FOCUS REPORT

Web Attraction: American Water Uses Electronic Communications to Draw Shareholders to its Annual Meeting

American Water Works may be a 124-years-old company, but when it comes to its upcoming 2010 annual meeting it is on the forefront of using technology to maximize shareholder participation.

The May 7 meeting, to be broadcast live from the company’s “traditional” meeting at its Voorhees, NJ headquarters, will allow shareholders to vote and submit questions electronically during the live meeting.

The company’s objective is to give access to a greater number of stockholders as well as encourage and maximize shareholder participation in the annual meeting. Recent rule changes that restrict broker votes on behalf of clients make it more important than ever to encourage retail investor participation, says Muriel Lange, manager of investor relations at American Water.  In addition, American Water views the annual meeting as another opportunity to extend its commitment as a tech-savvy and investor-friendly company.

“Technology allows us to take our annual meeting to a level beyond regulatory compliance and obligations as a public company and to give our shareholders even greater access to executive management and the board,” says Lange.

This is the first time that American Water, which trades on the NYSE under the symbol “AWK,” will run an annual meeting in this manner. The company, which was spun off from German parent RWE, broadcast its first annual meeting, in 2009, but did not enable electronic participation at that time.

It so happens that soon after the $1.25 billion IPO the annual meeting landscape began to change. In 2009 the SEC came out with Notice & Access rules for electronic distribution of proxy materials, and in 2010 the NYSE issued Rule 452 to restrict broker voting for clients. For the largest investor-owned U.S. water and wastewater utility company, with customers in more than 30 states and in Canada, it meant working even harder to re-establish a solid retail base, and that meant making the most of technology. “The new rule (452) has the potential to impact voting levels at the meetings,” Lange says. “What participation in virtual meeting has enabled us to do is to reach out without soliciting and saying ‘you are welcome to participate, you don’t have to leave your desk.’ We think it is important this year more than ever to open that door.”

The company’s shareholder communications extend to before, during and after the annual meeting. First, the company sent out a pre-proxy mailing, educating and notifying shareholders of record of ways to participate in the meeting.  It then established the American Water Investor Forum – a web platform to provide shareholders with direct access to investor relations to ask questions and share their thoughts regarding the company and its strategic initiatives. The questions will be answered during the meeting, which includes a video as well as an online “exhibit booth” with interactive screens displaying the company’s latest technologies and sustainability efforts.

During the meeting, remote participants will be able to log in and listen and then push a button to view the video. They will hear the CEO’s presentation, the Q and A and a preliminary vote tally. They will also be able to vote and ask questions during the live meeting. The company’s management will answer as many of the questions as time allows, both those from the pre-meeting forum and from the meeting itself, Lange says. After the meeting, the company’s investor relations representatives will answer all remaining questions within 24-48 hours.

In 2009, about 120 people observed the meeting webcast, including analysts. Lange is not making any number predictions for this year’s more active form of participation, saying the company is more interested in the quality of engagement with its investors. “What’s important is the access,” she says.