MPs ask ministers whether they will recoup Thames Water executive bonuses

The Guardian

2 days ago

The environment secretary has been asked if he will claw back controversial bonus payments to Thames Water senior executives after it emerged some bonuses had already been paid out.
Last month, Steve Reed vowed to block bonuses that Thames Water proposed to pay to managers at the beleaguered company. The firm's chair has been forced to admit that bonuses have already been paid to executives out of a £3bn emergency loan paid by creditors for the purpose of rescuing Thames from financial collapse.
In a letter to MPs on the environment, food and rural affairs committee, the chair of Thames Water, Sir Adrian Montague, admitted 21 members of the firm's senior management team received a first payment at 50% of base salary on 30 April 2025. He said 'the board does not intend to recover this money'. The letter says that the 21 individuals who received payments did not include Sir Adrian himself, the CEO Chris Weston, or the CFO Steve Buck. However, he added that Buck would be eligible for a later payment under the plan, which he confirmed is 'paused' pending a review.
He added that the bonuses are worth £18.5m in total, spread across three payments over two years – '50% of base salary on 30 April 2025; 50% on completion of [Thames Water's] second restructuring plan or, if earlier, December 2025; and a final payment of 200% of base salary in June 2026'.
The parliamentary committee has written to Reed asking 'whether you expect Ofwat to recoup the payments made on 30th April to all 21 of Thames management team?'
Alistair Carmichael, the chair of the committee, said: 'We have now learned that 21 members of Thames Water's senior management team, not including their CEO and CFO, received payments additional to their salary, in April 2025, at the not inconsiderable rate of 50% of their base rate of pay. Thames Water have stated in a letter to us that they do not intend to recover this money. They also say that the retention payments scheme has been 'paused'.
'As a committee, we are trying to seek clarity as to whether these payments fall within the remit of the government's ban and will be recouped, given that they were not paid to the company's CEO or CFO and are termed by Thames Water as 'retention payments' rather than bonuses. We are also asking whether Defra and Ofwat were aware of these payments and what undertakings they have received from Thames Water about the pausing or withdrawal of the retention plan.
'Given that the plan includes two further retention payments, including 200% of base salary due to be paid to these 21 individuals in June 2026, it is vital that Thames Water, Defra and Ofwat are clear with us all about what exactly is going on.'
In his letter, Montague also apologised for misleading the committee after the Guardian revealed he had wrongly told MPs the large bonuses were 'insisted' upon by creditors. He told the select committee that the lenders said that 'very substantial' bonuses of up to 50% of salary should be paid to company executives from the controversial loan in order to retain key staff. The Guardian revealed that sources with knowledge of the details of the agreement, the term sheet for the loan and court documents suggested that while the bonuses were agreed to by the creditors they were not necessarily proposed by them.
He said: 'For complete clarity, I did misspeak. However, I certainly did not intend to mislead. I deeply regret having caused confusion through my appearance.'
A Thames Water spokesperson said: 'We wrote to the Efra select committee to apologise for the confusion caused following the recent evidence session and to provide further clarity.
'The company's CEO is not party to the MRP [management retention plan] and has received no payments to date. None of the retention payments have been funded by customers. Full details of the plan have been shared with our economic regulator. We will review the requests from the select committee chair and will respond in due course.'
Defra has been contacted for comment.