Thames Water has «withdrawn» plans to pay senior bosses bonuses linked to the company securing a £3bn emergency loan, the environment secretary has said.
Steve Reed confirmed the proposals had been dropped during an Environment, Food and Rural Affairs (Efra) committee session with MPs on Tuesday.
The so-called retention plan would have amounted to 50% of senior bosses’ salaries – leading to them getting £1m on top of their annual salaries and regular bonuses.
The payments were linked to the struggling firm securing a rescue loan of up to £3bn to stave off collapse earlier this year.
The company’s chairman had earlier in the day admitted to incorrectly stating the retention plan was «insisted upon» by lenders.
Thames Water had been «trying to circumvent» upcoming rules that can ban water companies from paying bonuses by «calling their bonuses something different», Mr Reed told MPs.
«It was the wrong thing to do,» he said. «It offends against their own customers’ sense of fair play.»
A spokesman for Thames said: «It has never been the Thames Water board’s intention to be at odds with the government’s ambition to reform the water industry.»
The company’s board «has decided to pause the retention scheme and await forthcoming guidance from the regulator» in relation to the new rules, he added.
In a letter to the committee, Thames Water’s chairman Sir Adrian Montague said he may have «in the heat of the moment […] misspoken» when he was quizzed on the firm’s turnaround at an Efra session last week.
Thames Water is England’s biggest water firm, supplying around 16 million households across London and the South East.
It has been at the centre of growing public outrage over the extent of pollution and rising bills – which have inched higher while executives have been paid huge bonuses.
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New rules from the Water Services Regulations Authority (Ofwat) mean bonus payments to bosses can be banned if companies fail to meet standards to protect the environment, consumers and company finances.
It could also block payments funded not just by customer money, but by lenders and shareholders.
Thames Water has «withdrawn» plans to pay senior bosses bonuses linked to the company securing a £3bn emergency loan, as confirmed by Environment Secretary Steve Reed during an Environment, Food and Rural Affairs (Efra) committee session with MPs on Tuesday.
The proposed retention plan would have seen senior bosses receiving 50% of their salaries, resulting in an additional £1m on top of their annual salaries and regular bonuses. These payments were contingent upon the struggling firm securing a rescue loan to prevent collapse earlier this year.
The company’s chairman had previously stated that the retention plan was «insisted upon» by lenders, but later admitted to incorrectly conveying this information. Thames Water had attempted to bypass upcoming regulations that could prohibit water companies from paying bonuses by disguising these payments under a different name, according to Mr. Reed’s testimony to MPs.
«It was the wrong thing to do,» Reed stated. «It offends against their own customers’ sense of fair play.»
A spokesperson for Thames Water clarified that the board never intended to oppose the government’s efforts to reform the water industry. The board has decided to pause the retention scheme and await further guidance from regulators regarding the new rules.
In a letter to the committee, Thames Water’s chairman Sir Adrian Montague acknowledged that he may have misspoken during a previous session when questioned about the firm’s turnaround.
Thames Water, England’s largest water company serving approximately 16 million households in London and the South East, has faced public backlash over pollution levels and increasing bills. These issues have been exacerbated by the significant bonuses paid to executives.
New regulations from the Water Services Regulations Authority (Ofwat) now allow for the banning of bonus payments to bosses if companies fail to meet environmental, consumer, and financial standards. These regulations could also prevent bonuses funded not only by customer funds but also by lenders and shareholders.
Overall, Thames Water’s decision to withdraw the proposed retention plan reflects a step towards accountability and transparency in the water industry. During a session with MPs on Tuesday, Steve Reed confirmed that the proposals had been dropped by Thames Water. The retention plan, which would have given senior bosses up to £1m on top of their salaries and bonuses, was linked to a rescue loan of up to £3bn. The company’s chairman admitted to incorrectly stating that the plan was required by lenders. Thames Water had been trying to bypass upcoming rules that ban water companies from paying bonuses by renaming them. The company’s board has decided to pause the retention scheme and await guidance on the new rules.
Thames Water’s chairman, Sir Adrian Montague, acknowledged that he may have misspoken during a previous session with the Efra committee. The company, which serves around 16 million households in London and the South East, has faced criticism for pollution and rising bills while executives received large bonuses.
New regulations from Ofwat could prevent bonus payments to bosses if companies fail to meet environmental, consumer, and financial standards. These rules could also block payments funded by customers, lenders, and shareholders.
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