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.

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.