Thames Water pledges changes as chief’s bonuses frozen for two years
Steve Robertson will forgo a bonus until 2020 as he pledged to put customers first.
Thames Water has vowed to get the group “back on track” as its chief executive agreed to forgo bonuses until a potential £3.75 million payout in 2020 if he fixes leaks for suffering customers.
Steve Robertson, who joined the group in September 2016, will forgo a bonus for the next two years after the company forked out £120 million in compensation to customers and penalties for missing targets to cut leaks.
But under overhauled pay plans unveiled in the group’s annual report, Thames Water revealed it will pay out a maximum £3.75 million to Mr Robertson in 2020 if all targets on leaks and pollution are met.
This is about getting back on track. That's what customers want and deserve. If Steve achieves that, the company is in a far better position than when he joined. Ian Marchant, Thames Water chairman
None of the 2020 bonus will be linked to financial performance, in a shift away from traditional corporate pay deals.
Thames Water also announced it will not pay a dividend to shareholders – who are mainly pension funds – this year as it focuses on improving its service to customers.
Mr Robertson told the Press Association: “Talk is cheap, but what we want to do as a board is to send a clear message that this is a business that is absolutely putting customers at the heart of what we’re doing.”
But the annual report revealed Mr Robertson was handed a 10.9% hike in his annual base salary to £610,000 in 2017/18 to bring his pay in line with others in the industry.
Chief financial officer Brandon Rennet will also bank a 15% salary hike in July to £375,000.
On Mr Robertson’s £3.75 million potential bonus for 2020-21, chairman Ian Marchant said: “This is about getting back on track. That’s what customers want and deserve.”
“If Steve achieves that, the company is in a far better position than when he joined.”
On the salary rise, he added his basic pay was still in the lower average against peers and said the move was made to “make sure he was adequately retained”.
Earlier this month, Ofwat ordered Thames Water to pay customers £15 each over the next two years after the watchdog found the firm breached two of its legal responsibilities, including that the board and management “did not pay enough attention” to solving leakage issues.
As a result, Thames Water was ordered to pay £55 million as a penalty for missing the commitment it made to customers to cut leaks and agreed to a further £65 million in customer compensation.
Thames Water has pledged to cut leaks by a further 15% by 2025 and do more to engage with customers on leakage issues, including at board level.
The company is fixing more than one thousand leaks a week and spending hundreds of millions of pounds on fixing its ageing pipe network.
It has been hampered in the past, as many of the leaks are underground, but said it now has better technology in place to accurately detect leaks.
Despite investment of £500 million in the water business last year, the group has already said it will miss leakage targets for the next two years.
Thames Water saw underlying pre-tax profits fall to £34.6 million in 2017-18 against £38.1 million the previous year as it ramped up investment.