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Thames Water has threatened to increase the basic pay of its executives if the UK government goes ahead with plans to limit bonuses for water department heads.
The company, which plans to raise prices by at least a third for the 16 million customers it serves in and around London, plans to increase basic salaries, according to a report submitted to a British newspaper by the company’s regulatory strategy committee. The company has reportedly warned water regulators about the issue. Thames Water board.
“We have clearly communicated to Ofwat that if the proposal goes forward, base pay increases will likely be required to compensate for the loss of the performance-based pay plan,” the paper said on December 3. The date is stated in the report. John Haskins, Chief Risk and Compliance Officer at Thames Water, said:
“We also highlight the impact this proposal will have on attracting, retaining and motivating vital talent across the industry and the importance of this in attracting investment,” the report added. There is.
The plan to crack down on salaries and bonuses for underperforming water companies is part of the government’s Water (Special Measures) Bill, which is currently being passed by parliament and is expected to be ratified this year.
New legislation will allow Ofwat to completely ban performance-related pay in certain circumstances. It would also be possible to prosecute executives and directors if crimes such as obstructing investigations by environmental regulators were committed with their consent or through negligence.
Regulators now say they can force underperforming companies to pay bonuses to shareholders rather than customers. In 2024, Ofwat intervened in this way with three companies, including Thames Water.
The bill would also allow officers and directors to be prosecuted if crimes such as sewage pollution were committed with their consent or through their negligence.
When the EU introduced bonus caps for bankers after the financial crisis, many banks responded by raising basic salaries. The UK subsequently lifted this cap as part of its efforts to revitalize the City of London after leaving the EU.
Thames Water chief executive Chris Weston received a £195,000 bonus for three months of work last year ©Yui Mok/PA
Thames Water chief executive Chris Weston receives a £195,000 bonus for three months of work after joining the company in January last year, although he is on a total salary of £2.3 million. Ta. This brings his total salary from January 2024 to the end of March 2024 to £437,000. His predecessor, Sarah Bentley, refused to pay him a bonus in 2022-23.
Thames Water’s plan to object to new bonus rules comes as Ofwat allows the company to increase customer bills to an average of £588 over the next five years, despite the company’s poor track record on pollution and leakage. It was done without fail.
The company, struggling with a £19bn debt pile, has warned it could run out of cash next month and is trying to avoid temporary re-nationalisation.
Britain’s 16 privatized water companies have become lightning rods for anger over high pay for executives. These companies are accused of using debt to pay dividends while failing to properly invest in infrastructure that leads to sewage pollution, water outages and leaks.
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Overall, British water companies have paid out £83bn in dividends in the 34 years since privatization, while carrying debts of more than £74bn, according to research by the Financial Times.
Liberal Democrat MP Charlie Maynard said: “The focus on stopping bonuses is distracting from the fundamental problem that these companies are drowning in debt.”
“We will take further action under the powers proposed in the Government’s Water (Special Measures) Bill to regulate executive remuneration,” Ofwat said in a statement.
Thames Water declined to comment. The Department for Environment, Food and Rural Affairs did not respond to requests for comment.
