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AQUA AMERICA, INC.

2016 ANNUAL MEETING OF SHAREHOLDERS

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Christopher Franklin President & CEO		LETTER FROM THE CHIEF EXECUTIVE OFFICER TO OUR SHAREHOLDERS Dear Fellow Shareholder, We are pleased to invite you to our 2016 Annual Meeting of Shareholders that will be held on Friday, May 6, 2016 at the Drexelbrook Banquet Facility & Corporate Events Center, 4700 Drexelbrook Drive, Drexel Hill, PA 19026 at 8:30 A.M. local time. This year marks the Company’s 130th anniversary – a milestone that very few American companies are able to achieve, and one of which we are very proud. Aqua’s rich history has seen tremendous growth, especially over the last two decades. We are excited for the growth opportunities our great company has in the coming years.

The new leadership team, established in 2015, experienced a number of notable accomplishments:

Revenues increased 4.4 percent to $814.2 million from $779.9 million in 2014.

Adjusted income from continuing operations per share was $1.26 compared to $1.20 in 2014 (non-GAAP financial measure)*.

The Board of Directors approved a 7.9 percent increase in the quarterly dividend.

We internally funded our entire 2015 capital investment program of $364.7 million to improve our distribution network and enhance water quality and reliability for our customers.

We increased our total customer connection count by 1.9 percent, which includes additional customers from organic and acquisition growth.

Standard and Poors reaffirmed their A+ rating for Aqua Pennsylvania.

Our total shareholder return was 14.18 percent in 2015, compared to 1.38 percent for the S&P 500 Index and -5.94% for the S&P MidCap 400 Utilities Index.

*2015 income from continuing operations per share was $1.14; adjusted income is a non-GAAP financial measure that excludes Aqua’s share of a noncash joint venture impairment charge.

Speaking on behalf of the entire new leadership team, we remain focused on investing in upgrading aging infrastructure, supporting the communities we serve, continuing to add customer connections through prudent acquisitions to share our financial strength and operational expertise with new communities, and refining and developing our market-based operations – all to provide shareholder value. I am honored to serve as the new president and CEO of Aqua America, Inc., and look forward to seeing you at our annual meeting in May.

Sincerely,

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AQUA AMERICA, INC.

762 W. Lancaster Avenue

Bryn Mawr, Pennsylvania 19010

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held

Friday, May 7, 2014

6, 2016 at 8:30 A.M. local time

TO THE SHAREHOLDERS OF
AQUA AMERICA, INC.:

Notice is hereby given that theThe Annual Meeting of Shareholders of AQUA AMERICA, INC. (the “Company”) will be held at theDrexelbrook Banquet Facility & Corporate Events Center, 4700 Drexelbrook Drive, Drexel Hill, PA 19026onFriday,May 6, 2016, at8:30 A.M., local time, onWednesday,May 7, 2014, for the following purposes:

1.

To consider and take action on the election of eight nominees for directors;

	2.		To consider and take action on the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the 20142016 fiscal year;

	3.		To consider and take an advisory vote to approve the Company’s executive compensation as disclosed in this Proxy Statement;
	4.		To consider and take action on an advisory vote on the approval of the amended Aqua America, Inc. 2009 Omnibus Equity Compensation Plan;
	5.		To consider and take action on a shareholder proposal requesting that the Board of Directors create a comprehensive policy articulatingcompensation paid to the Company’s respectnamed executive officers for and commitment to2015, as disclosed in the human right to water, if properly presented at the meeting;Proxy Statement; and

	6.		To consider and take action on a shareholder proposal requesting that the Board of Directors create a policy in which the Board’s Chairman is an independent director who has not previously served as an executive officer of the Company, if properly presented at the meeting; and
	7.	4.	To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.

Only shareholders of record at the close of business on March 10, 20147, 2016 will be entitled to notice of, and to vote at, the meeting and at any adjournments or postponements thereof.

By Order of the Board of Directors,

CHRISTOPHER P. LUNING

Secretary

March 23, 2016

We urge each shareholder to promptly sign and return the enclosed proxy card or to use telephone or internet voting. See our questions and answers about the meeting and the voting section for information about voting by telephone or internet, how to revoke a proxy and how to vote your shares in person.

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TABLE OF CONTENTS

	By Order of the Board of Directors,
PROXY STATEMENT			1
PURPOSE OF THE MEETING			1
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING			2
PROPOSALS UNDERCHRISTOPHER P. LUNINGONSIDERATION AT THIS MEETING			4
PROCESS FOR SUBMITTING SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING			5
NOMINATING CANDIDATES FOR DIRECTOR			6
CONSIDERATION OF DIRECTOR CANDIDATES			6
COMMUNICATIONS WITH THE COMPANY OR INDEPENDENT DIRECTORS			7
	Secretary

March 27, 2014

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting To Be Held On May 7, 2014.We are mailing to many of our shareholders a notice of availability on the Internet of our proxy materials, rather than mailing a full paper set of the materials. The notice of availability contains instructions on how to access our proxy materials on the Internet, as well as instructions on how to obtain a paper copy if a shareholder elects to do so. All shareholders who do not receive such a notice of availability, including shareholders who have previously requested to receive a paper copy of the materials, will receive a full set of paper proxy materials by U.S. mail. This process will reduce our costs to print and distribute our proxy materials.

REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, AS A SHAREHOLDER YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, OR VOTE ELECTRONICALLY, THROUGH THE INTERNET OR BY TELEPHONE, BY FOLLOWING THE INSTRUCTIONS SET OUT ON THE PROXY CARD. BY USING THE INTERNET OR TELEPHONE YOU HELP THE COMPANY REDUCE POSTAGE AND PROXY TABULATION COSTS.

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TABLE OF CONTENTS

	Page
PURPOSE OF MEETING	1
WHAT WILL HAPPEN AT THE MEETING?	2
VOTING AT THE MEETING	2
PROPOSALS UNDER CONSIDERATION AT THIS MEETING	3
SHAREHOLDER PROPOSALS FOR 2014 ANNUAL MEETING	5
NOMINATING CANDIDATES FOR DIRECTOR	5
CONSIDERATION OF DIRECTOR CANDIDATES	6
COMMUNICATIONS WITH THE COMPANY OR INDEPENDENT DIRECTORS	6
PROPOSAL NO. 1 – ELECTION OF DIRECTORS	7		8
INFORMATION REGARDING NOMINEES AND DIRECTORS
ELECTION OF DIRECTORS			8
CORPORATE GOVERNANCE	14
DIRECTOR INDEPENDENCE CORPORATE GOVERNANCE	14		15
BOARD LEADERSHIP STRUCTURE DIRECTOR COMPENSATION	16		22
OVERSIGHT OF RISK MANAGEMENT	16
CODE OF ETHICS PROPOSAL NO. 2	17		24
POLICIES AND PROCEDURES FOR APPROVAL OF RELATED PERSON TRANSACTIONS	18
BOARD AND BOARD COMMITTEESRATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR THE 2016 FISCAL YEAR	18		24
REPORT OF THE AUDIT COMMITTEE			25
PROPOSAL NO. 3			26
ADVISORY VOTE ON THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS FOR 2015			26
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION & ANALYSIS TABLE OF CONTENTS			28
2015 EXECUTIVE COMPENSATION			51
REPORTOFTHE EXECUTIVE COMPENSATION COMMITTEE			53
OWNERSHIP OF COMMON STOCK	21		70
EXECUTIVE COMPENSATION	23
COMPENSATION DISCUSSION AND ANALYSIS	23
EXECUTIVE COMPENSATION COMMITTEE REPORT	38
CURRENT COMPENSATION	39
RETIREMENT PLANS AND OTHER POST-EMPLOYMENT BENEFITS	46
NON-QUALIFIED DEFERRED COMPENSATION	49
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL	50
DIRECTOR COMPENSATION	58
REPORT OF THE AUDIT COMMITTEE	59
PROPOSAL NO. 2 – RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED ADDITIONAL INFORMATION			72
PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR THE 2014 FISCAL YEAR	60
PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION	61
PROPOSAL NO. 4 – TO CONSIDER AND TAKE ACTION ON THE APPROVAL OF THE
AMENDED AQUA AMERICA, INC. 2009 OMNIBUS COMPENSATION PLAN	61
PROPOSAL NO. 5 – TO CONSIDER AND TAKE ACTION ON A SHAREHOLDER PROPOSAL
REQUESTING THAT THE BOARD OF DIRECTORS CREATE A COMPREHENSIVE
POLICY ARTICULATING THE COMPANY’S RESPECT FOR AND COMMITMENT TO
THE HUMAN RIGHT TO WATER, IF PROPERLY PRESENTED AT THE MEETING	71
PROPOSAL NO. 6 – TO CONSIDER AND TAKE ACTION ON A SHAREHOLDER PROPOSAL
REQUESTING THAT THE BOARD OF DIRECTORS CREATE A POLICY IN WHICH
THE BOARD’S CHAIRPERSON IS AN INDEPENDENT DIRECTOR WHO HAS NOT
PREVIOUSLY SERVED AS AN EXECUTIVE OFFICER OF THE COMPANY, IF PROPERLY
PRESENTED AT THE MEETING	74
ADDITIONAL INFORMATION	76
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	76		72
OTHER MATTERS	76		72
APPENDIX A			A-1

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 7, 20146, 2016

The Notice of Annual Meeting, Proxy Statement and 20132015 Annual Report to Shareholders

are
available at: http://ir.aquaamerica.com/

AQUA AMERICA, INC.

