Ofwat to Tighten Water Bonus Ban After Firms Skirt Rules
The UK water regulator is accelerating a review after accusing companies of undermining a bonus ban with large executive payments.
Britain's water regulator Ofwat is moving to strengthen its ban on executive bonuses after warning that industry firms risk causing serious harm to public confidence by engineering workarounds to the existing restrictions, according to a statement from the watchdog.
Anglian Water drew the sharpest rebuke, with Ofwat singling out the company for issuing "retention payments" to its chief executive, Mark Thurston, valued at up to £800,000 — a figure that the regulator views as effectively circumventing the spirit of the bonus prohibition. As a consequence, Anglian Water will be subjected to heightened regulatory scrutiny of its internal governance practices.
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Ofwat's intervention reflects mounting frustration that water companies are exploiting definitional loopholes to reward top executives even as the sector faces widespread criticism over infrastructure failures, sewage discharges, and customer service shortfalls. The regulator's characterization of the payments as potentially "undermining" the rules signals a shift toward more assertive enforcement rather than reliance on voluntary compliance.
The accelerated review suggests Ofwat intends to close the gaps that have allowed retention payments and similar mechanisms to function as de facto bonuses. The outcome could impose stricter definitions of prohibited compensation and expand Ofwat's powers to intervene when it determines that the intent of the ban is being subverted, though the full scope of proposed changes has not yet been disclosed.
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