The substantial bonus awarded to Thames Water executives linked to a crucial £3 billion loan has been “withdrawn,” according to Environment Secretary Steve Reid. This followed a situation where the Guardian mistakenly informed the company’s chairman that Congressional creditors had debated this payment.
During a session with the Environment, Food and Rural Affairs (EFRA) committee, Reid expressed relief that Thames Water pulled back its retention payment plan, stating, “I’m really pleased that Thames has withdrawn these proposals. It was wrong. They’ve now retracted their proposal to pay them.”
The Guardian had previously disclosed that there are intentions to prohibit new performance-based bonuses and to stop the Thames Water leadership from receiving bonuses amounting to hundreds of thousands of pounds.
Reid remarked that it seems Thames Water is attempting to sidestep this ban while still facilitating bonus payments by reclassifying them. In response to Reid’s comments, a spokesperson for Thames Water mentioned, “Thames Waterboard has never been at odds with the government’s goals for fisheries reform.” They are now waiting for guidance from regulatory authorities to implement various necessary measures.
Adrian Montague, chairman of Thames Water, acknowledged in a letter read at the same EFRA session that he might have made a “mistake.” He indicated that the large bonus, funded by the urgent loan, was “claimed” by creditors.
Montague shared that the lender had suggested a substantial bonus—up to 50% of salaries—for executives to retain essential staff. This proposal generated frustration last year when it was claimed the company was “completely running out of money.”
The Guardian also indicated that sources familiar with the loan agreements and related documents implied that while creditors agreed to bonuses, but they weren’t necessarily advocated by them.
Following an inquiry about why the lender claimed the bonuses were disbursed, Montague addressed the EFRA committee to clarify his earlier statements. In the letter, he noted that he had been approached by the Guardian, who seemed poised to publish a story insinuating he misinterpreted the committee’s comments on the company’s retention plan.
He acknowledged that during the discussions, his creditors had emphasized a maintenance plan. Montague described this retention plan as critical for keeping top talent to achieve better results amidst the current challenges, stating it was reflected in their credit agreement.
In the February ruling that permitted the loan, Judge Leach referenced evidence from Thames’ then-Treasury Director, Alastair Cochrane, noting that the decision about the retention plan rested with the board and retention committee, and there’s no requirement for lender approval.
Recently, it was reported that the government could prevent such bonuses under the forthcoming water (special measures) bill, especially since Thames is grappling with significant debt and ongoing sewage overflow issues, putting it on the brink of financial collapse.
A representative from the Environment, Food and Rural Areas commented, “For far too long, customer funds have been misallocated towards excessive payments instead of vital water system upgrades. This government is making it clear that the era of profiting from failures is over.”
