Pressure on all water bosses to forgo their bonuses

Pressure is building on all water company bosses to waive their bonuses this year.

Union leaders have called for all annual bonuses to be forfeited across the sector, in light of failings around sewage dumping and poor performance.

It comes after bosses at four companies – Thames, Yorkshire, South West and Welsh – announced that they would not be taking their bonusses this year.

GMB is leading the calls for “all water bosses to waive their annual bonuses until Ofwat can confidently say the scourge of sewage dumping is under control”.

Gary Carter, GMB national officer, added: “It’s grotesque for water companies to post such mammoth profits while so many are repeatedly caught dumping sewage in our nation’s glorious seas and waterways.

“Instead of fattening shareholders’ wallets, this money should be used to protect the UK’s fragile aquatic ecosystem.

“The UK’s water infrastructure is in desperate need of investment, while beleaguered water workers are underpaid and aren’t receiving the training they deserve.”

UNISON assistant general secretary Jon Richards added that “it’s high time other water companies followed suit”. He added: “There can be no rewards for poor performance. And there’s still a long way to go for our rivers, lakes, coasts and seas to be clean from sewage and safe for the public.”

Prospect Union deputy general secretary Sue Ferns added: “It’s right for senior leaders to reflect very carefully on taking bonus payments at a time when customers and their workforce are bearing the brunt of inflationary pressures and in the face of evident – and some high profile – failures in service delivery.”

Last year, Thames chief executive Sarah Bentley pocketed £496,000 in bonus pay, while Susan Davy of South West Water took home an additional £522,000 in her bonus.

Yorkshire Water boss Nicola Shaw, took over from Liz Barber in May of last year. It is unclear what Shaw’s bonus would have been, however Barber’s last bonus was £679,000. Meanwhile, Welsh Water chief executive Peter Perry last received £232,000 as a bonus on top of his annual salary.

While the four bosses have been widely praised for forgoing their bonuses, Lord Hollick – who chairs the House of Lords Industry and Regulators Committee – told Utility Week that it should not have been their decision to take.

He said: “Whilst we welcome the decision made by the four water company CEOs not to take their annual bonuses, the Committee believes that the decision to award and accept bonuses should be taken out of the hands of the water companies, where they are responsible for serious pollution.”

He added: “We urge Ofwat to take control of the situation and set out further provisions to ban bonuses at companies who have been found to have caused serious pollution incidents as part of the conditions of water company licences.”

Hollick’s comments reflect recommendations made in the committee’s recent report, The affluent and the effluent: cleaning up failures in water and sewage regulation, which called for closer links between water company performance and executive pay.

Emma Clancy, chief executive of the Consumer Council for Water, welcomed the decisions from company bosses to forgo their bonusses. She said: “Our recent research, Bridging the Gap, shows that bonuses add to people’s current frustration with the water industry and they would like much more openness and transparency on this issue. This announcement shows that people’s concerns are being listened to.”

Elsewhere, a Southern Water spokesperson said Lawrence Gosden, who joined the company as chief executive last July when Ian McAulay stepped down, would only receive a bonus if performance targets were achieved. Last year, McAulay was awarded £435,000 as an annual bonus as well as an exceptional bonus of £435,000 related to the acquisition by Macquarie.

Likewise, United Utilities’ chief executive Lou Beardmore – who has only been in the role for five weeks – will also only take a bonus linked to performance.

The remuneration committees of both Anglian and Wessex Water have yet to meet and make recommendations on bonuses, spokespeople for both companies said. While Severn Trent declined to comment on bonus payments.

Under new rules recently put forwards by Ofwat, bonuses for water company bosses will be more aligned with performance. The regulator is currently consulting on plans to implement an end-of-period reconciliation mechanism which would allow it to adjust a company’s revenue allowance if it does not meet Ofwat’s expectations, particularly around environmental objectives. The consultation on the proposed mechanism will run to 1 May.