Water firms' 'undeserved' bonuses to be paid for by investors

Investors in Thames Water, Yorkshire Water and Dwr Cymru Welsh Water will be forced to pick up the tab for executive bonuses after the regulator determined the sector had awarded "undeserved" extra payments worth £6.8m.

- Jasper Jolly, Helena Horton

Ofwat said yesterday that it had used new powers to ensure bonuses at the three companies were paid by shareholders and bondholders, rather than through customer bills, because the payments had not "adequately reflected overall company performance issues".

Water companies have faced public anger and a political criticism in recent years over leaks and sewage overflows as they have also come under increasing financial strain.

Nine water companies will not be allowed to use customer funds to pay bonuses, worth 56.8m.

Six said Voluntarily that shareholders would pay, but Ofwat had to use its powers directly in the cases of bonuses worth £1.5m from Thames, Yorkshire and Welsh.

Thames, which is trying to agree an emergency funding package worth £3bn, had tried to pay bonuses worth £770,000 to its chief executive and chief financial officer without offering any justification, Ofwat said.

Chris Weston, the chief executive at Thames, who joined in January, was handed a 5195,000 bonus for his first few months in the job, according to the company's annual report.