762 W. Lancaster Avenue,
Bryn Mawr, Pennsylvania 19010

PROXY STATEMENT

 

This proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or the “Board”) of Aqua America, Inc. (“Aqua America” or the “Company”) to be used at the Annual Meeting of Shareholders to be held on Wednesday,Friday, May 7, 20146, 2016 and at any adjournments or postponements thereof (“20142016 Annual Meeting” or the “meeting”).

The cost of soliciting proxies will be paid by the Company, which has arranged for reimbursement at the rate suggested by the New York Stock Exchange (the “NYSE”) of brokerage houses, nominees, custodians and fiduciaries for the forwarding of proxy materials to the beneficial owners of shares held of record. In addition, the Company has retained Alliance Advisors LLC to assist in the solicitation of proxies from (i) brokers, bank nominees and other institutional holders, and (ii) individual holders of record. The fee paid to Alliance Advisors LLC for normal proxy solicitation is an amountdoes not to exceed $6,500$7,000 plus expenses, which will be paid by the Company. Directors, officers and regular employees of the Company may solicit proxies, although no compensation will be paid by the Company for such efforts.

Under rules adopted by the U.S. Securities and Exchange Commission (“SEC”), the Company is now furnishing proxy materials to many of its shareholders on the Internet, rather than mailing printed copies of those materials to each shareholder. If you received a notice of availability over the Internet of the proxy materials (“Notice”) by mail, you will not receive a printed copy of the proxy materials unless you request one. Instead, the Notice will instruct you as to how you may access and review the proxy materials on the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice. The Notice was firstis being sent to shareholders of record as of March 10, 2014, and proxy7, 2016 on or about March 25, 2016. Proxy materials, which include the Notice of Annual Meeting of Shareholders, this proxy statementProxy Statement and the Annual Report to Shareholders for the year ended December 31, 2013,2015, including financial statements and other information with respect to the Company and its subsidiaries (the “Annual Report”), are first being made available to shareholders of record as of March 10, 2014,7, 2016, on or about March 27, 2014.25, 2016. Additional copies of the Annual Report may be obtained by writing to the Company at the address and in the manner set forth under “Additional Information” on page 76.72.

PURPOSE OF THE MEETING

As the meeting is the Annual Meeting of Shareholders, the shareholders of the Company will be requested to:

• consider
  Consider and take action on the election of eight nominees for directors;
  
• consider

• consider and take action on a shareholder proposal requesting that the Board of Directors create acomprehensive policy articulating the Company’s respect for and commitment to the human right towater, if properly presented at the meeting (the “Shareholder Proposal No. 1”);
  
• consider and take action on a shareholder proposal requesting that the Board of Directors create a policythat the Board’s Chair should be an independent director who has not previously served as an executiveofficer of the Company, if properly presented at the meeting (the “Shareholder Proposal No. 2”); and,
  
• transactTransact such other business as may properly come before the meeting or any adjournments orpostponementsor postponements thereof.

				1

WHAT WILL HAPPEN ATQUESTIONS AND ANSWERS ABOUT THE MEETING?2016 ANNUAL MEETING

VOTING AT THE MEETING

Who is entitled to vote?

How many shares can vote?

As of March 10, 2014,7, 2016, there were 177,012,823177,218,592 shares of Common Stock outstanding and entitled to be voted at the meeting.

How do I cast my vote?

What is the proxy card?proxy?

If a proxy is executed, can a shareholder still attend the meeting in person?

Can a shareholder revoke or change his or her vote?

				2

What are the voting requirements for the boardBoard of Directors to take action on the proposals discussed in the proxy statement?Proxy Statement?

What is a quorum?

What is a broker non-vote?

Your proxy vote is important. Accordingly, you are asked to complete, sign and return the proxy card or vote electronically or telephonically regardless of whether or not you plan to attend the meeting.YOUR PROXY VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, SIGN AND RETURN THE PROXY CARD OR SUBMIT AN ELECTRONIC PROXY, VOTE TELEPHONICALLY OR PROVIDE YOUR BROKER WITH INSTRUCTIONS ON HOW TO VOTE YOUR SHARES, REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.

				3

PROPOSALS UNDER CONSIDERATION AT THIS MEETING

How are directors elected?

What if an incumbent director receives more WITHHOLD votes than FOR votes in an uncontested election?

Why are the shareholders asked to vote on the ratification of the selection of the independent registered public accounting firm?

				4

What is the impact of an advisory vote?

    Anthe advisory vote will not be binding uponon the Company,compensation paid to the Board of Directors or the Executive Compensation Committee.Company’s named executive officers?

How are the shareholder proposals approved?PROCESS FOR SUBMITTING SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING

    Under the Company’s Articles of Incorporation and Bylaws, the affirmative vote of at least three quarters of the votes which all voting shareholders, voting as a single class, is required to approve a shareholder proposal because such a proposal is not being brought before the meeting on the recommendation of a majority of the Board of Directors. Abstentions and broker non-votes will not be considered votes cast on such shareholder proposals and, therefore, will have no effect, other than for purposes of determining the presence of a quorum.

What is the effect of approving a shareholder proposal?

    Since the Shareholder Proposal No. 1 and No. 2 are presented in the form of a request to the Board of Directors, approval of these shareholder proposals will not have the effect of requiring the Board of Directors to prepare a comprehensive report on the human right to water or to require that the Board’s Chairman be an independent director who has not previously served as an executive officer of the Company, but will represent simply an expression of the wishes of the shareholders on those subjects. The Board of Directors would still be required, by statute, to decide whether it would be in the best interests of the Company to adopt such policies and could decide in the exercise of its business judgment not to have the Company adopt such policies as requested in the shareholder proposals.

SHAREHOLDER PROPOSALS

Who can submit a shareholder proposal?proposal at an Annual Meeting?

What is the deadline for submitting shareholder proposals for inclusion in the Company’s Proxy Materials?Materials for the next Annual Meeting?

What is the deadline for proposing business to be considered at anthe next Annual Meeting, but not to have the proposed business included in the Company’s Proxy Materials?

				5

NOMINATING CANDIDATES FOR DIRECTOR

How does a shareholder nominate a director for election to the Board of Directors at the 20142016 Annual Meeting?

What is the deadline for submitting a Nomination Notice for the Nomination Notice?2016 Annual Meeting?

CONSIDERATION OF DIRECTOR CANDIDATES

Who chooses director candidates?

				6

How are director candidates evaluated?

What is the deadline for submitting a shareholder recommendation for a director candidate at the 20152017 Annual Meeting?

    Recommendations of candidates

COMMUNICATIONS WITH THE COMPANY OR INDEPENDENT DIRECTORS

				7

(PROPOSAL NO. 1)1

ELECTION OF DIRECTORS

    The Board of Directors was previously divided into three classes with one class elected each year to hold office for a three-year term. At the 2012 Annual Meeting of Shareholders, the shareholders approved an Amendment to the Company’s Articles of Incorporation (the “Amendment”) that provides for the transition to the annual electionAll of the members of the Board of Directors. The directors who are elected, at the 2013 Annual Meeting werewill be elected for a one-year term expiring at the 20142017 Annual Meeting, and until their successors are duly elected and qualified. The directors previously elected at the 2011 Annual Meeting were elected for a three-year term also expiring at the 2014 Annual Meeting. Thus, all the directors who are nominated for re-election and elected, will be elected for a one-year term expiring at the 2015 Annual Meeting, and until their successors are duly elected and qualified.

    In June 2012, Ms. Mary C. Carroll reached the retirement age of 72 under the Company’s Corporate Governance Guidelines. Ms. Carroll, who was elected at the 2011 Annual Meeting for a term expiring at the 2014 Annual Meeting, submitted her resignation effective on her 72^nd birthday to the Board on May 10, 2012. The Board of Directors requested, and Ms. Carroll agreed, that she remain on the Board of Directors until the 2013 Annual Meeting. Subsequently, the Board requested, and Ms. Carroll agreed, that she remain on the Board of Directors until the 2014 Annual Meeting, at which time Ms. Carroll will retire as a director of the Company after 33 years of service as director.

