Equity Compensation Plan Performance Stock Unit Grant Form C for ML1-Ml5



 Exhibit 10.3 

FORM C FOR 2010 LTIP – FOR ML1 – ML5 

“PSU GRANT” 
  

					
		  	 AMERICAN WATER WORKS COMPANY, INC.

 
 2007 OMNIBUS EQUITY COMPENSATION PLAN

 
 PERFORMANCE STOCK UNIT GRANT
	  	

 This PERFORMANCE STOCK UNIT GRANT, dated as of
            , 2010, (the “Date of Grant”), is delivered by American Water Works Company, Inc. (the “Company”) to
                     (the “Participant”). 

RECITALS 

WHEREAS, the Committee (as defined in the American Water Works Company, Inc. 2007 Omnibus Equity Compensation Plan) has adopted a 2010
Long Term Incentive Plan (“2010 LTIP”) pursuant to which designated employees will be granted equity awards (collectively, the “Equity Award”) for shares of Common Stock of the Company, par value $0.01 per share,
(the “Company Stock”); 
 WHEREAS, the Equity Award is comprised of four separate grants, a nonqualified stock
option and three performance stock unit grants; 
 WHEREAS, the Committee has determined that the Participant is eligible to
participate in the 2010 LTIP and to grant the Participant an Equity Award under the 2010 LTIP; and 
 WHEREAS, the Committee has
determined that the performance stock unit portion of the Equity Award granted to the Participant pursuant to the 2010 LTIP shall be issued under the American Water Works Company, Inc. 2007 Omnibus Equity Compensation Plan (the
“Plan”), and the terms and conditions of the performance stock unit grant that may be earned based on performance goals relating to increase in population served, as set forth in Exhibit A attached hereto, shall be
memorialized in this grant (the “Grant”). 
 NOW, THEREFORE, the parties to this Grant, intending to be legally
bound hereby, agree as follows: 
 1. Grant of Performance Stock Units. Subject to the terms and conditions set forth in this Grant and
the Plan, the Company hereby grants to the Participant                      performance stock units (the “Performance Units”). The
Performance Units are contingently awarded and will be earned and distributable if and only to the extent that the Performance Goals (as defined below) and other conditions set forth in this Grant are met. Each Performance Unit shall be a phantom
right and shall be equivalent to one share of Company Stock on the applicable payment date, as described in Paragraph 5 below. The number of Performance Units set forth above is equal to the target number of shares of Company Stock that the
Participant will earn for 100% achievement of the Performance Goals described in this Grant (the “Target Award”). 
 2.
Performance Unit Account. The Company shall establish and maintain a Performance Unit account as a bookkeeping account on its records (the “Performance Unit Account”) for the Participant and shall record in such Performance
Unit Account the number of Performance Units granted to the Participant. The Participant shall not have any interest in any fund or specific assets of the Company by reason of this grant or the Performance Unit Account established for the
Participant. 







 3. Performance Goals. 

(a) Unless a Change of Control (as defined below) occurs prior to the end of the Performance Period (as defined below), the distribution
of the shares of Company Stock attributable to the Performance Units is contingent upon achievement of the performance goal set forth in Exhibit A attached hereto (the “Performance Goal”) and the Participant satisfying the
continuation of employment and service with the Employer (as defined in the Plan) requirement described in Paragraph 4 below. 

(b) Following the end of the Performance Period, the Committee will determine whether and to what extent the Performance Goal has been
met and certify the number of Performance Units the Participant has earned, if any. Except as described in Paragraph 4 below, the Participant must be employed by, or providing service to, the Employer on the last day of the Performance Period in
order to earn the Performance Units. 
 (c) If a Change of Control occurs prior to the end of the Performance Period, then the
Performance Period will end on the date of the Change of Control and the Performance Units will be deemed earned at the Target Award level as of the date of the Change of Control (the “Change of Control Date”). For purposes of this
Grant, the term “Change of Control” shall mean as such term is defined in the Plan, except that a Change of Control shall not be deemed to have occurred for purposes of this Grant unless the event constituting the Change of Control
constitutes a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and its corresponding regulations. 
 (d) For purposes of this Grant, the term “Performance
Period” shall mean the three-year period beginning on January 1, 2010 and ending December 31, 2012. 
 4. Termination of
Employment or Service. 
 (a) If, at least one year after the beginning of the Performance Period, but
prior to the end of the Performance Period, the Participant ceases to be employed by, or provide service to, the Employer on account of any reason other than a termination for Cause (as defined below), the Participant will earn a pro-rata portion of
the Performance Units, if the Performance Goals and the requirements of this Grant are met as of the last day of the Performance Period. The prorated portion will be determined as the number of Performance Units that would have been earned if the
Participant had remained employed through the last day of the Performance Period, multiplied by a fraction, which fraction shall be equal to (i)  1
/3, if the Participant’s employment or service with the Employer terminates on or after January 1, 2011, but prior to January 1,
2012; (ii)  2/3, if the Participant’s
employment or service with the Employer terminates on or after January 1, 2012, but prior to January 1, 2013; and
(iii)  3/3, if the Participant’s
employment or service terminates with the Employer on or after January 1, 2013. If the Participant ceases to be employed by, or provide service to, the Employer for any reason other than on account of Cause, the prorated number of Performance
Units will be distributed in accordance with Paragraph 5. 
  

