Ofwat’s Bonus Ban Covers Nine Water Companies for 2025-26

Ofwat implemented powers on 6 June 2025 to ban executive bonuses when water companies fail specified standards.

By Career Ahead AI · England and Wales — AI-assisted, fact-verified against cited sources. Readers should verify key facts.

Nine companies face bonus bans for 2025-26

Nine water companies in England and Wales were banned from paying bonuses for the 2025-26 financial year. Seven of the bans were linked to environmental pollution. Thames Water and Yorkshire Water were among the companies affected. The other companies named were Severn Trent Water, Southern Water, South West Water, Wessex Water and Dŵr Cymru (Welsh Water). The restrictions apply to bonus payments for the specified financial year; the listed pollution-related cases account for most of the bans.^¹²³⁴

Ofwat said the companies would have paid executives another £6.5m during the year if the bans had not been in place. Helen Campbell of Ofwat said £10m in payments had been blocked over the past two years, and said companies continued to trigger the rule through serious performance failures. Thames Water also paid its chief executive, Chris Weston, a previously deferred bonus of £99,000 during the year despite the ban. The payment shows that a bonus deferred from an earlier period could still be paid while the restrictions were operating.^¹²³⁴

Ofwat said the companies would have paid executives another £6.5m during the year if the bans had not been in place.

New powers cover executive bonuses and company standards

The Government granted Ofwat powers to block water companies from paying bonuses to chief executives and chief financial officers. The powers sit under the Water (Special Measures) Act 2025 and took effect to ban executive performance bonuses when firms fail standards set out in the legislation. Executives can lose a bonus if their company triggers standards concerning consumer and environmental matters, criminal liability or financial resilience. These rules make company performance against those standards the basis for restricting executive payments.^¹²³⁴

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The new ban immediately affected Anglian Water, Southern Water, Thames Water, United Utilities, Yorkshire Water and Wessex Water. That list identifies the companies covered at the start of the new powers. The wider group of nine companies subject to bans for the financial year includes firms identified under the separate annual restrictions, while the new powers provide Ofwat with a basis for blocking payments when standards are breached. The distinction matters because the two sets of restrictions do not name the same number of companies.^¹²³⁴

Ofwat can review payments and require them to be returned

Ofwat may issue a direction if a water company does not comply with the rule. The direction can require the company to stop a bonus or claw it back after payment. A clawback means the company must recover a bonus that has already been paid. The enforcement route therefore covers both a planned payment and money already transferred to an executive. The available action depends on non-compliance with the rule, rather than applying automatically to every payment made by a water company.^¹²³⁴

Ofwat is reviewing all performance-related bonuses paid in relation to the financial year starting 1 April 2024 onwards. It said it would announce any action for non-compliance later in the year. The regulator’s previous powers had already stopped three companies from making customers pay for executive bonuses totalling £1.5 million in the 2023/24 financial year. That earlier policy focused on preventing the cost of those payments from being passed to customers; the newer powers directly allow Ofwat to block executive bonuses when companies fail the required standards.^¹²³⁴

Reported executive pay rose despite the restrictions

Water companies reported £25.3m in total pay for chief executives and chief financial officers for the year to the end of March, up from £24.9m the year before. The increase was 1.5%. The reported figures cover pay packets for both groups of senior executives, not only bonuses. The figures show that restrictions on particular bonus payments operated alongside overall reported pay that increased across the companies covered by the accounts analysis.^¹²³⁴

Louise Beardmore, chief executive of United Utilities, received £2.5m, which was £1.1m more than the previous year. Yorkshire Water said it was likely to be banned from paying bonuses, while its parent company, Kelda Holdings, paid Nicola Shaw, Yorkshire Water’s chief executive, another £600,000 on top of her fixed pay of £732,000. Separately, eight companies said they expected to be covered by the bonus ban. The bans were applied retrospectively to companies responsible for the most serious pollution incidents or financial failings.^¹²³⁴

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Ofwat is reviewing all performance-related bonuses paid in relation to the financial year starting 1 April 2024 onwards.

Check the fine print on deferred pay

When you weigh a job offer in a regulated sector, ask whether a bonus can be deferred from an earlier year and still paid after a ban takes effect. Thames Water paid its chief executive a previously deferred bonus of £99,000 during a year when the company faced a bonus ban. That means a promised payment from a prior period may survive new restrictions, so you should clarify in writing what happens to any deferred amounts if performance standards slip.^¹²³⁴

For those negotiating pay, note that overall reported executive pay rose by 1.5% to £25.3m even as bans blocked specific bonuses. United Utilities' chief executive received £2.5m, £1.1m more than the previous year, while Yorkshire Water's parent paid an extra £600,000 on top of fixed pay. This suggests base salary and other payments can rise despite bonus restrictions, so focus your negotiation on fixed pay and non-bonus components rather than relying solely on incentive awards.^¹²³⁴