Thames Water Bonus Payments

Thames Water has decided not to pay more than £2 million in retention bonuses to over 20 of its top executives this month. The decision comes amid political outrage over the payments. The company’s remuneration committee has decided to defer payouts worth around £2.46 million until further notice.

Background

The decision not to permanently cancel or hand over the awards risks being labeled a fumble by critics of the company. However, it avoids the possibility of a pre-Christmas bonus dispute. Thames Water is struggling to complete a multibillion-pound rescue operation led by its largest group of creditors.

Government and Regulatory Involvement

The government and Ofwat, the water industry regulator, were informed of the bonus decision this week. A major grant of around £13.5m is expected to be made over the course of 2026 as part of the retention plan. Alistair Carmichael, the chair of the select committee, expressed concerns over the payment, stating that it would be a scandal for the remuneration committee to award bonuses to already well-paid executives given Thames Water’s perilous financial situation.

Thames Water’s Financial Situation

Thames Water chief executive Chris Weston is already subject to a “bonus ban” imposed by regulator Ofwat under new rules that prevent payouts to water companies that fail to meet environmental, financial stability or consumer standards. He is not among the 21 executives eligible for the retention payments. Thames Water’s battle for survival will continue well into next year as it seeks approval from Ofwat for a deal that will see creditors invest around £5bn in the company.

Potential Nationalization

They would also write off billions of dollars in debt owed to them in exchange for regulators being more lenient on future environmental fines and targets. Without an agreement, Thames Water would effectively be nationalized through a process called the “special management regime”. The government had hired consultants to draw up contingency plans for such an eventuality. Thames Water declined to comment on the retention allocation decision.