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Performance-related bonuses paid to chief executives of water and sewerage companies will not be paid through consumer bills this year, a House of Lords inquiry has heard.
Bosses may, however, receive bonus payments through a non-regulated part of the organisation or a parent company.
That is according to the interim chief executive of Water UK, David Henderson, who told the Industry and Regulators Committee that the trade body does not oppose Ofwat’s work to strengthen links between performance and pay.
“Companies have taken action due to strength of public feeling on this issue,” Henderson said. “In England and Wales no water and sewerage company chief executive has taken a bonus paid through customer bills. Half are taking no bonus at all.”
Several bosses publicly declared they would forgo a bonus this year in light of public sentiment towards performance. This included Thames, South West, Welsh and Yorkshire.
Henderson added that for “the few taking a bonus for an environmental element” it was only at companies that meet the Environment Agency’s top Environmental Performance Assessment (EPA) score of four stars.
Northumbrian, Severn Trent and United Utilities were the only three companies to maintain the top rating in the EA’s most recent rating last July.
When pressed, Henderson said a bonus could be paid through other entities within the parent company such as property portfolio or energy production unit that are non-regulated.
Non-regulated businesses vary company-by-company but include anaerobic digestion plants that process waste into energy, land or property portfolios.
He said independent remuneration committees decide on performance-related pay taking a range of factors of overall performance into consideration, not just the regulated water or sewerage portion of a business.
On dividends, Henderson said average dividends being paid are 3.8%, which he stressed was below the rates a saver might get from a high street bank on a fixed-term deposit. “These are not high amounts,” he said.
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