Water regulator Ofwat has barred Thames Water and other water suppliers from using customer funds to pay executive bonuses, citing inadequate alignment with company performance.
The measure is part of new rules introduced during the 2023–24 financial year, designed to ensure bonuses reflect operational outcomes.
“In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability,” said Ofwat’s chief executive David Black.
“While we are starting to see companies take some positive steps, they need to do more to rebuild public trust.”
A total of nine companies, including Thames Water, Yorkshire Water and Dŵr Cymru Welsh Water, are impacted by Ofwat’s policy, with £6.8 million in bonuses now either prohibited or voluntarily funded by shareholders.
“Our new powers on bonuses mean that 9 water companies won’t be using customers’ money to fund them. This is because we believe these payouts don’t properly reflect company performance last year,” Ofwat Tweeted.
Thames Water is unlikely to win much support from shareholders given the water firm is on the brink of collapsing under a £15 billion debt profile.
Liberal Democrat environment spokesperson Tim Farron called it “an utter disgrace” that Thames Water executive are receiving bonuses at all..
“It is a welcome shock that Ofwat is actually acting to protect bill-paying customers for once after proving completely toothless in cracking down on these polluting firms for years," he said in comments published by Bloomberg.