Major water companies in England have resumed paying executive bonuses despite a regulatory ban intended to curb incentives following severe pollution incidents, according to recent disclosures.

One notable example involves Pennon Group, whose chief executive Susan Davy had her annual bonus of £270,000 reinstated after it was initially blocked. The bonus restoration came despite South West Water, the company’s subsidiary, contaminating tap water with cryptosporidium parasites, affecting more than 500 customers in Brixham, Devon, in May 2024. This incident led to a £1.9 million fine for South West Water. Ms. Davy’s total earnings during her tenure at Pennon now reportedly amount to £5.6 million, exceeding previous estimates.

The regulatory watchdog Ofwat introduced the bonus ban a year ago amid widespread public concern about pollution episodes and rising water bills. The rule empowers Ofwat to withhold performance-related payments to senior executives of water firms found responsible for the most serious pollution breaches. However, Pennon revealed in its latest annual report that after "further guidance" from Ofwat, the initial ban on bonuses for Ms. Davy and Pennon finance director Laura Flowerdew was lifted. Notably, Ms. Flowerdew was not employed by South West Water at the time of the pollution incident, and thus the ban did not originally apply to her.

Critics argue the bonus curbs are limited in scope and can be circumvented easily. Commenting on the issue, clean water campaigner Feargal Sharkey condemned the ban as “pantomime politics,” describing it as a demonstration of the water industry’s disregard for consumers. Mr. Sharkey advocates for renationalization of water services, a stance shared by Andy Burnham, the new MP for Makerfield.

Thames Water, the largest supplier serving London and the Thames Valley, faces a financial crisis marked by nearly £20 billion in debt. The company is under parliamentary scrutiny after confirming that 21 senior managers are eligible for bonuses totaling as much as £17.5 million, despite receiving an emergency government loan. Ofwat cannot recover these bonuses as the ban applies only to board-level directors and not other senior staff.

Similar concerns have emerged at Severn Trent, where new chief executive James Jesic received a £225,000 bonus after just three months, although his predecessor Liv Garfield’s bonus was blocked following two major pollution violations in 2025. Severn Trent stated that Mr. Jesic was not on the board at the time, therefore exempt from the ban. Public concern deepened after recent tests revealed elevated E. coli levels in the River Trent, with a hygiene consultant likening the contamination to that found in a pub restroom.

United Utilities, which supplies seven million customers in northwest England, also reported a significant pay increase for its chief executive Louise Beardmore, whose total remuneration rose 79 percent to £2.5 million last year. This came after Ofwat blocked her previous annual bonus following a reservoir pollution incident that caused thousands of fish deaths. The company has also faced criticism for illegal sewage discharges into Windermere, England’s largest freshwater lake.

Ofwat indicated that its bonus restriction had prevented nearly £4 million in payments to water executives last year and pledged continued oversight. A spokesperson emphasized that the regulator is currently reviewing company remuneration policies and remains prepared to intervene where rules are breached.