Environment Secretary Emma Reynolds has condemned Thames Water for handing out what she described as 'outrageous' payouts to top executives, as the troubled utility company revealed it paid over £4 million in bonuses and increased its chief executive's pay to £1.2 million.
Bonus Payments and CEO Pay Rise
Britain's largest water company, which is grappling with a £20 billion debt pile and faces the prospect of nationalisation, disclosed in its annual report that £4.09 million in bonuses were awarded to 'key management personnel' under its management retention plan. This marks an increase from £2.8 million the previous year. The bonuses, covering the year to March 31, included performance-related and retention awards for board members and executives.
Chief Executive Chris Weston saw his total pay rise to £1.16 million for the year to March 31, up from £1.04 million in 2024-45, after receiving a £99,000 retention payment deferred from a previous year. His basic salary was also increased by 14% from April 1 this year to £995,000.
Minister's Criticism
Environment Secretary Emma Reynolds criticised the payouts, arguing they undermine efforts to curb excessive executive compensation in the water industry. 'It's outrageous that one of the worst-performing water companies is handing out bonuses and inflation-busting pay rises to its executives,' she said. 'It flies in the face of basic fairness, and the British public are right to be furious. We've banned bonuses for polluting water bosses and will be taking action to prevent bonuses by any other name.'
Regulatory Context
The Water (Special Measures) Act, passed last year, empowers regulator Ofwat to ban performance-related bonuses for executives at utilities that fail customers and environmental standards. The government introduced the legislation as part of a broader crackdown on the struggling sector.
Mr Weston stated that his £99,000 retention bonus was awarded before the Act came into effect in June last year. The company confirmed he did not receive a performance-related payout for 2025-26. However, Thames Water has previously sparked controversy over retention payments to senior executives, which critics say circumvent the bonus ban. In December, amid public outcry, the firm agreed to pause £2.46 million of such payments to 21 top bosses—not including Mr Weston—after having already paid a similar amount earlier in the year.
Company's Defence
In its annual report, Thames Water's remuneration committee defended the payments, stating: 'The committee fully accepts and complies with the legal and regulatory position on performance-related pay but is concerned that the constraints now operating materially limit the extent to which the scale and challenge of the transformation being delivered can be reflected in total remuneration. The committee believes this creates a real risk to the retention of experienced leaders with the capability to deliver this transformation in exceptionally challenging circumstances.'
