Ofwat interim CEO David Black has written to the remuneration committees of water companies to reiterate our 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
As a monopoly provider of an essential public service, customers and society expect companies to uphold the highest standards of corporate governance. We were 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 we urge remuneration committees to give particular consideration to the clarity of reasoning for any awards made in this area.
Letter from David Black to Chairs of Remuneration Committees – Performance related executive pay for 2021-22