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

Water company bosses were blocked from receiving £4m bonuses in the last financial year and the industry regulator is considering forcing companies to report the salaries they receive from parent companies following a Guardian investigation.

Ofwat, the regulator of water firms in England and Wales, said the six companies complied with new rules governing the sector and did not pay bonuses to bosses. But additional rules are being consulted to require disclosure of payments made by other companies after it was revealed that Nicola Shaw, Yorkshire Water’s chief executive, received £1.3 million in secret payments through an offshore parent company.

In June the government banned bonuses for water companies that fail to protect the environment from the worst pollution incidents, following widespread public anger 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, none of which were giving their managers annual bonuses and other performance-related pay, according to Ofwat’s definitions.

Despite the ban and significant scrutiny on the industry, Guardian analysis found that salaries for senior managers at water companies in England and Wales rose by 5% in the last financial year to an average of £1.1 million; But salaries for bosses of six companies fell.

There were outliers even among the six: the £1.3 million awarded to Shaw was only disclosed after the Guardian raised questions about a lack of transparency.

Ofwat said Yorkshire Water payments made through an offshore company had prompted changes to its payment reporting rules.

“Yorkshire Water recognizes that it needs to provide more information about pay and has committed to taking a range of actions to improve the transparency of pay reporting going forward,” Ofwat said in its pay report. “While greater transparency in the remuneration of managers is always welcome, we think this should be the minimum level that all water companies are expected to follow.”

Meanwhile, Southern Water has given its chief executive, Lawrence Gosden, an 80% pay increase to £1.4m. Southern said he followed the rules. Ofwat said on Wednesday that the biggest part of the increase did not count as bonuses because it was part of a two-year “long-term incentive plan” implemented before the bonus ban was implemented.

Moreover, the ban applied only to senior managers and chief financial officers, prompting water companies, including the troubled Thames Water, to pay controversial bonuses to other executives.

Thames was also found to have displayed an “unacceptable” “lack of clarity” over its management retention plan, which sees pay for executives below senior executives despite deep financial problems at Britain’s biggest water company. Ofwat said this also contributed to increased transparency requirements.

Anglian Water, which mainly supplies water to the east of England, was placed on a “high concern” list for financial resilience by Ofwat amid questions about its investment plans after the credit rating agency downgraded it.