Key facts
- Ofwat said it would accelerate a review of the bonus ban over concerns companies were "undermining" the rule.
- Anglian Water will face increased monitoring of its governance arrangements over retention payments to Mark Thurston.
- Ofwat said nine companies were banned from bonuses for 2025-26, seven over environmental pollution.
- Ofwat said the banned companies would have paid out another £6.5m to executives without the rule.
- Thames Water paid chief executive Chris Weston a previously deferred bonus of £99,000 despite the ban, Ofwat said.
Ofwat said on Thursday it would accelerate a review of the water company bonus ban after accusing the industry of risking "damaging public trust" with large payments to executives. The regulator said growing use of fixed "retention payments" and substantial increases in base pay without sufficient explanation "risks damaging public trust and creating a perception that companies are circumventing the rule."
Nine water companies in England and Wales, including Thames Water and Yorkshire Water, were banned from paying bonuses for the 2025-26 financial year, Ofwat said. Seven of the bans related to environmental pollution. Anglian Water was singled out over retention payments worth up to £800,000 for chief executive Mark Thurston; Ofwat said the payments "could give the impression the company had prioritised offering executive directors a cash award in a way that would not technically breach the rule and would in practice replace the loss of PRP [performance-related pay] prohibited by it." Anglian will face increased monitoring of its governance arrangements.
Ofwat also highlighted potential retention payments of £1m for Thames Water chief financial officer Chris Weston, £1.5m for Northumbrian Water chief executive Heidi Mottram and £1.7m for United Utilities chief executive Louise Beardmore. Thames Water paid Weston a previously deferred bonus of £99,000 during the year despite the ban; Ofwat said future owners would have to pay for it rather than customers. Thames was also criticised for raising executives' base pay.
The other banned companies were Severn Trent Water, Southern Water, South West Water, Wessex Water and Dŵr Cymru (Welsh Water). Ofwat said they would have paid out another £6.5m to executives during the year had the ban not been in place. South East Water was not subject to the ban, but Ofwat said its shareholders will have to pay for future bonuses after supply failures left tens of thousands of households without water during the financial year.
Helen Campbell, Ofwat's interim executive director for delivery, said: "It is disappointing that so many companies continue to trigger the rule through serious performance failures which has seen £10m in payments blocked in the past two years." Ofwat also criticised the paucity of information on pay reported by South Staffs Water. Andy Burnham has said he wants to exert "more public control" over the water industry but is yet to give details or decide whether to move Thames Water into temporary government ownership.