Ofwat has opened a review of executive pay rules after nine water companies triggered its restrictions in 2025-26, barring more than £6.5 million in potential bonuses.
The Water Services Regulation Authority, which oversees water companies in England and Wales, said the figure represents performance-related pay prohibited under the rule. It is the value of potential bonuses barred, not money collected as a penalty. Ofwat said the cumulative value of potential payments prohibited since the rule began has topped £10 million.
The restriction applies to performance-related pay for directors on a regulated company’s board when the firm triggers one of four standards. Those standards concern consumer matters, the environment, financial resilience and criminal liability.
Ofwat will consider whether the framework needs reform and how to reduce the chance that companies can work around it. The regulator flagged guaranteed payments for executives who stay in their roles and sizeable base pay increases without a clear rationale as practices that could weaken public trust.
Environment Secretary Dame Angela Eagle called for a broad review that would address firms recasting rewards for poor performance as another type of pay. The government said the review’s findings will inform work to strengthen accountability, including through the Water Bill. The Guardian reported that the bonus restrictions followed public anger over sewage pollution.
Ofwat is inviting comments from customers, companies, investors and other stakeholders through Dec. 10. Responses will help the regulator decide whether changes are needed.