    In June, 2013, Mr. Mario C. Mele reached the retirement age of 72 under the Company’s Corporate Governance Guidelines. Mr. Mele, who was elected at the 2011 Annual Meeting for a term expiring at the 2014 Annual Meeting, submitted his resignation effective on his 72^nd birthday to the Board on May 8, 2013. The Board of Directors requested, and Mr. Mele agreed, that he remain on the Board of Directors until the 2014 Annual Meeting, at which time Mr. Mele will retire as a director of the Company after 5 years of service as director.

    In October, 2013, Mr. Richard H. Glanton, Chairman of the Corporate Governance Committee, recommended to the Corporate Governance Committee that Mr. Michael L. Browne, President and Chief Operating Officer of Harleysville Insurance, a Nationwide Insurance Company, be elected to the Board of Directors. At its meeting on October 1, 2013, the Corporate Governance Committee unanimously approved the nomination of Mr. Browne for election to the Board of the Directors and recommended his election to the Board of Directors. On October 4, 2013, the Board of Directors considered the qualifications of Mr. Browne and unanimously approved his election to the Board of Directors.

In accordance with the Company’s Corporate Governance Guidelines, the ChairmanChairperson of the Corporate Governance Committee reported to the Corporate Governance Committee that Christopher H. Franklin, Nicholas DeBenedictis, Michael L. Browne,Carolyn J. Burke, Richard H. Glanton, Lon R. Greenberg, William P. Hankowsky, Wendell F. Holland, and Ellen T. Ruff and Andrew J. Sordoni, III, would be willing to serve on the Board of Directors, if re-elected.elected. The Corporate Governance Committee reviewed the qualifications of the directors in relation to the criteria for candidates for nomination for election to the Board of Directors under the Company’s Corporate Governance Guidelines. The Corporate Governance Committee voted to recommend to the Board of Directors, and the Board of Directors approved, the nomination of Mr. Franklin, Mr. DeBenedictis, Mr. Browne,Ms. Burke, Mr. Glanton, Mr. Greenberg, Mr. Hankowsky, Mr. Holland, and Ms. Ruff, and Mr. Sordoni, for election as directors at the 20142016 Annual Meeting, with each nominee abstaining from the vote with respect to his or her nomination.

Therefore, eight directors will stand for election by a pluralitymajority of the votes cast at the 20142016 Annual Meeting. At the 20142016 Annual Meeting, proxies in the accompanying form, properly executed, will be voted for the election of the nominees listed below, unless authority to do so has been withheld in the manner specified in the instructions on the proxy card or the record holder does not have discretionary voting power under the NYSE rules (see “Voting At The Meeting”“What is the proxy?” on pagespage 2 and 3 and “Proposals Under Consideration at theThis Meeting” on page 3)4). Discretionary authority is reserved to cast votes for the election of a substitute should any nominee be unable or unwilling to serve as a director. Each nominee has stated his or her willingness to serve and the Company believes that the nominees will be available to serve.

The Board of Directors unanimously recommends that the shareholders vote FOR the election of Mr. Nicholas DeBenedictis, Mr. Michael L. Browne, Mr. Richard H. Glanton, Mr. Lon R. Greenberg, Mr. William P. Hankowsky, Mr. Wendell F. Holland, Ms. Ellen T. Ruff and Mr. Andrew J. Sordoni, III as directors.

INFORMATION REGARDING NOMINEES AND DIRECTORSINFORMATION REGARDING NOMINEES

For each of the eight nominees for election as directors at the 20142016 Annual Meeting, set forth below is information as to the positions and offices with the Company held by each, the principal occupation of each during the past five years, the directorships of public companies and other organizations held by each and the experience, qualifications, attributes or skills that, in the opinionsopinion of the Corporate Governance Committee and the Board of Directors make the individual qualified to serve as a director of the Company. The chart below summarizes the experience, qualifications, attributes, and skills of each of the nominees.

				Nicholas DeBenedictis Ardmore, PA Director since 1992 8

NOMINEES FOR ELECTION AT THE 2016 ANNUAL MEETING

Biography: Christopher H. Franklin is President and Chief Executive Officer of Aqua America. Previously, Mr. Franklin served as the Executive Vice President and President and Chief Operating Officer, Regulated Operations (January 2012 to 2015); Regional President—Midwest and Southern Operations and Senior Vice President, Public Affairs (January 2010 to January 2012); Regional President—Southern Operations and Senior Vice President, Public Affairs and Customer Relations (February 2007 to 2010); Vice President, Public Affairs and Customer Relations (May 2005 to February 2007); Vice President, Corporate and Public Affairs (1997 to May 2005); and Manager Corporate & Public Affairs (January 1992 to 1997).

Qualifications: Since joining Aqua America in December 1992 as manager, corporate and public affairs, Mr. Franklin headed several successful projects, including advocacy for the passage of legislation designed to provide customers of state-regulated water and wastewater utilities with improved water quality and better water and wastewater systems while allowing a fair and reasonable return for shareholders. Mr. Franklin also attained national print and broadcast media coverage for the company, changed the name and rebranded the company and its subsidiaries, and expanded its investor relations outreach to increase analyst coverage of the company. Before joining Aqua America, Mr. Franklin worked at PECO Energy Company (an Exelon company) where he was regional, civic and economic development officer, responsible for the review, recommendation and promotion of economic development initiatives in the Philadelphia region. Mr. Franklin earned his B.S. from West Chester University and his M.B.A. from Villanova University and serves on the board of directors of ITC Inc. (NYSE: ITC), where he chairs the board committee on operations and serves on the board audit committee. ITC is an electric transmission utility headquartered in Novi, Michigan. In addition, Mr. Franklin is active in the community and serves on the following nonprofit boards: University of Pennsylvania Board of Trustees, Philadelphia, PA and West Chester University’s Council of Trustees, West Chester, PA.

Biography: Mr. DeBenedictis retired as Chief Executive Officer of the Company on June 30, 2015 and currently serves as non-executive Chairman of the Board, a position that he has held since July 2015. Mr. DeBenedictis has been Chairman of the Board since May 1993. Between April 1989 and June 1992, he served as Senior Vice President for Corporate Affairs of PECO Energy Company (an Exelon Corporation). From December 1986 to

				9

April 1989, he served as President of the Greater Philadelphia Chamber of Commerce and from 1983 to 1986 he served as the Secretary of the Pennsylvania Department of Environmental Resources. Mr. DeBenedictis is a director of Exelon Corporation, P.H. Glatfelter Company and Mistras Group. He also serves on the Boards of Pennsylvania area non-profit, civic and business organizations

Qualifications: In addition to his knowledge and experience as the Company’s Chief Executive Officer from 1992 to 2015, and his prior experience as a senior executive of a major electric utility, Mr. DeBenedictis has experience as the head of Pennsylvania’s environmental regulatory agency. He serves as a director of three other public companies, including, from time to time, as a member of the corporate governance, audit, finance and compensation committees of those companies. Mr. DeBenedictis has also held leadership positions with various, educational, business, civic and charitable institutions. The Board of Directors views Mr. DeBenedictis’ experience with various aspects of the utility industry and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience supporting the Board of Directors’ conclusion that Mr. DeBenedictis should serve as a director of the Company.

Biography: This is the first nomination of Carolyn Burke as a director of the Company. Ms. Burke serves as Executive Vice President, Business Operations and Systems at Dynegy, Inc with overall responsibility for Supply Chain, Safety, Environmental, Information Technology, Construction & Engineering, Outage Services and PRIDE-Dynegy’s signature continuous margin and process improvement program. She also retains her role as Chief Integration Officer with overall responsibility for integration activities, most recently for Dynegy’s $6 billion EquiPower Corp. and Duke merchant portfolio acquisitions, and Dynegy’s project management office. From 2011 to 2014, Ms. Burke served as Dynegy’s Chief Administrative Officer with overall responsibility for corporate functions including Communications, Human Resources, Information Technology, Investor Relations and Regulatory Affairs. Prior to joining Dynegy, Ms. Burke served as Global Controller for J.P. Morgan’s Global Commodities business. She was also NRG Energy’s Vice President and Corporate Controller from 2006 to 2008 and Executive Director of Planning and Analysis from 2004 to 2006. Early in her career, she held various key financial roles at Yale University, the University of Pennsylvania and at Atlantic Richfield Company (now British Petroleum). Ms. Burke graduated from Wellesley College with a BA in Economics and Political Science and earned her MBA at The University Chicago Booth School of Business.

