Thames Water has sparked outrage by paying a delayed £1 million "golden handshake" to its chief financial officer and agreeing controversial retention payouts to top bosses as it fights to secure its financial future.
Payment from emergency facility
The stricken supplier, which owes more than £20 billion, disclosed in a letter to the Environmental, Food and Rural Affairs (EFRA) Committee that it made the signing-on payment to Steve Buck at the end of July from an emergency lending facility provided by creditors.
In the letter sent last week to committee chairman Alistair Carmichael, Thames Water chairman Sir Adrian Montague said the payment was a "necessary incentive" for Mr Buck to join the utility when he was appointed in April 2025, but it had been deferred when wider retention payments were put on hold. It is understood the payment was made after legal advice.
Retention payments settled
Thames Water also said in the letter that it had agreed individual settlements over retention payments for a dozen top bosses, plus two who have since left the business, despite a furore late last year.
The details emerge as Thames Water is fighting to secure a rescue deal proposed by its senior creditors to avoid collapse and temporary nationalisation by the Government. The payouts add to evidence that the sector can sidestep last year's Water (Special Measures) Act, which bans performance-related bonuses for bosses at utilities failing customers and the environment.
Government response
The Prime Minister's official spokesman said: "It's unacceptable that one of the worst-performing water companies is handing out huge payments to its executives when it should be focusing on improving performance and rebuilding public trust. We've banned bonuses for polluting water bosses. We expect companies to follow both the letter and the spirit of the rules. We look forward to the outcome of Ofwat's review, which will assess if and how these rules should be strengthened."
Mr Carmichael urged the Government to outline plans to prevent firms making payments that evade the bonus ban. He said: "The Government were clear in the early days that they wanted this to stop. It is obvious that they have not succeeded in this. We need to hear now from them about what they intend to do about it."
Payout details
Thames Water agreed last December, amid an outcry, to pause £2.46 million of retention payments to 21 top bosses, having already paid out a similar amount earlier in 2025. The company declined to comment further and has not disclosed how much it has agreed to pay, but it is understood the payments are less than originally proposed.
The letter confirms the payments will be finalised in the "coming weeks" after legal advice and have been deferred where possible. Sir Adrian said in the letter: "I understand that for customers who believe, rightly, that they have not received the service they deserve, it feels unjust that senior leaders of the company receive significant compensation. However, we need those senior leaders to remain in post to continue the good progress made on the turnaround."
Campaigner criticism
River Action called the payments "indefensible". Its head of campaigns, Amy Fairman, said: "Put Thames Water into special administration and rebuild it to serve its customers, and clean up our rivers, not reward failure." Cat Hobbs, director of public ownership campaign We Own It, said: "It's criminal to let this rip-off continue with 16 million households paying the price."
Last month, Thames Water's annual financial report revealed it had paid more than £4 million in bonuses and boosted its chief executive pay to £1.2 million, including a £99,000 retention payment for Chris Weston deferred from a previous year.
