Thames Water boss ordered to tell MPs if executives received bonus payments
The chief executive of Thames Water has been ordered to tell MPs whether any executives have received payments from a controversial bonus package taken from a £3bn loan.Britain’s biggest water company admitted last week that senior managers were in line for “substantial” bonuses linked to an emergency £3bn loan.Thames claimed the payouts were vital to retain staff and prevent rival companies from “picking off” its best employees.The disclosure provoked fury as the company has said its finances are “hair-raising” and that it came “very close to running out of money entirely” last year.On Tuesday, the environment secretary, Steve Reed, announced the bonuses had been withdrawn by the water company after the Guardian revealed the chair of Thames Water had wrongly claimed they were insisted upon by creditors.
The company later said the bonus payments had been paused.However, the Liberal Democrat MP Alistair Carmichael, the chair of the environment, food and rural affairs (Efra) select committee, has raised concerns that part of the bonus package may already have been paid.In a letter to the Thames Water boss, Chris Weston, he said: “The secretary of state told the committee that plans to pay out these retention bonuses have been dropped by Thames Water.However, a spokesperson for your company has said that the board has ‘paused’ these payments.“Who were the intended recipients of the bonuses? Have elements of these bonuses already been paid out? If so, will this money be recouped? What is the total figure from the loan earmarked for bonuses, and what will now happen to these funds? Have these bonuses been dropped or paused pending further consideration? If paused, under what circumstances might they be restarted?”Questions have been raised because Sir Adrian Montague, the chair of the company, suggested a tranche of these payments may have already gone out.
He said: “We have created incentives to try to retain our most precious resource, which is the senior management team,We have a bonus paid in completion of the first restructuring plan, another one at the end of the second restructuring plan, and then a large amount right at the end of the process,” The first restructuring plan was completed when a court case over whether the £3bn debt package was lawful concluded,The Guardian revealed previously that ministers were planning to use a new ban on performance-based bonuses to block bosses from Thames Water taking the bonuses, worth hundreds of thousands of pounds,Montague said he “may have misspoken” when he told the Efra committee last week that large bonuses to be paid to senior bosses out of the loan were “insisted” upon by creditors.
In fact, court documents, the term sheet for the loan, and sources close to the negotiations indicated that the creditors did not insist on the bonuses and that instead the scheme was drawn up by Thames.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionCarmichael also wrote to Montague on Friday, asking him to explain how he came to “misspeak” to the committee, and warned further action may be taken.He said: “You will understand, I hope, the seriousness of the situation in which we currently find ourselves.That evidence given to a select committee is accurate in every respect is a matter of the highest possible importance.It is for that reason that the laws of privilege surrounding the proceedings of parliament are framed as they are.
”He asked what Montague meant by “misspoken” and if there were other inaccuracies in his testimony, adding: “I note your assertion that in the heat of the moment you ‘may have misspoken’,I find the use of ‘may’ in this context to be problematic,Only you can tell us whether you did misspeak or not,It then begs the question of what you mean by the term ‘misspoken’,Your clarification on that would be appreciated.
”Thames Water declined to answer the Guardian’s questions about whether any of the retention package has already been paid,
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