Two bosses of Yorkshire Water have been handed a combined £616,000 in bonuses for a year in which thousands of its customers “struggled to go about their daily lives” for weeks due to a burst water pipe.
The payouts, part of a bonus system that could be banned in future under proposals outlined by the Labour government in this week’s king’s speech, were detailed in the company’s annual report.
The awards cover a period that also includes nine months of 2023, a year in which Yorkshire Water was named the second-worst water company in England for sewage spills.
The company’s chief executive, Nicola Shaw, was paid salary and benefits worth £657,000 for the year to the end of March 2024, topped up by a £371,000 bonus. Shaw, who was appointed in 2022, forfeited her bonus the previous financial year amid public outrage over sewage spills.
Yorkshire Water’s chief financial officer, Paul Inman, was paid £436,000 in salary and benefits, as well as a £245,000 bonus.
The extra awards are part of a short-term “executive incentive plan”, a cash award that can be collected after a year and is calculated based on measures that include profits, customer service and environmental performance.
In April, the water regulator Ofwat said Yorkshire Water had “failed” customers in Goole, East Yorkshire, after a burst water pipe affected 12,700 people for more than a fortnight between October and November 2023.
“Residents described how they struggled to go about their daily lives, many were unable to bathe, do household chores, or turn their heating on during the start of the winter period,” Ofwat said at the time.
A spokesperson for Yorkshire Water said it had paid out £37,000 in compensation and established a community fund, adding: “We know there were some learnings from how we handled this incident; we’ve taken these onboard and made some changes to improve the service our customers would receive if this incident were to happen again.”
Earlier this year, Yorkshire Water was singled out as the second-worst water company for sewage discharge from storm overflows.
The company said this was “due to the industrial heritage of parts of our region, and the way the network was created at the time”, adding that it was investing £180m to reduce “discharges into watercourses from our storm overflows”.
In its annual report, it said its executive directors received only short-term bonuses because they had not been at the company long enough to take part in any long-term awards.
It also said awards under the scheme would not vest (be paid out) unless the company’s pay committee was satisfied that performance had been satisfactory “considering any relevant factors”.
A spokesperson said directors were on track to receive 61% of their maximum bonus but that it had reduced this to 42% to reflect environmental performance “not being where we want it to be”.
The company has revised its pay and bonus plan for this year.
Earlier this week, the chief executive of Southern Water received a £183,000 bonus despite submitting a business plan that has been criticised by Ofwat and attempting to raise bills more than any other English water company.
The government has said it will give the water regulator powers to block bonuses at companies that do not meet environmental standards. The measure, announced in the king’s speech on Wednesday, will be accompanied by plans to make water bosses criminally liable for breaking laws on water quality.
Yorkshire Water, which serves 5.5 million customers across Yorkshire, parts of Lincolnshire and Derbyshire, has provisionally been given the green light by Ofwat to increase bills from £430 a year to £537 over the next five years.
Every water company in England and Wales is under investigation by Ofwat over sewage spills, it emerged this week.
