Thames Water has deferred almost £2.5 million in controversial retention payments to 21 senior executives following a political outcry. The decision comes as Britain's biggest water supplier struggles to finalize a multibillion-pound rescue deal with creditors and regulators.
The debt-laden utility postponed the bonus payments "until further notice" after talks between directors in recent days. The same group of executives had already received an identical £2.46 million in retention awards earlier this year.
Alistair Carmichael, chairman of the Environment, Food and Rural Affairs Select Committee, had contacted Thames Water in recent weeks raising concerns over the payment plans. On Tuesday, he issued a statement saying: «It's important that the focus of Thames management is on turning round the company and not on rewarding staff and having to handle negative headlines. The public is rightly furious at the prospect of senior staff in a company with the performance record of Thames receiving bonuses. We will continue to monitor this situation.»
Financial Pressure and Rescue Talks
The company, which serves around 16 million customers, is engaged in ongoing discussions with the government and regulators regarding a proposed rescue plan. Class-A creditors including hedge funds and banks had provided an emergency £3 billion loan at 9.75% interest, on top of existing debts of approximately £11.5 billion.
The retention payments proved particularly controversial as they were funded from the emergency creditor loan. A third tranche of £10.8 million collectively is still due next June.
Thames Water reported surging underlying earnings of £1.2 billion for the six months to September 30, up from £715.1 million a year earlier. Revenue increased 42% due to bill hikes, which also funded £1.3 billion in capital investment aimed at fixing leaks, reducing sewage spills, and improving water quality.
Regulatory Scrutiny
Chief executive Chris Weston is currently subject to a bonus ban imposed by industry regulator Ofwat. The Water (Special Measures) Act, passed in May, specifically bans performance-related payments for the chief executive and chief financial officer, though retention payments fall outside this prohibition.
Sir Adrian Montague, chair of Thames Water, had previously apologized after incorrectly informing parliament that creditors had demanded the bonus payments. The company declined to comment on the deferral.
Thames Water risks renationalisation if it fails to secure the additional £5.3 billion in investment needed and gain relief from hundreds of millions of pounds in regulatory fines. US private equity firm KKR had previously pulled out of a rescue deal, forcing creditors to intervene.
Note: This article was created with Artificial Intelligence (AI).
