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Southern Water’s CEO Awarded £183,000 Bonus Despite Company’s Financial Struggles
Introduction
Southern Water, a water provider in south-east England, has been under fire for its business practices and financial struggles. Despite this, the company’s CEO, Lawrence Gosden, was awarded a £183,000 bonus for the year to March 31, increasing his total pay to £764,000. This raises questions about the company’s priorities and the impact on its customers.
Background
Southern Water has been criticized by regulators for its business plan, which did not meet "minimum" standards. The company had asked for a 73% rise in household bills over the next five years, but the regulator, Ofwat, has proposed a 44% increase. This is still a significant rise, and the company has been accused of prioritizing profits over customer needs.
Executive Pay and Bonuses
The company’s CEO, Lawrence Gosden, was awarded a £183,000 bonus, taking his total pay to £764,000. This is a significant increase from the previous year, when no bonuses were paid. The CFO, Stuart Ledger, received a £128,000 bonus, taking his total pay to £610,000. This has sparked outrage among customers and critics, who feel that the company is prioritizing executive pay over customer needs.
Impact on Customers
The proposed increase in household bills will have a significant impact on customers. The average household bill will rise from £451 to £722 by 2030, after annual inflation of 2%. This is a significant increase, and customers are likely to feel the pinch.
Regulatory Issues
Ofwat has criticized Southern Water’s business plan, saying it does not meet "minimum" standards. The company has been told to rewrite its plan and has been placed on a financial health watch list, along with Thames Water and South East Water. This raises concerns about the company’s ability to deliver services to its customers.
Investment and Financial Performance
Despite its financial struggles, Southern Water has received significant investment from its majority owner, Macquarie. The company has invested £828mn in its water and sewage network over the past year, and has received £375mn in equity funding from Macquarie and other shareholders.
Industry-Wide Issues
The water industry in England has faced widespread criticism for its handling of sewage pollution and high executive pay. The industry is responsible for extensive pollution in rivers and seas, and customers are feeling the impact of under-investment in vital infrastructure.
Government Response
The UK’s new Labour government has announced plans to ban bonuses for executives at poorly performing water companies. This is a welcome move, and could help to address the industry’s problems.
Conclusion
Southern Water’s decision to award its CEO a £183,000 bonus despite its financial struggles and regulatory issues raises questions about the company’s priorities. The impact on customers will be significant, and the company’s handling of sewage pollution and under-investment in infrastructure is a major concern. The government’s plans to ban bonuses for poorly performing water companies are a step in the right direction, and could help to address the industry’s problems.
FAQs
Q: Why was Southern Water’s CEO awarded a £183,000 bonus?
A: The company said that 75% of the available bonus was not awarded to Gosden because not all criteria were met. However, the company has been criticized for prioritizing executive pay over customer needs.
Q: What is the impact of the proposed increase in household bills?
A: The average household bill will rise from £451 to £722 by 2030, after annual inflation of 2%. This is a significant increase, and customers are likely to feel the pinch.
Q: Why has Southern Water been criticized by regulators?
A: The company’s business plan did not meet "minimum" standards, and the regulator, Ofwat, has proposed a 44% increase in household bills instead of the company’s requested 73% rise.
Q: What is the government’s response to the industry’s problems?
A: The UK’s new Labour government has announced plans to ban bonuses for executives at poorly performing water companies. This is a welcome move, and could help to address the industry’s problems.
Q: What is the impact of sewage pollution on the industry?
A: The industry is responsible for extensive pollution in rivers and seas, and customers are feeling the impact of under-investment in vital infrastructure. This has led to widespread criticism and outrage among customers and critics.
Author: www.ft.com
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