Remuneration Committees and CEO Pay in the UK Privatized Water Industry

This paper examines the operation of remuneration committees in the privatized water industry through interviews with members of the remuneration committees and an empirical comparative analysis of water company and other UK CEO pay awards over the period 1991-1999. The claims made in interview that the committees work effectively, and that despite criticisms to the contrary, their CEOs are relatively underpaid, appear to be borne out by the empirical analysis. The empirical analysis also indicates that the water company remuneration committees have resisted upward drift in CEO pay levels, and that water company CEO pay awards are significantly related to firm performance.