There are three key principles of our approach to executive remuneration.
1
Align
to our purpose, vision and strategy
2
Incentivise
great customer service
3
Create
long-term value
for all of our stakeholders
Key measure of shareholder value
Delivering the best service to customers is a strategic objective.
Ofwat can apply financial incentives or penalties depending on our customer service performance.
Delivering the best service to customers is a strategic objective.
Delivering the best service to customers is a strategic objective.
Keeping tight control of our capital programmes ensures we can provide a reliable service to our customers at the lowest sustainable cost.
Deferral of part of bonus into shares aligns the interests of executive directors and shareholders
Outperformance will result in an increase to RoRE which should translate into higher returns for investors through share price performance.
Delivering the best service to customers is a strategic objective.
There is a direct financial impact on the company of Ofwat incentives and penalties for delivery/non-delivery of customer promises.
Ensures continued alignment with shareholder interests and provides an additional period over which withholding can be applied.
It is important that each executive director builds and maintains a significant shareholding in shares of the company to provide alignment with shareholder interests.
KEY
The best service to customers
At the lowest sustainable cost
In a responsible manner
Communities
Customers
Environment
Investors
Suppliers
A significant proportion of executive directors’ pay is performance-linked, long-term and remains ‘at risk’ (i.e. subject to withholding and recovery provisions for a period over which the committee can withhold vesting or recover sums paid):
Fixed pay comprises base salary, benefits and pension.
The charts below show the results of the performance against targets for the annual bonus and LTP.
ANNUAL BONUS – YEAR ENDED 31 MARCH 2021
Underlying operating profit(1)
£763.0m
C-MeX ranking versus the other water companies
5th out of 17
Written complaints
16.51
Outcome delivery incentive (ODI) composite
£18.1m
Time, Cost and Quality index (TCQi)
95.3%
LONG TERM PLAN – THREE YEARS ENDED 31 MARCH 2021
Total shareholder return (TSR)(2)
48.0%
Underlying dividend cover(3)
1.35
Customer service excellence(4)
4th out of 11