred Compensation Plan in its discretion; provided,
however, that each affected Participant shall be given the opportunity, without
limiting or otherwise impairing any other right of such Participant regarding
changes in investment directions, to redirect the allocation of his Deferred
Compensation Account deemed invested in the discontinued investment vehicle
among the other hypothetical investment vehicles, including any replacement
vehicle.

      4.6. ALLOCATION AND REALLOCATION OF HYPOTHETICAL INVESTMENTS. A
Participant may allocate amounts credited to his Deferred Compensation Account
to one or more of the hypothetical investment vehicles authorized under the
Deferred Compensation Plan. Subject to the rules established by the
Administrator, a Participant may reallocate amounts credited to his Deferred
Compensation Account to one or more of such hypothetical investment vehicles as
of the next day following the filing of the Participant's election to reallocate
amounts credited to his Deferred Compensation Account. The Administrator may, in
its discretion, restrict allocation into or reallocation by specified
Participants into or out of specified investment vehicles or specify minimum or
maximum amounts that may be allocated or reallocated by Participants.

      4.7. DIVIDEND EQUIVALENTS. Dividend equivalents will be credited on Stock
Equivalent Units credited to a Participant's Deferred Compensation Account as
follows:

            (a) CASH AND NON-STOCK DIVIDENDS. If American Water Works declares
      and pays a dividend on Stock in the form of cash or property other than
      shares of Stock, then a number of additional Stock Equivalent Units shall
      be credited to a Participant's Deferred Compensation Account as of the
      payment date for such dividend equal to (I) the number of Stock Equivalent
      Units credited to the Deferred Compensation Account as of the record date
      for such dividend, multiplied by (ii) the amount of cash plus the fair
      market value of any property other than shares actually paid as a dividend
      on each share at such payment date, divided by (iii) the closing market
      price of a share of Stock at such payment date as published in The Wall
      Street Journal report of New York Stock Exchange Composite Transactions.


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            (b) STOCK DIVIDENDS AND SPLITS. If American Water Works declares and
      pays a dividend on Stock in the form of additional shares of Stock, or
      there occurs a forward split of Stock, then a number of additional Stock
      Equivalent Units shall be credited to the Participant's Deferred
      Compensation Account as of the payment date for such dividend or forward
      Stock split equal to (I) the number of Stock Equivalent Units credited to
      the Deferred Compensation Account as of the record date for such dividend
      or split, multiplied by (ii) the number of additional shares actually paid
      as a dividend or issued in such split in respect of each share of Stock.

      4.8. RESTRICTIONS ON PARTICIPANT DIRECTION. The provisions of Sections 4.5
and 4.6 notwithstanding, the Administrator may restrict or prohibit
reallocations of amounts deemed invested in specified investment vehicles, and
subject such amounts to a risk of forfeiture and other restrictions, in order to
conform to restrictions applicable to any award or amount deferred under the
Deferred Compensation Plan and resulting in such deemed investment, to comply
with any applicable law or regulation, or for such other purpose as the
Administrator may determine is not inconsistent with the Deferred Compensation
Plan.

                                    ARTICLE V

                                  DISTRIBUTIONS

      5.1. ELECTION OF DISTRIBUTION DATE. At the time a Participant makes an
election to defer compensation under Article IV, such Participant shall also
specify in writing in the Deferred Compensation Agreement the date or event on
which the payment of the Participant's Deferred Compensation Account shall be
made. Payments in settlement of a Deferred Compensation Account shall be made as
soon as practicable after the date or dates (including upon the occurrence of
specified events), and in such number of installments, as may be directed by the
Participant in his election relating to such Deferred Compensation Account.

      5.2. METHOD OF PAYMENT. All distributions under this Deferred Compensation
Plan shall be made in cash.

      5.3. SPECIAL ELECTION FOR EARLY DISTRIBUTION. A Participant may apply to
the Administrator for early distribution of all or any part of his Deferred
Compensation Account excluding any amounts attributable to mandatory deferrals
that have not been credited to his Deferred Compensation Account for the minimum
period of mandatory deferral. Such early distribution shall be made in a single
lump sum, provided that 10% of the amount withdrawn in such early distribution
shall be


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forfeited to American Water Works prior to payment of the remainder to the
Participant. In the event a Participant's early distribution election is
submitted within one year after a Change in Control, the forfeiture penalty
shall be reduced to 5%.

      5.4. DISTRIBUTIONS ON DEATH. In the event of a Participant's death before
his Deferred Compensation Account has been distributed, distribution of his
entire account (including mandatory deferrals) shall be made to the Beneficiary
selected by the Participant in a single lump sum payment within 30 days after
the date of death (or, if later, after the proper Beneficiary has been
identified). A Participant may from time to time change his designated
Beneficiary without the consent of such Beneficiary by filing a new designation
in writing with the Administrator. If no Beneficiary designation is in effect at
the time of the Participant's death, or if the designated Beneficiary is missing
or has predeceased the Participant, distribution shall be made to the
Participant's estate.

