United Utilities chief to quit with potential £4m payout

Philip Green, head of Warrington-based water company United Utilities, is expected to announce plans to quit this week, in a move that will allow him to cash in shares and options worth £4m. The payment is part of an incentive plan negotiated by Green when he joined the company in 2005 with a brief to sell "non-core" assets and turn the company into a "profitable pure water play". The shares and options windfall will come on top of the £1.7m that Green collected last year. The original remuneration scheme involved Green spending £650,000 of his own money to buy shares in United Utilities, which employs 9,000. He was given five years to reshape the company that previous management had turned into a mini conglomerate loathed by City investors who argued the firm needed sharper focus. Green went to work quickly, selling an electricity distribution business in the north of England for £1.5bn and returning the proceeds to shareholders. In total, he sold more than half a dozen "peripheral" businesses , including a gas pipeline network, a telecommunications firm and a stake in a water company in the Philippines. "United Utilities had imperial ambitions that never quite came off, so Philip's job was to bring the company back down to earth," said one analyst. Despite his success, the company has been hit by a tough new pricing regime imposed by regulator Ofwat that will hit half-yearly profits, due to be announced this week. Green cut the dividend to take account of an expected drop in income after Ofwat forced United to cut prices by over 4%. The company has more than 7 million customers. United is believed to be struggling to find a successor for Green after the leading candidate, Kevin Whiteman, chairman of Kelda, the parent company of Yorkshire Water, dropped out of the running. In the City, speculation is swirling that United could become a bid target for a private equity group after Green leaves. The share price closed at 628p on Friday, valuing the company at £4.3bn. The prospective dividend yield is 5.3%. Nomura Securities said recently: "We are likely to see mergers and acquisitions activity in the UK water space in the coming 12 months. Debt financing for infrastructure deals is increasingly available, despite tighter covenants."