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 (b) If at any time prior to the earlier of January 1, 2011 or a Change of Control, the
Participant’s employment or service with the Employer is terminated by the Employer on account of any reason or no reason or by the Participant for any reason or no reason, all of the Performance Units subject to this Grant shall be immediately
forfeited as of the date of the Participant’s termination of employment or service with the Employer and the Participant shall not have any rights with respect to the distribution of any portion of the Performance Units. 

(c) If at any time prior to the date the Performance Units are distributed in accordance with Paragraph 5 the Participant’s
employment or service with the Employer is terminated on account of Cause, all of the Performance Units subject to this Grant shall be immediately forfeited and the Participant will not have any rights with respect to the distribution of any portion
of the Performance Units, irrespective of the level of achievement of the Performance Goals. For purposes of this Grant, the term “Cause” shall mean a finding by the Committee that the Participant (A) has breached his or her
employment or service contract with the Employer, if any; (B) has engaged in disloyalty to the Employer, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty; (C) has disclosed trade
secrets or confidential information of the Employer to persons not entitled to receive such information; (D) has breached any written noncompetition or nonsolicitation agreement between the Participant and the Employer; or (E) has engaged
in such other behavior detrimental to the interests of the Employer as the Committee determines. 
 5. Time and Form of Payment with Respect
to Performance Units. Unless an election is made pursuant to Paragraph 6 below, the Participant will receive a distribution with respect to the Performance Units earned as described in Paragraphs 3 and 4 above within seventy (70) days
following the earlier of (i) January 1, 2013 (the “Distribution Date”), or (ii) the Change of Control Date. The Performance Units will be distributed in shares of Company Stock, with each Performance Unit earned
equivalent to one share of Company Stock. Any Performance Units not earned because of the failure to attain the Performance Goal and service condition will be forfeited. 

6. Deferrals. The Participant may make an irrevocable election to defer the Distribution Date (or further defer the Deferred Date (as defined
below), if applicable) of all of the Performance Units that are earned, plus dividend equivalents earned on such Performance Units as described in Paragraph 7 below, to a later date, provided that (i) the election shall not take effect until at
least twelve (12) months after the date on which the election is made, (ii) the deferred Distribution Date cannot be earlier than five (5) years from the original Distribution Date under Paragraph 5 above (or five (5) years from
the applicable Deferred Date, if a subsequent deferral of a Deferred Date is being made), and (iii) the election must be made no less than twelve (12) months prior to the date of the Distribution Date (twelve (12) months prior to the
previously applicable Deferred Date, if a subsequent deferral of a Deferred Date is being made). To defer the Distribution Date, the Participant must elect to defer 100% of the Performance Units, including corresponding dividend equivalents, earned
by the Participant under this Grant, as well as 100% of the other performance stock units, including corresponding dividend equivalents, earned by the Participant under the 2010 LTIP, and complete the deferral election form provided to the
Participant by the Committee. If the Participant desires to make a further deferral, the Participant must make such election on a separate form provided by the Committee for such purpose. Any such election shall be made in accordance with section
409A of the Code and any corresponding guidance and regulations issued under section 409A of the Code. Notwithstanding a Participant’s election pursuant to this Paragraph, if the Change of Control Date occurs prior to the Deferred Date, the
distribution of the Participant’s earned Performance Units, plus corresponding dividend equivalents, will be the Change of Control Date. If a Distribution Date is delayed one or more times pursuant to this Paragraph 6, the new Distribution Date
shall be referred to as the “Deferred Date.” 
  

