Southern Water boss doubles salary whilst debt piles up and company hikes customer bills
Southern Water, the second most indebted water firm in the UK, faces growing reputation issues following doubling of CEO compensation in 12 months.
Southern Water’s CEO received £1.4 million pay package in the last financial year – double his previous year’s earnings. This is despite the company’s soaring debt and a regulatory ban on performance-related bonuses. Few things can damage a firm’s reputation more than when its leadership is financially compensated for overseeing a failing entity.
Lawrence Gosden’s compensation included:
- £500,600 salary
- £691,200 from a long-term incentive plan
- £111,400 in benefits
- £75,100 in pension contributions
This payout nearly doubled his previous year’s earnings of £764,200.
The revelation will likely infuriate Southern Water customers and further tarnish its reputation amid ongoing environmental and financial issues.
Indeed, the company’s financial struggles are well-documented having amassed £9 billion in debt. This makes it one of the most heavily indebted water company in the UK – second only to Thames Water.
Misaligned priorities
Across the board, high executive pay packages always come under scrutiny. For many sectors, it can be justified; good talent costs more but as long as the organisation can see significant returns from its people investment then that is simply good business.
But the case of Southern Water (and others) is different. Here we have a clear prioritisation of executive interests over customer and environmental concerns. This creates scepticism about whether the company’s leadership is truly committed to improvement and accountability, which leads to a further erosion of trust.
Worsening reputation
Trust is a key component of brand equity. Customer and public perception of Southern Water will only deteriorate on the back of this news, especially when one considers that that they are also among a group with five other water companies urging regulators to allow them to charge their customers even more than previously granted. It is not a good look.
Time for nationalisation of the sector? Not likely
The timing and scale of the CEO’s pay will add to the growing pressure on the government to re-nationalise the water industry. But the Labour government says that is not going to happen on their watch.
Estimates suggest that nationalising the sector would cost UK taxpayers between £90-£100 billion. At a time of economic uncertainty and speculation of further tax hikes still to come, the consequences of asking the public to take on even more debt are not worth thinking about.
Last word
The reputation of UK water companies has suffered significant damage in recent years, driven by a combination of environmental scandals, executive pay controversies, and systemic underperformance. Southern Water is among the worst performers.
Figures show that Sothern Water, Thames Water, and Yorkshire Water were responsible for 80% of sewage spills in 2024 alone. As customers face rising bills and the environmental degradation continues, the prioritisation of shareholder returns over environmental and customer outcomes is clearly evident.
This is not my field. I can only speak on these matters with a reputation management hat on. However, as a Thames Water customer, it seems to me that the solution to the water industry problem is not nationalisation but better regulation.
So, while the water companies struggle to regain customer trust and protect what little positive perception they might have, the government needs to step in and take a harder line against those companies putting shareholder returns before customer and environmental concerns.
