SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

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Filed by a Party other than the Registrant / /

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/ / Preliminary Proxy Statement
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Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
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/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

Philadelphia Suburban Corporation
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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/X/ No fee required
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PHILADELPHIA SUBURBAN CORPORATION 
762 W. LANCASTER AVENUE 
BRYN MAWR, PENNSYLVANIA 19010 

--------------------
Notice of Annual Meeting of Shareholders 
To Be Held May 15, 1997 
--------------------

TO THE SHAREHOLDERS OF 
PHILADELPHIA SUBURBAN CORPORATION: 

Notice is hereby given that the Annual Meeting of Shareholders of 
PHILADELPHIA SUBURBAN CORPORATION will be held at the Company's principal 
offices, 762 W. Lancaster Avenue, Bryn Mawr, Pennsylvania 19010, at 10:00 
A.M., local time, on Thursday, May 15, 1997, for the following purposes: 

1. To elect four directors; and 

2. To transact such other business as may properly come before the 
meeting or any adjournments thereof. 

Only shareholders of record at the close of business on March 24, 1997 
will be entitled to notice of, and to vote at, the Annual Meeting and at any 
adjournments thereof. 

By order of the Board of Directors,

PATRICIA M. MYCEK 
Secretary 

April 4, 1997 

===============================================================================
REGARDLESS OF WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, SHAREHOLDERS 
ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE 
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. 
===============================================================================

PHILADELPHIA SUBURBAN CORPORATION 
762 W. LANCASTER AVENUE 
BRYN MAWR, PENNSYLVANIA 19010 

---------------
PROXY STATEMENT 
---------------

This proxy statement is furnished in connection with the solicitation of 
proxies by the Board of Directors of Philadelphia Suburban Corporation (the 
"Company") to be used at the Annual Meeting of Shareholders to be held May 
15, 1997 and at any adjournments thereof. This proxy statement and the 
enclosed proxy are being mailed to shareholders on or about April 4, 1997. 

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, 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 the firm of Corporate Investor 
Communications, Inc., to assist in the solicitation of proxies from (i) 
brokers, bank nominees and other institutional holders, and (ii) individual 
holders of record. The fee to Corporate Investor Communications, Inc. for 
normal proxy solicitation is $4,000 plus expenses, which will be paid by the 
Company. Directors, officers and regular employees of the Company may also 
solicit proxies, although no additional compensation will be paid by the 
Company for such efforts. 

The Annual Report to Shareholders for the year ended December 31, 1996, 
including financial statements and other information with respect to the 
Company and its subsidiaries, was mailed with this proxy statement by 
combined first class bulk mailing to shareholders of record as of March 24, 
1997. Additional copies of the Annual Report may be obtained by writing to 
the Company. KPMG Peat Marwick, the Company's independent certified public 
accountants, has been selected by the Board of Directors to continue in such 
capacity for the current year. Representatives of that firm are expected to 
be present at the meeting and will be available to respond to appropriate 
questions. 

PURPOSE OF THE MEETING 

As the meeting is the Annual Meeting of Shareholders, the shareholders of 
the Company will be requested to elect four directors to hold office as 
provided by law and the Company's Bylaws. 

VOTING AT THE MEETING 

Holders of shares of the Company's Common Stock of record at the close of 
business on March 24, 1997 are entitled to vote at the meeting. As of that 
date, there were 19,346,615 shares of Common Stock outstanding 

1

and entitled to be voted at the meeting. Each shareholder entitled to vote 
shall have the right to one vote on each matter presented at the meeting for 
each share of Common Stock outstanding in such shareholder's name. The 
presence in person or by proxy of shareholders entitled to cast a majority of 
all votes entitled to be cast will constitute a quorum at the meeting. 

The holders of a majority of the shares entitled to vote, present in 
person or represented by proxy, constitute a quorum. Directors are to be 
elected by a plurality of the votes cast at the meeting. The affirmative vote 
of the holders of a majority of the shares present in person or represented 
by proxy entitled to vote at the meeting is required to take action with 
respect to any other matter that may properly be brought before the meeting. 
Shares cannot be voted at the meeting unless the holder of record is present 
in person or by proxy. The enclosed proxy card is a means by which a 
shareholder may authorize the voting of his or her shares at the meeting. The 
shares of Common Stock represented by each properly executed proxy card will 
be voted at the meeting in accordance with each shareholder's direction. 
Shareholders are urged to specify their choices by marking the appropriate 
boxes on the enclosed proxy card; if no choice has been specified, the shares 
will be voted as recommended by the Board of Directors. If any other matters 
are properly presented to the meeting for action, the proxy holders will vote 
the proxies (which confer discretionary authority to vote on such matters) in 
accordance with their best judgment. 

With regard to the election of directors, votes may be cast in favor or 
withheld; votes that are withheld will be excluded entirely from the vote and 
will have no effect, other than for purposes of determining the presence of a 
quorum. Brokers that are member firms of the New York Stock Exchange ("NYSE") 
and who hold shares in street name for customers, but have not received 
instructions from a beneficial owner, have the authority under the rules of 
the NYSE to vote those shares with respect to the election of directors. Such 
shares which are not voted by brokers will be considered present and entitled 
to vote at the meeting. 

Execution of the accompanying proxy will not affect a shareholder's right 
to attend the meeting and vote in person. Any shareholder giving a proxy has 
the right to revoke it by giving written notice of revocation to the 
Secretary of the Company at any time before the proxy is voted by executing a 
proxy bearing a later date, which is voted at the meeting, or by attending 
the meeting and voting in person. 

Your proxy vote is important. Accordingly, you are asked to complete, sign 
and return the accompanying proxy card regardless of whether or not you plan 
to attend the meeting. 

Employees will not receive a separate proxy for shares owned (subject to 
vesting) under the Company's Thrift Plan or the Philadelphia Suburban Water 
Company Personal Savings Plan, as the trustee for these Plans will vote the 
shares of Common Stock held thereunder. 

2 

(PROPOSAL NO. 1) 
ELECTION OF DIRECTORS 

VOTING ON PROPOSAL NO. 1 

The Board of Directors is divided into three classes. One class is elected 
each year to hold office for a three-year term and until successors of such 
class are duly elected and qualified, except in the event of death, 
resignation or removal. Upon the recommendation of the Nominating Committee 
of the Board of Directors (the "Nominating Committee"), the Board of 
Directors, at its February 4, 1997 meeting: increased the size of the Board 
from nine to ten members effective as of the 1997 Annual Meeting; increased 
the size of the class of directors to be elected at the 1997 Annual Meeting 
from three to four effective as of the 1997 Annual Meeting; and nominated 
John H. Austin, Jr., Alan R. Hirsig, John F. McCaughan and Harvey J. Wilson 
for election to this class of directors at the 1997 Annual Meeting (Messrs. 
Austin, McCaughan and Wilson are current directors whose terms expire at the 
1997 Annual Meeting). 