      5.5. VALUATION OF CASH DISTRIBUTIONS. All cash distributions under this
Deferred Compensation Plan shall be based upon the cash value of the investment
credited to a Participant's Deferred Compensation Account as of the date
immediately preceding the date of the distribution. It is understood that
administrative requirements may lead to a delay between such valuation date and
the date of distribution, not to exceed 30 days.

      5.6. FINANCIAL EMERGENCY AND OTHER PAYMENTS. Other provisions of this
Deferred Compensation Plan notwithstanding, if, upon the written application of
a Participant, the Administrator determines that the Participant has a financial
emergency of such a substantial nature and beyond the individual's control that
payment of amounts previously deferred under this Deferred Compensation Plan is
warranted, the Administrator may direct the payment to the Participant of all or
a portion of the balance of his Deferred Compensation Account and the time and
manner of such payment.


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                                     ARTICLE
                                       VI

                       FUNDING AND PARTICIPANT'S INTEREST

      6.1. DEFERRED COMPENSATION PLAN UNFUNDED. This Deferred Compensation Plan
shall be unfunded and no trust shall be created by this Deferred Compensation
Plan. The crediting to each Participant's Deferred Compensation Account shall be
made through record keeping entries. No actual funds shall be set aside;
provided, however, that nothing herein shall prevent American Water Works from
establishing one or more grantor trusts from which benefits due under this
Deferred Compensation Plan may be paid in certain instances. All distributions
shall be paid by American Water Works from its general assets and a Participant
(or his Beneficiary) shall have the rights of a general, unsecured creditor
against American Water Works for any distributions due hereunder. This Deferred
Compensation Plan constitutes a mere promise by American Water Works to make
benefit payments in the future.

      6.2. PARTICIPANT'S INTEREST IN PLAN. A Participant has an interest in the
cash value of amounts credited to his Deferred Compensation Account.

                                   ARTICLE VII

                        ADMINISTRATION AND INTERPRETATION

      7.1. ADMINISTRATION. Except where certain duties are delegated to the
Administrator, the Committee shall be in charge of the operation and
administration of this Deferred Compensation Plan. The Committee has, to the
extent appropriate and in addition to the powers described elsewhere in this
Deferred Compensation Plan, full discretionary authority to construe and
interpret the terms and provisions of this Deferred Compensation Plan; to adopt,
alter and repeal administrative rules, guidelines and practices governing this
Deferred Compensation Plan; to perform all acts, including the delegation of its
administrative responsibilities to advisors or other persons who may or may not
be employees of American Water Works; and to rely upon the information or
opinions of legal counsel or experts selected to render advice with respect to
this Deferred Compensation Plan, as it shall deem advisable, with respect to the
administration of this Deferred Compensation Plan.

      7.2. INTERPRETATION. The Committee may take any action, correct any
defect, supply any omission or reconcile any inconsistency in this Deferred
Compensation Plan, or in any election hereunder, in the manner and to the extent
it shall deem necessary to carry this Deferred


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Compensation Plan into effect or to carry out the Board's purposes in adopting
the Plan. Any decision, interpretation or other action made or taken in good
faith by or at the direction of American Water Works, the Board, the Committee,
or the Administrator arising out of or in connection with this Deferred
Compensation Plan, shall be within the absolute discretion of all and each of
them, as the case may be, and shall be final, binding and conclusive on American
Water Works and all Participants and Beneficiaries and their respective heirs,
executors, administrators, successors and assigns. The Committee's or
Administrator"s determinations hereunder need not be uniform, and may be made
selectively among Eligible Directors, whether or not they are similarly
situated. Any actions to be taken by the Committee or Administrator will require
majority vote of the Committee or the Administrator. If a member of the
Committee or the Administrator is a Participant in this Deferred Compensation
Plan, such member may not decide or determine any matter or question concerning
his benefits under this Deferred Compensation Plan that such member would not
have the right to decide or determine if he were not a member.

      7.3. RECORDS AND REPORTS. The Administrator shall keep a record of
proceedings and actions and shall maintain or cause to be maintained all such
books of account, records, and other data as shall be necessary for the proper
administration of this Deferred Compensation Plan. Such records shall contain
all relevant data pertaining to Participants and their rights under this
Deferred Compensation Plan. The Administrator shall have the duty to carry into
effect all rights or benefits provided hereunder to the extent assets of
American Water Works are properly available.

      7.4. PAYMENT OF EXPENSES. American Water Works shall bear all expenses
incurred by it and by the Committee in administering this Deferred Compensation
Plan. If a claim or dispute arises concerning the rights of a Participant or
Beneficiary to amounts deferred under this Deferred Compensation Plan,
regardless of the party by whom such claim or dispute is initiated, American
Water Works shall, and upon presentation of appropriate vouchers, pay all legal
expenses, including reasonable attorneys' fees, court costs, and ordinary and
necessary out-of-pocket costs of attorneys, billed to and payable by the
Participant or by anyone claiming under or through the Participant (such person
being hereinafter referred to as the "Participant's Claimant"), in connection
with the bringing, prosecuting, defending, litigating, negotiating, or settling
of such claim or dispute; provided, that:

      (a) The Participant or the Participant's Claimant shall repay to American
Water Works any such expenses theretofore paid or advanced by American Water
Works if and to the extent that the party disputing the Participant's rights
obtains a judgment in its favor from a court of competent jurisdiction from
which no appeal may be taken, whether because the time to do so has


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expired or otherwise, and it is determined by the court that such expenses were
not incurred by the Participant or the Participant's Claimant while acting in
good faith; provided, further, that

      (b) In the case of any claim or dispute initiated by a Participant or the
Participant's Claimant, such claim shall be made, or notice of such dispute
given, with specific reference to the provisions of this Deferred Compensation
Plan, to the Committee within two years (three years, in the event of a Change
in Control) after the occurrence of the event giving rise to such claim or
dispute.

