The executive overseeing construction of London’s “super sewer” under the Thames has been awarded bonuses that doubled his pay to nearly £1m despite delays and cost over-runs on the flagship project.
With executive pay in the water industry already under scrutiny, Tideway has revealed it paid its chief executive, Andy Mitchell, a total package of £928,000 for the year to 31 March 2022, up 7.5% from £863,000 a year earlier.
Mitchell almost doubled his £489,000 base salary through a £215,000 bonus and £206,000 granted under a long-term incentive plan, plus benefits, company filings show, after receiving 95% of the bonus he could have raked in under the company’s bonus scheme. Tideway handed a 2.5% salary increase to staff and executives during the year.
Amid an extended drought and the threat of widespread hosepipe bans, UK water companies have been criticised for doling out large pay packets to executives and dividends to shareholders while seeing widespread leaks in their networks and notching up poor pollution records.
The 25km Thames sewage tunnel, which runs under the river, was originally due to be completed in 2024. However, during the pandemic in 2020, Tideway announced the completion date would be pushed back by nine months to the first half of 2025, with the forecast total cost rising by £233m to £4.13bn.
In its annual report, Tideway said the capital cost of the sewer was now £4.3bn, an increase of 2% since its last update. The firm raised an extra £300m in March by issuing green bonds, which are designed to support environmental projects.
Its construction is also being funded by Londoners, with Thames Water customers paying an extra £20 to £25 on their bills.
Investors including the German financial services behemoth Allianz and the fund manager Dalmore Capital have also put money into the project.
The director of the High Pay Centre, Luke Hildyard, condemned Mitchell’s pay packet. He said: “This is an administrative role providing a vital public service. It shouldn’t really require a vast bonus on top of a salary already far beyond the reality of 99.99% of the population.
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“We are seeing real public anger about the cost of living crisis and boards and pay committees shouldn’t be complacent about the inflammatory nature of top pay awards and the social and economic instability they could cause.”
In total, Tideway’s board were paid £2.97m last year, up from £2.61m a year earlier. Its high profile members include non-executive chairman and former Tarmac chief Sir Neville Simms, who received £285,000, and Heathrow airport boss John Holland-Kaye and former Mitie chief Ruby McGregor-Smith, who were each paid £64,000 for their roles as non-executive directors.
Mitchell is an infrastructure industry veteran who has worked on a string of projects including Hong Kong airport and the Thameslink rail line. He took the Tideway role after leaving his position in 2014 as programme director at Crossrail, the London rail line which opened in May, three and a half years late.
In 2020, Mitchell was mistakenly overpaid £206,000 and the former chief operating officer Mark Sneesby £143,000 under the long-term incentive plan. They later paid the money back after the “administrative error”.
The company said in the annual report that “there continues to be a very competitive labour market and it is important for the project’s success that we offer an attractive overall compensation and benefits package”.
Michael Queen, chair of Tideway’s remuneration committee, said: “Our company annual bonus targets are set with the aim of promoting individual and collective motivation to realise the company’s objectives and purpose, focusing on health and safety, the time, cost and quality of build and importantly the impact on our communities and support to our people.”
The Tideway project aims to prevent the spillage of millions of tonnes of raw sewage into the River Thames each year. London currently relies on a 150-year-old sewer system built for a population less than half of its current size.
In Tideway’s annual report, Mitchell said: “Sewage pollution in the UK’s watercourses has never been higher up the public agenda. We have a critical responsibility – our project is urgently needed if London is to meet its environmental ambitions as a world city.”
Tideway said the increase in the cost of the project “reflects new commercial agreements, revisions to the cost of works and a revised forecast of the impact of inflation”.
The sewer stretches from Beckton sewage treatment works in Newham, east London, to a storm water tanks site in Acton, west London.