Prospectus filed on same day as American Water asks for 32 percent rate increase for Joplin shows CEO is living high on the hog

It must be great to have a product that people absolutely have to have and a virtual monopoly on it.
Missouri American Water, as the Joplin Globe reported today, has asked for a 32 percent rate increase for Joplin customers, on top of the 64 percent increase it received last year. Of course, the increase has to go before the Missouri Public Service Commission.

Missouri American Water is a subsidiary of American Water, which is about to have its initial public offering at $24 to $26 per share, and filed a prospectus today with the Securities and Exchange Commission.

The prospectus offers much information about the company, including the following information about the Joplin operation:

In our Joplin service area in Missouri, our source of water supply is limited. To manage this issue on the demand side, the water use of a large industrial customer has been restricted under an interruptible tariff. Additional wells have and will be developed to address supply and reliability deficiencies.

As always, my favorite part of these documents is finding out just how much the CEOs of these companies make, and this one doesn't disappoint. While Joplin customers, including the poorest residents, are being asked to cover added expenses that are going to make it tough for ends to meet, that won't be a problem for American Water CEO Donald Correll.

Correll, who has headed the company since April 2006, received $1,102,317 in compensation during 2007, including a base salary of $562,059. His perks include having the company pay $480 for his life insurance, $18,000 for his car allowance, $38,109 for a deferred pension plan, $8,067 for a matching 401K contribution, and $5,364 for in travel expenses to industry conferences.

Now that last one might sound like a reasonable expense, since it is important for the CEO of a utility company to keep up with the latest advances, but the $5,364 is not for Correll...but for his wife.

Things get even better with Correll's latest contract, which went into effect as of this month. Correll will now receive a "monthly living allowance" of $10,000 "to cover living expenses incurred by him as a result of his maintaining a residence in the Voorhees, N. J./Philadelphia, Pa., area up to a maximum of $250,000." If Correll closes on the sale of his home in that time, he will be given "a one-time relocation allowance of $350,000."

But just in case things go wrong and American Water's Board of Directors decides to divest itself of Correll, he will have a soft cushion on which to land. According to the prospectus, his severance pay will amount to 18 months of salary, with all benefits included.

Correll stands to make a pretty penny if the IPO goes well. According to the prospectus, he will receive an amount equal to his annual salary as a bonus.