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 7. Dividend Equivalents. Until the earlier of the Distribution Date (or the Deferred Date, if
elected) or the Change of Control Date, if any dividends are declared with respect to the shares of Company Stock, the Company shall credit to a dividend equivalent account (the “Dividend Equivalent Account”) the value of the
dividends that would have been distributed if the Performance Units credited to the Participant’s Performance Unit Account at the time of the declaration of the dividend were shares of Company Stock. At the same time that the Performance Units
are converted to shares of Company Stock and distributed to the Participant, the Company shall pay to the Participant a lump sum cash payment equal to the value of the dividends credited to the Participant’s Dividend Equivalent Account;
provided, however, that any dividends that were credited to the Participant’s Dividend Equivalent Account that are attributable to Performance Units that have been forfeited as provided in Paragraph 3 and 4 above shall be forfeited and not
payable to the Participant. No interest shall accrue on any dividend equivalents credited to the Participant’s Dividend Equivalent Account. 

8. Change of Control. Except as set forth above, the provisions set forth in the Plan applicable to a Change of Control (as defined in the Plan)
shall apply to the Performance Units, and, in the event of a Change of Control, the Committee may take such actions as it deems appropriate pursuant to the Plan and is consistent with the requirements of section 409A of the Code. 

9. Acknowledgment by Participant. By accepting this Grant, the Participant acknowledges that with respect to any right to distribution pursuant to
this Grant, the Participant is and shall be an unsecured general creditor of the Company without any preference as against other unsecured general creditors of the Company, and the Participant hereby covenants for himself or herself, and anyone at
any time claiming through or under the Participant, not to claim any such preference, and hereby disclaims and waives any such preference which may at any time be at issue, to the fullest extent permitted by applicable law. The Participant also
hereby agrees to be bound by the terms and conditions of the Plan and this Grant. The Participant further agrees to be bound by the determinations and decisions of the Committee with respect to this Grant and the Plan and the Participant’s
rights to benefits under this Grant and the Plan, and agrees that all such determinations and decisions of the Committee shall be binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under this
Grant and the Plan on behalf of the Participant. 
  

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 10. Restrictions on Issuance or Transfer of Shares of Company Stock. 

(a) The obligation of the Company to deliver shares of Company Stock upon the Participant earning the Performance Units shall be subject
to the condition that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the shares of Company Stock upon any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of shares of Company Stock, the shares of Company Stock may not be issued in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The issuance of shares of Company Stock and the payment of cash to the Participant pursuant to this Grant
is subject to any applicable taxes and other laws or regulations of the United States or of any state having jurisdiction thereof. 

(b) As a condition to receive any shares of Company upon conversion of the earned Performance Units, the Participant agrees: 

(i) to be bound by the Company’s policies regarding the limitations on the transfer of such shares, and understands
that there may be certain times during the year that the Participant will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging, hypothecating or otherwise encumbering the shares; and 

(ii) that any shares of Company Stock received by the Participant upon the distribution of the earned Performance Units
pursuant to this Grant shall be subject to the restrictions set forth in the Company’s Stock Retention Program for Executives. 
 11.
Grant Subject to Plan Provisions. This Grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. In the event of any contradiction,
distinction or difference between this Grant and the terms of the Plan, the terms of the Plan will control. Except as otherwise defined in this Grant, capitalized terms used in this Grant shall have the meanings set forth in the Plan. This Grant is
subject to the interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights
and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the shares of Company Stock, (iii) changes in capitalization of the Company, and (iv) other requirements of applicable law. The
Committee shall have the authority to interpret and construe this Grant pursuant to the terms of the Plan, its decisions shall be conclusive as to any questions arising hereunder and the Participant’s acceptance of this Grant is the
Participant’s agreement to be bound by the interpretations and decisions of the Committee with respect to this Grant and the Plan. 
 12.
No Rights as Stockholder. The Participant shall not have any rights as a stockholder of the Company, including the right to any cash dividends (except as provided in Paragraph 7), or the right to vote, with respect to any Performance Units.

 13. No Rights to Continued Employment or Service. This Grant shall not confer upon the Participant any right to be retained in the
employment or service of the Employer and shall not interfere in any way with the right of the Employer to terminate the Participant’s employment or service at any time. The right of the Employer to terminate at will the Participant’s
employment or service at any time for any reason is specifically reserved. 
  

