Scottish Water executives take home £225,000 in eye-watering bonuses
By Democrat reporter
Three senior figures at the publicly-owned Scottish Water pocketed nearly £250,000 in bonuses at the same time as prices were raised for customers, according to the Sunday Herald.
The “incentive” top ups were worth around 35% of salary, with chief executive Douglas Millican receiving an extra £92,000.
Water boss Douglas Millican and MSP Jackie Baillie.
Dumbarton and Lomond Labour MSP Jackie Baillie said: “People will be appalled that their individual bonuses are more than most people earn in a year.”
Scottish Government pay policy states that “non-consolidated performance payments”, otherwise known as bonuses, remain suspended.
The approach was taken to allow public bodies to “maximise the resources” available to address fair pay issues, but an exception is made for Scottish Water if it “outperforms the demanding efficiency targets set by its independent economic regulator”.
Scottish Water, which provides its services to 2.52m households and 152,000 business premises, is a statutory corporation answerable to Holyrood.
According to its latest annual report, senior executives can benefit from an annual out-performance incentive plan (AOIP) which links bonuses to key strategic priorities. Bonuses can be paid out to the CEO and other Executive members at a maximum of 40% of salary.
The actual amount is assessed according to four measures, such as regulated profit and customer-focused areas.
The 2017/18 accounts state that Millican received £92,000 on top of his £256,000 salary, chief operating officer Peter Farrer got a £67,000 bonus to supplement his £186,000 salary, while finance director Alan Scott took home £66,000 in AOIP.
The £225,000 in bonuses amounted to a near 7% rise on the top up payments enjoyed by the same three individuals twelve months earlier, which stood at £211,000.
As of March last year, the same set of accounts show that Millican’s pension benefits were worth £1.4m, while the equivalent figures for Farrer and Scott were £1.7m and £226,000.
In recent years, the charges for water supply and waste water collection services rose by 1.6%. The accounts also lay out details of the public corporation’s financial performance.
The headline “group surplus” before tax was £22.4 million lower than the previous year at £71.8 million. This reduction, according to the accounts, was “primarily due” to a fall in a subsidiary’s surplus and an expected increase in non-cash pension charges of £16.7 million.
However, Scottish Water, on a “regulatory accounting basis”, generated a surplus before tax of £107.8 million, which was £8.3 million higher than last year.
Baillie added: “This SNP government has got some cheek. The fact that they allow Scottish Water to award just three senior executives with eye-watering bonuses, adding up to almost a quarter of a million pounds, is shocking.
“There are expected to be significant rises for households and businesses with the cost of water in the future. The SNP need to make sure that Scottish Water spends less time topping up the already sizeable salaries of their senior executives, and a little more time supporting the hard working Scots that they claim to represent.”
Gary Cook, an organiser at the GMB Scotland trade union, said: “It’s safe to say this six figure carve up among three already highly paid individuals will be met with scorn among our members and the hard-pressed public.
“This culture of excessive bonus payments in Scottish Water and in our wider public sector needs to be reined-in by Holyrood.
“As we enter a second decade of austerity and with our finances threatened further by Brexit uncertainty, this is an appalling waste of money.”
A Scottish Water spokesperson said: “Executive remuneration arrangements are set by independent non-executive directors on the Board of Scottish Water.”