Qualifications:Ms. Burke has over 20 years of experience in various roles within the energy and infrastructure industry with responsibilities ranging from accounting and finance, to information technology and human resources to operations and environmental compliance. The Board of Directors views Ms. Burke’s independence, her broad experience in finance and operations, and her leadership roles within the industry as important qualifications, skills and experience that support the Board of Directors’ conclusion that Ms. Burke should serve as a director of the Company.

NOMINEES FOR ELECTION AT THE 2014 ANNUAL MEETING				10

Biography:Mr. Glanton is Founder, Chairman and Chief Executive Officer of ElectedFace Inc., an on-line social media website which consolidates 21 of the most proven and popular social media features and functions into one platform to connect individuals and organizations of all types, including government officials and agencies, educational institutions and their leaders, businesses, faith groups, cultural icons and establishments, and community organizations and associations. Mr. Glanton was Senior Vice President of Corporate Development at Exelon Corporation from 2003 to 2008. From 1983 to 2003, he was a partner at the law firms of Wolf Block LLP (1983 to 1986) and Reed Smith LLP (1986 to 2003). Mr. Glanton is a director of The GEO Group, Inc. and Mistras Group, Inc.

Qualifications:Mr. Glanton has more than 25 years of legal experience in law firms and 13 years of executive experience as President of The Barnes Foundation for more than eight years from 1990 to 1998 and at Exelon Corporation. Mr. Glanton has approximately 29 years of continuous experience serving on boards of publicly traded companies. He has served as a director on boards of five publicly traded companies, four of which are traded on the NYSE and one, CGU, is traded on the United Kingdom Stock Exchange. He served as a Director of CGU of North America, a British-based Insurance Company, from 1983 to 2003 when it was sold to White Mountain Group of Exeter, New Hampshire and Berkshire Hathaway. He was a member of both its Executive and Audit Committees during his 20-year tenure on that board. From 1990 until 2003, he served as Director of PECO Energy/Exelon Corporation Boards until he resigned to assume a senior management position within the company at the request of its Chairman. He served on the Executive, Audit and Governance Committees of PECO/Exelon. He has been a director of the GEO Group since 1998, where he serves on its three member Executive Committee, and as Chairman of the Audit and Finance Committee and a member of its Governance and Compensation Committees. The Board has determined that Mr. Glanton is an independent director. The Board of Directors views Mr. Glanton’s independence, his experience in utility acquisitions, his experience as a director of other publicly traded companies and his demonstrated leadership roles in other business activities as important qualifications, skills and experience that support the Board of Directors’ conclusion that Mr. Glanton should serve as a director of the Company.

Biography:Mr. Greenberg retired from his position as non-executive Chairman of the Board of Directors of UGI Corporation on January 28, 2016, where he served as Chairman since August 1996 and Chief Executive Officer since August 1995, until his retirement in April 2013. He was formerly President (July 1994 to

				11

August 2005), Vice Chairman of the Board (1995 to 1996) and Senior Vice President – Legal and Corporate Development (1989 to 1994) of UGI Corporation. Mr. Greenberg is a member of the Board of Trustees of Temple University and the Chairman of the Board of Trustees of the Temple University Health System. Mr. Greenberg also serves as a director of Ameriprise Financial, Inc. and AmerisourceBergen Corporation.

Qualifications:Mr. Greenberg has over 20 years of experience in various executive, legal and corporate development roles with a major gas utility and energy services company and international distributor of propane. He was also Chairman of the nation’s largest retail propane marketer and he serves as a director for a NYSE listed financial planning, products and services company, as well as a NYSE listed global pharmaceutical sourcing and distribution services company. He is a member of the Board of Trustees of a major university in Philadelphia and the university’s health system. Mr. Greenberg has served as a member of the Company’s Executive Compensation Committee since 2005, and was appointed Committee Chairman in 2015. He has served as a member of the Company’s Audit Committee since 2009, serving as Chairman from 2012 through 2015. Mr. Greenberg has also held leadership positions with various civic and charitable institutions. The Board of Directors has determined that Mr. Greenberg is an independent director, financially literate and an audit committee financial expert within the meaning of applicable SEC rules. The Board of Directors views Mr. Greenberg’s independence, his experience with various aspects of the utility industry, his experience as an executive of a non-utility business and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience that support the Board of Directors’ conclusion that Mr. Greenberg should serve as a director of the Company.

Biography: Mr. Hankowsky has been Chairman, President and Chief Executive Officer of Liberty Property Trust, a fully integrated real estate firm, since 2003. Mr. Hankowsky joined Liberty in 2001 as Executive Vice President and Chief Investment Officer. Prior to joining Liberty, he served for 11 years as President of the Philadelphia Industrial Development Corporation. Prior to that, he was Commerce Director for the City of Philadelphia. Mr. Hankowsky serves on the Board of Directors of Citizens Financial Group and on various charitable and civic boards, including the Philadelphia Convention and Visitors Bureau and the Pennsylvania Academy of Fine Arts.

Qualifications: Mr. Hankowsky has over 35 years of experience managing public, private and non-profit organizations, including eleven years as Chairman and Chief Executive Officer of Liberty Property Trust, a publicly traded Real Estate Investment Trust which owns 100 million square feet of office and industrial space in over 24 markets throughout the United States and the United Kingdom. He has experience in financing, acquisitions and real estate matters across the United States. Mr. Hankowsky has also held leadership positions with various cultural and civic institutions in the greater Philadelphia region. The Board of Directors has determined that Mr. Hankowsky is an independent director, financially literate and an audit committee financial expert within the meaning of applicable SEC rules. The Board of Directors views Mr. Hankowsky’s independence, his experience with real estate, financing and acquisitions and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience supporting the Board of Directors’ conclusion that Mr. Hankowsky should serve as a director of the Company.

Qualifications:Ms. Ruff has over 30 years of experience with a major utility company in various management, operations, legal planning and public affairs positions. Ms. Ruff has lived and worked in North Carolina, an important area of the Company’s operations, for many years. Ms. Ruff has served as a member of the Company’s Executive Compensation Committee since 2006. The Board of Directors has determined that Ms. Ruff is an independent director. The Board of Directors views Ms. Ruff’s independence, her experience with various aspects of the utility industry, her knowledge of North Carolina and her demonstrated leadership roles in business and community activities as important qualifications, skills and experience supporting the Board of Directors’ conclusion that Ms. Ruff should serve as a director of the Company. 12

Biography: Mr. Holland has been a partner in CFSD Group, LLC, advisors for local and regional utility financing, since July 2009. Mr. Holland was partner in the law firm of Saul Ewing, LLP from October 2008 to September 2013. Mr. Holland served as Chairman of the Pennsylvania Public Utility Commission from 2004 to 2008 and as a Commissioner from 1990 to 1993, and 2003 to 2004. Mr. Holland was Of Counsel to the law firm of Obermayer Rebman from 1999 to 2003, Vice President of American Water Works Company from 1996 to 1999 and a partner at the law firm of LeBoeuf Lamb Greene and McRae from 1993 to 1995. He has served as Treasurer of the National Association of Utility Regulatory Commissioners (NARUC) and also served on NARUC’s Executive Committee, Board of Directors, and as Chairman of its Audit and Investment Committees. He is a member of the Board of Bryn Mawr Trust Bank and was a member of the Allegheny Energy Board of Directors from 1994 to 2003.

Qualifications: Mr. Holland has extensive knowledge and experience in the regulation of public utilities, especially water utilities. His experience as chairman of the Public Utility Commission in Pennsylvania for four years and a Commissioner for an additional four years enables him to provide valuable insight into the regulatory process. His prior service as a member of the Board of Directors of a large, publicly traded energy company also enables him to play a meaningful role on the Company’s Board of Directors. As outside counsel to, and an executive at other public utility companies, he has a valuable perspective on the various issues facing public utility companies. The Board of Directors has determined that Mr. Holland is an independent director. The Board of Directors views Mr. Holland’s independence, his experience with utility regulation and utility operations, his reputation in the utility industry and his leadership roles in business and community activities as important qualifications, skills and experience supporting the Board of Directors’ conclusion that Mr. Holland should serve as a director of the Company.

Biography: Ms. Ruff is a partner in the law firm of McGuireWoods, LLP. She was President, Office of Nuclear Development, for Duke Energy Corporation, from December 2008 until her retirement in January 2011. Duke Energy Corporation is a leading energy company focused on electric power and gas distribution operations and other energy services in the Americas. From April 2006 through December 2008, Ms. Ruff was President of Duke Energy Carolinas, an electric utility that provides electricity and other services to customers in North Carolina and South Carolina. Ms. Ruff joined the Duke Energy organization in 1978 and during her career held a number of key positions, including: Vice President and General Counsel of Corporate, Gas and Electric

				13

Operations; Senior Vice President and General Counsel for Duke Energy; Senior Vice President of Asset Management for Duke Power; Senior Vice President of Power Policy and Planning; and Group Vice President of Planning and External Affairs. Ms. Ruff is a retired director of Mistras Group, Inc.

