Thames Water executives have defended their decision to award bonus payouts totaling £770,000 despite a surge in pollution incidents.
Chief executive Chris Weston and Chairman Sir Adrian Montague are at the helm of the utility company’s recovery efforts, following its close brush with insolvency earlier this year when it secured a £3bn emergency loan from creditors, as reported by City AM.
Weston, who pocketed a £195,000 bonus just three months into his role last year, told the environment select committee that his contributions have been significant.
“I started to put in place the new organizational structure, I started to give people confidence and reassurance about how proud they could be of the job they did and what we were setting out to do.”
Thames Water is struggling under a £20bn debt burden, facing increased scrutiny due to a rise in sewage leaks and pollution incidents.
Sir Adrian Montague has argued that the bonuses represent a “very small” sum compared to Thames Water’s infrastructure investments. He maintains the bonuses are crucial for retaining key team members.
“I have not watched in detail the discussions you have had with water company chief executives and their supporters, but bonuses featured in all of them.
“The fact is we are in a marketplace for talent, talent goes where it thinks it is going to have the best future.”
These remarks come against a backdrop of intensifying critique about the water industry’s remuneration and dividend distribution practices.
Water companies have been lobbying regulator Ofwat to significantly increase bills in order to fund much-needed investment into the network’s aging infrastructure.
During the same period when Thames Water’s top executives received £770,000, pollution incidents at the company rose by 46%. There were 469 incidents in total, 33 of which were categorized as “serious.”
Montague offered an apology for “letting customers down.
“We know that pollutions, we know that spills, we know that supply interruptions cause inconvenience and sometimes real hardship. So I think the right thing to do is to start a discussion of the turnaround plan by acknowledging that we haven’t always served our customers as well as we should.”
Weston stated that sewage leaks and pollution were the most problematic areas for the company, with approximately 569 megalitres of sewage entering British rivers every day.
“That’s not acceptable. No one at Thames comes to work to cause a leakage, everyone wants to try and minimize that as much as possible,” he added.
Thames Water situation ‘hair raising’
Thames Water’s £3 billion bailout earlier in the year has positioned US private equity firm KKR as the most likely candidate to acquire the company.
Montague, who joined the board in 2023, revealed that running a corporation with only five weeks’ worth of liquidity had at times been “hair raising.”
The decline of Thames Water is partly attributed to its former owner Macquarie, the infrastructure investors that saddled the company with a substantial amount of debt.
Thames Water chief executive Sarah Bentley departed the company earlier in the year, with Ian Marchant appointed as the company’s executive chairman.
The company claimed it had reduced sewage discharges into rivers by 22% since 2022. Weston acknowledged the issue of “excessive” debt utilization within the water industry and admitted that Macquarie’s stewardship may have “exacerbated” the ongoing predicament.
He also directed criticism towards regulatory bodies, noting: “The fundamental problem has been with the regulatory regime, there are flaws in the regulatory regime.”
