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Yorkshire Water has handed its chief executive a £1.03mn pay package despite leaving thousands of households with disrupted water supplies for a fortnight and “severe” sewage pollution failures.
Nicola Shaw, the chief executive of the water utility, received a base salary of £585,000 and a total pay package of £1.03mn — including a £371,000 bonus; 42.2 per cent of the maximum allowed — according to the 2023-2024 annual report published this week.
Last year Shaw did not receive a bonus and took home £718,000 for the 10-month period, after joining in May 2022.
The payout comes after Yorkshire Water, which serves 5mn households in the north of England, was rapped by the regulator in April after a burst water pipe seriously limited water supply for a fortnight late last year.
Ofwat said 12,700 households were affected with customers left struggling “to go about their daily lives”, and the regional monopoly failing to provide adequate support such as bottled water.
The new Labour government meanwhile laid out plans during Wednesday’s King’s Speech to make bosses of water companies face personal criminal liability for breaking laws on water quality. The bill will also give new powers to Ofwat to ban bonuses if environmental standards are not met.
Yorkshire Water said in its annual report that the board “recognises that the business did not achieve the level of performance required”, and that there were a number of “serious pollution events”.
According to Environment Agency data, it was the second-worst company for sewage spills last year and received a downgrade in its environmental performance rating, from three to two stars.
Shaw, a former chief executive of the HS1 high-speed railway line, will also receive undisclosed pay from her roles at Kelda Holdings, Yorkshire Water’s Jersey-registered parent company. She also holds an additional role as non-executive director at International Airlines Group.
Kate Bayliss, an academic and water expert at the University of London Soas, said water companies are “clearly not reading the room, given the public outrage at their performance, especially when these pay packages are funded by customer bills and there is a cost of living crisis”.
“There is clearly no evidence that higher CEO salaries lead to better performance when it comes to environmental and social outcomes,” she added.
Ofwat has provisionally agreed a 25 per cent increase in bills for customers of Yorkshire Water, which would see households pay £537 a year by 2030, up from the current £430. A final decision will be made by December as part of the regulator’s five-year settlement with water companies.
Yorkshire Water paid £84.1mn in dividends within the group structure, up from £62.3mn over the previous 12 months.
The company said its “ultimate shareholders have not received a dividend for the last eight years”. Its owners include Singaporean wealth fund GIC, Corsair Infrastructure Management, DWS and SAS Trustee Corporation.
Other water companies have also paid out bonuses. Thames Water awarded its new chief executive Chris Weston a £195,000 bonus and total pay of £437,00 for the three months to the end of March.
Severn Trent chief executive Liv Garfield received a £584,000 bonus and total pay of £3.2mn in the year to the end of March, while Southern Water chief executive Lawrence Gosden received a £183,000 bonus for the year to March 31, increasing his total pay for the year to £764,000.
Yorkshire Water said its bonus scheme takes into account “customer service and environmental measures, as well as considering the wider performance of the business in the round.”
“Over the past year we’ve been making great strides to improve our performance as a company and the hard work is starting to pay off.”
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