Some of the highly paid bosses of England’s water companies are earning tens of thousands of pounds in second boardroom jobs, advising on the pay deals of other top executives.
Five of the chief executives of England’s nine water and sewerage companies are also working as non-executive directors in other firms, sitting on remuneration committees.
Campaigners say it is inappropriate for water bosses to be helping to fix the pay and bonuses of senior executives in other companies.
Nicola Shaw, who was appointed head of Yorkshire Water in May, is also on the board of International Airlines Group (IAG), which owns British Airways. She sits on its remuneration and safety committees, earning €123,000 (£115,000) last year.
Yorkshire Water said this weekend that Shaw’s second boardroom role did not affect her commitment to improving water services.
Susan Davy, boss of Pennon Group, owner of South West Water, which was spilling sewage and stormwater into seas around Devon and Cornwall last week, is on the board of data management firm Restore plc. She was paid £53,000 by the firm last year, sitting on a remuneration committee.
An analysis by the Liberal Democrats revealed last week that the average water company boss’s total pay rose by 20% in 2021, despite most firms failing to meet sewage pollution targets. The party said the pay packages were a “national scandal”.
Andy Prendergast, national secretary of the GMB union, which has criticised the level of pay and bonuses given to water bosses, said: “This country is facing a water crisis and the fact that those paid fortunes to deal with it have enough time to moonlight in second jobs beggars belief.
“At a time of hosepipe bans and sewage discharges, we deserve that those paid high salaries devote their time to putting it right. The fact their second roles largely involve green-lighting massive salary increases for other bosses is scandalous.”
The performance of water companies is under mounting scrutiny as drought has been declared across large swaths of the country. The Environment Agency reported in July that “the environmental performance of England’s nine water and sewerage companies was the worst we have seen for years”.
Swimmers were warned of sewage and stormwater flowing on to beaches last week, mainly on the south coast. A Labour party analysis has found that water companies have spent more than 9 million hours discharging raw sewage and stormwater into the country’s rivers and seas since 2016.
Other water bosses with non-executive roles include Sarah Bentley, boss of Thames Water, who was paid more than £2m last year. She is a non-executive director of Lloyds Bank, sitting on the remuneration committee. Thames Water and Lloyds Bank declined a request from the Observer last week to disclose any fees paid to her.
Heidi Mottram, who earns £648,000 a year as boss of Northumbrian Water, is a non-executive director of the energy firm Centrica, where she was paid £93,000 last year. She sits on three committees, including the remuneration committee.
Steve Mogford, who was paid £3.2m last year as boss of north-west water firm United Utilities, started as non-executive director of the defence firm Qinetiq this month. Mogford, a former senior executive at the defence giant BAE Systems, sits on four committees, including the remuneration committee.
Luke Hildyard, executive director of the High Pay Centre, a thinktank that researches on issues around the pay of senior executives and corporate governance, said: “Most people would be astounded if they realised that pay levels for chief executives are set by committees made up of other chief executives and people in similar roles.
“The justification for paying such large salary packages to company chief executives is that they are doing such important and demanding work. This is undermined if they have time to sit on the boards of other major companies.”
On Monday the High Pay Centre will launch its annual review of executive pay in the country’s top companies. It is calling for more representation from a company’s workforce on remuneration committees.
It is not unusual for company heads to accept non-executive roles and employers say it can provide fresh insights for senior bosses. There can, however, be concerns about the level of commitment required.
In February 2015 Liv Garfield, the chief executive of Severn Trent, announced she was standing down as non-executive director of Tesco. She said she wanted to “concentrate fully” on her chief executive role at the water company.
Water companies said last week that the other jobs performed by their CEOs are properly disclosed.
A Thames Water spokesperson said: “Sarah Bentley’s role as a non-executive director is in the public domain. The insight and perspective that she gets from her role at Lloyds, given their turnaround, is valuable to her role at Thames Water and was approved by our board when she joined in 2020.”
Yorkshire Water said Nicola Shaw’s work at IAG did not “impact on her role” at the water firm. A spokesperson said: “In fact, as for many other executive directors who hold similar positions, the role brings back knowledge and experience from other industries that we can take learnings from.”
None of the water companies responded to a request to provide the hours their chief executives worked each month on their other boardroom roles.
