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Sky News
20-05-2025
- Business
- Sky News
Thames Water drops £1m bonuses for top bosses after government criticism
Thames Water has "withdrawn" plans to pay senior bosses bonuses linked to the company securing a £3bn emergency loan, the environment secretary has said.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. 1:28 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.
The Independent
20-05-2025
- Business
- The Independent
Thames Water drops bonuses due for bosses after Government criticism
Thames Water has 'withdrawn' plans to pay senior bosses large bonuses linked to the water company securing a £3 billion emergency loan, Environment Secretary Steve Reed has said. Mr Reed confirmed the proposals had been dropped during an Environment, Food and Rural Affairs (Efra) committee session with MPs on Tuesday. Earlier in the day, Thames Water's chairman admitted to incorrectly stating that the so-called retention plan was 'insisted upon' by the company's lenders. This was set to amount to 50% of senior bosses' salaries, leading to them getting £1 million on top of their annual salaries and regular bonuses. The payments were linked to Thames Water securing a rescue loan earlier this year that could reach £3 billion to stave off collapse. Mr Reed told MPs that Thames Water had been 'trying to circumvent' upcoming rules that can ban water companies from paying bonuses, by 'calling their bonuses something different so they continue to pay them'. 'I'm very happy indeed that Thames have now dropped those proposals,' he said. 'It was the wrong thing to do. It offends against their own customers' sense of fair play. Asked if he was confirming Thames will not be making the retention payments, he said: 'They won't be doing that. 'The Government will take any action necessary to prevent them trying to circumvent the ban that we've now tried to put in law. They've now withdrawn their proposal to make those payments.' Thames' chairman Sir Adrian Montague said he may have 'misspoken' when he said the group's creditors 'insisted' upon the retention incentives, when quizzed on the struggling water firm's turnaround at an Efra committee session last week. In a letter to the committee, Sir Adrian wrote: 'I appreciate that in the heat of the moment I may have misspoken when I stated that the creditors insisted on the management retention plan.' Thames Water is England's biggest water firm and supplies around 16 million households across London and the South East. The company has been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses at the UK's privatised water firms. Downing Street said on Tuesday that Thames Water bosses should not be receiving bonuses. The Prime Minister's official spokesman said: 'Water bosses rewarding themselves for failure is clearly not acceptable and ministers are clear that, after presiding over years of mismanagement, Thames Water should not be handing itself bonuses. 'The new Ofwat powers that are set out in the Water Act and will be coming into effect shortly will be applied retrospectively, meaning that they apply to Thames Water, just as they will any other company.' The regulator's new rules mean it can ban bonus payments to water bosses if they fail to meet standards to protect the environment, their consumers, and their company's finances. It also means it could block payments funded not just by customer money, but also by lenders and shareholders. Thames Water has said the retention incentives are different to performance-related bonuses, so are not covered by the rules, and will be funded by lenders.
The Independent
20-05-2025
- Business
- The Independent
Thames Water chairman rows back on comments over bonuses for bosses
Thames Water's chairman has admitted to incorrectly stating the water firm's lenders insisted on top bosses receiving large bonuses as part of a recent £3 billion emergency loan. Sir Adrian Montague said he may have 'misspoken' during an Environment, Food and Rural Affairs (Efra) committee session with MPs last week. In a letter to the committee, published on Tuesday, Sir Adrian wrote: 'I appreciate that in the heat of the moment I may have misspoken when I stated that the creditors insisted on the management retention plan.' The executive had previously said lenders 'insisted' upon the so-called retention incentives when quizzed on the struggling water firm's turnaround. These could amount to 50% of senior bosses' salaries, leading to them getting £1 million on top of their annual salaries and regular bonuses. Rewarding executives was important to stop rivals from 'picking off' senior members of the team, the chairman said last week. The payments are linked to Thames Water securing a rescue loan earlier this year that could reach £3 billion to stave off collapse. In Tuesday's letter, Sir Adrian went on to suggest that creditors agreed to, rather than insisted upon, the bonus payments linked to the funding. 'It was agreed that a retention plan was important to retain the people best placed to deliver the improved outcomes our stakeholders rightly expect during this current period of uncertainty and this was reflected in the term sheet we agreed with our creditors,' he wrote. Thames Water is England's biggest water firm and supplies around 16 million households across London and the South East. The company has been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses at the UK's privatised water firms.
