Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On August 27, 2008, the board of directors of the Company appointed Mr. Richard R. Grigg as an independent director of the Company, with a term expiring at the 2009 annual meeting of stockholders. Mr. Grigg will serve on the Nominating/Corporate Governance Committee. In accordance with the Company's current board of directors' compensation arrangement, Mr. Grigg will receive the $12,145 portion of the annual retainer payable for the remainder of 2008, $2,000 for each board of directors meeting attended, $1,000 for each interim telephonic board meeting attended and $1,500 for each committee meeting attended, as well as reimbursement for expenses incurred in attending board and committee meetings. Mr. Grigg will also be paid additional annual stock compensation for the remainder of 2008 of $13,880: 40% of which will consist of restricted stock units and 60% of which will consist of stock options.

In connection with the appointment of Mr. Grigg, the Company issued a press release on August 27, 2008. A copy of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Also effective as of August 27, 2008, the membership of the committees of American Water's board of directors is as follows:

- Audit Committee: Martha Clark Goss (Chair), George MacKenzie, William J. Marrazzo and Dr. Rolf Pohlig

- Compensation Committee: George MacKenzie (Chair), Martha Clark Goss, William J. Marrazzo and Dr. Rolf Pohlig

- Nominating/Corporate Governance Committee: George MacKenzie (Chair), Dr. Manfred Doss, Richard R. Grigg and Julia L. Johnson