In view of the tragic death of Claudio Elia (a member of the class of 
directors with terms expiring at the 1998 Annual Meeting), and to avoid 
having two vacancies in the class of directors with terms ending at the 1998 
Annual Meeting, upon recommendation of the Nominating Committee, the Board of 
Directors approved the retention of Joseph C. Ladd as a director until the 
1997 Annual Meeting even though Mr. Ladd reached the mandatory retirement age 
of 70 in January 1997. Upon the recommendation of the Nominating Committee, 
the Board of Directors at its March 4, 1997 meeting elected Richard L. Smoot 
to fill the vacancy that will be created in the class of directors with terms 
expiring at the 1998 Annual Meeting by the retirement of Mr. Ladd, such 
election to be effective as of the August 5, 1997 regularly scheduled meeting 
of the Board. 

Therefore, four directors, Messrs. Austin, Hirsig, McCaughan and Wilson, 
are to be elected by a plurality of the votes cast at the Annual Meeting, 
five directors will continue to serve in accordance with their prior election 
and one nominee for director will begin serving effective with the August 5, 
1997 Board meeting. At the meeting, proxies in the accompanying form, 
properly executed, will be voted for the election of the four nominees listed 
below, unless authority to do so has been withheld in the manner specified in 
the instruction on the proxy card. 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 willingness to 
serve and the Company believes that all of the nominees will be available to 
serve. 

The Board of Directors recommends that the shareholders vote FOR the 
election of Messrs. Austin, Hirsig, McCaughan and Wilson as directors. 

GENERAL INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES 

The Board of Directors held six meetings in 1996. 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. The 
Board of Direc- 

3 

tors annually elects from its members the Executive, Audit, Executive 
Compensation and Employee Benefits, Nominating, and Pension Committees. Each 
incumbent director, for the period served in 1996, attended at least 75% of 
the aggregate of all meetings of the Board and the Committees on which he or 
she served. 

Executive 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 
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 1996. The 
Executive Committee currently has seven members, and the Chairman of the 
Company serves as Chairman of the Executive Committee. 

Audit Committee. The Audit Committee is composed of four directors who are 
not officers of the Company or any of its subsidiaries. It meets periodically 
with the Company's financial officers and independent certified public 
accountants to review the scope of auditing procedures and the policies 
relating to the Company's accounting procedures and controls. The Committee 
also provides general oversight with respect to the accounting principles 
employed in the Company's financial reporting. The Audit Committee held two 
meetings in 1996. 

Executive Compensation and Employee Benefits Committee. The Executive 
Compensation and Employee Benefits Committee is composed of three members of 
the Board who are not officers of the Company or any of its subsidiaries. The 
Executive Compensation and Employee Benefits Committee has the power to 
administer the Company's 1982 and 1988 Stock Option Plans and to administer 
and make awards of stock options, dividend equivalents and restricted stock 
under the Company's 1994 Equity Compensation Plan. In addition, the Executive 
Compensation and Employee Benefits Committee reviews the recommendations of 
the Company's Chief Executive Officer as to appropriate compensation of the 
Company's officers (other than the Chief Executive Officer) and key personnel 
and recommends to the Board the compensation of such officers and the 
Company's Chief Executive Officer for the ensuing year. The Executive 
Compensation and Employee Benefits Committee held three meetings in 1996. 

Nominating Committee. The Nominating Committee reviews and makes 
recommendations to the Board of Directors with respect to candidates for 
director of the Company. The Nominating Committee has three members and held 
two meetings during 1996. It is the present policy of the Nominating 
Committee to consider nominees who are recommended by shareholders as 
additional members of the Board or to fill vacancies on the Board. 
Shareholders desiring to submit the names of, and any pertinent data with 
respect to, such nominees should send this information in writing to the 
Chairman of the Nominating Committee in care of the Company. See 
"Requirements for Advance Notifications of Nominations." 

Pension Committee. The Pension Committee serves as the Plan Administrator 
for the Company's qualified benefit plans. The Committee reviews and 
recommends to the Board any actions to be taken by the Board in the discharge 
of the Board's fiduciary responsibilities under the Company's qualified 
benefit plans and meets periodically with the Company's financial, legal, 
actuarial, and investment advisors. The Committee consists of five members 
and met four times in 1996. 

4

The current members of the Committees of the Board of Directors are as 
follows: 

Executive Compensation and                 Audit 
Executive Committee               Employee Benefits Committee              Committee 
- ----------------------------   -------------------------------   ---------------------------- 

Nicholas DeBenedictis*           John F. McCaughan*                John H. Austin, Jr.* 
John H. Austin, Jr.              G. Fred DiBona, Jr.               John W. Boyer, Jr. 
John W. Boyer, Jr.               Joseph C. Ladd                    Richard H. Glanton, Esq. 
G. Fred DiBona, Jr.                                                Harvey J. Wilson 
Richard H. Glanton, Esq. 
Joseph C. Ladd 
John F. McCaughan 

Pension Committee               Nominating Committee 
- -------------------------      ------------------------- 

Joseph C. Ladd*                  G. Fred DiBona, Jr.* 
John H. Austin, Jr.              Mary C. Carroll 
John W. Boyer, Jr.               Nicholas DeBenedictis 
Mary C. Carroll 
Nicholas DeBenedictis 

- ------ 
*Chairman 

REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONS 

Nominations for election of directors may be made at the Annual Meeting by 
any shareholder entitled to vote for the election of directors, provided that 
written notice (the "Notice") of the shareholder's intent to nominate a 
director at the meeting is filed with the Secretary of the Company prior to 
the Annual Meeting in accordance with provisions of the Company's Amended and 
Restated Articles of Incorporation and Bylaws. 

Section 4.13 of the Company's Bylaws requires the Notice to be received by 
the Secretary of the Company not less than 14 days nor more than 50 days 
prior to any meeting of the shareholders called for the election of 
directors, with certain exceptions. These notice requirements do not apply to 
nominations for which proxies are solicited under applicable regulations of 
the Securities and Exchange Commission ("SEC"). The Notice must contain or be 
accompanied by the following information: 

(1) the name and residence of the shareholder who intends to make the 
nomination;

(2) a representation that the shareholder is a holder of record of 
voting stock and intends to appear in person or by proxy at the meeting to 
nominate the person or persons specified in the Notice; 

(3) such information regarding each nominee as would have been required 
to be included in a proxy statement filed pursuant to the SEC's proxy 
rules had each nominee been nominated, or intended to be nominated, by the 
management or the Board of Directors of the Company; 

5

(4) a description of all arrangements or understandings among the 
shareholder and each nominee and any other person or persons (naming such 
person or persons) pursuant to which the nomination or nominations are to 
be made by the shareholder; and 

(5) the consent of each nominee to serve as a director of the Company 
if so elected. 

Pursuant to the above requirements, appropriate Notices in respect of 
nominations for directors must be received by the Secretary of the Company no 
later than May 1, 1997. 

