Lori Sutton
American Water Works CompanyAbout Lori Sutton
Lori Sutton is American Water’s Chief Human Resources Officer: she was named Senior Vice President, CHRO effective April 1, 2025, and promoted to Executive Vice President, CHRO effective October 1, 2025, reporting to CEO John Griffith; she is a Section 16 officer and an at‑will employee based in Evansville, IN . Her 2025 compensation terms reflect EVP status: base salary ~$450,000, Annual Performance Plan (APP) target 60% of salary (up from 50%), and Long‑Term Performance Plan (LTPP) target 120% of salary (up from 90%), subject to ED&CC approval . Company performance context for incentive alignment: AWK’s 2024 diluted EPS was $5.39 vs $4.90 in 2023, the APP paid at 157.32% of target on a balanced scorecard, while 5‑year TSR to 12/31/2024 was 10.8% vs 34.2% for the PHLX Utility Index and 97.0% for the S&P 500; management cites higher interest rates and investor rotation toward data‑center‑exposed utilities as headwinds to relative TSR .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| American Water | SVP, Chief Human Resources Officer | Apr 1, 2025 – Sep 30, 2025 | Succeeded outgoing CHRO (Melanie M. Kennedy) to ensure continuity of human capital and compensation programs during executive transition . |
| American Water | EVP, Chief Human Resources Officer | Oct 1, 2025 – present | Elevated to EVP; charged with workforce strategy, leadership development, and culture; public communications emphasize talent development and retention programs (e.g., internships, employer of choice positioning) . |
Fixed Compensation
| Item | Details |
|---|---|
| Base salary (effective Oct 1, 2025) | ~$450,000 annualized |
| APP target | 60% of base salary for 2025 (up from 50% prior to promotion; pro‑rated from effective date) |
| LTPP target | 120% of base salary for 2025 (up from 90%; pro‑rated “top‑up” grants to reflect increased target) |
| Employment status | At‑will; Section 16 officer; reports to CEO John Griffith; Evansville, IN office |
Performance Compensation
2024 APP design and results (company-level; applies to Sutton’s plan construct in 2025)
| Performance Measure | Corporate Weight | Threshold | Target | Max | Actual | % Earned |
|---|---|---|---|---|---|---|
| Adjusted EPS | 50.0% | $5.05 (0.0%) | $5.15 (50.0%) | $5.25 (100.0%) | $5.32 | 100.0% |
| Customer Satisfaction (states in top quartile) | 15.0% | 0 (0.0%) | 4 (15.0%) | 8 (30.0%) | 3 | 11.25% |
| Safety: ORIR | 5.0% | 1.11 (0.0%) | 0.61 (5.0%) | 0.40 (10.0%) | 0.40 | 10.0% |
| Safety: DART Severity Rate | 10.0% | 0.67 (0.0%) | 0.29 (10.0%) | 0.20 (20.0%) | 0.14 | 20.0% |
| Environmental: Drinking Water Compliance NOVs | 5.0% | 13 (0.0%) | 6 (5.0%) | 4 (10.0%) | 8 | 3.57% |
| Environmental: Drinking Water Quality NOVs | 10.0% | 4 (0.0%) | 2 (10.0%) | 0 (20.0%) | 2 | 10.0% |
| People: Women Representation | 2.5% | 24.0% (0.0%) | 25.0% (2.5%) | 27.0% (5.0%) | 24.5% | 1.25% |
| People: Ethnic & Racial Diversity Representation | 2.5% | 20.0% (0.0%) | 21.0% (2.5%) | 23.0% (5.0%) | 20.5% | 1.25% |
| APP payout (weighted total) | — | — | — | — | — | 157.32% |
Notes: APP metrics and weights are set annually by the ED&CC; adjustments to EPS follow disclosed guidelines; non‑financial metric caps increased to 200% in 2024; the safety metrics include a fatality guardrail determination .
LTPP structure (applies to Sutton’s 2025 participation)
| Component | Weight of LTPP | Performance period & metric |
|---|---|---|
| RSUs (time-based) | 30% | Ratable vesting over ~3 years of service |
| PSUs: Compounded EPS growth | 35% | 3‑year compounded adjusted EPS growth vs 2023 base; payout per curve |
| PSUs: Relative TSR | 20% | 3‑year TSR vs 2024 peer group; payout per percentile curve |
| PSUs: ROE | 15% | 3‑year average ROE (five‑quarter average equity each year); payout per curve |
Program features: No stock options since 2017; double‑trigger equity vesting upon change‑in‑control (with parallel CoC severance policy); clawback policy exceeds SEC/NYSE requirements .
Equity Ownership & Alignment
| Item | Policy/Status |
|---|---|
| Stock ownership guidelines | EVPs must hold common stock equal to 3x base salary; 5‑year compliance window; new 5‑year window begins upon promotion to a higher tier . |
| Counting rules | Shares, vested/unvested RSUs, and vested PSUs count; unvested PSUs and options do not count . |
| Hedging/pledging | Prohibited for directors, officers, employees; no margin or pledging; 10b5‑1 plans require pre‑clearance and compliance with policy . |
| Clawback | Incentive compensation subject to recovery provisions exceeding SEC/NYSE rules . |
| Option overhang/expiry risk | No executive stock options since 2017, reducing expiry‑driven selling pressure . |
Note: As a newly promoted EVP (Oct 1, 2025), Sutton’s ownership guideline compliance would follow the 5‑year window stated in policy from her promotion date .
