Ofwat 'assessing' whether £660K undisclosed payment to Yorkshire Water CEO breaks bonus ban

These were not published in Yorkshire Water’s annual report and executive pay does not have to be declared in Jersey. They were only revealed after an investigation from The Guardian newspaper.

This means in 2023-24, Ms Shaw’s overall remuneration package was almost £1.7m, as the additional payment was on top of a base salary of £585,000, more than three times that of the Prime Minister, along with a bonus of £371,000 and additional benefits of £72,000.

In 2024-25, the CEO decided not to take a bonus so her overall pay was £689,000, with the Kelda Holdings payment pushing this up to £1.35m. That’s a whopping £3m in just two years.

In June, the Government announced that Yorkshire Water was one of six companies that are banned from paying bonuses for the 2024-25 financial year due to poor performance.

Sewage spills have contributed to a situation in which no single river in Yorkshire is considered to be in good overall health, while Ilkley Beach is the most polluted waterway in the country.

The Environment Agency has given Yorkshire Water a “red rating” for pollution, and recent figures showed it had the third most serious pollution incidents of any water company in the country.

In March, Yorkshire Water agreed to pay regulator Ofwat a £40m fine, which led to the bonus ban.

The Department for the Environment, Food and Rural Affairs said Ofwat is now assessing whether the £660,000 payment for 2024-25 breaks the bonus ban.

A spokesperson said: “We are aware of these payments, which Ofwat are currently assessing as a matter of urgency.

“Undeserved bonuses for water company bosses have now been banned as part of the government’s plan to clean up our rivers, lakes and seas for good.

“Any instances of companies trying to circumvent the new rules are completely unacceptable.

“The Government will leave no stone unturned in clawing back any payments if found to be against the rules.”

Yorkshire Water has claimed that the £1.3m over two years was paid as a salary for additional work for Kelda Holdings.

A spokesperson said that as part of her role Ms Shaw “also does some work for the benefit of Yorkshire Water’s parent company, Kelda Group, including investor engagement, financial oversight, and management of the Kelda Group, which is recognised by a fee of £660,000 paid by shareholders.

“This is a conscious governance decision: we do not believe that work done on investor-related activities should be paid for by Yorkshire Water customers’ bills.”

The Yorkshire Post has asked Yorkshire Water for how many hours each month Ms Shaw spends in this additional role.

The Ilkley Clean River Campaign has written to the firm’s chair Vanda Murray asking how she is assured that “Ms Shaw is able to execute her role as CEO whilst also taking on additional work with Kelda Holdings, given the appalling performance of Yorkshire Water?”

It said: “To the customer the additional payments to Ms Shaw look like a way of 'working around' the fact that bonuses were causing public outrage and subsequently banned by government.”

Yorkshire Water customers have been left furious as only a few months after hiking bills by 29 per cent, the company brought in a hosepipe ban following record-breaking dry weather.

Kelda Group is a subsidiary of Kelda Holdings, which is part owned by the Singapore Government, US investor Corsair Capital, German firm DWS and Australian pension fund SAS Trustee Corporation.

Yorkshire Water currently has a debt to equity ratio of 70 per cent with its holding company, which regulator Ofwat describes as unstable.

Dividend payments are effectively paid as debt interest to the shareholders. In the last seven years, the company’s debt has risen from £4.2bn to £6.8bn, requiring £275m to be spent each year servicing the interest.