Ofwat is considering changing the rules around water companies’ annual pay reporting after Yorkshire Water’s chief executive received an extra £1.3 million from the firm’s offshore parent company.
The water regulator has already blocked bonus payments from Yorkshire Water, as well as five other water companies, over serious pollution incidents and other performance issues.
But it was revealed earlier this year that Yorkshire Water CEO Nichola Shaw had received the previously undisclosed extra pay from Kelda Holdings since 2023.
Yorkshire Water has said it has “now committed to disclosing the value of any Kelda related payments for our CEO and CFO as part of Yorkshire Water’s accounts in future”.
Ofwat said it is now considering plans to force water firms to report pay received from parent companies.
It comes after the then environment secretary Steve Reed said he had asked Ofwat to investigate the payments to Ms Shaw “as a matter of urgency”.
He said he would “not tolerate any company attempting to circumvent this government’s ban on unfair bonuses”.
Ofwat said “while greater transparency on executive remuneration is always welcome”, it considers that “this should be the minimum of what should be expected of all water companies to follow”.
“This is something we will be consulting to include in our planned updates to company reporting requirements on PRP [performance-related executive pay] for next financial year so that customers can clearly see what a director receives and why,” the regulator said.
York Central MP Rachael Maskell said she wrote to Yorkshire Water over the “shameful” extra pay to Ms Shaw, which was first reported by the Guardian, but described its response as “unsatisfactory”.
“To justify the bonus of a chief executive of a water company that fails to invest in infrastructure, future resilience and releases sewage into our rivers, giving focus on share-holder activity and gaining the system, as opposed to fixing our broke water system is not acceptable,” she said.
Ofwat said more than £4 million of potential bonuses from Yorkshire Water, Anglian Water, Southern Water, Thames Water, United Utilities Water and Wessex Water were banned under the new rules on performance-related executive pay.
The powers were introduced in June as a result of concerns that the pay of water firms’ top bosses was not reflecting their environmental performance.
Ofwat said that a further £2.4 million of performance-related executive pay was not required to be blocked, but should not be funded by customers.
