Responding to a study by the University of Greenwich that found water companies over the past decade had paid out as much in dividends as they made in profits – about £18 billion, she pointed to how there had already been improvements in the way companies were operating their businesses.
But Fletcher added: “It’s really important that people around the board table of these companies are going in and making decisions with the interests of the public front and centre.”
Reforms from Ofwat last July supported the theme, calling for a greater sharing of benefits with consumers, which could see the most highly geared water companies forced to share up to £230 million with customers over the period 2020-25, and decisions boards reached on debt, dividends and executive pay “aligned more closely with their customers’ interests”.
As part of the same package, Ofwat called for boards to boost transparency around dividends and executive pay, “both matters which have a significant bearing on customer trust”.
Each water company, the regulator said, must now “show clearly how it is linking performance-related executive pay to stretching performance for customers.
“In a similar vein, companies will need to explain clearly how decisions on dividends are made and how they relate to the delivery of companies’ obligations.”