INFORMATION REGARDING NOMINEES AND DIRECTORS 

For the four nominees for election as directors at the 1997 Annual Meeting 
and the six directors whose terms of office expire either at the 1998 Annual 
Meeting or the 1999 Annual Meeting, there follows information as to the 
positions and offices with the Company held by each, the principal occupation 
of each during the past five years, and certain directorships of public 
companies and other organizations held by each. 

- ----------------------------------------------------------------------------- 
NOMINEES FOR ELECTION AT ANNUAL MEETING 
- ----------------------------------------------------------------------------- 

John H. Austin, Jr.  ...  Mr. Austin retired as President of Philadelphia Electric Company (now known as PECO 
Berwyn, PA                Energy Company), a public utility, in 1988. Mr. Austin served as President of PECO 
Director since 1981       Energy Company from 1982 to 1988. He is also a director of Selas Corporation of America. 
Age: 68.

John F. McCaughan  .....  Since 1995, Mr. McCaughan has served as President of BetzDearborn, Inc. Foundation. 
Doylestown, PA            From 1995 to 1996, Mr. McCaughan was Chairman of Betz Laboratories, Inc., which provides 
Director since 1984       engineered chemical treatment of water, wastewater and process systems. Mr. McCaughan 
was Chairman and Chief Executive Officer of Betz Laboratories from 1982 to 1994. He 
is also a director of BetzDearborn, Inc. and Penn Mutual Life Insurance Company. Age: 
61. 

Harvey J. Wilson  ......  Mr. Wilson is President and CEO of Eclipsys Corporation, a healthcare information 
Delray Beach, FL          systems company. Mr. Wilson was a co-founder of Shared Medical Systems Corporation. 
Director since 1983       He is also a director of Eclipsys Corporation, FPA Medical Management, RMSC of West 
Palm Beach, and Enterprise Application Systems, Inc. Age: 58. 

6 

Alan R. Hirsig  ........  Mr. Hirsig has been President and Chief Executive Officer of ARCO Chemical Company 
Haverford, PA             since 1991. From 1984 to 1990, Mr. Hirsig was President of ARCO Chemical European 
Operations. Mr. Hirsig is a director of ARCO Chemical Company, and BetzDearborn Inc., 
as well as Chairman of the Executive Committee of the Chemical Manufacturers Association, 
a director of Greater Philadelphia First and a trustee of Bryn Mawr College, the YMCA 
of Philadelphia and Vicinity and the Eisenhower Exchange Fellowships. He also is Chairman 
of the Advisory Board of PRIME, Inc. Age: 57. 

- ----------------------------------------------------------------------------- 
DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING IN 1998 
- ----------------------------------------------------------------------------- 

Mary C. Carroll  ............  Ms. Carroll is a consultant, a community volunteer and an advisor to nonprofit corporations, 
Bryn Mawr, PA                  businesses and government agencies. Presently, she serves as Chair of the National Parks 
Director since 1981            Mid-Atlantic Council. She is Vice Chair of Ft. Mifflin on the Delaware and is a founder, 
director or trustee of various civic and charitable organizations, including the Metropolitan 
YMCA, the Urban Affairs Coalition, Philadelphia Hospitality, Inc., International House, 
and Preservation Action. Age: 56. 

Richard H. Glanton, Esq.  ...  Mr. Glanton has been a partner in the law firm of Reed, Smith, Shaw & McClay in Philadelphia 
Philadelphia, PA               since 1986. Mr. Glanton is a director of General Accident Insurance Company of North America, 
Director since 1995            PECO Energy Company, the Greater Philadelphia Chamber of Commerce and the Philadelphia 
Industrial Development Corporation. Age: 50. 

- ----------------------------------------------------------------------------- 
INDIVIDUAL NAMED TO BECOME A DIRECTOR WITH A TERM EXPIRING IN 1998 
- ----------------------------------------------------------------------------- 

Richard L. Smoot  ...  Mr. Smoot has served as president and chief executive officer of PNC Bank in Philadelphia 
Radnor, PA             and Southern New Jersey, and its predecessor, Provident National Bank, since 1991. Prior 
to becoming president, he served as executive vice president responsible for Operations 
and Data Processing for PNC Bank Corp. Before joining PNC Bank in 1987, Mr. Smoot spent 
10 years as first vice president and chief operating officer of the Federal Reserve Bank 
of Philadelphia. Mr. Smoot is a director of P.H. Glatfelter Company and Southco Inc. 
He also serves as Chairman of the Board of Directors of Greater Philadelphia First and 
Chairman of the Board of Trustees of the Agnes Irwin School and the Philadelphia Award 
and is a director of the Philadelphia Orchestra, the Settlement Music School, the Greater 
Philadelphia Urban Affairs Coalition and Widener University. Age: 56. 

7 

- ----------------------------------------------------------------------------- 
DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING IN 1999 
- ----------------------------------------------------------------------------- 

John W. Boyer, Jr.  ......  Mr. Boyer retired as Chairman of the Company on May 20, 1993, having served in that capacity 
St. Davids, PA              since the restructuring of the Company on July 1, 1981. Mr. Boyer also served as the 
Director since 1981         Company's Chief Executive Officer from July 1, 1981 to July 1, 1992. Mr. Boyer is a director 
of Betz Laboratories, Inc., Gilbert Associates, Inc. and Rittenhouse Trust Company. Age: 
68. 

Nicholas DeBenedictis  ...  Mr. DeBenedictis has served as Chairman of the Company since May 20, 1993. Mr. DeBenedictis 
Ardmore, PA                 also continues to serve as the Company's Chief Executive Officer and President, the positions 
Director since 1992         he has held since joining the Company in July 1992. He also serves as Chairman, Chief 
Executive Officer and President of the Company's principal subsidiary, Philadelphia Suburban 
Water Company. Between April 1989 and June 1992, he served as Senior Vice President for 
Corporate Affairs of PECO Energy Company. From December 1986 to 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 Provident Mutual Life Insurance Company of Philadelphia, 
Air & Water Technologies Corporation and P.H. Glatfelter Company. Age: 51. 

G. Fred DiBona, Jr.  .....  Mr. DiBona has served since 1990 as President and Chief Executive Officer of Independence 
Bryn Mawr, PA               Blue Cross, the Delaware Valley region's largest health insurer. He also serves as Chairman 
Director since 1993         of Independence Blue Cross' subsidiaries and affiliates. Between 1987 and 1990, Mr. DiBona 
served as President and Chief Executive Officer for Pennsylvania Blue Shield's holding 
company, Keystone Ventures, Inc. Mr. DiBona is also a director of Independence Blue Cross 
and its subsidiaries, Pennsylvania Savings Bank, Magellan Health Services, Inc., PECO 
Energy Company and various civic and charitable organizations. Age: 46. 

8 

OWNERSHIP OF COMMON STOCK 

The following table sets forth certain information as of January 31, 1997, 
with respect to shares of Common Stock of the Company beneficially owned by 
each director, nominee for director and executive officer and by all 
directors, nominees and executive officers of the Company as a group. This 
information has been provided by each of the directors and officers at the 
request of the Company. Beneficial ownership of securities as shown below has 
been determined in accordance with applicable guidelines issued by the 
Securities and Exchange Commission ("SEC") and 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). 

