Helen Campbell, Executive Director, Delivery at Ofwat, has written to the Remuneration Committee Chairs of the English and Welsh water companies warning them that excessive increases in base pay, retention payments or other types of remuneration without sufficient justification and transparency could undermine Ofwat’s objective of rebuilding public trust.
The water sector regulator recently proposed new regulatory reporting requirements on remuneration which were finalised on 31 March 2026 and will apply to reporting for the 2025-26 financial year.
The new reporting requirements now mandate that companies transparently explain any changes they have made to their remuneration policy, including a sufficient reason for those changes. Changes could include a significant rise in base pay, amendments to how an annual bonus scorecard is structured, or the introduction of new schemes – whether performance related or not.
“We have observed stakeholder concerns over the year that water companies are trying to circumvent the rule"
Helen Campbell told the Committee Chairs:
“As you will be aware, the last financial year saw once again significant stakeholder attention on executive remuneration. Whilst this was the first year in which we applied our new Performance related executive pay (PRP) Prohibition Rule, there was also a lack of transparency in how water companies disclosed and justified their remuneration decisions….
“We have observed stakeholder concerns over the year that water companies are trying to circumvent the rule, whether through increases in fixed pay or via other schemes such as a retention payment scheme.
“Such concerns show how important each company's approach to remuneration is to rebuilding trust and confidence in the sector.”
The letter, which was also copied to the Chairs of the English and Welsh water companies, reminds them of their licence obligation, set out in Condition P, to meet the objectives of the 2019 Board, Leadership, Transparency and Governance Principles.
Pointing out that the third objective is that "the Board of the Appointee’s leadership and approach to transparency and governance engenders trust in the Appointee and ensures accountability for their actions,"
the letter says:
“In the context of our requirements, we will be evaluating whether water companies' decisions on all executive remuneration are aligned to this principle.”
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