Yorkshire Water CEO defends £1m-plus pay packet despite admitting sewage and pollution failures
Yorkshire Water’s CEO has defended her £1m-plus pay packet in a grilling from MPs, despite also admitting the company has been failing customers and the environment.
In the previous financial year, Nicola Shaw was awarded 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.
It was revealed at the Environment, Farming and Rural Affairs select committee that Yorkshire Water’s remuneration committee did not consider customer affordability when setting the CEO’s massive bonus.
This is despite the company being one of the worst offenders when it comes to sewage overflows, and the Environment Agency giving Yorkshire Water a “red” rating due to rising pollution incidents.
On top of this, customers’ bills are set to rise by almost a third from April, by £123 on average, while it was revealed at the meeting that £345m of dividends were paid out to the ownership group in 2024.
Responding to questions from MPs, Ms Shaw accepted her pay “is a large number”, but said: “On pay in particular, one of the challenges is how to adapt and move ourselves forward in a world that is very competitive.”
Explaining her £371,000 bonus, she said: “The shareholders and board of Yorkshire Water’s remuneration committee decided to set us really stretching targets in regard to a number of things.
“In particular we improved and continue to improve on leakage and in relation to our staff engagement and staff safety and they wanted to reflect that in what had been a difficult year.
“They also recognised that we did nowhere nearly well enough in relation to our outcomes in relation to the environment and removed any bonus in relation to the environment.”
Labour MP Tim Roca responded: “Fitch [Ratings] downgraded you in January, you were the second worst company for pollution in 2023, you were in the elevated concern category of Ofwat, and yet you’ve received an additional £371,000 taking your pay to £1.028m. That might seem excessive to some.
“Are you alive and are the board alive to the concerns the public have in this area?”
Ms Shaw said: “I am very aware of concerns and the board has equally been made aware of them.”
Prior to this, the CEO had repeatedly admitted Yorkshire Water’s failings, particularly around pollution and sewage issues.
She told committee chair Alistair Carmichael: “We want to achieve a thriving Yorkshire, which is doing the right thing for our customers and the environment. We know we are not doing that at the moment.”
She admitted there are 2,100 sewage overflows across Yorkshire that are discharging “more frequently than we would like”.
They discharge on average 31 times per year, and Yorkshire Water’s target is to cut this down to 20 by 2030.
These spills have contributed to a situation in which no single river in Yorkshire is considered to be in good overall health.
This includes Ilkley Beach, which has the highest level of untreated sewage anywhere in the UK.
Ms Shaw said she was “not happy” but pointed to an additional £75m of investment, and appeared to say Ofwat should have let water companies hike bills sooner.
She told MPs: “The water industry has not been sufficiently confident in making the case for more expenditure, and making sure it’s aware of the long-term impact to the environment and the impact of not doing that.”
At the same meeting, chief financial officer Paul Inman revealed that over 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.
That puts Yorkshire Water’s debt to equity ratio at 70 per cent, which regulator Ofwat describes as unstable, however Mr Inman said the company’s leadership was “very focused on having a resilient business”.