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 14. Assignment and Transfers. No Performance Units or dividend equivalents awarded to the Participant
under this Grant may be transferred, assigned, pledged, or encumbered by the Participant and the Performance Units and dividend equivalents shall be distributed during the lifetime of the Participant only for the benefit of the Participant. Any
attempt to transfer, assign, pledge, or encumber the Performance Units or dividend equivalents under this Grant by the Participant shall be null, void and without effect. The rights and protections of the Company hereunder shall extend to any
successors or assigns of the Company. This Grant may be assigned by the Company without the Participant’s consent. 
 15.
Withholding. The Participant shall be required to pay to the Employer, or make other arrangements satisfactory to the Employer to provide for the payment of, any federal, state, local or other taxes that the Employer is required to withhold
with respect to the grant, vesting and distribution of the Performance Units and dividend equivalents. Any tax withholding obligation of the Employer with respect to the distribution of shares of Company Stock pursuant to the Performance Units that
are earned by the Participant under this Grant shall be satisfied by having shares of Company Stock withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax
liabilities. 
 16. Effect on Other Benefits. The value of shares of Company Stock and dividend equivalents distributed with respect to
the Performance Units shall not be considered eligible earnings for purposes of any other plans maintained by the Company or the Employer. Neither shall such value be considered part of the Participant’s compensation for purposes of determining
or calculating other benefits that are based on compensation, such as life insurance. 
 17. Applicable Law. The validity, construction,
interpretation and effect of this Grant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. 

18. Notice. Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the General Counsel at the
Company’s corporate headquarters, and any notice to the Participant shall be addressed to such Participant at the current address shown on the payroll records of the Employer, or to such other address as the Participant may designate to the
Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States
Postal Service. 
 19. Section 409A of the Code. As applicable, this Grant is intended to comply with the requirements of section
409A of the Code and shall be interpreted and administered to avoid any penalty sanctions under section 409A of the Code. If any distribution cannot be provided or made at the time specified herein or as elected by the Participant, then such
distribution shall be provided in full at the earliest time thereafter when such sanctions cannot be imposed. Unless a valid election is made pursuant to Paragraph 6 above, in no event may the Participant, directly or indirectly, designate the
calendar year of distribution. 
  

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 IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this
Grant, effective as of the Date of Grant. 
  

			
	By:	 	 Donald L. Correll

		
		 	




		
	Its:	 	 President and CEO



 

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 2010 LONG TERM INCENTIVE PLAN 

PERFORMANCE STOCK UNIT GRANT 

SUBSEQUENT DEFERRAL ELECTION FORM 

PART A. TIME OF DISTRIBUTION 
 I,
            , (the “Participant”) hereby irrevocably elect to have all of the Performance Units, plus corresponding dividend equivalents, (the “Deferred
Units”) that I earn under the Company’s 2010 Long Term Incentive Plan (the “2010 LTIP”) under my Performance Stock Unit Grants, each dated as of             ,
2010, (collectively, the “Grants”) under the American Water Works Company, Inc. 2007 Omnibus Equity Compensation Plan (the “Plan”) that would have been distributed by American Water Works Company, Inc. to me on
January 1, 2013 (the “Distribution Date”), instead be distributed to me on the deferred date designated below (the “Deferred Date”), which date must be at least five (5) years later than the Distribution
Date, and this election is at least twelve (12) months prior to the Distribution Date (to make this deferral election you must defer all of the Performance Units you earn under the 2010 LTIP, plus corresponding dividend equivalents, meaning
there is no partial deferral): 
  

					
	 Number of Earned

Performance Units,

and Dividend

Equivalents, under

the Grants to be

Further Deferred

(All Must Be

Deferred)
	  	 Original Distribution Date

(Election Must Be Made at

Least 12 Months Prior to the

Distribution Date)
	  	 Deferred Date

(Must be a calendar year that is

at least five years later than the

Original Distribution Date)

	 100%
	  	January 1, 2013	  	

 PART B. ACKNOWLEDGMENT 

I understand and expressly agree that (i) the Deferred Date for the Deferred Units shall be the date I specified in Part A above (which is a date
that is at least five (5) years later than the original Distribution Date), and (ii) I will not be entitled to receive distribution of the Deferred Units on an earlier date, except in the event the Change of Control Date (as defined in the
Grants) occurs prior to the Deferred Date. I also understand and expressly agree that this deferral election is irrevocable, is being made at least twelve (12) months prior to the original Distribution Date, and shall not take effect until
twelve (12) months after the date on which I make this election. I further understand and agree that the terms and conditions of the Grants and the Plan are hereby incorporated into this form. Lastly, I understand and agree that this deferral
election applies to 100% of the Performance Units, and corresponding dividend equivalents, that I earn under the 2010 LTIP pursuant to the Grants. 
  

											
	PARTICIPANT SIGNATURE	 		 		 	
						
	Participant:	 	  
	 		 	Date:	 	  
	 	
				
	Receipt Acknowledged:	 		 		 	
						
	By:	 	  
	 		 	Date:	 	  
	 	
						
	Title: