Water board member demolishes proposal to increase salary of CEO paid £892k

Martin Shipton

A Member of Glas Cymru, the not-for-profit company that owns Dŵr Cymru Welsh Water, has ripped to shreds the idea that the firm’s chief executive deserves to be paid more.

Peter Perry, the current CEO of DCWW, is due to retire in spring 2026. His most recent annual remuneration was £489,000.

In a letter sent to all Members of Glas Cymru, Jo Kenrick, who chairs the Dwr Cymru Remuneration Committee, refers to the need to update the way executive salaries are determined.

Members of Glas Cymru have a governance and oversight role.

Changes

She states: “The key factors driving our proposed changes are:

Increasing disparity between our positioning of Executive Remuneration compared to the rest of the UK Water Sector and beyond, potentially limiting our ability to attract required talent into Executive Director roles. Benchmarking against the UK Water Sector … shows that current salaries of both the CEO and the CFO [Chief Finance Officer] are at the bottom end of the table for Executive pay, and increasingly we note that the roles below Executive Director level are commanding salaries that are close to those of our Executive Directors. This will become increasingly important in light of our imminent Executive Director succession.

Changes to the regulatory regime making our current pay scheme unviable … Changes to the regulatory regime since 2023, including [the industry regulator] Ofwat’s unprecedented powers of intervention on performance-related pay decisions, mean that our ability to operate our variable pay plans in this way is no longer viable.

Implications of the Water (Special Measures) Act 2025: The Act further erodes the Remuneration Committee’s ability to determine whether and at what level variable pay should be paid. The Act gives Ofwat the power to prohibit the payment of all performance-related pay if certain factors are triggered … If we are not able to pay our most senior talent competitively for genuine progress during this period, then we risk losing them to peers or outside the sector, and we will struggle to recruit replacements of the necessary calibre to deliver what is required.”

One-off increases

The Remuneration Committee proposes making one-off increases to the salaries of the CEO and the CFO ‘to bring their salaries closer to market levels’. The repositioning of the base salary will ensure that the CEO and CFO are more fairly paid for their roles … [We] expect that there will be an increase to fixed pay, across the sector as other companies respond to the impact of the Act. We therefore believe that this repositioning is even more critical now, to ensure that we do not fall further below our current market position.”

One of the members of the DCWW board is Steve Thomas, the former chief executive of the Welsh Local Government Association.

In a written response to Ms Kenrick, which has been sent to all members of the board, Mr Thomas states: “These proposals – trailed in recent meetings and now put forward for formal consideration – come at a time of intense public scrutiny, regulatory intervention, and persistent performance failures within the company. After careful reflection, I strongly oppose the proposal to increase executive salaries.

“I would sincerely hope that fellow Council members recognise the gravity of this moment. To support such a proposal would seriously undermine the already fragile credibility of the Glas Cymru governance model. One that is being openly questioned by Ofwat and within the Senedd. Can I further clarify whether this proposal has been endorsed by Ofwat? If so, it should be stated clearly. If not, the rationale for pressing ahead becomes even more questionable.

“At best, this is a tone-deaf proposal—particularly the suggestion of a one-off payment. At worst, it is an indefensible misjudgment by the Executive Board.

“The UK water industry is already mired in scandal over executive pay: widespread environmental violations, service failures, and customer dissatisfaction. The fact that this has done little to dampen the flow of multi-million-pound bonuses means public anger is justified – and growing.

“This proposal will widely be seen as a cynical attempt to get round – or as you euphemistically say in your letter – to ‘mitigate’ the provisions and intention of The Water (Special Measures) Act to limit water industry executive pay. To do so while the Cunliffe Commission [due to come up with a set of recommendations to reform the water sector regulatory] is in the middle of its deliberations is to invite public scorn. You ignore clear government policy and public opinion at your peril. This at a time when bills are set to increase by the highest levels in the UK with a 27% rise in 2025-26

“The letter again fails to reflect the Welsh devolved context, which remains markedly different from the situation in England. Scotland and Northern Ireland have adopted a more restrained, socially responsible approach—yet the Remuneration Committee continues to gaze across Offa’s Dyke, benchmarking against some of the most excessive and controversial salary levels in the sector – and public utilities more widely. “That is not leadership. It is mimicry of the worst kind.

“Below, I outline the core reasons for my objection.

1. Misguided Justification for Higher Pay

The assertion that executive salaries must rise to remain ‘competitive’ is fundamentally flawed in the context of a not-for-profit utility. The Cunliffe Review was established to undertake a root-and-branch examination of Britain’s water sector—including executive pay. Why are these proposals emerging in advance of its findings?

Dŵr Cymru exists to serve the public, not to enrich executives. Benchmarking against private-sector, profit-driven companies is inappropriate. If senior leaders seek private-sector compensation, they are welcome to pursue private-sector roles.

“No evidence has been presented that current pay is hampering recruitment. Where is the data showing that qualified candidates have declined roles due to salary?

Comparing salaries within Dŵr Cymru to those in discredited companies like Thames Water and United Utilities is not only ill-judged – it underscores a corporate mindset that has lost sight of public accountability.

“Some might also question the concept of Dŵr Cymru having to remain ‘competitive’ when it is not operating in a competitive market, providing a monopoly public utility and does so as a not-for-profit or not-for-shareholder company?

2. Rewarding Failure.

“The timing of this proposal is incomprehensible. Dŵr Cymru has now been found wanting by all four of its regulators. It was fined £40m by Ofwat for misreporting performance data and has been downgraded by Natural Resources Wales from a 4-star to a 2-star performance for its environmental performance, including increased sewage pollution.

“In addition, the Drinking Water Inspectorate has put Dŵr Cymru in Special Measures on two key indicators on water quality and the Consumer Council for Water assessed Dŵr Cymru’s customer satisfaction performance as in the category ‘Poor’ – with 62.1 complaints per 10,000 connections – the third worst ranking of all companies. The company’s customers now endure some of the highest water bills in the UK and many of the most polluted rivers.

“Is this time for already highly paid executives to seek ‘one-off’ salary increases to ‘align with the market’; particularly as they approach the end of their careers? On what moral or operational basis is this defensible? Bonuses are to be earned, not expected. Your own admission that variable pay was previously awarded with a ‘reasonable expectation of payout’ reveals the system has become a vehicle for entitlement, not performance.

“The Water (Special Measures) Act was introduced to constrain reckless executive rewards. Shifting compensation from variable to fixed pay circumvents the spirit – if not the letter – of that regulation. How can leadership justify pay increases while households face rising costs and worsening service? If these proposals are agreed Dwr Cymru needs to formally drop the not-for-profit label which has become increasingly inaccurate as a description of the governance model.

3. A Deficit of Transparency and Accountability

“The rationale behind the proposals provided lacks substance. There are no concrete, performance-linked justifications—only vague references to ‘market alignment’. The management sophistry around ‘variable pay’ in Dwr Cymru is concentrated on the deployment of low bar targets and non-challenging metrics rather than genuinely improving performance.

Where are the measurable outcomes that warrant a pay rise? Fewer pollution events? Faster leak repairs? Higher customer satisfaction?

Where is the cost-benefit analysis for customers, who will ultimately fund this proposal? You state in the letter that ‘the committee has been informed of public opinions and sentiments concerning the water industry and remain acutely aware of this in our decision making’. If that is the case, can you point to the empirical evidence for significant public support to increase senior executive remuneration?

“Are these proposals unanimously supported by all Executive Board members? If so, it confirms that the board is effectively a tool of management and cares more about the organisation than its customers.

The ‘interactive sessions’ appear more performative than consultative. Is stakeholder input genuinely being considered, or is this simply a procedural formality?

4. Performance-Related Pay

“Looking at the 12 measures for Dwr Cymru in the recent Ofwat water company performance report, seven of them were in the ‘poorer than performance commitment level’. Dwr Cymru finished in the bottom three of the performance league table in the ‘lagging’ category.

“Therefore, as a counter proposal can I ask for a new approach. If the goal is to reward impact, then base it on actual, demonstrable improvement. I propose:

* A freeze on all executive and board salaries until measurable service improvements are achieved.

* Bonuses linked to strict, transparent targets—including environmental performance, regulatory judgements and customer satisfaction.

“Executives claiming to serve the public should have no issue accepting such conditions. Indeed, if your proposals are agreed to go forward to the AGM, I will place a counter notice of motion opposing them along the lines set out above.

Conclusion:

Dŵr Cymru cannot credibly claim to operate ‘for the public good’ while seeking to increase executive pay amidst systemic underperformance. This proposal is not only untimely – it is indefensible. I urge the Remuneration Committee to:

Withdraw the proposed increases in executive salaries and await the outcomes of the Cunliffe Review.

Tie any future pay enhancements to clear, measurable results based on company performance not meaningless metrics.

Commit to genuine transparency with stakeholders before resuming any further remuneration discussions.”