Employment Terms
| Provision | Economics/terms |
|---|---|
| Employment agreement | Offer letter confirms EVP CHRO role; ED&CC approval for compensation; at‑will employment; Section 16 status; Evansville, IN location; reports to CEO . |
| Executive Severance Policy (non‑CoC) | For terminations without cause: 12 months salary continuation for executives other than CEO/President; pro‑rata APP for year of termination (if earned); company‑paid welfare benefits for specified weeks (up to COBRA durations); up to 12 months outplacement; vesting credit for severance period under certain plans . |
| Change‑of‑Control (double trigger) | If terminated without cause or resigns for good reason within 24 months post‑CoC: 2x (for NEOs other than CEO/President) sum of base salary + greater of last APP or 3‑year average APP; paid COBRA for statutory max; EAP access; up to 12 months outplacement; full vesting of amounts under the nonqualified deferred comp plan per its terms . |
| Deferred compensation | Eligible to participate in the Nonqualified Savings & Deferred Compensation Plan with match above IRS caps and a 5.25% employer contribution on salary+APP over limits if applicable (consistent with post‑2006 hires); investment alternatives are notional . |
Compensation Structure Analysis
- Mix shift to performance equity: LTPP is 70% PSUs with multi‑metric design (EPS growth, relative TSR, ROE), emphasizing long‑term value drivers and aligning with investor priorities in regulated utilities .
- Balanced APP scorecard: 2024 payout of 157.32% was driven by strong EPS and safety/quality outcomes; the plan uses both financial and non‑financial measures (safety, environmental, customer, DEI), reducing single‑metric risk .
- Risk controls: Double‑trigger CoC protection, explicit no‑hedging/pledging policy, above‑market clawback, and lack of options mitigate misalignment and selling pressure risks .
- Governance signals: 2024 Say‑on‑Pay approval of ~87.3% suggests general investor support for pay design and outcomes .
Compensation Peer Group (benchmarking reference)
| 2024 Peer Group (no changes vs 2023) |
|---|
| Alliant Energy; Ameren; Atmos Energy; CenterPoint Energy; CMS Energy; Entergy; Essential Utilities; Evergy; Eversource; NiSource; OGE Energy; Pinnacle West; PPL; Public Service Enterprise Group; WEC Energy . |
Equity Ownership & Beneficial Holdings
- The 2025 proxy enumerates beneficial ownership generally but does not provide an individual beneficial ownership table for Sutton (who was appointed CHRO in 2025). No specific share count, vested/unvested breakdown, or pledged shares are disclosed for Sutton as of the 2025 record date; AWK policy prohibits pledging and hedging .
Employment Transitions & Related Filings (context)
- Predecessor CHRO separation: The company agreed to a separation with Melanie M. Kennedy effective March 1, 2025, followed by a severance agreement consistent with the Executive Severance Policy plus a supplemental cash payment and extended COBRA coverage .
- Sutton appointment cadence: CHRO effective April 1, 2025 (SVP) per 2025 proxy; EVP elevation with updated pay targets effective Oct 1, 2025 via offer letter .
Performance & Track Record (company context during Sutton’s onboarding)
| Metric | 2023 | 2024 |
|---|---|---|
| Diluted EPS ($/sh) | 4.90 | 5.39 |
| 5‑yr TSR (to 12/31/24) | — | 10.8% AWK; 34.2% PHLX Utility; 97.0% S&P 500 |
| APP payout (company) | — | 157.32% |
Management notes that relative TSR was pressured by rising interest rates and capital rotation toward utilities with data‑center exposure, despite execution against EPS/dividend targets .
Investment Implications
- Alignment and retention: Sutton’s EVP pay design ties a majority of long‑term compensation to PSUs with EPS/ROE/TSR metrics, plus a 3x salary ownership guideline and strict no‑pledging rules—supportive of long‑term alignment and reducing forced‑sale risk; incremental “top‑up” LTPP grants in Oct‑2025 create predictable vesting over 3 years that can influence trading windows but not option expiries (no options since 2017) .
- Separation economics baseline: If turnover risk were to materialize, economics are governed by standard policies (12‑month salary continuation and pro‑rata APP; 2x salary+bonus under double‑trigger CoC), limiting unexpected payouts or tax gross‑ups and thus lowering governance risk .
- Pay‑for‑performance vector: The APP’s safety/quality/people metrics (and 2024 over‑target outcome) combined with LTPP financials suggest strong emphasis on operational and regulatory execution; monitoring future PSU outcomes (particularly relative TSR) will be key in assessing compensation outcomes versus shareholder returns .
- Integration lens: Sutton is a visible culture and workforce voice in 2025 communications (e.g., employer‑of‑choice messaging, program continuity), which may be relevant as AWK executes its announced all‑stock merger with Essential Utilities over a multi‑year period; management has stated no anticipated material changes to employee compensation/benefits as a result of the proposed transaction at this stage .