Sole voting          Shared voting           Total and 
and/or sole          and/or shared        percent of class 
Beneficial Owner                   investment power   investment power(1)(2)    outstanding(3) 
-----------------------------------------------   ----------------   ----------------------   ---------------- 

John H. Austin, Jr.  ...........................         2,100                    24                 2,124 
John W. Boyer, Jr.  ............................        70,668                    --                70,668 
Mary C. Carroll  ...............................         1,350                   706                 2,056 
Morrison Coulter  ..............................        38,862                10,165(4)             49,027 
Nicholas DeBenedictis  .........................       107,368                31,249(5)            138,617 
G. Fred DiBona, Jr.  ...........................         1,800                    --                 1,800 
Richard H. Glanton, Esq.  ......................           728                    43                   771 
Michael P. Graham  .............................        23,748                15,155                38,903 
Alan R. Hirsig  ................................            --                    --                    -- 
Joseph C. Ladd  ................................         4,276                    --                 4,276 
John F. McCaughan  .............................         5,100                    --                 5,100 
Richard R. Riegler  ............................        28,028                 1,890                29,918 
Richard L. Smoot(6)  ...........................            --                    --                    -- 
Roy H. Stahl  ..................................        30,498                19,896                50,394 
Harvey J. Wilson  ..............................        10,350                    --                10,350 
All directors and executive officers as a group 
(15 persons) .................................       324,876(7)             79,128(8)            404,004(2.1%) 

9 

- ------ 
(1) The shareholdings indicated include 1,127 shares held in the Company's 
Dividend Reinvestment Program. 

(2) Under the Company's Thrift Plan, participants do not have any present 
voting power with respect to shares allocated to their accounts. Such 
shares have been included in this column. 

(3) Percentages for each person or group are based on the aggregate of the 
shares of Common Stock outstanding as of January 31, 1997 (19,210,537 
shares) and all shares issuable to such person or group upon the exercise 
of outstanding stock options exercisable within 60 days of that date. 
Percentage ownership of less than 1% of the class then outstanding as of 
January 31, 1997 has not been shown. 

(4) The shareholdings indicated include 2,052 shares owned of record by Mr. 
Coulter's wife. Mr. Coulter disclaims beneficial ownership as to such 
shares. 

(5) The shareholdings indicated include 606 shares owned of record by Mr. 
DeBenedictis' wife and 5,944 shares owned of record by Mr. DeBenedictis' 
son. Mr. DeBenedictis disclaims beneficial ownership as to such shares. 

(6) The shareholdings indicated do not include approximately 340,000 shares 
as to which PNC Bank, National Association, or its affiliates have sole 
voting power as trustee of the Philadelphia Suburban Corporation Thrift 
Plan and Philadelphia Suburban Water Company Personal Savings Plan for 
Local 473 Employees. Mr. Smoot is the President and Chief Executive 
Officer of PNC Bank in Philadelphia and Southern New Jersey. Mr. Smoot 
disclaims beneficial ownership of such shares. 

(7) The shareholdings indicated include 204,117 shares exercisable under the 
1982 and 1988 Stock Option Plans and the 1994 Equity Compensation Plan on 
or before April 1, 1997. 

(8) The shareholdings indicated include 58,594 shares (i) held in joint 
ownership with spouses, (ii) held as custodian for minor children or 
(iii) owned by family members. 

The following table sets forth certain information as of March 31, 1997, 
except as otherwise indicated, with respect to the ownership of shares of 
Common Stock of the Company by certain beneficial owners of 5% or more of the 
Company's total outstanding shares. 

Percent of 
Amount and Nature           Outstanding 
Beneficial Owner            of Beneficial Ownership           Shares 
---------------------------   ------------------------------    ------------- 

Compagnie Generale des Eaux   Sole voting and dispositive power      14.1%     
52 Rue D'Anjou 75384        over 2,710,900 shares (1)
Paris, France                

- ------ 
(1) Based on the Form 4 of Compagnie General des Eaux dated March 7, 1997. 

10

EXECUTIVE COMPENSATION

REPORT OF THE EXECUTIVE COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE 

OVERALL OBJECTIVES 

Philadelphia Suburban Corporation's executive compensation program is 
designed to motivate its senior executives to achieve the Company's goals of 
providing its customers with cost-effective, reliable water services and 
providing the Company's shareholders with a market-based return on their 
investment. 

Toward that end, the program: 

o Provides compensation levels that are competitive with those provided by 
companies with which the Company may compete for executive talent. 

o Motivates key senior executives to achieve strategic business 
initiatives and rewards them for their achievement. 

o Creates a strong link between stockholder and financial performance and 
the compensation of the Company's senior executives. 

In administering the executive compensation program, the Executive 
Compensation and Employee Benefits Committee (the "Committee") attempts to 
strike an appropriate balance among the above-mentioned objectives, each of 
which is discussed in greater detail below. 

At present, the executive compensation program is comprised of three 
components: base salary, annual cash incentive opportunities and equity 
incentive opportunities. In determining the relative weighting of 
compensation components and the target level of compensation for the 
Company's executives, the Committee considers compensation programs of a peer 
group of companies. Because of the limited number of investor-owned water 
utilities from which comparable compensation data is available, the Committee 
utilizes survey data from a composite market ("Composite Market") compiled by 
a nationally recognized compensation consulting firm in assessing the 
competitiveness of the components of the Company's compensation program. The 
Composite Market for the base salary and annual cash incentive elements of 
the program consists of 50% water utilities, 25% other utilities and 25% 
general industrial businesses. There are fourteen water utilities in the 
Composite Market, twelve of which are included in the Edward Jones Water 
Utility Industry Index used for the stock performance chart contained herein. 
Competitive compensation levels are targeted at the median of the third 
quartile range of compensation levels in the Composite Market, except for 
equity incentives, which are targeted at the 50th percentile of the 
compensation consulting firm's data base of general industrial organizations, 
including utilities, that have long-term incentive programs. 

COMPENSATION COMPONENTS 

BASE SALARY 

To ensure that its pay levels are competitive, the Company regularly 
compares its executive compensation levels with those of other companies and 
sets its salary structure in line with competitive data from the Composite 
Market. Individual salaries are considered for adjustment annually and any 
adjustments are based on gen- 

11

eral movement in external salary levels, individual performance, and changes 
in individual duties and responsibilities. 

CASH INCENTIVE AWARDS 

The annual cash incentive plan is based on target incentive awards for 
each executive, which are stated as a percentage of their base salaries. 
Annual incentive awards for executive officers are calculated by a formula 
that multiplies the executive's target incentive percentage times a Company 
rating factor based on the Company's overall financial performance and an 
individual rating factor based on the executive's performance against 
established objectives. These factors can range from 0% to 125% for the 
Company rating factor and 0% to 150% for the individual rating factor. Each 
of these percentages are correlated with defined objectives and approved by 
the Committee each year. Regardless of the Company's financial performance, 
the Committee retains the authority to determine the final Company rating 
factor, and the actual payment and amount of any bonus is always subject to 
the discretion of the Committee. 

