Thames Water has sparked outrage after handing a delayed £1 million “golden handshake” to its chief financial officer and agreeing controversial retention payouts to top bosses as it battles to secure its financial future.
The stricken supplier, which is sinking under a debt pile of more than £20 billion, disclosed in a letter to the Environmental, Food and Rural Affairs Committee that it had made the so-called signing-on payment to Steve Buck at the end of July from an emergency lending facility from creditors.
In the letter sent last week to committee chairman Alistair Carmichael, Thames Water chairman Sir Adrian Montague said the payment was a “necessary incentive” to Mr Buck in joining the utility when he was appointed in April 2025, but that it had been deferred when wider retention payments were put on hold.
It is understood the payment was made after legal advice.
Thames Water also said in the letter that it had agreed individual settlements over what it calls retention payments for a dozen top bosses, plus two who have now left the business, despite a furore late last year over them.
Details of the payments have emerged as Thames Water is fighting to secure a rescue deal proposed by its senior creditors to avoid collapse and being placed in temporary nationalisation by the Government.
The payouts also add to growing evidence that the sector is able to side-step last year’s Water (Special Measures) Act banning performance-related bonuses for bosses at utilities failing customers and the environment.
The Prime Minister’s official spokesman said: “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.”
Thames Water agreed last December amid an outcry to pause £2.46 million of retention payments to 21 top bosses, having already paid out a similar amount earlier in 2025.
Thames Water declined to comment further on the payouts detailed in the letter and has not disclosed how much it has agreed to pay.
But it is understood the payments are less than originally proposed, which it had been due to make last December and in June this year.
The letter confirms the payments will be finalised in the “coming weeks” after seeking legal advice and have been deferred where possible.
Sir Adrian said in the letter: “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 added: “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.”
River Action said the payments were “indefensible”.
The group’s 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, said: “It’s criminal to let this rip-off continue with 16 million households paying the price.”
It was revealed last month in Thames Water’s annual financial report that it had paid more than £4 million in bonuses and boosted its chief executive pay to £1.2 million, including a £99,000 retention payment for Chris Weston deferred from a previous year.