Qualifications: Ms. Ruff has over 30 years of experience with a major utility company in various management, operations, legal planning and public affairs positions. Ms. Ruff has lived and worked in North Carolina, an important area of the Company’s operations, for many years. Ms. Ruff has served as a member of the Company’s Executive Compensation Committee since 2006. The Board of Directors has determined that Ms. Ruff is an independent director. The Board of Directors views Ms. Ruff’s independence, her experience with various aspects of the utility industry, her knowledge of North Carolina and her demonstrated leadership roles in business and community activities as important qualifications, skills and experience supporting the Board of Directors’ conclusion that Ms. Ruff should serve as a director of the Company.

Andrew J. Sordoni, III Forty Fort, PA Director since 2006
				Biography: Mr. Sordoni is Chairman of Sordoni Construction Services, Inc., a building construction and management services company, where he has been an officer of that company since 1967. Mr. Sordoni was Chairman or President of C-TEC Corporation, a diversified telecommunications company from 1979 to 1993. Since 1974, he has headed Sordoni Foundation, Inc. and has served as a director of various business and charitable organizations. He is also a director of Harsco Corporation. Age: 70. Qualifications: Mr. Sordoni has experience as a director and executive of various public and private companies throughout the course of his career, including experience in construction, finance, administration and acquisitions. He was Chairman and President of a regulated public utility company in Pennsylvania. He has been a director of another publicly-traded company since 1988 and has served as a member of that company’s Nominating Committee and Compensation Committee. Mr. Sordoni has lived and worked in northeast Pennsylvania, an important area of the Company’s operations, for over 50 years. Mr. Sordoni has served as a member of the Company’s Audit Committee since 2006. The Board of Directors has determined that Mr. Sordoni is an independent director, financially literate and an audit committee financial expert within the meaning of applicable SEC rules. The Board of Directors views Mr. Sordoni’s independence, his experience as an executive of a public utility company in Pennsylvania, his experience in construction, finance and acquisitions, his knowledge of northeast Pennsylvania, his experience as a director of another publicly-traded company and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience supporting the Board of Directors’ conclusion that Mr. Sordoni should serve as a director of the Company.14

CORPORATE GOVERNANCE

The Board of Directors operates pursuant to a set of written Corporate Governance Guidelines. Copies of these Guidelines can be obtained free of charge from the Corporate Governance portion of the Investor Relations section of the Company’s website,www.aquaamerica.com.www.aquaamerica.com

. Our website is not part of this Proxy Statement. References to our website address in this Proxy Statement are intended to be inactive textual references only.

In accordance with best practices and its commitment to strong corporate governance, in 2015 the Board of Directors retained a renowned corporate governance advisor to review the Company’s corporate governance guidelines and practices. In the fall of 2015, the Board of Directors adopted the following changes to its corporate governance practices:

In addition, the Board of Directors continues to focus on succession planning as an important component of good governance. The search for and recruitment of Carolyn J. Burke as a nominee to join the Company’s Board of Directors is a result of that commitment.

DIRECTOR INDEPENDENCEDIRECTOR INDEPENDENCE

The Board of Directors is, among other things, responsible for determining whether each of the directors is independent in light of any relationship such director may have with the Company. The Board has adopted Corporate Governance Guidelines that contain categorical standards of director independence that are consistent with the listing standards of the NYSE. Under the Company’s Corporate Governance Guidelines, a director will not be deemed independent if:

• the
  The director is, or has been within the last three years, an employee of the Company, or an immediatefamilyimmediate family member is, or has been within the last three years, an executive officer of the Company;
  

• (A) the director or an immediate family member is a current partner of a firm that is the Company’sinternalCompany’s internal or external auditor, (B) the director is a current employee of such a firm, (C) the director hasanhas an immediate family member who is a current employee of such a firm and personally works on theCompany’sthe Company’s audit, or (D) the director or an immediate family member was within the last three years (butis(but is no longer) a partner or employee of such firm and personally worked on the Company’s audit withinthatwithin that time;
  
• the
  The director or an immediate family member is, or has been within the last three years, employed as anexecutivean executive officer of another company where any of the Company’s present executive officers at the sametimesame time serves or served on that company’s compensation committee;
  
• the
  The director has received, or has an immediate family member who has received, during any twelve-monthtwelve- month period within the last three years, more than $120,000 in direct compensation from the Company,other than director and committee fees and pension or other forms of deferred compensation for priorserviceprior service (provided such compensation is not contingent in any way on continued service) and, in the caseofcase of an immediate family member who is not an executive officer, other than compensation for service asanas an employee of the Company;
  
• the

  The director is an executive officer or employee, or someone in her/his immediate family is an executiveofficer,executive officer, of another company that, during any of the other company’s past three fiscal years made paymentsto,

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  made payments to, or received payments from, the Company for property or services in an amount which, in any singlefiscal year of the other company, exceeded the greater of $1 million or 2% of the other company’sconsolidated gross revenues; or the Company for property or services in an amount which, in any single fiscal year of the other company, exceeded the greater of $1 million or 2% of the other company’s consolidated gross revenues; or

  The director serves as an executive officer of a charitable organization and, during any of the charitableorganization’scharitable organization’s past three fiscal years, the Company made charitable contributions to the charitableorganizationcharitable organization in any single fiscal year of the charitable organization that exceeded the greater of $1 millionormillion or two percent of the charitable organization’s consolidated gross revenues.

For purposes of the categorical standards set forth above, (a) a person’s immediate family includes a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone (other than domestic employees) who shares such person’s home, and (b) the term “executive officer” has the same meaning specified for the term “officer” in Rule 16a-1(f) under the Exchange Act.Act, and (c) the “Company” includes Aqua and its consolidated subsidiaries.

In addition to these categorical standards, no director will be considered independent unless the Board of Directors affirmatively determines that the director has no material relationship with the Company (either directly, or as a partner, stockholder, director or officer, of an organization that has a relationship with the Company). When making independence determinations, the Board of Directors broadly considers all relevant facts and circumstances surrounding any relationship between a director or nominee and the Company. Transactions, relationships and arrangements between directors or members of their immediate family and the Company that are not addressed by the categorical standards may be material depending on the relevant facts and circumstances of such transactions, relationships and arrangements. The Board of Directors considered the following transactions, relationships and arrangements in connection with making the independence determinations:determinations for the current board of directors:

Based on a review applying the categorical standards set forth in the Company’s Corporate Governance Guidelines and considering the relevant facts and circumstances of the transactions, relationships and arrangements between the directors and the Company described above, the Board of Directors has affirmatively determined that each nominee for director, other than Mr. DeBenedictis,Franklin, the Company’s Chief Executive Officer, is independent.

    In 2005, the Board of Directors approved share ownership guidelines for each director to own shares of Company common stock having a value equal to five times the annual cash retainer for directors. Directors have up to five years to attain this guideline share ownership level. As of March 10, 2014, each director owned sufficient shares to comply with these guidelines except: Mr. Holland, who has until 2016 to meet the guidelines, five years following his election to the Board of Directors; Mr. Browne, who has until 2018 to meet the guidelines, five years following his election to the Board of Directors; and Mr. Glanton, who has inadvertently and temporarily fallen belowDeBenedictis, the guideline. Mr. Glanton has consistently met the guidelines during his tenure as a director and has assured us that he will meet the guidelines on or before June 30, 2014.

BOARD OF DIRECTORS LEADERSHIP STRUCTURE

    The Board of Director’s current policy is that the positions of Chairman andCompany’s former Chief Executive Officer, be held byis independent.

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BOARDOF DIRECTORS LEADERSHIP STRUCTURE

Mr. Franklin serves as Chief Executive Officer and Mr. DeBenedictis serves as the same person.non-executive Chairman of the Board. The Board of Directors believes that this leadership structure has servedprovides continuity and efficiency for the Company well overand best utilizes the years by providing unified leadershipskills and directionexperience of Mr. Franklin and in combination withMr. DeBenedictis. Under this present structure, the Company’s other corporate governance policies and procedures, is in the best interests of the Company’s shareholders. The Board of Directors may separate these positions in the future should circumstances change, such as in connection with a transition in leadership.