      7.5. INDEMNIFICATION FOR LIABILITY. American Water Works shall indemnify
the Administrator, the members of the Committee, and the employees of American
Water Works to whom the Administrator delegates duties under this Deferred
Compensation Plan, against any and all claims, losses, damages, expenses and
liabilities arising from their responsibilities in connection with this Deferred
Compensation Plan, unless the same is determined to be due to gross negligence
or willful misconduct.

      7.6. CLAIMS PROCEDURE. If a claim for benefits or for participation under
this Deferred Compensation Plan is denied in whole or in part, a Participant
will receive written notification. The notification will include specific
reasons for the denial, specific reference to pertinent provisions of this
Deferred Compensation Plan, a description of any additional material or
information necessary to process the claim and why such material or information
is necessary, and an explanation of the claims review procedure. If the
Committee fails to respond within 90 days, the claim is treated as denied.

      7.7. REVIEW PROCEDURE. Within 60 days after the claim is denied or, if the
claim is deemed denied, within 150 days after the claim is filed, a Participant
(or his duly authorized representative) may file a written request with the
Committee for a review of his denied claim. The Participant may review pertinent
documents that were used in processing his claim, submit pertinent documents,
and address issues and comments in writing to the Committee. The Committee will
notify the Participant of its final decision in writing. In its response, the
Committee will explain the reason for the decision, with specific references to
pertinent Deferred Compensation Plan provisions on which the decision was based.
If the Committee fails to respond to the request for review within 60 days, the
review is treated as denied.


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                                  ARTICLE VIII

                            AMENDMENT AND TERMINATION

      8.1. AMENDMENT AND TERMINATION. The Committee shall have the right, at any
time, to amend or terminate this Deferred Compensation Plan, in whole or in
part, provided that such amendment or termination shall not adversely affect the
right of any Participant or Beneficiary to payment of Participant's Deferred
Compensation Account. The Administrator, upon review of the effectiveness of
this Deferred Compensation Plan, may at any time recommend amendments to, or
termination of, this Deferred Compensation Plan to the Committee. American Water
Works reserves the right, in its sole discretion, to discontinue deferrals
under, or completely terminate, this Deferred Compensation Plan at any time. If
this Deferred Compensation Plan is discontinued with respect to future
deferrals, Participants' Deferred Compensation Accounts shall be distributed on
the distribution dates elected in accordance with Section 5.1, unless the
Committee designates that distributions shall be made on an earlier date. If the
Committee designates such earlier date, each Participant shall receive
distribution of his entire Deferred Compensation Account as specified by the
Committee. If this Deferred Compensation Plan is completely terminated, each
Participant shall receive distribution of his entire Deferred Compensation
Account in one lump sum payment as of the date this Deferred Compensation Plan
terminates.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

      9.1. ALIENATION OR ASSIGNMENT OF BENEFITS. A Participant's rights and
interest under this Deferred Compensation Plan shall not be assigned or
transferred except as otherwise provided herein, and a Participant's rights to
benefit payments under this Deferred Compensation Plan shall not be subject to
alienation, pledge or garnishment by or on behalf of creditors (including heirs,
beneficiaries, or dependents) of the Participant or of a Beneficiary.

      9.2. RIGHT TO WITHHOLD. To the extent required by law in effect at the
time a distribution is made from this Deferred Compensation Plan, American Water
Works or its agents shall have the right to withhold or deduct from any
distributions or payments any taxes required to be withheld by federal, state or
local governments.

      9.3. CONSTRUCTION. All legal questions pertaining to this Deferred
Compensation Plan shall be determined in accordance with the laws of the State
of New Jersey, to the extent such laws are not superseded by applicable federal
law.


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      9.4. HEADINGS. The headings of the Articles and Sections of this Deferred
Compensation Plan are for reference only. In the event of a conflict between a
heading and the contents of an Article or Section, the contents of the Article
or Section shall control.

      9.5. NUMBER AND GENDER. Whenever any words used herein are in the singular
form, they shall be construed as though they were also used in the plural form
in all cases where they would so apply, and references to the male gender shall
be construed as applicable to the female gender where applicable, and vice
versa.


 AMERICAN WATER WORKS COMPANY, INC.


By: /s/ J. James Barr
    -------------------------------------
    President and Chief Executive Officer


Attest: /s/ W. Timothy Pohl
        -------------------------------------
        General Counsel and Secretary


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