EQUITY INCENTIVES 

As part of its review of the total compensation package for the Company's 
officers, the Committee, with the assistance of a nationally-recognized 
compensation consulting firm, reviewed the Company's equity incentive 
compensation program. Given the importance of dividends to a utility 
investor, the consultant recommended using a combination of stock options 
with dividend equivalents to best link executive long-term incentives to 
corporate performance and shareholder interests. 

Under the terms of the Company's Equity Compensation Plan, which was 
approved by the shareholders at the 1994 Annual Meeting, the Committee and 
the Board of Directors may grant stock options, dividend equivalents and 
restricted stock to officers and key employees, and stock options to key 
consultants of the Company and its subsidiaries who are in a position to 
contribute materially to the successful operation of the business of the 
Company. The purpose of the Plan is to help align executive compensation with 
shareholder interests by providing the participants with a long-term equity 
interest in the Company. The Plan also provides a means through which the 
Company can attract and retain employees of significant abilities. 

SUMMARY OF ACTIONS TAKEN BY THE COMMITTEE 

SALARY INCREASE 

Under the Company's salary program, the base salary budget is based on 
salary levels for comparable positions in the Composite Market. The projected 
overall annual increase is based on annual salary budget increase data 
reported by published surveys. Under these guidelines, actual salary 
increases are determined based on a combination of an assessment of the 
individual's performance and the individual's salary compared to the market. 
In the case of executive officers named in this Proxy Statement, the 
determination of salary levels is made by the Committee, subject to approval 
by the Board of Directors. 

Mr. DeBenedictis' salary for 1996 was consistent with the target level for 
the CEO position within the Composite Market. Mr. DeBenedictis' salary for 
1997, which was approved by the Board of Directors on February 4, 1997 and 
effective on April 1, 1997, is consistent with published salary survey 
information on salary levels and projected annual salary increases for 1997 
and is based on the Committee's favorable assessment of his and the Company's 
performance. 

12

ANNUAL INCENTIVE AWARD 

At its January 31, 1997 meeting, the Committee determined the annual cash 
incentive awards to be made to the participants in the annual incentive plan. 
The awards were based on the Company's performance compared to its financial 
goal for 1996 as well as the participants' achievement of their individual 
objectives. The incentive awards to the Company's officers were approved by 
the Board of Directors on February 4, 1997. Mr. DeBenedictis' annual 
incentive compensation for 1996, was based on the Company's earnings and the 
Committee's assessment of Mr. DeBenedictis' individual performance. Mr. 
DeBenedictis' achievements in 1996 included increasing revenues and net 
income to record levels, reducing controllable operating expenses and 
interest costs, increasing customer growth through acquisitions, improving 
return on equity and implementing other management initiatives intended to 
control costs, enhance customer satisfaction and increase shareholder value. 
It was the Committee's assessment that Mr. DeBenedictis exceeded all of his 
1996 objectives. 

EQUITY INCENTIVES 

At its March 3, 1997 meeting, the Committee approved the grant of 
incentive stock options and dividend equivalents under the Company's 1994 
Equity Compensation Plan to its executive officers at the fair market value 
on the date of grant for such stock options of $20.1875. The options are 
exercisable in installments of one-third each year starting on the first 
anniversary of the date of grant and expire at the end of 10 years from the 
date of grant. The dividend equivalents will accumulate dividends over a 
period of four years. Mr. DeBenedictis received a grant of 30,000 options and 
dividend equivalents on March 3, 1997 at the grant price stated above. In 
addition, at its March 3, 1997 meeting, the Committee approved management's 
recommendation to reduce the performance period for the dividend equivalents 
granted in 1995 and 1996 by one year based on the Company's performance 
against the measurement criteria established by the Committee for this 
purpose at its March 4, 1996 meeting. The measurement criteria involve 
targets for earnings per share, dividends, total return to shareholders and 
customer growth. 

Section 162(m) of the Internal Revenue Code generally precludes the 
deduction for federal income tax purposes of more than $1 million in 
compensation paid to the Chief Executive Officer and the other officers named 
in the Summary Compensation Table in any one year, subject to certain 
specified exceptions. Given the nature of the stock option grants and the 
level of other compensation paid to the Chief Executive Officer and the other 
executive officers named in the Summary Compensation Table, the deduction 
limitation is presently inapplicable to the Company. The Committee will 
address this limitation if and when it becomes applicable to the Company's 
compensation program. 

Respectfully submitted,

John F. McCaughan 
G. Fred DiBona, Jr. 
Joseph C. Ladd 

13

The foregoing report of the Executive Compensation and Employee Benefits 
Committee shall not be deemed incorporated by reference by any general 
statement incorporating by reference this proxy statement into any filing 
under the Securities Act of 1933 or Securities Exchange Act of 1934, except 
to the extent that the Company specifically incorporates this information by 
reference, and shall not otherwise be deemed filed under such Acts. 

SUMMARY COMPENSATION TABLE 

The following Summary Compensation Table shows compensation paid by the 
Company for services rendered during the years 1996, 1995 and 1994, or for 
the year in which the individual was an executive officer, if shorter, for 
the Company's Chief Executive Officer and the other four most highly 
compensated executive officers of the Company. 

SUMMARY COMPENSATION TABLE 

Long Term Compensation 
------------------------------------- 
Annual Compensation                        Awards              Payouts 
-----------------------------------------   --------------------------  --------- 
Securities 
Other     Restricted       Under-                  All Other 
Annual        Stock         lying         LTIP       Compen- 
Name and                                                 Compen-     Award(s)       Options/      Payouts      sation 
Principal Position      Year   Salary ($)(1)   Bonus($)(2)  sation($)(3)    ($)(4)       SAR's (#)        ($)        ($)(5) 
- --------------------    -----  ---------------  -----------  ------------ -----------   ------------   ---------   ----------- 

N. DeBenedictis ....    1996      263,485        206,325        4,911            --        30,000         --         80,694 
CEO                     1995      252,372        229,281        4,666            --        30,000         --         55,505 
1994      241,027        157,697        4,620       174,375        22,500         --         30,240 

R. Stahl ...........    1996      158,852         49,808        4,911            --         6,000         --         13,042 
Sr. V.P. & Gen. Cnsl.   1995      155,766         62,330        4,620            --         6,000         --          7,958 
1994      151,775         57,682        4,453            --         5,250         --          1,960 

M. Graham ..........    1996      134,934         45,763        4,048            --         6,000         --         13,261 
Sr. V.P.-Finance        1995      129,501         52,078        3,885            --         6,000         --          8,157 
1994      122,554         43,812        3,677            --         5,250         --          1,960 

R. Riegler (6) .....    1996      144,944         42,158        4,348            --         6,000         --         13,878 
Sr. V.P.-Operations     1995      140,548         47,389        4,216            --         6,000         --          8,234 
1994      135,624         36,973        2,910            --         5,250         --          1,960 

M. Coulter (7) .....    1996      132,756         37,455        3,589            --         6,000         --         15,494 
Sr. V.P.-Production     1995      125,818         34,925        3,468            --         6,000         --          9,245 

14

- ------ 
(1) Salary deferred at the discretion of the executive and contributed to the 
Company's Thrift Plan or Executive Deferral Plan is included in this 
column. 

