Some of the highest paid bosses of England’s water companies are earning tens of thousands of pounds in second boardroom positions, advising on pay offers for other senior executives.
Five of the chief executives of England’s nine water and sewerage companies also serve as non-executive directors at other companies and sit on remuneration committees.
Campaigners say it is inappropriate for water chiefs to help set the pay and bonuses of senior executives at other companies.
Nicola Shaw, who was appointed head of Yorkshire Water in May, also sits on the board of International Airlines Group (IAG), which owns British Airways. He sits on its remuneration and safety committees, and earned €123,000 (£115,000) last year.
Yorkshire Water said this weekend that Shaw’s second boardroom role did not affect its commitment to improving water services.
Susan Davy, head of Pennon Group, which owns South West Water, which last week was spilling sewage and stormwater into seas around Devon and Cornwall, is on the board of data management company Restore plc The firm paid him £53,000 last year, sitting on a remuneration committee.
Analysis by the Liberal Democrats revealed last week that the average total pay of a water company boss rose by 20% in 2021, despite most companies failing to meet waste water pollution targets . The party said the pay packets were a “national scandal”.
Andy Prendergast, national secretary of the GMB union, which has criticized the level of pay and bonuses given to water chiefs, said: “This country is facing a water crisis and the fact that the fortunes of paid to cope have enough time to moonlight.in second jobs believing beggars.
“In a time of hose bans and sewage discharges, we deserve those who pay high salaries to spend their time fixing it. The fact that their second roles largely involve massive pay rises from other bosses is outrageous.”
The performance of water companies is under increasing scrutiny as drought has been declared in large parts 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 about sewage and stormwater flowing onto beaches last week, mainly on the south coast. An analysis by the Labor party has found that water companies have spent more than 9 million hours dumping raw sewage and stormwater into the country’s rivers and seas since 2016.
Other water chiefs in non-executive roles include Sarah Bentley, head of Thames Water, who was paid more than £2m last year. She is a non-executive director of Lloyds Bank, a member of the remuneration committee. Thames Water and Lloyds Bank refused a request from the Observer last week to reveal any fees they paid it.
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Heidi Mottram, who earns £648,000 a year as head of Northumbrian Water, is a non-executive director of energy firm Centrica, where she was paid £93,000 last year. He is part of 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 this month as a non-executive director of defense firm Qinetiq . Mogford, a former senior executive at defense giant BAE Systems, sits on four committees, including the remuneration committee.
Luke Hildyard, chief executive of the High Pay Centre, a think tank that researches issues relating to senior executive pay and corporate governance, said: “Most people would be shocked to realize that the pay levels of executive directors are established by committees formed by other executive directors and persons with similar functions.
Beachgoers in Swanage, named on the Wessex Water website as one of the beaches where sewage was dumped on August 17. Photograph: Finnbarr Webster/Getty Images
“The justification for paying company directors such large pay packets is that they are doing such an important and demanding job. This is undermined if they have time to sit on the boards of other big companies.”
On Monday, the High Pay Center will launch its annual review of executive pay at the nation’s top companies. It calls for more representation of a company’s workforce on remuneration committees.
It’s not unusual for company bosses to accept non-executive roles, and employers say it can provide senior bosses with fresh ideas. However, there may be concerns about the level of commitment required.
In February 2015 Liv Garfield, the chief executive of Severn Trent, announced that she was stepping down as a non-executive director of Tesco. He said he wanted to “concentrate completely” on his role as chief executive at the water company.
The water companies said last week that the rest of the work done by their chief executives was properly disclosed.
A Thames Water spokesman said: “Sarah Bentley’s role as non-executive director is in the public domain. The insight and perspective she brings from her role at Lloyds, given her change, is valuable to her role at Thames Water and were approved by our board when it joined in 2020.”
Yorkshire Water said Nicola Shaw’s work at IAG did not “impact on her role” at the water firm. A spokesman said: “Indeed, as with many other chief executives in similar roles, the role brings knowledge and experience from other industries that we can learn from.”
None of the water companies responded to a request to provide the hours their chief executives worked each month in their other boardroom roles.