Image description: 5, 10 and 20 pound notes spread out on a surface. Photo by Christopher Bill on Unsplash.

Ofwat, the regulator for English and Welsh water firms, has revealed more than £4 million of potential bonuses were banned under new rules on performance-related executive pay. The Guardian says that the industry regulator is also now considering forcing companies to report pay received from parent companies in the wake of a Guardian investigation.

According to Ofwat, the six companies whose bonuses were banned this year were Anglian Water, Southern Water, Thames Water, United Utilities, Wessex Water and Yorkshire Water, all of which did not give their directors an annual bonus and other relevant performance-related pay. The regulator’s new rule, introduced under the Water (Special Measures) Act, prohibits companies from awarding performance-related pay (PRP) when they fail to meet key standards, including pollution control and financial resilience.

Thames Water had seven of the most serious category of pollution incidents, recorded in 2024. It also breached its licence to hold a sufficient credit rating and had a one-star rating in relation to its environmental performance. This meant that no bonuses or other awards were paid to its chief executive or its former finance chief, who left in March.

Ofwat said that a further £2.4m of performance-related executive pay was not required to be blocked, but should not be funded by customers.