American Water
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Ethics and Compliance

The American Water Code of Ethics serves as the cornerstone of the company's ethics and compliance program. The Code of Ethics sets forth American Water's basic ethical principles, serving as a foundation to promote ethical conduct and compliance with all applicable laws and regulations, and as a mechanism to deter wrongdoing.

The Code of Ethics applies to all American Water employees across all business lines and functions. Employees are trained on the Code of Ethics and all new American Water employees complete training on the Code of Ethics during their initial orientation upon joining the company.

The Code of Ethics defines the standards of conduct we expect employees to follow and provides clear guidance on how to engage in an ethical manner with colleagues, customers, business partners and other stakeholders. American Water employees are required to annually verify that they have read and understand the Code of Ethics.

In 2009, a Chief Ethics and Compliance Officer was appointed and in 2010, the company published an updated version of its Code of Ethics. We are currently providing live or interactive web-based training to employees on the company's ethics and compliance program. The training sessions incorporate practical case scenarios to keep the training "real" and interactive. A third-party vendor provided an analysis of our Code of Ethics process in 2009.

Reporting Violations

American Water maintains a confidential Ethics Hotline which employees are informed about in their orientation package as well as during our annual Code of Ethics training/certification. The information is also publicized at least annually in our internal news vehicles and resides permanently on American Water's intranet.

American Water is committed to completing a timely investigation, follow-up and resolution of all reported issues. Alleged violations, including reports of corruption, if any, are promptly reviewed by trained investigators and analyzed by the Company's Ethics Committee and, ultimately, the Audit Committee of the Board of Directors.

A total of 132 matters reported to the Ethics Hotline were investigated and closed in 2009. Of those, 30 related to matters that did not allege any violation of the Code of Ethics and thus, were turned over to Human Resources for review.

For more information on our ethics and compliance program, please see our corporate responsibility reporting section under Society.