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Thames Water has recently made the decision to halt its plan to distribute substantial bonuses to senior executives associated with securing its £3bn rescue loan. This choice was made in response to Downing Street’s declaration that rewarding the leaders at the troubled company for their failures was unacceptable. The company’s proposed “retention scheme,” which would have equated to 50% of the pay received by senior executives, could have resulted in additional earnings of up to £1m on top of their regular salaries and bonuses. The environment secretary accused Thames Water of attempting to evade upcoming regulations that would prohibit water companies from issuing bonuses.
During a session with Members of Parliament, Steve Reed stated that Thames Water had been disguising their bonuses under a different name to continue making payments. Downing Street agreed that it was not appropriate for Thames Water to grant themselves bonuses after overseeing years of mismanagement. Following discussions, the company’s board has decided to suspend the retention scheme while awaiting guidance from the regulator Ofwat, which may introduce new regulations to prevent water companies from awarding bonuses.
Thames Water is waiting for input from the regulator to ensure its actions align with the company’s turnaround objectives and the expectations of the public. A company spokesperson expressed that it was never their intention to oppose the government’s efforts to reform the water industry. Thames Water has been under criticism for its poor performance in recent years due to sewage discharges and leaks. The government has been prepared to place Thames Water under special administration since the dire state of its finances was revealed around 18 months ago. In an effort to prevent collapse, the company obtained a £3bn emergency loan in March and is currently seeking to reduce its £20bn debt by negotiating discounts with lenders. With its services accounting for approximately a quarter of the UK’s population, Thames Water is expected to exhaust its funds by mid-April, but assurances have been made that water supplies and waste services to households will not be disrupted
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