Thames Water has ignited a fresh wave of public anger after confirming it paid a deferred £1 million 'golden handshake' to its chief financial officer, Steve Buck, and agreed controversial retention payouts to a dozen senior executives, even as the company fights to secure a rescue deal to avoid collapse.
The struggling utility, which is drowning under a debt pile exceeding £20 billion, disclosed the payments in a letter to the Environmental, Food and Rural Affairs Committee. The letter, sent last week to committee chairman Alistair Carmichael, revealed that the signing-on payment to Buck was made at the end of July, funded from an emergency lending facility provided by creditors.
Chairman defends payment as 'necessary incentive'
In the letter, Thames Water chairman Sir Adrian Montague defended the payment, describing it as a 'necessary incentive' to secure Buck's appointment in April 2025. He explained that the payment had been deferred when wider retention payments were put on hold last December, but was now being made following legal advice.
The company, which serves a vast region including London, the Thames Valley, Oxfordshire, Berkshire, Wiltshire, and Gloucestershire, also confirmed it had reached individual settlements over retention payments for a dozen current top bosses, plus two who have since left the business. This comes despite a public furore late last year over such payouts.
Payments sidestep bonus ban, critics say
The revelations have intensified scrutiny on the water sector's ability to circumvent the Water (Special Measures) Act 2024, which banned performance-related bonuses for executives at utilities failing customers and the environment. The payments emerge as Thames Water battles to secure a rescue deal proposed by its senior creditors, which would avoid temporary nationalisation by the government.
The Prime Minister's official spokesman condemned the payments, stating: 'It's unacceptable that one of the worst-performing water companies is handing out huge payments to its executives when it should be focusing on improving performance and rebuilding public trust. We've banned bonuses for polluting water bosses. We expect companies to follow both the letter and the spirit of the rules. We look forward to the outcome of Ofwat's review, which will assess if and how these rules should be strengthened.'
Retention payments paused, then resumed
Last December, Thames Water agreed to pause £2.46 million in retention payments to 21 top bosses following an outcry, having already paid a similar amount earlier in 2025. The company has declined to comment further on the payouts detailed in the letter and has not disclosed the total amount agreed.
However, it is understood the payments are less than originally proposed, and the letter confirms they will be finalised in the 'coming weeks' after seeking legal advice, with payments deferred where possible.
Chairman: payments retain key staff
Sir Adrian Montague argued in the letter that the individual agreements were a cost-effective measure: 'Based on clear legal advice the company decided that reaching an individual agreement with each participant would be significantly cheaper and less disruptive than being in due course ordered by a court to make payment, with associated costs and damages. Importantly, this approach also provided the best opportunity of retaining the relevant employees.'
He acknowledged the public's frustration: 'I understand that for customers who believe, rightly, that they have not received the service they deserve, it feels unjust that senior leaders of the company receive significant compensation. However, we need those senior leaders to remain in post to continue the good progress made on the turnaround.'
Campaigners demand special administration
Environmental campaign group River Action called the payments 'indefensible'. Head of campaigns Amy Fairman said: 'Put Thames Water into special administration and rebuild it to serve its customers, and clean up our rivers, not reward failure.'
Cat Hobbs, director of public ownership campaign We Own It, added: 'It's criminal to let this rip-off continue with 16 million households paying the price.'
Last month, Thames Water's annual financial report revealed it had paid more than £4 million in bonuses and boosted chief executive Chris Weston's pay to £1.2 million, including a £99,000 retention payment deferred from a previous year.
