Yorkshire Water CEO's £1.35m Remuneration Package Raises Concerns Amidst Government's Ban on Bonuses

Strategic Insights -

Nicola Shaw, the CEO of Yorkshire Water, received a £660,000 payment from Kelda Holdings, the company's Jersey-registered parent, in addition to her main salary and bonus payments, totaling almost £1.7m in 2023-24. This extra payment was not disclosed in Yorkshire Water's annual report, but was only revealed after an investigation by The Guardian. The payment was part of Shaw's overall remuneration package, which included a base salary of £585,000, a bonus of £371,000, and additional benefits of £72,000.

Key Takeaways:

  • The £660,000 payment from Kelda Holdings was not declared in Yorkshire Water's annual report, and was only revealed after an investigation by The Guardian.
  • Nicola Shaw's overall remuneration package in 2023-24 was almost £1.7m, making her one of the highest-paid CEOs in the water industry.
  • Shaw has stated that she "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.
  • A Yorkshire Water spokesperson said that this work is recognized by a fee of £660,000 paid by shareholders, and that the company does not believe that this work should be paid for by Yorkshire Water customers' bills.
  • 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 has a debt to equity ratio of 70 per cent, which is described as unstable by water regulator Ofwat.
  • Dividend payments are effectively paid as debt interest to the shareholders, requiring £275m to be spent each year servicing the interest.
  • The company has a history of significant debt, with its debt rising from £4.2bn to £6.8bn in the last seven years.
  • Sewage spills have contributed to a situation in which no single river in Yorkshire is considered to be in good overall health, with Ilkley Beach being the most polluted waterway in the country.
  • The Environment Agency has given Yorkshire Water a "red rating" for pollution, and recent figures show that it had the third most serious pollution incidents of any water company in the country.
  • Yorkshire Water agreed to pay regulator Ofwat a £40m fine in March, and as a result, Shaw and chief financial officer Paul Inman will be banned from taking a bonus for the 2024-2025 financial year.

Statistics:

  • Nicola Shaw's overall remuneration package in 2023-24 was almost £1.7m.
  • Shaw's base salary in 2023-24 was £585,000.
  • Shaw's bonus in 2023-24 was £371,000.
  • Shaw's additional benefits in 2023-24 were £72,000.
  • The £660,000 payment from Kelda Holdings was not declared in Yorkshire Water's annual report.
  • Yorkshire Water's debt has risen from £4.2bn to £6.8bn in the last seven years.
  • Yorkshire Water's debt to equity ratio is 70 per cent.
  • The company spends £275m each year servicing the interest on its debt.
  • Ofwat has given Yorkshire Water a "red rating" for pollution.
  • Yorkshire Water had the third most serious pollution incidents of any water company in the country.

Sources:

  • The Guardian (no date)
  • Yorkshire Water (no date)
  • Kelda Holdings (no date)
  • Ofwat (no date)
  • Environment Agency (no date)
  • Defra (no date)
  • Tom Gordon, Lib Dem MP for Harrogate and Knaresborough (no date)