Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Open the editor’s digest for free
FT editor Rula Khalaf picks her favorite stories in this weekly newsletter.
Thames Water has threatened to raise the basic pay of executives if the UK government plans to cap water chiefs’ bonuses.
The planned utility Increase the bills by at least one third It has warned of plans to increase the water regulator’s basic charges for its 16 million customers in and around London, according to a report by the company’s Regulatory Strategy Committee to the Thames Water Board.
“We have made it clear to Ofwat that if the proposals go ahead, an increase in basic pay will be needed to offset performance-related pay schemes,” the report, dated December 3, said. John Haskins, chief risk and compliance officer at Thames Water.
“We also highlight the impact it has on attracting, retaining and motivating the talent needed in the sector, and the importance of this in attracting investment,” the report added.
The plan to ease the pay and bonuses of poor water companies is part of the government’s Water (Special Measures) Bill, which is being pushed through Parliament and is expected to be passed this year.
The new legislation allows Ofwat to ban performance-related payments entirely in certain circumstances. It allows executives and directors to be prosecuted in cases of crimes Obstructing investigations It is committed by environmental regulators, their consent or negligence.
Currently, the regulator says it can force shareholders to pay bonuses to underperforming companies instead of forcing clients to do so. In 2024, Ofwat In this way he intervened With three companies including Thames Water.
The law allows executives and directors to be prosecuted when a tort such as sewage pollution is committed willfully or negligently.
After the financial crisis, when the European Union introduced a cap on bank bonuses, many banks responded by increasing basic wages. There is England. Because he stole the hat As part of a post-Brexit push to grow the City of London.
At Thames Water, chief executive Chris Weston received a total pay package of up to £2.3mn. £195,000 bonus Worked for three months after joining in January last year. This took his total pay from January to the end of March 2024 to £437,000. His predecessor, Sarah Bentley, did not receive a bonus in 2022-23.
Thames Water plans to challenge the new bonus rules despite Ofwat allowing the company to raise customer bills by an average of £588 over the next five years and its poor record on pollution and scratches.
The company, which is struggling with a £19bn debt mountain, has warned it could run out of cash next month and is scrambling to get rid of it. Temporary restoration.
Thames Water has agreed a £3bn loan with creditors, which must be approved by the courts. The company’s top bondholders, including hedge fund Elliott, have offered a lucrative package to the utility’s management team. “Retention” incentives.
Big payouts for executives Lightning Britain’s privatized water companies have been accused of underinvesting in sewage pollution, water cuts and failing infrastructure to pay off debt.
They generally have English water companies It paid out £83 billion in dividends. Accumulating more than £74bn of debt in the 34 years since privatisation, a study by the Financial Times found.
Liberal Democrat MP Charlie Maynard said: “The focus on ending bonuses is a distraction from the fundamental problem that these companies are sinking into debt.”
Ofwat said in a statement: “It will take further action on powers to control executive pay proposed in the Government’s 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.
