Regulators are investigating whether water companies are finding ways to bypass a ban on bonuses, following a situation where a top executive received a £500,000 reward for remaining in the position.
Mark Thurston, the CEO of major player Anglian Water, received this “retention” payment as part of a nearly £1.86 million package for the previous year. Additionally, he obtained over £450,000 this month through a separate scheme.
Last year, despite legislation implemented by the Labour Party to prohibit bonuses for water firms failing to meet environmental standards, Anglian Water granted these substantial payouts.
Emma Reynolds, the Environment Secretary, emphasized the need to take action to prevent bonuses under any guise.
In the past year, Anglian Water faced a hefty penalty of nearly £63 million due to its mismanagement of treatment facilities and network, leading to issues handling sewage flows. The company was involved in 12 serious pollution incidents, up from seven the previous year when the target was zero. They were also fined for leaks and service disruptions.
Despite serving seven million customers, Anglian Water plans to raise customer bills by 44% between 2024/25 and 2029/30.
The company clarified that Mr. Thurston did not receive a bonus but rather a retention fee to ensure his continued presence until January of the following year. This fee was deemed necessary to retain high-quality leadership recently recruited.
Anglian Water stressed that the payments to Mr. Thurston under the “medium-term alignment plan” were related to his broader role within the Anglian Water Group, not just the water supply business.
The company stated, “The chief executive and chief finance officer roles cover the entire Anglian Water Group, which includes separate businesses conducting various commercial activities and generating around £800 million in annual revenues.”
Ofwat is anticipated to scrutinize these payments as part of a broader review of executive pay in water companies. Last November, it announced the use of new powers to block over £4 million in potential bonuses for water executives in the previous financial year.
Ms. Reynolds expressed her discontent, stating, “These payments go against basic fairness, and the public has every right to be outraged. We have already banned £4 million in bonuses for polluting water executives and will take further action to prevent any form of bonuses.”
Similar concerns arose over Chris Weston, the CEO of crisis-ridden Thames Water, who defended his nearly £1 million pay rise despite the company’s financial struggles and the potential need for a taxpayer bailout. His annual salary jumped from £869,000 to £995,000 as of April 1, with no bonus received.
Mike Keil, CEO of the Consumer Council for Water, stated, “Customers would be furious if any water company was found to be evading bonus restrictions, and we expect the regulator to intervene if any evidence of such practices surfaces.”
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