Ofwat CEO writes to water company remuneration committee Chairs
Ofwat interim CEO David Black has written to the remuneration committees of water companies to reiterate their expectations on their approach to performance related executive pay for 2021-2022. These include expectations that:
performance for customers, including performance on the environment, should be taken into account
decisions made are backed up by robust and clear explanations that are accessible to the public
Ofwat point out that as a monopoly provider of an essential public service, customers and society expect companies to uphold the highest standards of corporate governance. The regulator states it was clear as part of the 2019 price review that performance related executive pay should demonstrate a substantial link to stretching performance delivery for customers which includes environmental commitments and obligations. Given the current concern about environmental performance Ofwat urge remuneration committees to give particular consideration to the clarity of reasoning for any awards made in this area.