    The Board of Directors annually elects a lead independent director to coordinate the activities of the other independent directors and enhance the role of the independent directors in the overall corporate governance of the Company. Unless otherwise determined byMr. Glanton is currently the Board, the director elected annually to serve as the Chair of the Corporate Governance Committee will also serve as the lead independent director.Lead Independent Director. The duties and powers of the lead independent director include:

• presiding
  Presiding at all meetings of the Board at which the Chairman of the Board is not present, includingexecutiveincluding executive sessions of the independent directors;
  
• serving
  Serving as liaison between the independent directors and the Chairman of the Board;
  
• consulting
  Consulting with the Chairman of the Board, reviewing and approving meeting agendas and informationprovidedinformation provided to the Board for meetings, including the authority to add items to the agendas for any such meeting;
  
• reviewing
  Reviewing and approving meeting schedules to assure that there is sufficient time for discussion of allagendaall agenda items;
  
• having
  Having the authority to call executive sessions of the independent directors and to prepare the agendas forsuchfor such executive sessions;
  
• if
  If requested by major shareholders, ensures that he or she is available for consultation and directcommunications;
  
• servingdirect communications;
  Serving as a member of the Executive Committee;
  
• in
  In the event of the death or incapacity of the Chairman, and Chief Executive Officer, becoming the actingChairmanacting Chairman of the Board until a new Chairman is selected; and
  
• having
  Having the authority (on behalf(with the approval of at least the independentmajority of the directors) to engage such legal, financial or otheradvisorsother advisors as the independent directors shall deem appropriate at the expense of the Company and withoutconsultationwithout consultation or the need to obtain approval of any officer of the Company.

OVERSIGHT OF RISK MANAGEMENTAGEAND TERM LIMITS

The Board believes that term limits are an important element of good governance. However, it also believes that it must strike the appropriate balance between the contribution of directors who have developed, over a period of time, meaningful insight into the Company and its operations, and therefore can provide an increasing contribution to the Board as a whole. Accordingly, in 2015 the Board established that upon the fifteenth anniversary of a director accepting an initial appointment or election to the Board of Directors, the director shall tender his resignation to the Board (the “Term Limit Policy”). The Term Limit Policy does not apply to Directors who were elected on or before December 1, 2015.

The Board also believes that our policy of retirement for directors at age 72 is in the best interests of the Company. All directors are required to submit their resignation from the Board effective as of their 72^nd birthday.

OVERSIGHTOF RISK MANAGEMENT

The Board oversees management’s risk management activities through a combination of processes:

• In 2015, the Board created the Risk Mitigation and Investment Policy Committee. Pursuant to its charter, the purpose of Risk Mitigation and Investment Policy Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with respect to the Company’s risk management

  				17

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  practices, the Company’s compliance with legal and regulatory requirements, and to review and approve the Company’s risk management framework.

  Management has developed a Company-wide Enterprise Risk Management process intended to identify,prioritize and monitor key risks that may affect the Company.
  At least annually,quarterly, the BoardRisk Mitigation and Investment Policy Committee reviews thisEnterprisethis Enterprise Risk Management process and management presents to the Board a report on the status of therisksthe risks and the metrics used to monitor those risks. Each risk that is tracked as part of the Enterprise RiskManagementRisk Management process has a member of the Company’s management who serves as the owner and monitorformonitor for that risk. The risk-ownersrisk owners and monitors report on the status of their respective risks at the quarterlymeetingquarterly meeting of management’s Compliance Committee. The information discussed at the ComplianceCommitteeCompliance Committee meeting is then reviewed by the Disclosure Committee composed of the Company’s ChiefExecutiveChief Executive Officer, Chief Financial Officer, General Counsel, Chief Accounting Officer and Director ofInternalof Internal Audit. The results of the Disclosure CommitteeCommittee’s meetings are presented to the Risk Mitigation and Investment Policy Committee or the Audit Committeeeach quarter.
  
• Committee each quarter, as appropriate.
  The Audit Committee, in consultation with management, the independent registered public accountantsandaccountants and the internal auditors, discusses the Company’s policies and guidelines regarding risk assessment andriskand risk management as well as the Company’s significant financial risk exposures and the steps managementhasmanagement has taken to monitor, control and report such exposures. The Audit Committee meets in executive session

with the Director of Internal Audit and with the independent registered public accountants at the end of each Audit Committee meeting. The Company’s General Counsel reports to the Audit Committee quarterly regarding any significant litigation involving the Company and his opinion of the adequacy of the Company’s reserves for such litigation.

• The At least annually, the Executive Compensation Committee considers the risks that may be presented by the structure of theCompany’sthe Company’s compensation programs and the metrics used to determine individual compensation underthatunder that program. In addition, two members of the Audit Committee are also members of the ExecutiveCompensation Committee, which allows for the sharing of information concerning the risk assessmentand risk management reviewed by the Audit Committee with the Executive Compensation Committee initsshares its views and opinions with the Audit Committee concerning the risk assessment and risk management it undertakes in its consideration of the Company’s compensation policies and practices.
  

• The Corporate Governance Committee leads an annual discussion by the Board of Directors regardingtheregarding the Company’s strategic plans and management’s performance with respect to such plans.
  

• Management briefs the Board of Directors on regulated acquisitions valued in excess of $2 million andtheand the Board approves every acquisition valued in excess of $10 million or which involves the issuance oftheof the Company’s common stock as part of the acquisition. Management briefs the Board of Directors onunregulatedon unregulated acquisitions and projects valued in excess of $1 million.
  

• In addition to updates at each Board meeting by operating management regarding any significantoperationalsignificant operational or environmental matters, management provides the Board with an annual update onenvironmentalon environmental matters by the Company’s Senior Manager, Environmental Affairs in connection with apresentationa presentation by the Company’s Senior Vice President of Engineering on the Company’s proposed capitalspendingcapital spending plans.
  

• In administering the executive compensation program, the Executive Compensation Committee attemptstoattempts to strike an appropriate balance among the elements of our compensation program to achieve the objectivesdescribed below in the Compensation Discussion and Analysis.program’s objectives. Each of the elements of the program is discussed in greater detail herein. In reviewingthein this Proxy Statement. As a result of its review of the Company’s overall compensation program in the context of the risks identified in the Company’senterpriseCompany’s enterprise risk management processes, the Executive Compensation Committee does not believe thatthethat the risks the Company faces are materially increased by the Company’s compensation programs and,therefore, the Executive Compensation Committee believes that the compensation program does notcreatenot create the reasonable likelihood of a material adverse effect on the Company.

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The Board believes that the present leadership structure, of having the same person serve as the Chairman and Chief Executive Officer of the Company, along with the important risk oversight functions performed by the Audit Committee, the Risk Mitigation and Investment Policy Committee, the Executive Compensation Committee and the full Board, permits the Board to effectively perform its role in the risk oversight of the Company.

CODE CODEOF ETHICS ETHICS

The Company maintains a Code of Ethical Business Conduct for its directors, officers and employees, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as defined by the rules adopted by the SEC pursuant to Section 406(a) of the Sarbanes-Oxley Act of 2002. The Code of Ethical Business Conduct covers a number of important subjects, including: conflicts of interest; corporate opportunities; fair dealing; confidentiality; protection and proper use of Company assets; compliance with laws, rules and regulations (including insider trading laws); and encouraging the reporting of illegal or unethical behavior. Copies of the Company’s Code of Ethical Business Conduct can be obtained free of charge from the Corporate Governance portion of the Investor Relations section of the Company’s website,www.aquaamerica.com. The Company intends to post amendments to or waivers from the Code of Ethical Business Conduct (to the extent applicable to the Company’s executive officers, senior financial officers or directors) on its website.

ANTIPOLICIES AND PROCEDURES FOR APPROVAL OF RELATED PERSON TRANSACTIONS-HEDGING POLICY

We believe that issuance of incentive and compensatory equity awards to our named executive officers along with our stock ownership guidelines help to align the interests of such officers with our shareholders. As part of our insider trading policy, we prohibit any officers from engaging in hedging activities with respect to any owned shares or outstanding equity awards. Such policy also discourages pledges of any Company stock by officers, and requires Company notice and approval. None of our named executive officers pledged any shares of Company stock during 2015.

POLICIESAND PROCEDURESFOR APPROVALOF RELATED PERSON TRANSACTIONS

The Board has a written policy with respect to Related Person Transactionsrelated person transactions to document procedures pursuant to which such transactions are reviewed, approved or ratified. The policy applies to any transaction in which: (1) the Company is a participant;participant, (2) any related person has a direct or indirect material interest;interest, and (3) the annual amount involved exceeds $120,000, but excludes certain types of transactions in which the related person is deemed not to have a material interest.

Under this policy, a related person means: (a) any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director, an executive officer or a director nominee; (b) any person known to be the beneficial owner of more than 5% of any class of the Company’s voting securities; (c) any immediate family member of a person identified in items (a) or (b) above, meaning such person’s spouse, parent, stepparent, child, stepchild, sibling, mother- or father-in-law, son- or daughter-in-law, brother- or sister-in-law or any other individual (other than a tenant or employee) who shares the person’s household; or (d) any entity that employs any person identified in (a), (b) or (c) or in which any person identified in (a), (b) or (c) directly or indirectly owns or otherwise has a material interest.

