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Yorkshire Water has handed its chief executive a £1.03m pay packet despite leaving thousands of households with water supplies cut off for a fortnight and “serious” sewage contamination failures.
Nicola Shaw, Chief Executive of the water serviceHe received a base salary of £585,000 and a total pay package of £1.03m, including a £371,000 bonus – 42.2 per cent of the maximum allowed, according to the 2023-24 annual report published this week.
Last year, Shaw received no bonus and took home £718,000 for the 10-month period, after joining in May 2022.
The payment comes after Yorkshire Water, which serves 5 million homes in the north of England, was fined by the regulator in April after a burst water main severely restricted water supplies for a fortnight late last year.
Ofwat said 12,700 households were affected, with customers struggling to “go about their daily lives” and the regional monopoly unable to provide adequate support, such as bottled water.
Meanwhile, the new Labour government presented plans during King’s speech on Wednesday The bill will also give Ofwat new powers to ban rebates if environmental standards are not met.
Yorkshire Water said in its annual report that the board “acknowledges that the company did not achieve the required level of performance” and that there had been a number of “serious pollution events”.
According to data from the Environment Agency, 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 high-speed rail company HS1, will also receive an undisclosed salary for her roles at Kelda Holdings, the Jersey-registered parent company of Yorkshire Water. She also holds an additional role as a non-executive director at International Airlines Group.
Kate Bayliss, an academic and water expert at Soas University of London, said water companies were “clearly not reading the situation, given the public outrage over their performance, especially when these pay packets are funded from customers’ bills and there is a cost of living crisis”.
“There is clearly no evidence that higher CEO pay leads to better performance on environmental and social outcomes,” he added.
Ofwat has provisionally agreed a 25 per cent rise in Yorkshire Water customers’ bills, which would mean households would pay £537 a year in 2030, up from £430 at present. A final decision will be made in December as part of the regulator’s five-year deal with water companies.
Yorkshire Water paid out £84.1m in dividends across the group structure, up from £62.3m in the previous 12 months.
The company said its “end shareholders have not received any dividends in the past eight years.” Their owners They include Singapore wealth fund GIC, Corsair Infrastructure Management, DWS and SAS Trustee Corporation.
Other water companies have also paid bonuses. Thames Water rewarded its new chief executive Chris Weston a bonus of £195,000 and a total salary of £437,000 for the three months to the end of March.
Severn Trent CEO Liv Garfield received a bonus of £584,000 and a total salary of £3.2m in the year to the end of March, while the chief executive of Southern Water Lawrence Gosden received a bonus of £183,000 for the year to March 31, increasing his total salary 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 broader performance of the overall business”.
“Over the past year we have made great strides in improving our performance as a company and the hard work is starting to pay off.”