Severn Trent chief’s pay package rises to £3.2mn despite pollution fine

Severn Trent has awarded its chief executive a total pay package of £3.2mn, including a £584,000 bonus, just months after the water utility received a £2mn fine for water pollution.

Liv Garfield, the chief executive of FTSE 100-listed Severn Trent, which provides 4.6mn households and businesses in England with sewerage and water services, saw her total pay increase by 2.1 per cent on last year, according to the annual report released on Tuesday. This was despite Garfield’s bonus being cut because of the fine.

Garfield has earned at least £27.7mn in total remuneration since becoming chief executive in April 2014, according to a study by the Financial Times of the company’s accounts.

The industry is under intense scrutiny over the unknown quantities of sewage pouring into rivers and coastal waters, which is set to be a critical issue during the general election next month. The Conservatives, Labour and the Liberal Democrats have discussed restricting water company bonuses in cases of severe sewage pollution.

The pay awards come as water companies ask customers to pay for steep increases in bills, with a draft decision expected by regulator Ofwat in July. Severn Trent has proposed a 36 per cent increase in bills to £546 a year per household excluding inflation by 2030.

Susan Davy, the chief executive of FTSE-listed Pennon, which owns South West Water, said on Monday that she had forgone her annual bonus that would have been worth £237,000. Davy’s pay rose to £860,000, up from £543,000 in 2022-23 as she picked up a long-term performance award to be held for two years and reinvested in Pennon stock.

Pennon was already under fire for paying a £127mn dividend to shareholders, days after a parasitic outbreak in drinking water in Devon.

Severn Trent said Garfield had her bonus reduced because of the £2mn fine received for pollution in February. This allowed huge amounts of raw sewage to flow into the river Trent near Stoke between 2019 and February 2020.

About 260mn litres of this — the equivalent of 10 Olympic-sized swimming pools — was discharged illegally and in breach of permits.

An Environment Agency investigation found that a pump at the Strongford wastewater treatment works near Stoke-on-Trent had been broken for 52 days prior to the incident.

Severn Trent said Garfield’s bonus was justified as the company had delivered against “operational targets for customers” and achieved a “4-star rating from the Environmental Agency for a fourth consecutive year”.

“Just under three-quarters of executive pay is directly linked to performance, with stretching targets in place,” the company added.

Shares in the company closed down 0.8 per cent to £23.87 a share in Tuesday trading.

Although water companies are required as of last year to have electronic monitors on combined sewage overflow pipes, these measure the frequency but not the volume of spills.

There are also an additional 7,000 emergency pipes, which are meant to operate only in urgent circumstances such as power outages, that do not yet have monitors, but will be required to have them installed by 2030.