Ministers could block executives at Thames Water from taking bonuses from a £3bn emergency loan.
Speaking at an environment select committee this week, Thames Water chair Adrian Montague said the company’s finances were “hair-raising”, telling MPs that it was “close to running out of money entirely”.
He also told the committee that some executives at the business had been in line for payouts amounting to 50% of salary as part of the debt package approved by the high court earlier this year.
However, government sources have revealed to the Guardian newspaper that these bonuses could be banned from next month under new legislation.
Executive bonuses
The Water (Special Measures) Bill will give water regulator Ofwat the power to ban financial rewards for executives presiding over a failing company. Thames Water’s debt levels and poor record on sewage could mean it is classified as such.
Chief executive Chris Weston was paid £195,000 for three months of work after he joined in January 2024 as part of an overall £2.3m package.
He told the select committee: “I joined Thames because it matters to society. Within the first three months I did make a difference.”
Montague explained that bonuses would be paid in three stages: in completion of the first restructuring plan; then at the end of the second phase of restructure; and finally the largest portion at the end of the process.
“We have a bonus scheme to protect our most precious resource, which is the senior management team.”
Last year, £9.1m was paid out in bonuses to executives of water companies, despite customers’ bills rising and increasing problems with infrastructure.
A Thames Water spokesperson told the Guardian: “Thames Water is progressing a complex turnaround and restructuring process so we can deliver better results for our customers and the environment and seek a long-term solution to our financial resilience.
“It is critical that the business retains the people best placed to deliver the improved outcomes our stakeholders rightly expect.”
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