Severn Trent has doubled the size of a long-term reward scheme for its new chief executive, James Jesic, to as much as £3.1 million, a move that could see him significantly outearn his predecessor despite widespread anger over water company executives' pay.
LTIP Increase and Potential Earnings
The FTSE 100 water company revealed in its annual report that the long-term incentive plan (LTIP) for Jesic would increase from 200% of his base salary to 400%. Including salary, annual bonus, LTIP, and benefits, Jesic could receive as much as £4.8 million in a single year.
Jesic started as chief executive in January on a base salary of £775,000. In the first three months of 2026, he earned £740,000 in pro rata salary and bonuses, which were not banned because he was not CEO during the incidents that triggered regulatory penalties. However, he was employed in a senior role at the time.
Context of Regulatory Scrutiny
Water company pay has faced intense scrutiny amid public disgust over sewage discharges into Britain's rivers and seas. Severn Trent's previous CEO, Liv Garfield, was among those blocked from receiving bonuses for the financial year ending March due to environmental failures. Severn Trent had escaped the ban the previous year and complained bitterly, arguing the penalty was disproportionate and undermined the sector's ability to attract talent.
The utility, which serves 4.7 million customers across Bristol, the Midlands, and east Wales, also removed an environmental performance measure from the criteria determining future bonuses. The company said the measure could be heavily influenced by factors outside management's control, reducing its effectiveness. It replaced it with a customer service metric, while some other environmental measures remain.
Criticism from Campaign Groups
James Wallace, chief executive of the River Action campaign group, criticized the pay package, stating: “The public will rightly question whether any chief executive should receive a multimillion-pound pay package when the company they were responsible for recorded around 36,000 sewage spills lasting more than 200,000 hours in 2025.”
Severn Trent's theoretical maximum pay for Jesic in a single year could reach £4.8 million, including salary, bonuses, benefits such as an electric car and a £15,000 green travel allowance, plus pension contributions. This would significantly exceed the £3.9 million peak annual earnings for Garfield in 2022.
Company Defense and Future Outlook
A Severn Trent spokesperson defended the policy, saying: “Our remuneration policy follows both the letter and the spirit of Ofwat’s rules. We have been completely open with Ofwat and our application of the rules, which apply to all our incentive programmes, is entirely compliant and is funded by shareholders and not customer bills. Critically, our policy is focused on delivering long term for our customers, communities and continued sector-leading environmental performance. We’re investing billions in our infrastructure at record levels and at an accelerating pace, reducing spills by 41% last year, and remain highly confident of achieving the top environmental status for a record-breaking seventh year.”
Severn Trent's LTIP remains subject to any future bonus bans by Ofwat. Other companies have faced similar criticism; United Utilities awarded its CEO Louise Beardmore a £435,000 allowance with no performance conditions. A United Utilities spokesperson said the company was committed to competitive, market-based remuneration and that increased pay reflected strong performance.
