Thames Water has announced it will not pay performance-related bonuses to its chief executive and finance chief, a decision that comes as Andy Burnham, who is slated to become Prime Minister, has pledged to renationalize the UK's water sector.
Chris Weston, Thames Water's chief executive, was reportedly in line to receive a bonus that could have increased his pay to £3.6 million this year, despite the company's £20 billion debt and its precarious financial situation. Finance chief Steve Buck was also set to be eligible for up to £2.2 million. The company confirmed this weekend that no performance-related bonuses would be issued to Weston or Buck, without providing a specific reason for the change.
This development occurs as Thames Water faces potential collapse and a possible return to public ownership. Reports suggest the company, which supplies 16 million households in London and the Thames Valley, could enter special administration, a form of temporary nationalization, as early as this week. This would be a significant blow to its creditors, who currently control the company and have proposed their own rescue plan.
Weston's potential compensation package was detailed in the company's annual report. Last year, he received £1.2 million, including a £99,000 bonus. Thames Water stated this bonus was deferred from a previous year and predated a ban by regulator Ofwat on bonuses for companies failing to meet environmental, customer service, and financial standards. Weston had previously drawn criticism for stating his 14 percent salary increase to £955,000 was “deserved.” Environment Secretary Emma Reynolds had called such payments “outrageous” and vowed to prevent similar bonus schemes.
Water companies have faced widespread criticism for circumventing bonus bans, particularly regarding their environmental performance and the practice of sewage dumping. Thames Water is one of several companies whose executive pay has drawn scrutiny.
United Utilities reportedly sidestepped a bonus ban by awarding its chief executive an additional £435,000 "allowance." Severn Trent increased the maximum annual earnings potential for its new boss to £6.3 million. Pennon reinstated a £270,000 bonus for its chief executive after it was initially withheld when its South West Water subsidiary contaminated tap water, affecting over 500 customers.
Thames Water's annual report cited the need to pay competitive rates to retain "capable leaders" and suggested the company would rank among London Stock Exchange's largest firms if recapitalized. This assertion was made despite its major shareholders having written down the value of their equity stakes to zero. The company noted that Weston's potential payout was benchmarked against earnings of chiefs at FTSE 100 companies.
Environment Secretary Reynolds recently rejected a £10 billion proposal from creditors, arguing it would impose excessive costs on consumers. Thames Water had previously warned of "material uncertainty" regarding its future and expressed uncertainty about Burnham's plans.
Burnham has not detailed his strategy but has criticized the water industry for "profiteering" and called for United Utilities to cancel its final dividend payment. An announcement regarding the water industry is anticipated in the coming days, which could determine Thames Water's fate. Public opinion, according to a recent YouGov poll, shows over 80 percent support for state ownership of water utilities.
The water sector was privatized debt-free but has since accumulated over £60 billion in debt while distributing £72 billion in dividends to shareholders. Currently, more than eight million people are facing hosepipe bans due to dry conditions in southern England. Thames Water confirmed that neither its chief executive nor chief financial officer will be eligible for performance-related pay for the 2026-27 fiscal year.