Mr Ackroyd will donate 25% of his bonus to charity
The chief executive of Scottish Water is to give a quarter of his annual bonus to charity.
Richard Ackroyd, who is Scotland's highest earning public servant, is entitled to a performance-related bonus on top of his £263,000 a year salary.
Mr Ackroyd said 25% of his award will be donated to the charity WaterAid.
The total value of Mr Ackroyd's bonus will be determined by the company's performance at the end of the current financial year.
It could be up to 40% of his salary if the quango's board decides that business targets have been outperformed.
He was handed a £100,571 bonus last year.
Mr Ackroyd's decision followed an appeal from Scotland's Finance Secretary John Swinney for public sector executives to forgo all or part of their bonuses.
Mr Swinney wrote to 28 public bodies and government agencies last year, including Scottish Water, business development agency Scottish Enterprise and the Scottish Environment Protection Agency on the issue.
Mr Ackroyd said: "I have looked carefully at all the circumstances and at how people are being affected by the consequences of the downturn in the economy.
"My priority as chief executive is to ensure that Scottish Water continues to deliver increasing value for money for our customers and that objective is even more vital in the current circumstances.
"While all Scottish Water staff must be properly rewarded for delivering outstanding performance, Scottish Water will divert 25% of any incentive payment due to me for our performance in 2009/10 to go to charity."
The company's current bonus structure was set up in 2002 and last agreed by minister's in 2006.
A Scottish government spokeswoman said: "This is a welcome step by Mr Ackroyd.
"The finance secretary has made clear his desire that chief executives of public bodies should give up some or all of their bonus voluntarily.
"That request has already produced positive responses."
Jeremy Purvis, the Liberal Democrat finance spokesman, said he doubted whether the public would be "impressed" by Mr Ackroyd's actions.
He added: "What we need is the government to make sure that no quango boss receives any bonus this year.
"This is taxpayers' money after all and the system should not revolve around the partial generosity of one individual boss."
Scottish Labour finance spokesman David Whitton said Mr Ackroyd was effectively making a donation to charity with taxpayers' money.
He added: "It would have been far better if he had agreed to forego his bonus, as he was asked to do, and this money was spent supporting frontline services."
Derek Brownlee, Conservative finance spokesman, said: "The issue here is that Scottish Water needs to be taken out of state control to free up £140m of public spending, to be spent on other frontline services. Scottish Conservatives have continually been calling for this to happen."