Watercare chief executive Raveen Jaduram has resigned.
In recent months he has come under pressure as Auckland's water crisis led to restrictions on outdoor water usage.
His salary of $775,000 has also been scrutinised.
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In separate statements, Mayor Phil Goff and Watercare chairwoman Margaret Devlin thanked Jaduram for his years of service as a senior employee and chief executive since late 2014.
Raveen leaves Watercare on October 31, saying in a statement it was time to consider new opportunities.
Goff said as mayor he has had regular discussions with Devlin "on ways in which we can improve the performance of the organisation".
"I have previously commented on the Watercare chief executive's salary, which is a legacy issue. My expectation is that the new chief executive of Watercare will start on a considerably lower salary than what is paid to the outgoing chief executive," Goff said.
Goff has previously said no one on the ratepayer payroll should be paid more than the new council chief executive, Jim Stabback, who starts work next month on a salary of $600,000.
The mayor has also said that since becoming mayor in 2016, new chief executive salaries at the council-controlled organisation have been less than the salary of the council chief executive.
Stabback's salary has been pegged back from the $698,000 salary of his predecessor Stephen Town.
In his statement, Jaduram said he was proud of what Watercare had achieved during his time as chief executive, including developing effective customer services to Aucklanders and big investment in infrastructure, including the $1.2 billion central interceptor wastewater pipeline from the city to the Mangere treatment plant to clean up the city's dirty beaches.
He said the Government's proposed water reforms and the just published review of the council-controlled organisations(CCOs) was the time for a new chief executive to bring a fresh approach to Watercare.
The Ratepayers Alliance said Jaduram had made Watercare one of the most transparent public sector organisations in New Zealand, his resignation was a "huge loss" to the Super City and he had been made the "fall guy" for cost overruns at the council's payroll budget.
Jaduram's salary is the highest of any executive at Auckland Council and the five CCOs.
Jaduram replaced Mark Ford as chief executive in 2014 on a base salary of $510,000, rising to a possible $586,500. Between 2016 and 2019 his salary rose from $605,000 to $775,000.
Last month, Devlin defended the salary, saying it reflects the size and complexity of the role of chief executive.
Jaduram has had to endure flak over the water crisis, brought about by the worst drought in the city's history.
This led to emergency spending of $224 million to bolster the city's water supply, restrictions on using hoses and water blasters outdoors and a four-minute limit on showers.
If the weather forecasts are correct and not enough rain falls in winter and spring, Watercare has raised the possibility of turning off the taps and making people queue for water at hydrants during summer.
The city's dams are sitting at 61.4 per cent full when normally they would be 87.1 per cent full.
Jaduram's salary is up there with some of the biggest jobs and names in the public sector. He pockets more than the head of the Defence Force, Treasury and Prime Minister Jacinda Ardern, who earns $471,000.
The highest-paid public sector boss is NZ Super Fund chief executive Matt Whineray who earns $1,065,000. Fletcher Building chief executive Ross Taylor is the highest-paid private sector boss with a salary of $5.6m in 2019.
Watercare has a history of fat salaries. Former Watercare board chairman Ross Keenan recalled Mark Ford returning to the water company after setting up the Super City on behalf of the government.
"He came back on a high and thought he had done a very good job and it was time he was rewarded. He was comparing himself to Ralph Norris and felt his worth in the job was $1 million," Keenan earlier said.
The retired businessman said he laughed at the suggestion and reminded Ford he was not in the private sector and should be rewarded with a salary below then-council chief executive Doug McKay.
When Ford left Watercare for health reasons in late 2014, shortly before he died, he was on a salary of $860,000.