AWG comes clean over ?500,000 in special bonus payments

AWG, the Anglian water and infrastructure management group, paid almost £500,000 in special bonuses to four directors last year in a move it accepts falls short of corporate governance best practice.

The payments, detailed in the AWG annual report, were made last July after a refinancing exercise that ring-fenced the group's water business and returned £500m to investors.

The report shows that former chief executive Chris Mellor, 55, who left the group in March with a £1.2m compensation package, received a bonus of £150,000, taking his total pay for the year to £487,000. Finance director Elliott Mannis picked up £200,000 in addition to his bonus. Roy Pointer, chief executive of the water business, was paid £100,000 and executive director Tony Eckford received £25,000.

In a surprisingly frank admission, the chairman of AWG's remuneration committee, Jim McKenna, told shareholders: "In accordance with best practice, the committee has now determined that special or transaction bonuses would not be expected to be paid in the future." A spokesman for the company said yesterday that the bonuses seemed "entirely appropriate" at the time and there was no suggestion that they should be repaid.

"We want people to recognise that we have been open and have made it clear that we won't be doing it again."

The group is braced for possible fallout at its annual meeting this month.

But a National Association of Pension Funds spokesman welcomed the statement. "Transaction bonuses are generally inappropriate. It's encouraging that the company is acknowledging that."