Thames Water has determined to “pause” its scheme to pay out large bonuses to senior executives linked with securing its £3bn rescue mortgage.
The choice comes after Downing Avenue mentioned bosses on the troubled agency “rewarding themselves for failure is clearly not acceptable”.
The corporate’s “retention scheme” was set to quantity to 50% of senior bosses’ pay packets, which might have led to them getting £1m on prime of their annual salaries and common bonuses.
Thames had been accused by the surroundings secretary of “attempting to avoid” forthcoming guidelines to ban water corporations from paying bonuses.
Steve Reed informed MPs on Tuesday the corporate had been “calling their bonuses one thing completely different so that they proceed to pay them”.
Downing Avenue added ministers have been “clear that, after presiding over years of mismanagement, Thames Water shouldn’t be handing itself bonuses”.
A spokesperson for Thames mentioned in an announcement that following discussions, its board had “determined to pause the retention scheme” and await steerage from the regulator Ofwat, who might be granted new rules to prevent any water firms from handing out any bonuses.
Thames mentioned it might look ahead to the regulator’s steer to make sure the corporate’s “strategy helps each our turnaround targets and broader public expectations”.
“It has by no means been the Thames Water board’s intention to be at odds with the federal government’s ambition to reform the water business,” the spokesperson added.
Thames has confronted heavy criticism over its efficiency in recent times following a sequence of sewage discharges and leaks.
For the reason that dire state of the corporate’s funds first emerged about 18 months in the past, the federal government has been on standby to place Thames into particular administration.
The corporate secured an emergency £3bn mortgage in March to stave off collapse and is now trying to scale back its large £20bn debt pile by requiring lenders to simply accept a reduction in what they’re owed.
The provider serves a few quarter of the UK’s inhabitants, principally throughout London and components of southern England, and employs 8,000 folks. It’s anticipated to expire of money utterly by mid-April.
No matter what occurs to the corporate sooner or later, water provides and waste providers to households will proceed as regular.
Reed mentioned he was “very comfortable” that Thames had dropped its retention scheme.
“It was the flawed factor to do. It offends in opposition to their very own clients’ sense of honest play,” he added.
Thames beforehand mentioned its “retention funds” weren’t performance-related bonuses lined by the brand new guidelines.
It mentioned none of those retention funds can be funded by clients.
Earlier on Tuesday, Thames chairman Sir Adrian Montague clarified feedback he had made about bonuses to a committee of MPs final week.
He mentioned he may need “misspoken” when he acknowledged lenders had “insisted” upon the “retention incentives” when questioned on the troubled water agency’s turnaround.
“We reside in a aggressive market and now we have to supply the best type of packages to those folks in any other case the pinnacle hunters come knocking,” he mentioned on the time.
Final November, Ofwat blocked three water companies – together with Thames, Yorkshire Water and Dwr Cymru Welsh Water – from utilizing buyer cash to fund a complete of £1.6m in bosses’ bonuses.
