Executives at several UK water companies are set to receive substantial payments that are exempt from a regulator's power to block bonuses due to pollution. The payments, described as retention fees or allowances, come as the industry faces public criticism over sewage dumping and rising household bills.
Northumbrian Water plans to pay its chief executive, Heidi Mottram, £1.5 million over the next five years as a 'retention payment'. This move comes despite the water regulator Ofwat's authority to ban bonuses for executives at companies found to have breached pollution rules. The company stated the incentive was necessary because Mottram is 'a highly marketable individual working in a sector where remuneration is exceptionally highly regulated and often subject to media scrutiny.' Earlier in July, Northumbrian Water was fined £500,000 for two sewage discharges into waterways in the North East.
Louise Beardmore of United Utilities will receive a £435,000 'allowance', also not subject to the bonus ban. Anglian Water is paying its chief executive, Mark Thurston, £1.3 million in awards, citing a need to ensure 'stability of leadership.'
In a separate case, Pennon's chief executive, Susan Davy, had her annual bonus of £270,000 reinstated after it was initially blocked. This followed an incident where its South West Water unit contaminated tap water for over 500 customers with a parasite. South West Water was fined £1.9 million in June 2024 for allowing cryptosporidium from animal feces to infect drinking water supplied to more than 16,000 homes in Brixham, Devon. Although Ofwat initially banned performance-related awards to senior directors, the ban on Davy's payment and a £190,000 payment to finance director Laura Flowerdew was reversed 'following further guidance' from the regulator, according to Pennon's annual report.
The bonus prohibition power was introduced a year ago amidst public outcry over sewage pollution and increasing water bills. It allows Ofwat to block performance-related awards for senior directors if their company is found guilty of severe pollution incidents.
Other executive pay increases include Wessex Water chief executive Ruth Jefferson receiving a 14 per cent salary increase to £670,000, and Southern Water chief executive Lawrence Gosden getting a 3.5 per cent pay rise to £536,000, in addition to £140,000 for benefits. Thames Water's chief executive, Chris Weston, saw his total pay rise to £1.2 million after a 9.5 per cent increase.