Thames Water among nine water companies prevented from awarding £6.8m of bonuses with customer cash
Nine water companies have been prevented from using customer money to award their top bosses “undeserved” bonuses worth £6.8million.
Ofwat, the water company regulator, stepped in to block water companies who cannot show that bonuses are sufficiently linked to performance from using money gained from customers to award bonuses. The planned payouts amounted to 73% of the proposed award to top bosses across the industry.
David Black, chief executive of Ofwat, said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability. While we are starting to see companies take some positive steps, they need to do more to rebuild public trust.”
A total of nine companies have been hit with the restrictions. This includes Thames Water, Yorkshire Water, and Dwr Cymru Welsh Water, amongst others.
Ofwat has said that new rules on bonuses and dividend payouts relating to water companies were “beginning to bite” after being introduced last year. The regulator also said that it will adjust costs for companies so that they cannot recover it from customers.
It comes as it was announced that Thames Water was planning to use £770,000 worth of customer cash to pay the bonuses of executive Chris Weston and chief financial officer Alastair Cochran, despite growing public outrage over pollution and rising bills. Yorkshire Water was set to use £616,000 of customer cash, while Dwr Cymru Welsh Water has been due to use £163,000 of cash to pay bonuses.
Secretary of State for Environment, Food and Rural Affairs Steve Reed said: “It is disgraceful that half of water companies have given out unjustifiable and unmerited bonuses.
“That is why this Government is introducing urgent legislation to ban the payment of unfair bonuses to polluting water bosses so payouts of this kind can never happen again. But there are deeper issues that need long-term solutions, which is why we have launched the largest review of the sector since privatisation.”
The regulator also revealed that £9.3m was paid out in executive bonuses last year. Ofwat has said that it will be able to block executive bonuses altogether under the new water bill being brought before the government.