Water companies circumventing bonus rules? What did ministers expect? | Nils Pratley
Door was left open to such behaviour because the regulator for England and Wales can only use the powers it was given by parliament Thames Water’s £1m payout to finance chief is ‘unacceptable’, says government department Anybody who followed the supposed “clampdown” on bankers’ bonuses after the great financial crash in 2008 knew what to expect when water company bosses became a similar target…
A loophole existed that allowed water companies to circumvent bonus regulations, according to a government department which criticised Thames Water for paying £1m to its chief executive. The regulator responsible for enforcing such rules in England and Wales was only granted its current powers by parliament, raising questions about the effectiveness of its enforcement.
The "waterbed principle" played out once again, with water company bosses shifting their focus from performance-related bonuses to fixed pay increases. In response to EU caps on bonuses, banks had long employed "role-based allowances" to compensate top earners, who often preferred the stability of a guaranteed salary increase over the uncertainty of an uncertain bonus.
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