Ofwat has published a consultation seeking feedback on a new rule that will prevent water companies from awarding bonuses to water bosses in certain circumstances.
The proposed rule sets out four areas which if the company triggers would prohibit any performance related pay being paid to directors who sit on the regulated company board.
Ofwat has acquired new powers under the Water Special Measures Act 2025 to set rules about remuneration and governance, including a rule specifically relating to prohibition of performance related pay.
The proposals are based on feedback from an earlier consultation launched in October 2024, which set out Ofwat’s initial thinking on three remuneration and governance rules required by the Act. Ofwat plans to consult on the other two rules later in the year.
Ofwat said it is aware that public trust in the water sector is at an all-time low, and believes it is in the public’s interest to apply the rule as soon as possible. The regulator has proposed to implement the new rule for bonuses paid from 1 April 2024 onwards.
All interested stakeholders are invited to respond to this consultation, which will be closing 29 April 2025. It is expected that the rule will come into force later this year.
Consultation – Performance related executive pay (PRP) Prohibition Rule – Ofwat
