Chief executive of Welsh Water Peter Perry has staunchly defended his remuneration after being questioned by MPs in Westminster. In the spotlight for his 2021 pay packet, which totalled £892,000, Mr Perry stood his ground during a grilling by cross-party MPs on the environment committee.
Mid and South Pembrokeshire MP Henry Tufnell questioned Perry, highlighting, "In 2021, Peter, your total remuneration was £892,000 and last year you took a bonus of £91,000. I wonder whether, if you take into consideration what we've talked about with water security, environmental performance, water quality with the public health element to it, do you think level of pay is justified and that's in alignment with your not-for-profit model?".
Mr Perry corrected Mr Tufnell on terminology: "We don't have the term 'bonus' – we have the term 'variable pay' and variable pay puts at risk a potential earnings based on performance."
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He further explained that despite receiving a £91,000 sum, labelled a bonus, it represented only a quarter of what could have been earned. "100% of our variable pay is entirely based on performance" and maintained that in 2021, Welsh Water achieved a four-star environmental rating, underscoring that their reward system is "reflective of performance".
"I personally have no influence over my pay – that's decided by an independent committee of the board – and the one thing I would say is it's significant. I can't say anything else about that but it is very much linked to performance and if we don't perform then we don't reach our earnings potential,"
According to Welsh Water accounts, Mr Perry received a total remuneration of £675,000 in 2022 and £792,000 in 2023. The company has a policy allowing for variable pay of up to 100% of the salaries for the chief executive and chief finance officer each year.
For 2023, a total of 41% of this bonus was allocated.
The 2024 published accounts reveal the chief executive's base salary as £355,000, while his variable pay amounted to an additional £91,000. Including pension contributions worth £34,000 and another payment of £9,000, the cumulative remuneration for Mr Perry stood at £489,000.
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MP Mr Tufnell remarked on the issue, stating: "The environmental performance, the impact on my constituents in Pembrokeshire, the impact on the Cleddau and river quality, and pay is still being reflected in terms of that variable pay. You can call it what you like but it's the same thing."
Mr Perry acknowledged that the variable pay scheme failed to reward environmental measures in the last year and has not since 2021. Facing concerns raised by MP Mr Tufnell about public perception regarding bonuses, especially when operating under a not-for-profit model, he elaborated on the link between pay and performance.
"The public see it as a whole and it's not in line with the overall performance," commented Mr Tufnell. For an insightful daily briefing on the most pressing national issues, subscribe to the Wales Matters newsletter here.
Interim chief financialoOfficer Samantha James explained that while setting remuneration, they had to strike a balance between attracting "the right people" for the roles and meeting public expectations. "There is a fixed and a variable element of pay. If you look at the fixed element it is one of the lowest in the sector. The variable one is only paid out when business achieves certain levels of performance."
She noted that the company hasn't rewarded environmental performance "for some time".
Mr Tufnell drew comparisons between the Welsh Water CEO role and other high-profile positions in Wales. He cited the chief executives of Cardiff and Pembrokeshire councils, who earn £229,000 and £212,000 respectively, despite managing thousands of employees and substantial budgets.
He contrasted these figures with the 2021 earnings of Mr Perry. "That's wildly different figures compared to very similar levels of responsibility and impact on lives and livelihoods," he observed.
Ms James assured that the remuneration was set annually by an external body and underwent rigorous scrutiny. "They're not insignificant numbers but it goes through a lot of scrutiny," she informed the committee.