Thames Water has faced renewed criticism after awarding a £1 million payment to its chief financial officer, Steve Buck, despite the company’s ongoing financial struggles and restrictions on executive bonuses. The payment was made last month as part of a signing-on agreement, even as the water utility battles a crippling £20 billion debt load and efforts to avoid nationalisation.

The company is currently prohibited by the industry regulator Ofwat from awarding performance-related bonuses to its top executives, including its chief executive Chris Weston and Buck himself. However, the £1 million paid to Buck is considered a “retention fee” rather than a performance bonus and was promised when he joined Thames Water in April 2022. The company’s latest annual report had indicated the payment was on hold, but it was subsequently disbursed, according to a letter from Sir Adrian Montague, the Thames Water chairman, addressed to the environmental select committee of Parliament.

Montague acknowledged customer frustration surrounding executive pay, stating that while it may seem unfair to those who have suffered from poor service, retaining senior executives is critical to the ongoing turnaround efforts. He emphasized that the current leadership was largely brought in to rectify the company’s problems, not to cause them.

In addition to Buck’s retention fee, the company has postponed millions in bonuses for other executives amid public backlash over its sewage management and continued hosepipe restrictions affecting more than 10 million customers. Thames Water’s CEO Chris Weston did not receive a bonus last year due to Ofwat’s restrictions but was granted a 14% salary increase to nearly £1 million. Buck’s salary also rose from £500,000 to £630,000 in the latest period.

The utility’s challenges have escalated calls for government intervention, with Labour politician Andy Burnham advocating for nationalisation. Thames Water's creditors are currently negotiating a restructuring plan with regulators which could involve writing off a substantial portion of the company’s debt and injecting additional capital to sustain operations. The company has warned that it only holds sufficient cash reserves through the end of this year.

Emma Reynolds, Chief Secretary to the Treasury and former environment secretary, criticized the payments as “outrageous,” highlighting the tension between executive compensation and the company’s performance. Thames Water declined to provide a comment on the matter.