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Thames Water has threatened to raise basic salaries for executives if the UK government goes ahead Plan to limit rewards to water bosses.
The utility you plan to Raise bills by at least a third For the 16 million customers it serves in and around London, the water regulator has warned of its plans to raise basic pay, according to a report by the company's regulatory strategy committee to Thames Water's board.
“We have made clear to Ofwat that if it proceeds with its proposals, it is very likely that it will need to increase basic pay to compensate for the loss of performance-linked pay schemes,” the report dated December 3 said. John Haskins, Chief Risk and Compliance Officer at Thames Water.
“We also highlight the impact of the proposals on attracting, retaining and motivating much-needed talent across the sector, and the importance of this in attracting investment,” the report adds.
The plan to clamp down on wages and bonuses for poorly performing water companies is part of the government's draft Water (Special Measures) Bill, which is making its way through Parliament and is expected to be ratified this year.
The new law will allow Ofwat to completely ban performance-related pay in certain circumstances. It will also enable executives and directors to be prosecuted when a crime, such as obstructing investigations by environmental regulators, is committed with their consent, or due to their negligence.
For now, the regulator says it can force shareholders, but not customers, to pay bonuses at underperforming companies. In 2024 Ovoat I intervened in this way With three companies, including Thames Water.
The bill will also enable executives and directors to be prosecuted when a crime such as sewage pollution is committed with their consent or due to their negligence.
When the European Union imposed a cap on bankers' bonuses after the financial crisis, many banks responded by raising basic salaries. The United Kingdom has Since she canceled the cover As part of a post-Brexit campaign to boost the City of London.
At Thames Water, chief executive Chris Weston, who has a total pay package of £2.3m, received a bonus. A reward of £195,000 For three months after joining in January last year. This brings his total salary from January to the end of March 2024 to 437 thousand pounds sterling. His predecessor Sarah Bentley declined the bonus in 2022-23.
Thames Water's plan to lobby against new bonus rules comes despite Ofwat allowing the company to raise customer bills to an average of £588 over the next five years, despite a poor record on pollution and leaks.
The company, which has a £19bn debt mountain, has warned it could run out of cash next month and is trying to avoid that. Temporary renationalisation.
Thames Water has agreed a £3bn loan with creditors, which needs to be ratified by the courts. The company's major bondholders, including hedge fund Elliott, have offered the facilities management team a lucrative package of… “Retention” incentives..
High pay for executives has become a cause of anger at Britain's 16 privatized water companies, which are accused of using debt to pay dividends while failing to invest adequately in infrastructure, leading to sewage pollution, water cuts and leaks.
In general, English water companies have done this Dividend distribution of £83 billion Over the 34 years since privatisation, it has accumulated debts of more than £74bn, according to research by the Financial Times.
Charlie Maynard, a Liberal Democrat MP, said: “The focus on stopping bonuses distracts from the fundamental problem of these companies being drowned in debt.”
Ofwat said in a statement that it would take “further action under the powers to regulate executive pay proposed in the Government's draft Water (Special Measures) Bill”.
Thames Water declined to comment. The Department for Environment, Food and Rural Affairs did not immediately respond to a request for comment.