(2) Includes cash bonuses for services rendered during the specified year, 
regardless of when paid. 

(3) Company matching contributions pursuant to the Company's Thrift Plan and 
Executive Deferral Plan are included in this column. 

(4) Mr. DeBenedictis was awarded a grant of 15,000 shares (adjusted for the 
1996 3-for-2 stock split) of restricted stock under the Company's 1994 
Equity Compensation Plan on May 19, 1994 at a fair market value on the 
date of grant of $11.96 per share (adjusted for the 1996 3-for-2 stock 
split), less the $.50 par value per share paid by Mr. DeBenedictis. 
One-third of the restricted stock under this grant is released to Mr. 
DeBenedictis each year starting on May 19, 1995 and he is entitled to 
receive the dividends on the restricted shares pending their release. At 
year-end 1996, the value of the 5,000 shares still subject to 
restrictions was $99,375 based on a closing price for the stock of 
$19.875. 

(5) Includes: (a) the dollar value, on a term loan approach, of the benefit 
of the whole-life portion of the premiums for a split dollar life 
insurance policy on Mr. DeBenedictis maintained by the Company, projected 
on an actuarial basis ($9,041); (b) Company payments on behalf of Mr. 
DeBenedictis to cover the premium attributable to the term life insurance 
portion of the split dollar life insurance policy ($9,436); (c) the 
amounts accrued for the named executive's accounts in 1996 in connection 
with the dividend equivalent awards made in 1994, 1995 and 1996 (Messrs. 
DeBenedictis $59,513; Stahl $12,496; Graham $12,496; Riegler $12,496; and 
Coulter $12,496); and (d) the value of group term life insurance 
maintained by the Company on the named executives (Messrs. DeBenedictis 
$2,704; Stahl $546; Graham $765; Riegler $1,382; and Coulter $2,998). The 
Company will be reimbursed for the amount of the premiums paid under the 
split dollar program for Mr. DeBenedictis upon his death or repaid such 
premiums by Mr. DeBenedictis if he leaves the Company. 

(6) Mr. Riegler is Senior Vice President of the registrant's principal 
subsidiary and was designated as an executive officer of the registrant 
in 1994 by the Board of Directors. 

(7) Mr. Coulter is Senior Vice President of the registrant's principal 
subsidiary and was designated as an executive officer of the registrant 
in 1995 by the Board of Directors. 

COMPARATIVE STOCK PERFORMANCE 

The graph below compares the cumulative total shareholder return on the 
Common Stock of the Company for the last five years with the weighted average 
cumulative total return of a peer group of companies represented by the 
Edward Jones ("EJ") Water Utility Industry Index (adjusted for total market 
capitalization) and the cumulative total return on the S&P 500 over the same 
period, assuming a $100 investment on January 1, 1991 and the reinvestment of 
all dividends. The EJ Water Utility Industry Index consists of the following 
companies: American Water Works Company, Inc.; Aquarion Company; California 
Water Service Company; Connecticut Water Service Company; Consumers Water 
Company; Dominguez Services Corporation; E'town Corporation; IWC Resources 
Corporation; Middlesex Water Company; Philadelphia Suburban Corporation; SJW 
Corporation; Southern California Water Company; Southwest Water Company; and 
United Water Resources, Inc. 

15

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMOUNG PSC, S&P AND EJ WATER UTILITY AVERAGE

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|              #                                                          |
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100 |*#@----------------------------------------------------------------------|
1991          1992           1993           1994          1995          1996

For 1997 Proxy        1991      1992      1993       1994      1995      1996
- -------------------------------------------------------------------------------
PSC              *    100      $108.75   $132.41    $138.57   $168.72   $254.27
EJ WEIGHTED AVG  #    100      $110.75   $126.19    $117.56   $147.90   $180.82
S&P 500          @    100      $107.61   $118.40    $120.01   $164.95   $202.72

The foregoing comparative stock performance graph shall not be deemed 
incorporated by reference by any general statement incorporating by reference 
this proxy statement into any filing under the Securities Act of 1933, as 
amended, or the Securities Exchange Act of 1934, as amended, except to the 
extent that the Company specifically incorporates this information by 
reference, and shall not otherwise be deemed filed under such Acts. 

16 

STOCK OPTION GRANTS IN 1996 

The following table sets forth information concerning individual grants of 
stock options under the Company's 1994 Equity Compensation Plan during 1996 
to each executive officer identified in the Summary Compensation Table who 
received options during the period. 

OPTION GRANTS IN LAST FISCAL YEAR 

Grant Date 
Individual Grants                             Value 
-------------------------------------------------------------   ------------ 
% of 
Number of           Total 
Securities      Options/SAR's     Exercise 
Underlying       Granted to       or Base                     Grant Date 
Options/SAR's       Employees        Price       Expiration       Present 
Name            Granted(#)(1)    in Fiscal Year    ($/Sh)(2)        Date        Value($)(3) 
- --------------------    ---------------   --------------   ----------   ------------    ------------ 

DeBenedictis .......        30,000            15.7%         14.9167        3/4/06         60,600 
Stahl ..............         6,000             3.1%         14.9167        3/4/06         12,120 
Graham .............         6,000             3.1%         14.9167        3/4/06         12,120 
Riegler ............         6,000             3.1%         14.9167        3/4/06         12,120 
Coulter ............         6,000             3.1%         14.9167        3/4/06         12,120 

- ------ 
(1) The options listed in the column are qualified stock options granted at 
an exercise price equal to the fair market value of the Company's common 
stock on the date of grant under the Company's 1994 Equity Compensation 
Plan. Grants become exercisable in installments of one-third per year 
commencing on the first anniversary of the grant date. An equal number of 
dividend equivalents, with a four year accumulation period, were awarded 
to the named individuals under the 1994 Equity Compensation Plan. The 
accrued value of the dividend equivalent awards for 1994, 1995 and 1996 
is shown on the Summary Compensation Table. 

(2) The exercise price for options granted is equal to the mean of the high 
and low sale prices of the Company's common stock on the New York Stock 
Exchange composite tape on the date the option is granted. 

(3) The values in this column were determined using Black-Scholes Option 
Pricing Model. The actual value of stock options, if any, that may be 
realized will depend on the difference between the exercise price and the 
market price on the date of exercise. The estimated values under the 
Black-Scholes model are based on assumptions as to such variables as 
interest rates, stock price volatility and dividend yield. The key 
assumptions used in the Black-Scholes model valuation of the stock 
options are (i) an assumed dividend yield of 6.3%, (ii) a risk free rate 
of return of 7.4%, (iii) volatility of 12.5%, (iv) an exercise date of 10 
years from the date of grant, and (v) no reduction in values to reflect 
non-transferability or other restrictions on the options. These 
assumptions are not a forecast of future dividend yield, stock 
performance or volatility. 

