Thames Water's Troubled Waters: MPs Grill Company Over Executive Pay and Performance

MPs scrutinized Thames Water, Britain's largest distressed company, over its handling of financial and environmental issues, with CEO Chris Weston facing scrutiny over his £2.3 million remuneration package, including a £195,000 bonus. Chairman Sir Adrian Montague apologized for "letting down" the company's 16 million customers, citing legacy issues from its previous ownership by the Australian finance house Macquarie.

Key Takeaways:

• MPs criticized Thames Water's high executive pay, with CEO Weston's package allowing for bonuses of up to 156% of his salary, compared to 3-6% for frontline workers.
• The company is facing £900 million in penalties from Ofwat for failure to meet performance targets, including pollution and mains leakage.
• Thames Water's decision to welcome private equity house KKR as its preferred bidder has been questioned, with concerns over its impact on customers.
• The company's acceptance of a £3 billion emergency bailout from super-senior creditors, which demanded 9.25% interest rates, has raised eyebrows, with some suggesting it may have been linked to £1 million retention bonuses for executives.
• The total costs of the emergency restructuring came in at £159 million, described as "eyewatering" by the judge who signed off on them.

Statistics:

• 16 million: number of customers served by Thames Water.
• 567 megalitres: daily mains leakage on Thames Water's network.
• 40%: rise in pollution incidents.
• 83%: gearing level of Thames Water's £20 billion net assets value, worse than previously reported.
• £900 million: provision for penalties from Ofwat.
• £3 billion: emergency bailout from super-senior creditors.
• £159 million: total costs of the emergency restructuring.
• £1 million: retention bonuses for executives.

Sources:

• The Guardian, Senate and Parliament
• The Financial Times, KKR