Thames Water has “withdrawn” plans to pay senior bosses bonuses linked to the company securing a £3bn emergency loan, the environment secretary has said.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 chairman Sir Adrian Montague addressing the committee last Tuesday. Pic: House of Commons/UK Parliament
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.
