An extended equation of dispersive water waves, proposed by Kupershmidt, is considered. By an ansatz on eigenfunctions of its recursion operator, a linear spectral problem, which turns to be type of the energy dependent Schrödinger, is constructed for the system. As by-products, modified systems are presented. Furthermore, a new bi-Hamiltonian system is obtained and shown to be related to a three component generalization of the Camassa–Holm equation under a Miura-type transformation.