17

STOCK OPTION EXERCISES IN 1996 AND VALUE OF OPTIONS AT YEAR-END 1996 

The following table sets forth information concerning the number of stock 
options exercised under the Company's 1982 and 1988 Stock Option Plans and 
the 1994 Equity Compensation Plan during 1996 by each executive officer 
listed below and the number and value of unexercised options as of December 
31, 1996, indi- cating in each case the number and value of those options 
that were exercisable and unexercisable as of that date. 

AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES

Number of Securities               Value of Unexercised 
Underlying Unexercised                  In-the-Money 
Options/SAR's at                   Options/SAR's at 
Shares                            Fiscal Year-End (#)              Fiscal Year-End ($)(1) 
Acquired         Value       --------------------------------  -------------------------------- 
Name             on Exercise(#)   Realized($)    Exercisable      Unexercisable     Exercisable     Unexercisable 
- ----------------------    --------------   -----------   -------------   ---------------   -------------    --------------- 

DeBenedictis .........       19,668         160,093         73,432           77,900           724,672          568,172 
Stahl ................           --              --         23,499           16,251           210,948          115,547 
Graham ...............           --              --         16,749           16,251           149,354          115,547 
Riegler ..............        8,461          57,198         15,211           15,651           133,905          109,722 
Coulter ..............           --              --         31,900           16,100           308,256          114,083 

- ------ 
(1) Based on the closing price on the New York Stock Exchange-Composite 
Transactions of the Company's Common Stock on December 29, 1996 
($19.875). 

CERTAIN COMPENSATION PLANS 

RETIREMENT PLAN 

The Retirement Plan for Employees of the Company (the "Retirement Plan") 
is a defined benefit pension plan. In general, participants are eligible for 
normal pension benefits upon retirement at age 65 and are eligible for early 
retirement benefits upon retirement at age 55 with ten years of credited 
service. Under the terms of the Retirement Plan, a participant becomes fully 
vested in his or her accrued pension benefit after five years of credited 
service. Benefits payable to employees under the Retirement Plan are based 
upon "final average compensation", which is defined as the average cash 
compensation through the five highest consecutive years of the last ten full 
years preceding retirement. 

The Employee Retirement Income Security Act of 1974, as amended, ("ERISA") 
imposes maximum limitations on the annual amount of pension benefits that may 
be paid under, and the amount of compensation that may be taken into account 
in calculating benefits under, a qualified, funded defined benefit pension 
plan such as the Retirement Plan. The Retirement Plan complies with these 
ERISA limitations. Effective December 1, 1989, the Board of Directors adopted 
an Excess Benefits Plan for Salaried Employees (the "Excess Plan"). The 
Excess Plan is a nonqualified, unfunded pension benefit plan that is intended 
to provide an additional pension benefit to participants in the Retirement 
Plan and their beneficiaries whose benefits under the Retirement Plan are 
adversely affected by these ERISA limitations. The benefit under the Excess 
Plan is equal to the difference between (i) the amount of the benefit the 
participant would have been entitled to under the Retirement Plan absent such 
ERISA limitations, and (ii) the amount of the benefit actually payable under 
the Retirement Plan. 

18

The following tabulation shows the estimated annual pension payable 
pursuant to the Retirement Plan and the Excess Plan to employees, including 
employees who are directors or officers of the Company, upon retirement after 
selected periods of service. This table is provided for illustrative purposes 
only and does not reflect pension benefits presently due under the Retirement 
Plan or Excess Plan. 

PENSION TABLE

Average Salary 
During Five Years              Estimated Annual Pension Based on Service of 
--------------------------------------------------------------- 
Preceding Retirement     15 Years     20 Years     25 Years     30 Years      35 Years 
- --------------------    ----------   ----------    ----------   ----------   ---------- 

$100,000            $ 25,100     $ 33,500     $ 41,900     $ 44,400      $ 46,900 
125,000              31,900       42,500       53,100       56,300        59,400 
150,000              38,600       51,500       64,400       68,100        71,900 
175,000              45,400       60,500       75,600       80,000        84,400 
200,000              52,100       69,500       86,900       91,900        96,900 
225,000              58,900       78,500       98,100      103,800       109,400 
250,000              65,600       87,500      109,400      115,600       121,900 
300,000              79,100      105,500      131,900      139,400       146,900 
350,000              92,600      123,500      154,400      163,100       171,900 
400,000             106,100      141,500      176,900      186,900       196,900 
450,000             119,600      159,500      199,400      210,600       221,900 
500,000             133,100      177,500      221,900      234,400       246,900 

The Company's contributions to the Retirement Plan are computed on the 
basis of straight life annuities. The following executive officers listed in 
Summary Compensation Table have the indicated number of completed years of 
service under the Retirement Plan, and would, upon retirement at age 65 on 
March 31, 1997, be entitled to a pension based on the remuneration level 
listed in the following table: 

Completed 
Covered               Years of 
Name                      Remuneration         Credited Service 
- --------------------------------        ------------         ---------------- 
Nicholas DeBenedictis  .........          $336,401                   5 
Roy H. Stahl  ..................          $195,781                  15 
Richard R. Riegler  ............          $168,809                  27 
Michael P. Graham  .............          $159,439                  20 
Morrison Coulter  ..............          $147,569                  36 

A Supplemental Executive Retirement Plan or SERP has been established for 
Mr. DeBenedictis. This Plan, which is nonqualified and unfunded, was approved 
by the Board of Directors and is intended to provide Mr. DeBenedictis with a 
total retirement benefit, in combination with the Retirement Plan and Excess 
Plan, that is commensurate with the retirement benefits for the chief 
executive officers of other companies. Under the terms of the SERP, Mr. 
DeBenedictis will be eligible to receive a benefit at normal retirement equal 
to the difference between (i) the benefit to which he would otherwise be 
entitled under the Retirement Plan assuming he had 25 years of service and 
absent the ERISA limitations referred to above, and (ii) the benefit payable 
to him under the Retirement Plan and the Excess Plan. Under the terms of Mr. 
DeBenedictis' SERP, if his employment is terminated for any reason prior to 
age 65, he is entitled to receive a supplemental retirement benefit equal to 
the 

19 

difference between (i) the benefit to which he would otherwise be entitled 
under the Retirement Plan assuming he was credited with two years of service 
for each of his first seven years of credited service and (ii) the benefit 
payable to him under the Retirement Plan and the Excess Plan. If Mr. 
DeBenedictis retires from the Company at age 65, the SERP is projected to 
provide an annual benefit of $88,300. 

