Thames Water’s boss Sarah Bentley has stepped down with immediate effect, a few days after it emerged that the leakage rate from the company’s pipes was at a five-year high and she gave up her annual bonuses over its environmental track record.
The UK’s largest water company, which has 15 million customers in London and the Thames Valley, announced that Bentley would be replaced by Alastair Cochran, the finance chief, and Cathryn Ross, the former boss of the water watchdog Ofwat, as joint interim chief executives.
Thames has come under heavy fire over the discharge of raw sewage into rivers and missing targets on pollution and sewer flooding.
It is battling to fix its environmental performance and its reputation, amid controversy over executive pay deals. Bentley, who joined as chief executive in September 2020, said last month that she and Cochran would forgo their bonuses for the 2022-23 financial year. In the previous year she received a £496,000 payout.
However, the company was accused of a “flimsy PR stunt” as Bentley’s latest pay packet had been boosted by one-off payments, as part of a “golden hello” incentive package used to lure her from rival Severn Trent three years ago.
Bentley’s total package, £1.5m for 2022-23, is due to be confirmed next month and is expected to fall from the £2m she received in 2021-22, but outstrip the £1.2m she was handed the year before that.
Bentley’s predecessor Steve Robertson also departed abruptly in 2019.
Ross started at Thames in June 2021 in a newly created strategy and regulatory affairs director position, joining from BT in 2018, and was boss of Ofwat before that.
The Thames Water board will start to look for a new permanent chief executive, who will be tasked with pushing through the firm’s eight-year turnaround plan, announced two years ago.
Last week it emerged that the company had the highest leakage rate since 2018, and will not meet its target to plug the leaks this year, according to information obtained by the Guardian under freedom of information laws. Leaks are estimated at 630m litres a day.
Thames is owned by a clutch of pension funds and sovereign wealth investors including the BT pension scheme, Canadian funds giants Omers and British Columbia Investment Management Corporation, the China Investment Corporation and the UK lecturers’ pension fund USS. Last summer they agreed to pump an extra £500m of equity into the business, with a possible £1bn to follow, to repair Thames’s finances.
Its former owner between 2006 and 2017, the Australian bank Macquarie, gained notoriety and fierce political scrutiny for extracting billions in shareholder dividends while Thames’s debt soared.
Ian Marchant, Thames Water’s chair, said Bentley had “built a first-class executive team and led the first phase of the turnaround of the company”.
Bentley said: “The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”
Thames Water has proposed controversial measures to tackle drought in the future, including a “recycling” scheme in which millions of litres of treated sewage from the Mogden sewage works will be pumped into the River Thames at Teddington, south-west London, every day.
Gary Carter, the GMB union’s national officer, said: “Sarah Bentley’s resignation highlights what a perilous situation Thames Water is in.
“After being asset stripped by the previous owner, shareholders desperately need to put the company first and unlock the funds needed to keep the infrastructure and workforce of this vital public resource from collapsing.”
The Liberal Democrats’ environment spokesperson Tim Farron said: “Thames Water is a complete mess and it’s time ministers stepped in to reform the firm from top to bottom.
“The days of profit before the environment must end. We must now see environmental experts on the board and the company take a completely new direction.
“The public has lost all faith in the country’s largest water firm, which is polluting our rivers with foul sewage whilst paying out massive dividends and bonuses.”
