Bosses at six water firms had £4m in bonuses blocked under new rules, Ofwat says

Water company bosses were blocked from receiving £4m in bonuses for the last financial year – and the industry regulator is considering forcing companies to report pay received from parent companies after a Guardian investigation. Ofwat, the regulator for English and Welsh water firms, said six companies had complied with the new rules governing the sector and did not pay out bonuses to bosses. However, it is consulting on further rules to force the disclosure of payments by other companies after the revelation that Yorkshire Water’s chief executive, Nicola Shaw, had received £1.3m in secret payments via an offshore parent company. The government in June banned bonuses for water companies that failed to protect the environment from the worst pollution incidents, after widespread public outrage over the extent of sewage in Britain’s rivers and seas. The six companies whose bonuses were banned this year were Anglian Water, Southern Water, Thames Water, United Utilities, Wessex Water and Yorkshire Water, all of which did not give their directors an annual bonus and other relevant performance-related pay, according to Ofwat’s definitions. Despite the ban and the significant scrutiny on the sector, Guardian analysis found that the pay of water company chief executives in England and Wales rose by 5% in the last financial year to an average of £1.1m – although the pay awarded to the bosses of the six companies did fall. There were outliers even among the six: the £1.3m given to Shaw was only disclosed after the Guardian raised questions about the lack of transparency. Ofwat said that the Yorkshire Water payments, made via an offshore company, had prompted it to make changes to the rules on pay reporting. “Yorkshire Water has since acknowledged it should have disclosed more about the payments and has committed to several actions to improve transparency of their remuneration reporting going forward,” Ofwat said in its pay report. “While greater transparency on executive remuneration is always welcome, we consider this should be the minimum of what should be expected of all water companies to follow.” Meanwhile, Southern Water awarded its chief executive, Lawrence Gosden, an 80% pay increase to £1.4m. Southern said it had complied with the rules. Ofwat on Wednesday said the largest part of the increase was not counted as a bonus because it was part of a two-year “long-term incentive plan” implemented before the bonus ban was in place. Furthermore, the ban applied only to the chief executives and chief financial officers, leaving water companies including troubled Thames Water to pay controversial bonuses to other executives. Thames was also found to have displayed an “unacceptable” “lack of openness” over its management retention plan, which awarded payments to executives below chief executive level despite deep financial problems at Britain’s largest water company. Ofwat said this also added to the case for increased transparency requirements. Anglian Water, which provides water mainly to the east of England, was also added by Ofwat to an “elevated concern” list for financial resilience because of questions over its investment plans after credit rating agency downgrades.