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL 
ARRANGEMENTS 

Under the terms of Mr. DeBenedictis' employment arrangement, if his 
employment is terminated by the Company for any reason other than his 
disability, death or for cause, he will be entitled to receive a severance 
payment equal to twelve months of his base compensation paid in twelve equal 
monthly installments without offset. In the event that the employment of any 
of the executive officers named in the Summary Compensation Table set forth 
above is terminated, actually or constructively, within two years following a 
change of control of the Company, the executive officers will be entitled to 
certain payments under agreements with the Company and its primary 
subsidiary, Philadelphia Suburban Water Company. Under the terms of these 
agreements, the Chief Executive Officer will be entitled to two and one-half 
times his average annual base cash compensation and the other executive 
officers will be entitled to two times their average annual base cash 
compensation, plus continuation of their normal fringe benefits for a period 
of three years for the Chief Executive Officer and two years for the other 
executive officers. The agreement with the Chief Executive Officer also 
provides that, in exchange for a non-competition agreement, he will be 
entitled to receive one-half of his average annual base cash compensation and 
the transfer to him of a split dollar life insurance policy maintained by the 
Company on his life. Under the terms of the 1994 Equity Compensation Plan 
approved by the shareholders, outstanding stock options will become 
immediately exercisable, dividend equivalents will become immediately payable 
and the restrictions on restricted stock grants shall immediately lapse upon 
certain change of control events. 

COMPENSATION OF DIRECTORS 

Directors who are full-time employees of the Company do not receive a 
retainer or fees for service on the Board of Directors or Committees of the 
Board. Members of the Board of Directors who were not full-time employees of 
the Company or any of its subsidiaries ("Non-employee Directors") receive an 
annual retainer fee of $12,000, plus an annual grant of 300 shares of the 
Company's common stock (on a post-split basis). Directors also receive a fee 
of $1,000 for attendance at each meeting of the Board of Directors of the 
Company, including Committee meetings. In addition, each Committee Chairman 
who is a Non-employee Director receives an annual retainer fee of $2,500. All 
directors are reimbursed for reasonable expenses incurred in connection with 
attendance at Board or Committee meetings. 

CERTAIN TRANSACTIONS 

Richard H. Glanton, Esq., a director, is a partner in the law firm of Reed 
Smith Shaw & McClay, which firm has provided legal services to the Company in 
1996. 

SHAREHOLDER SUGGESTIONS AND PROPOSALS FOR 1998 ANNUAL MEETING 

Consideration of certain matters is required at the Annual Meeting of 
Shareholders, such as the election of directors. In addition, pursuant to 
applicable regulations of the Securities and Exchange Commission, sharehold- 

20 

ers may present resolutions, which are proper subjects for inclusion in the 
proxy statement and for consideration at the Annual Meeting, by submitting 
their proposals to the Company on a timely basis. In order to be included for 
the 1998 Annual Meeting, resolutions must be received by December 5, 1997. 

The Company receives many shareholder suggestions which are not in the 
form of resolutions. All are given careful consideration. We welcome and 
encourage your comments and suggestions. Your correspondence should be 
addressed as follows: 

Patricia M. Mycek 
Secretary 
Philadelphia Suburban Corporation 
762 W. Lancaster Avenue 
Bryn Mawr, PA 19010 

ADDITIONAL INFORMATION

The Company will provide without charge, upon written request, a copy of 
the Company's Annual Report on Form 10-K for 1996. Please direct your 
requests to Patricia M. Mycek, Secretary, Philadelphia Suburban Corporation, 
762 W. Lancaster Avenue, Bryn Mawr, PA 19010. 

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires 
the Company's officers and directors, and persons who own more than 10% of a 
registered class of the Company's equity securities (a 10% Shareholder), to 
file reports of ownership and changes in ownership with the Securities and 
Exchange Commission ("SEC"). Officers, directors and 10% Shareholders are 
required by the SEC regulations to furnish the Company with copies of all 
Section 16(a) forms they file. 

Based solely on its review of the copies of such forms received by it, or 
a written representation from certain reporting persons that no Form 5's were 
required for those persons, the Company believes that, during the period 
January 1, 1996 through December 31, 1996, all filing requirements applicable 
to its officers, directors and 10% Shareholders have been complied with. 

OTHER MATTERS

The Board of Directors is not aware of any other matters which may come 
before the meeting. However, if any further business should properly come 
before the meeting, the persons named in the enclosed proxy will vote upon 
such business in accordance with their judgment. 

By Order of the Board of Directors,

PATRICIA M. MYCEK 
Secretary 
April 4, 1997 

21

PROXY

PHILADELPHIA SUBURBAN CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PHILADELPHIA SUBURBAN CORPORATION

Proxy for Annual Meeting of Shareholders, May 15, 1997

The undersigned hereby appoints Nicholas DeBenedictis, Roy H. Stahl and
Patricia M. Mycek, or a majority of them or any one of them acting singly in the
absence of the others, with full power of substitution, the proxy or proxies of
the undersigned, to attend the Annual Meeting of Shareholders of Philadelphia
Suburban Corporation, to be held at 762 W. Lancaster Avenue, Bryn Mawr,
Pennsylvania, 19010, at 10:00 a.m., on Thursday, May 15, 1997 and any
adjournments thereof, and, with all powers the undersigned would possess, if
present, to vote all shares of Common Stock of the undersigned in Philadelphia
Suburban Corporation, including any shares held in the Dividend Reinvestment
Plan of Philadelphia Suburban Corporation, as designated on the reverse side.

The proxy when properly executed will be voted in the manner directed
herein by the undersigned. If the proxy is signed, but no vote is specified,
this proxy will be voted FOR the nominees listed in item 1 on the reverse side,
and in accordance with the proxies' best judgment upon other matters properly
coming before the meeting and any adjournments thereof.

PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING THE
ENCLOSED ENVELOPE.

(continued on reverse side)

- -------------------------------------------------------------------------------
o FOLD AND DETACH HERE o

/X/ Please mark
your vote as
indicated in
this example

1. Election of Directors. The Board of Directors recommends that you vote FOR
all nominees: John H. Austin, Jr., Alan R. Hirsig, John F. McCaughan,
Harvey J. Wilson.

VOTE FOR          WITHHOLD          To withhold authority to vote for any
all nominees      AUTHORITY         individual nominee while voting for the
listed (except    to vote for       remainder, write that nominee's name in
as marked to      all nominees      the space provided below:
the contrary)
----------------------------------------

2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.

Dated:                         , 1997
-------------------------

-------------------------------------
Signature

-------------------------------------
Signature (if held jointly)

THIS PROXY MUST BE SIGNED EXACTLY AS
NAME APPEARS HEREIN.
Executors, Administrators, Trustees,
etc. should give full title as such.
If the signer is a corporation, please
sign full corporate name by duly
authorized officer.

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o FOLD AND DETACH HERE o

Dear Shareholder:

Enclosed are materials relating to Philadelphia Suburban Corporation's
1997 Annual Meeting of Shareholders. The Notice of the Meeting and Proxy
Statement describe the formal business to be transacted at the meeting.

Your vote is important to us. Please complete, sign and return the
attached proxy card in the accompanying postage-paid envelope whether or not you
expect to attend the meeting.

Nicholas DeBenedictis
Chairman & President