The Corporate Governance Committee, with assistance from the Company’s General Counsel, is responsible for reviewing, approving and ratifying any related person transaction. In its review and approval or ratification of related person transactions (including its determination as to whether the related person has a material interest in a transaction), the Corporate Governance Committee will consider, among other factors:

• the
  The nature of the related person’s interest in the transaction;
  
• the
  The material terms of the transaction, including, without limitation the amount and type of the transaction;
  
• the

  				19

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  The importance of the transaction to the related person;
  
• the
  The importance of the transaction to the Company;
  
• whether
  Whether the transaction would impair the judgment of a director or executive officer to act in the bestinterestsbest interests of the Company; and
  
• any
  Any other matters the Corporate Governance Committee deems appropriate.

The Corporate Governance Committee intends to approve only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its shareholders.

    As noted under Director Independence on page 14, the Company had a pre-existing relationship with the law firm that Mr. Holland joined as a partner in 2008 prior to Mr. Holland joining the firm. Most of the legal services provided by that law firm to the Company relate to regulatory matters for the Company’s New Jersey subsidiaries and do not involve services by Mr. Holland. Because the legal services provided to the Company exceeded $120,000 in 2013, and Mr. Holland was employed by the law firm for a period in 2013, the relationship between the Company and the law firm constitutes a related person transaction. Prior to nominating Mr. Holland for appointment to the Board of Directors, the Corporate Governance Committee reviewed the relationship between the Company and the law firm pursuant to the Company’s Related Person Transaction Policy and concluded that the relationship was in the best interests of the Company since the attorneys performing most of that work had been handling regulatory matters for the Corporation’s New Jersey subsidiary for several years prior to Mr. Holland joining the firm. Mr. Holland is no longer associated with the law firm.

BOARD BOARDAND BOARD COMMITTEES BOARD COMMITTEES

    The Board of Directors held five meetings in 2013. The Company’s Bylaws provide that the Board of Directors, by resolution adopted by a majority of the whole Board, may designate an Executive Committee and one or more other committees, with each such committee to consist of two or more directors.directors except for the Audit Committee and Executive Compensation Committee, which must have at least three members. The Board of Directors annually elects from its members the Executive, Audit, Executive Compensation, Risk Mitigation and Investment Policy, and Corporate Governance Committees. The Board may also from time to time appoint an ad hoc Financecommittees such as an Executive Search Committee to approve the terms ofoversee the Company’s financings.succession planning activities. The Retirement and Employee Benefits Committee, which is comprised of senior management of the Company,

reports periodically to the Board of Directors. Ms. Carroll and Mr. Holland

Michael L. Browne, a member of the Board of Directors since 2013, served as advisors toa member of the RetirementBoard of Directors during 2015. He resigned from the Board of Directors on March 11, 2016. At the time of his resignation, Mr. Browne was a member of the Company’s Audit Committee and Employee Benefits Committee during 2013.its Executive Compensation Committee. The Board subsequently filled the vacancies on March 15, 2016.

The Board of Directors held twelve (12) meetings in 2015. Each director attended at least 75% of the aggregate of all meetings of the Board and the Committees on which each such director served in 2013.2015. The Board of Directors encourages all directors to attend the Company’s Annual Meeting of Shareholders. All the directors were in attendance at the 20132015 Annual Meeting of Shareholders.

Each of the standing Committees of the Board of Directors operates pursuant to a written Committee Charter. Copies of these Charters can be obtained free of charge from the Corporate Governance portion of the Investor Relations section of the Company’s website,www.aquaamerica.com.

The current members of the standing Committees of the Board of Directors, areas of December 31, 2015, were as follows:

Mary C. Carroll
Mario C. Mele
Michael L. Browne

Executive CommitteeEXECUTIVE COMMITTEE

The Company’s Bylaws provide that the Executive Committee shall have and exercise all of the authority of the Board in the management of the business and affairs of the Company, with certain specified exceptions. The Executive Committee is intended to serve in the event that action by the Board of Directors is necessary or desirable between regular meetings of the Board, or at a time when convening a meeting of the entire Board is not practical, and to make recommendations to the entire Board with respect to various matters. The Executive Committee did not meet in 2013. The Executive Committee currently has fourfive members, and the Chairman of the Board of Directors serves as Chairman of the Executive Committee. The Executive Committee met once in 2015.

Audit CommitteeAUDIT COMMITTEE

The Audit Committee is composed of three directors, whom the Board of Directors has affirmatively determined meet the standards of independence required of audit committee members by the NYSE listing requirements and applicable SEC rules. Based on a review of the background and experience of the members of the Audit Committee, the Board of Directors has determined that, currently, all members of the Audit Committee, except for Ms. Ruff, are financially literate and are audit committee financial experts within the meaning of applicable SEC rules. The Audit Committee is required to meet at least four times during the year and met four times during 2013. The Audit Committee operates pursuant to a Board-approved charter which states its duties and responsibilities. The primary responsibilities of the Audit Committee are to monitor the integrity of the Company’s financial reporting process and systems of internal controls, including the review of the Company’s annual audited financial statements, and to monitor the independence of the Company’s independent registered public accounting firm. The Audit Committee is required to meet at least four times during the year and met four times during 2015.

The Audit Committee has the exclusive authority to select, evaluate and, where appropriate, replace the Company’s independent registered public accounting firm.

The Audit Committee has considered the extent and scope of non-audit services provided to the Company by its independent registered public accounting firm and has determined that such services are compatible with the independent registered public accounting firm maintaining its independence. For more information, see the Report of the Audit Committee on page 59.

Executive Compensation CommitteeEXECUTIVE COMPENSATION COMMITTEE

The Executive Compensation Committee is composed of three directors, whom the Board of Directors has affirmatively determined are independent directors as defined by the NYSE listing requirements.requirements and applicable SEC rules. The Executive Compensation Committee operates pursuant to a Board-approved charter which states its duties and responsibilities. The Executive Compensation Committee has the power to, among other things, administer and make awards under the Company’s equity compensation plans. The Executive Compensation Committee reviews the recommendations of the Company’s Chief Executive Officer as to appropriate compensation of the Company’s executive officers (other than the Chief Executive Officer) and determines the compensation of such executive officers. The Committee reviews and recommends to the Board of Directors the compensation for the Company’s Chief Executive Officer, which is subject to final approval by the independent members of the Board of Directors. The Executive Compensation Committee met fourfive times during 2013.2015.

Corporate Governance CommitteeCORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee is composed of fourthree directors, whom the Board of Directors has affirmatively determined are independent directors as defined by the NYSE listing requirements. The Corporate Governance Committee operates pursuant to a Board-approved charter which states its duties and responsibilities, which include identifying and considering qualified nominees for directors, and developing and periodically reviewing the Corporate Governance Guidelines by which the Board of Directors is organized and executes its responsibilities. The Corporate Governance Committee advises the Board of Directors on executive

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selections and succession, including ensuring that there is a succession plan for the Chief Executive Officer and such other senior executives as determined by the Corporate Governance Committee. In addition, the Chairman of the Corporate Governance Committee, as lead independent director, conducts corporate governance discussions in executive sessions with the Board of Directors. The Corporate Governance Committee also reviews and approves, ratifies or rejects related person transactions under the Company’s written policy with respect to related person transactions. The Corporate Governance Committee met twofive times during 2013.2015.

OWNERSHIP OF COMMON STOCKRISK MITIGATIONAND INVESTMENT POLICY COMMITTEE

The Risk Mitigation and Investment Policy Committee was formed on December 1, 2015 and is composed of four directors and the Company’s Chief Financial Officer. The Risk Mitigation and Investment Policy Committee operates pursuant to a Board approved charter, which states its duties and responsibilities. The Committee oversees the Company’s risk management process, policies, and procedures for identifying, managing and monitoring critical risks, including cyber related risks, and its compliance with legal and regulatory requirements. The Committee communicates with other Board of Directors Committees to avoid overlap and potential gaps in overseeing the Company’s risks. The Risk Mitigation and Investment Policy Committee advises the Board of Directors in its performance of its oversight of enterprise risk management. The Risk Mitigation and Investment Policy Committee met once during 2015.

EXECUTIVE SEARCH COMMITTEE

During 2015, the Board of Directors had an ad hoc Executive Search Committee composed of all eight directors, chaired by Mr. Glanton, the lead independent director, which was charged with oversight of the Company’s succession planning activities. The Executive Search Committee Chairman held separate meetings on fourteen occasions and the Executive Search Committee met eight times during 2015.