The Guardian
20-05-2025
- Business
- The Guardian
Thames Water chair says he ‘may have misspoken' to MPs over bonuses
The chair of Thames Water has admitted he may have 'misspoken' when he told a parliamentary committee that large bonuses to be paid to senior bosses out of an emergency £3bn loan were insisted upon by creditors. Sir Adrian Montague told the environment, food and rural affairs (Efra) select committee last week that the lenders 'insisted' that 'very substantial' bonuses of up to 50% of salary should be paid to company executives from the controversial loan in order to retain key staff. The proposed bonuses provoked fury as the company has said that its finances are 'hair raising' and that it had come 'very close to running out of money entirely' last year. However, the Guardian revealed that sources with knowledge of the details of the agreement, the term sheet for the loan and court documents suggested that while the bonuses were agreed to by the creditors, they were not necessarily proposed by them. After the Guardian approached Thames to ask why its chair claimed the lenders 'insisted' bonuses were paid, Montague wrote to the Efra committee to clarify his comments. 'Following the session we have been approached by the Guardian who we understand intend to write a story suggesting that we misled the committee in relation to the company's management retention plan,' he wrote in the letter made public by the Efra committee. 'I appreciate that in the heat of the moment I may have misspoken when I stated that the creditors insisted on the management retention plan.' He added that the management retention plan, which included the bonuses, 'rose from our discussions related to our liquidity extension transaction', adding: 'It was agreed that a retention plan was important to retain the people best placed to deliver the improved outcomes our stakeholders rightly expect during this current period of uncertainty and this was reflected in the term sheet we agreed with our creditors.' The Guardian understands that the committee is considering recalling Montague. In a judgment in February approving the loan, Mr Justice Leech cited evidence by Thames's then finance director, Alastair Cochran, that the retention plan 'was a matter for the board and the retention committee'. Leech said there was no evidence that it had to be approved by the lenders. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The Guardian revealed last week the bonuses could be the first to be blocked under the government's water (special measures) bill, which gives the regulator Ofwat powers to ban financial rewards for executives presiding over a failing company. Thames Water could be classed as such, as it is presiding over record sewage spills, heavily laden with debt and on the brink of financial collapse. Thames is trying to argue that as the bonuses would come out of the loan rather than customer funds, and are retention payments rather than performance based bonuses, they will not fall under the scope of the ban. Ministers say this is not the case and they can still ban them.
The Guardian
20-05-2025
- Business
- The Guardian
Thames Water chair could face questions after comments to MPs on bonuses
The chair of Thames Water could face more questions over his statement to parliament that large bonuses to be paid to senior bosses out of an emergency £3bn loan were 'insisted' upon by creditors. Sir Adrian Montague told the environment, food and rural affairs (Efra) select committee last week that the lenders 'insisted' that 'very substantial' bonuses of up to 50% of salary should be paid to company executives from the controversial loan in order to retail key staff. The proposed bonuses provoked fury as the company has said its finances are 'hair raising' and that it had come 'very close to running out of money entirely' last year. Sources and court documents suggest the bonuses were agreed by the creditors, but not necessarily proposed by them. Sources close to Thames said that it was executives at the company who pushed for the retention incentives and said all decisions ultimately had to be made by a committee on Thames's board of directors that is responsible for remuneration. The term sheet for the loan simply agrees that retention payments could be a factor at some point, and this was agreed to and not insisted upon by creditors. Sources close to the lenders also said accessing the loan is not contingent on paying bonuses to Thames executives. Montague will not be among the executives paid the retention incentives, it is understood. Montague last week told the Efra committee that senior managers were the company's 'most precious resource' and that the group of lenders had asked for the retention payments. He said: 'To be honest, this is the first time that I have encountered this. I have done a few reconstructions in my time, and I do not think we would have got there but for the fact that the lenders insisted, should we say.' He added that the bonuses linked to the £3bn loan 'will be funded by the lenders' and not customers. In a judgment in February approving the loan Mr Justice Leech cited evidence by Thames's then finance director, Alastair Cochran, that the retention plan 'was a matter for the board and the retention committee'. Leech said there was no evidence that it had to be approved by the lenders. A Thames Water spokesperson said in a statement: 'Thames Water is progressing a complex turnaround and restructuring process so we can deliver better results for our customers and the environment and seek a long-term solution to our financial resilience. 'During our liquidity extension discussions it was agreed that a retention plan was important to retain the people best placed to deliver the improved outcomes our stakeholders rightly expect during this current period of uncertainty and this was reflected in the term sheet we agreed with our creditors on 25 October 2024.' The company declined to repeat Montague's assertion or go beyond its statement. The UK's largest water company is in a desperate race to raise funds and persuade the water regulator to let it off hundreds of millions of pounds of fines or risk being renationalised. The company won a court battle which allowed it to accept the loan, which comes with an expensive 9.75% interest rate and fees. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The Guardian revealed last week the bonuses could be the first to be blocked under the government's water (special measures) bill, which gives the regulator Ofwat powers to ban financial rewards for executives presiding over a failing company. Thames Water could be classed as such, as it is presiding over record sewage spills, heavily laden with debt and on the brink of financial collapse. The environment secretary, Steve Reed, said last week that 'the days of profiting from failure are over'. Thames is trying to argue that the bonuses are not performance-related pay as they are retention payments, but ministers insist they will still be able to block them under the new rules, and have said this proposal is a 'crude attempt' at clinging on to bonuses. A consultation on the new bonus rules is still ongoing but ministers hope they will be in place by June. Alistair Carmichael, the chair of the Efra committee, said: 'This is a serious matter which my committee will look at carefully. The government has already stated it expects Ofwat to block the bonuses discussed in our hearing with Thames Water last week. We look forward to discussing these and other developments relating to the water sector in our evidence session with the secretary of state on Tuesday.' A spokesperson for the creditors declined to comment. The company, which serves about a quarter of the country's population, is loaded with £20bn in debt and is now in exclusive discussions with the private equity group KKR over a potential purchase of the business.
