The boss of Southern Water received an almost £700,000 payout linked to the company’s performance just weeks before a ban on bonuses for the firm was introduced.
Lawrence Gosden took home a base salary of £500,600 in the last tax year in addition to the “long-term incentive” payment.
While the settlement is legal under the frameworks in place at the time, it has been branded “morally disgraceful” by critics.
Southern Water has often been criticised for its pollution incidents, including pumping sewage into the seas off the Kent coast, as well as having dozens of leaks across its network.
Mr Gosden also received payments of £111,400 worth of benefits and £75,100 of pension-related benefits, according to a Southern Water report.
Thanks to the company’s two-year “turnaround plan”, Mr Gosden will receive an extra £691,200 over the next two years thanks to overseeing the business’s Long-term Investment Plan (LTIP).
Chris Stanley, a retired magistrate who was taken to court after he withheld the Southern Water portion of his bill, has hit out at the system allowing Mr Gosden to be rewarded.
Speaking to KentOnline, he said: “It’s legal, because the law was passed after it was agreed but morally, it’s disgraceful.
“I was told in court I could not withhold my payment because they have a statutory right to collect that money even if they perform very badly and pollute the sea.
“I think most reasonable people would agree they do pollute the sea.
“They continue to abuse their position, and I don’t know what performance this is supposed to be, but it must be a corrupt set-up that allows somebody to be paid hundreds of thousands of pounds extra for doing a very bad job.”
Southern Water says the expense will be paid for entirely by shareholders, not customers, who will continue to invest, having already put £1.6 billion into the firm.
It comes despite the government’s water regulator, Ofwat, confirming Southern Water is now one of six companies forbidden from paying senior executives traditional bonuses for failing to meet high standards.
This new rule, which came into effect in June, prevented Mr Gosden from pocketing a further £396,475, but the company says his LTIP bonus up to the end of March will be paid in full as it was agreed before the ban was brought in.
Ofwat has also clarified its priority is to protect customers and that it couldn’t intervene on this occasion.
For the eighth consecutive year, Southern Water says no dividends were paid to external shareholders – with no plans to make any dividend payments until 2030 at the earliest.
A Southern Water spokesperson said: “Chief executive and chief finance officer salaries and benefits are decided by the Remuneration Committee, with a majority membership of independent non-executive directors, and following protocols and rules set out by Ofwat and in accordance with the law.
“Their decision is reviewed by external remuneration consultants who bring sectoral and wider business experience as well as remuneration expertise.
“Lawrence Gosden’s 2025 package includes a relocation allowance and Long Term Incentive Plan paid by shareholders, which marks improvements made during the delivery of our Turnaround Plan.
“Both of these payments represent common industry practice.”
The two-year turnaround plan was designed to deliver “a short sharp boost in performance” after being plagued with complaints over sewage leaks and dumping.
A new 24/7 Control Centre now coordinates activity across the Southern Water network, using data from 32,000 digital sewer monitors.
Southern Water bosses say this has been the driving force behind total pollution figures dropping by more than 30% during the Turnaround Plan period.
The firm also says it has reduced overall leakage, with an 18% fall in 2024/25.
According to the Environment Agency, Southern Water was responsible for 15 pollution incidents considered to pose “serious or persistent” harm to fisheries, drinking water and human health last year.
In April, bosses pleaded guilty in court to 13 counts relating to untreated sewage spills on the Kent coast.
The Environment Agency brought the prosecution, which relates to unpermitted discharges from Margate and Broadstairs wastewater pumping stations, committed between July 2019 and December 2021.
The company has not yet been sentenced.
