Scottish Water has defended a decision to pay senior executives £338,000 in bonuses.

The four longest-serving board members also had pension pots worth £4.2 million, 10% more than the previous year. But the bonus pot fell by 22% in the 2012/13 financial year.

Chief operating officer Peter Farrar had an 11% pay rise after being promoted.

The board earned £1.4m, a 12% drop on the previous year.

Chief executive Douglas Millican is Scotland's highest-paid public-sector employee, earning a basic £200,000, £65,000 bonus and £11,000 in other benefits.

Former chief executive Richard Ackroyd earned £212,000 a year at the time of his death last October.

Asset management director Geoff Aitkenhead received an extra £69,000 in bonus and benefits as part of his £241,000 remuneration package.

Commercial director Chris Banks earned £67,000, bringing his total wage packet to £226,000.

Scottish Water has delivered £487m of investment in 2012/13 while giving Scots customers the lowest bills in Britain. It also froze charges in 2012/13.But the group made a £95.1m surplus, down from £107m.

A Scottish Water spokesman said: "This is a high-performing business in Scotland, increasingly valued internationally and delivering the investment that Scotland needs. We need the right person in charge of that."

He added Mr Millican's salary was 10% lower than that of his predecessor.