Peer pushes for public vote on water bosses pay

A Labour peer has called for customers to have the final say on whether water company bosses deserve to take home their lofty pay packets.

Lord Sikka’s controversial vision for overhauling executive pay would see the public given powers to strip water company bosses of their basic salaries and block their bonuses.

Sikka – who lists his hobbies as “afflicting the comfortable and tormenting dinosaurs” in his publicly-available 80-page CV – suggests that his unconventional proposal would incentivise water company bosses to prioritise customer service and improve environmental performance. 

Speaking in the House of Lords, the accountancy professor and supporter of Jeremy Corbyn also called for much greater transparency in the remuneration process and how it is reported in annual accounts.

“All customers should be empowered to vote on executive remuneration policy and amounts,” Sikka said.

“A 51% vote should be needed to approve directors’ basic pay. If directors have polluted rivers, did not plug leaks, did not invest adequately or exploited customers, it is extremely unlikely that they will get their pay. Customers will simply not reward them for it.”

The life peer who has spent his career in economics and academia went on to suggest that a bonus for “extraordinary performance” would need to be approved by at least 90% of customers.

“If the minister disagrees with empowering people, I hope he will tell the house why people cannot be trusted but some administrator at Ofwat can be, even though it has failed ever since privatisation,” Sikka put to representatives from the Department for environment, food and rural affairs.

Defra undersecretary of state, Lord Douglas-Miller, insisted the government had faith in the powers of the regulation and the oversight of Ofwat to ensure remuneration committees consider legitimate stakeholder concerns when taking decisions.

He said: “We are taking clear and decisive action to ensure that no one profits from illegal behaviour and that water company executives take personal responsibility for serious breaches and damaging the environment.”

In June last year, Ofwat said any company that did not demonstrate how decisions about executive pay and bonuses could link to performance could not recover the cost of bonuses from billpayers.

Earlier this month environment secretary Steve Barclay announced the terms of Ofwat having the power to block bonuses, subject to a consultation. The ban is anticipated to apply to all executive board members and chief executives when it comes into effect later this year.