DIRECTOR COMPENSATION

In December 2015, the Board of Directors approved a revised directors’ compensation program effective January 1, 2016. Upon the recommendation of its Executive Compensation Committee, the Board of Directors approved the following directors’ compensation for 2016 for the non-employee directors of Aqua America, Inc.: (1) an annual cash retainer of $75,000; (2) an annual cash retainer for the Chair of the Executive Compensation Committee of $12,500; (3) an annual cash retainer for the Chair of the Audit Committee of $12,500; (4) an annual cash retainer for the Chair of the Corporate Governance Committee of $10,000; (5) an annual cash retainer for the Chair of the Risk Mitigation Committee of $10,000; (6) an annual cash retainer for the Lead Independent Director of $25,000; (7) an annual stock grant to directors of $75,000; and (8) the non-executive Chairman shall be paid a retainer in the amount of $175,000 per year and the normal director equity award as set forth above. All directors are reimbursed for reasonable expenses incurred in connection with attendance at Board or Committee meetings.

As a component of this program, the Board of Directors approved share ownership guidelines for each director to own shares of Company common stock having a value equal to five times the annual base cash retainer for directors. Directors have up to three years to attain this new guideline share ownership level.

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The following table sets forth certain informationthe compensation paid to the Aqua America Board of Directors in 2015:

THE BOARDOF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FORTHE ELECTIONOF MR. FRANKLIN, MR. DEBENEDICTIS, MS. BURKE, MR. GLANTON, MR. GREENBERG, MR. HANKOWSKY, MR. HOLLAND,AND MS. RUFFAS DIRECTORS.

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PROPOSAL NO. 2

RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR THE 2016 FISCAL YEAR

The Audit Committee of the Board of Directors appointed PricewaterhouseCoopers LLP (“PwC”) as the independent registered public accounting firm for the Company for the 2016 fiscal year. PwC has been the Company’s independent registered public accountants since 2000. The Board of March 10, 2014Directors recommends that the shareholders ratify the appointment.

Although shareholder ratification of the appointment of PwC is not required by law or the Company’s Bylaws, the Board of Directors believes that it is desirable to give our shareholders the opportunity to ratify the appointment. If the shareholders do not ratify the appointment of PwC, the Audit Committee will take this into consideration and may or may not consider the appointment of another independent registered public accounting firm for the Company for future years. Even if the appointment of PwC is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm during the year if the Audit Committee determines such a change would be in the best interests of the Company. Representatives of PwC are expected to be present at the 2016 Annual Meeting of Shareholders, will have the opportunity to make a statement at the meeting if they desire to do so, and will be available to respond to appropriate questions.

PwC has informed us that they are not aware of any independence-related relationships between their firm and the Company other than the professional services discussed in “Services and Fees” below. Under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm. As a result, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm in order to assure that such services do not impair the auditor’s independence from the Company. The Audit Committee has established a procedure to pre-approve all auditing and non-auditing fees proposed to be provided by the Company’s independent registered public accounting firm prior to engaging the accountants for that purpose. Consideration and approval of such services occurs at the Audit Committee’s regularly scheduled meetings, or by unanimous consent of all the Audit Committee members between meetings. All fees and services were pre-approved by the Audit Committee for the 2015 fiscal year.

Services and Fees

The following table presents the fees paid to PwC for professional services rendered with respect to shares of Common Stock of the Company beneficially owned by: (1) each person known to the Company to be the beneficial owner of more than 5% of the Common Stock of the Company; (2) each director, nominee for director2015 fiscal year and executive officer named in the Summary Compensation Table; and (3) all directors, nominees and executive officers of the Company as a group. This information has been provided by each of the directors, executive officers and nominees at the request of the Company or derived from statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Exchange Act. Beneficial ownership of securities as shown below has been determined in accordance with applicable guidelines issued by the SEC. Beneficial ownership includes the possession, directly or indirectly, through any formal or informal arrangement, either individually or in a group, of voting power (which includes the power to vote, or to direct the voting of, such security) and/or investment power (which includes the power to dispose of, or to direct the disposition of, such security).2014 fiscal year:

	The information for The Vanguard Group was obtained from the Schedule 13 G/A filed by The Vanguard Group with the SEC on February 11, 2014.
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REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal control. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Annual Report, including: the quality of the accounting principles, practices and judgments; the reasonableness of significant judgments; the clarity of disclosures in the financial statements; and the integrity of the Company’s financial reporting processes and controls. The Committee also discussed the selection and evaluation of the independent registered public accounting firm, including the review of all relationships between the independent registered public accounting firm and the Company.

The Audit Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles in the United States of America, their judgments as to the quality of the Company’s accounting principles and such other matters as required to be discussed by the Auditing Standard No. 16, Communications with Audit Committees as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has discussed with the independent registered public accounting firm the firm’s independence from management and the Company, including the matters in the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and considered the compatibility of non-audit services with the accountants’ independence.

The Audit Committee discussed with the Company’s internal auditors and independent registered public accounting firm, the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC.

Respectfully submitted,

William P. Hankowsky, Chairman

Lon R. Greenberg

Ellen T. Ruff

The foregoing Audit Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2016 FISCAL YEAR.

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PROPOSAL NO. 3

ADVISORY VOTE ON THE COMPENSATION PAID TO THE COMPANY’S

NAMED EXECUTIVE OFFICERS FOR 2015

The Company has chosen to present its shareholders with an advisory (non-binding) vote on the executive compensation program as described in this Proxy Statement for our named executive officers (sometimes referred to as “Say on Pay”) each year. Accordingly, the following resolution is being presented by the Board of Directors at the 2016 Annual Meeting:

“RESOLVED, that the compensation paid to the company’s named executive officers for 2015,

as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion

and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

This vote is non-binding. The Board of Directors and the Executive Compensation Committee, which is comprised of independent directors, expect to take into account the outcome of the vote when considering future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results.

As described in detail under our Compensation Discussion and Analysis on pages 28 through 50 of this Proxy Statement, our executive compensation program is designed to motivate our executives to achieve our primary goals of providing our customers with quality, cost-effective and reliable water and wastewater services and providing our shareholders with a long-term, positive return on their investment. We believe that our executive compensation program, with its balance of short-term incentives and long-term incentives and share ownership guidelines, reward sustained performance that is aligned with the interests of our customers, employees and long-term shareholders. Shareholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables and the related narrative disclosure.

THE BOARDOF DIRECTORSUNANIMOUSLYRECOMMENDSTHATYOUVOTE FORTHEAPPROVAL,ONANADVISORYBASIS,OFTHECOMPENSATIONPAIDTOOURNAMEDEXECUTIVEOFFICERSFOR 2015ASDISCLOSEDINTHE COMPENSATION DISCUSSIONAND ANALYSIS,THEACCOMPANYINGCOMPENSATIONTABLESANDTHERELATEDNARRATIVEDISCLOSUREINTHIS PROXY STATEMENT.

		The information for BlackRock, Inc. was obtained from the Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 28, 2014.
(5)		The information for State Street Corporation was obtained from the Schedule 13G filed by State Street Corporation with the SEC on February 5, 2014.
(6)		The shareholdings indicated are owned of record by Mrs. Carroll’s husband.
(7)		The shareholdings indicated include less than 1 share held jointly with Mr. DeBenedictis’ wife. The shareholdings indicated also include 215,939 shares owned by Mr. DeBenedictis’ wife, including 131,448 shares in a Trust for which his wife is trustee.
(8)		The shareholdings indicated are owned jointly with Mr. Greenberg’s wife.
(9)		The shareholdings indicated are owned jointly with Mr. Kyriss’ wife.
(10)		The shareholdings indicated include 4,582 shares owned by the Fidelio Foundation for which Mr. Mele is trustee, 9,895 shares owned by Dental Delivery Systems, Inc. of which Mr. Mele is President, and 5,000 shares owned by Mele Brothers Realty of which Mr. Mele is partner.
(11)		The shareholdings indicated are owned jointly with Mr. Smeltzer’s wife.
(12)		The shareholdings indicated include 2,500 shares owned of record by Mr. Sordoni’s wife and 13,169 shares owned by a trust for the benefit of Mr. Sordoni’s children and with respect to which Mr. Sordoni’s wife is trustee.
(13)		The shareholdings indicated include 377,613 shares issuable to such group upon exercise of outstanding stock options exercisable on or before May 31, 2014.
(14)		The shareholdings indicated include 382,498 shares (i) held in joint ownership with spouses, (ii) held as custodian for minor children, (iii) owned by family members or (iv) in trusts for adult children. 26

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

AND 2015 EXECUTIVE COMPENSATION

TABLE OF CONTENTS