Ofwat chief executive, David Black, re-emphasised the need for “responsible decisions” on executive pay and dividends in a speech to water company non-executive directors, published last week.
In the context of the cost of living crisis and customers struggling to pay their bills, Black pointed out: “We have already stressed the importance of linking dividends and executive remuneration to operational performance and encouraged more transparency on these issues. It is vital that boards make responsible decisions on dividends and executive pay and we will be looking closely to see how companies deliver on their PR19 commitments on dividends and exec pay and on their licence obligations.”
Elsewhere in his speech, Black highlighted current and future challenges facing the sector: the state of rivers, the need to get the basics right, improving water supply resilience, the net zero transition and reducing adverse environmental impacts.
He said these challenges will demand changes of water companies, including relating to: systems, data, green infrastructure, taking a longer term approach, collaboration/partnerships, use of markets, customer influencing, and resilient financing. On the latter, Black said: “There is no good reason for regulated water monopolies to have a credit rating at the bottom end of investment grade ratings.” He promised a summer consultation to propose a way forward on addressing the issue, following last autumn’s discussion paper.
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