2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 320 The table below shows the portion of each named executive officer’s 2017 total direct compensation that is considered performance-based (i.e., annual cash incentives and performance-based equity incentives). Name 2017 Salary 2017 Cash Incentive Paid in 2018 2017 Performance Share Units 2017 Restricted Stock Units 2017 Non Qualified Options Total Percentage Performance-based Compensation F RANKLIN 26% 27% 27% 16% 4% 74% S MELTZER 39% 26% 20% 12% 3% 49% F OX 38% 28% 19% 12% 3% 50% S CHULLER 39% 27% 20% 11% 3% 50% L UNING 43% 23% 20% 11% 3% 46% With respect to the named executive officer’s total direct compensation, at least 74% of the Chief Executive Officer’s compensation is performance and/or stock-based and at least 60% of the average of the other named executive officer’s compensation is performance and/or stock-based: CEO RestrictedStock Units (RSUs)non Performance 12% PerformanceShare Units (PSUs) 19% NonQualified Options (NQ) 3% BaseSalary 40% Short-Term Incentives (Cash) 26% RestrictedStock Units (RSUs) PerformanceBased 16% PerformanceShare Units (PSUs) 27% NonQualified Options (NQ) 4% BaseSalary 26% Short-Term Incentives (Cash) 27% Performance and/or Stock-Based Compensation 74% Performance and/or Stock-Based Compensation 60% LTI 47% LTI 34% Long-Term Incentives (LTI) Annual Compensation Base Salary Restricted Stock Units (RSUs) Short-Term Incentives (Cash) Performance Share Units (PSUs) Non Qualified Options (NQ) OTHER NEOs P AY FOR P ERFORMANCE AND R ESULTS OF THE 2017 A DVISORY V OTE TO A PPROVE E XECUTIVE C OMPENSATION Our goal is to instill a “pay for performance” culture throughout the Company, and we target the 50 th percentile of the Company’s peer group as the appropriate level of pay for our named executive officers. At our 2017 Annual Meeting, we submitted a proposal to our shareholders for a non-binding advisory vote on our 2016 compensation awarded to our named executive officers. Our shareholders approved the proposal with over 94% of the votes cast in favor of the Company’s compensation programs for our named executive officers. 26 AQUA AMERICA, INC.