LONDON (ShareCast) - (Sharecast News) - Water company bosses have been blocked from receiving more than £4m in bonus payments by the regulator, it was announced on Wednesday.

New rules on performance-related pay, introduced in June, allow Ofwat to stop bonus payouts if water companies fail to meet specific environmental and customer standards.

Ofwat said six firms had triggered the bonus ban during the last financial year, for a "variety" of failures. Most, however, were centred on pollution incidents.

The companies were Thames Water, Anglian Water, Southern Water, United Utilities, Wessex Water and Yorkshire Water.

The update was included in Ofwat's latest Monitoring Financial Resilience report.

It showed that crisis-struck Thames Water remained in the most severe category, 'action required', along with two other companies, South East Water and Southern Water.

Joining five other firms in the second-highest category, 'elevated concern', was Anglian Water.

The remainder are in the final category, 'standard', which requires only routine monitoring and not the enhanced oversight associated with the other categories.

Water companies have long come under sustained criticism for high levels of executive pay and for paying out dividends despite failing to shore up balance sheets or invest in ageing infrastructure. Leaks, sewage spills and high levels of pollution remain common place.

However, Ofwat noted: "Last year, dividend policies and transparency improved. Nine companies did not declare a dividend for 2024/25, in some cases to support financial resilience and growth.

"Thames, Southern, and South East are currently in cash lock-up under their licence and cannot pay dividends without Ofwat's consent."

Russ Mould, investment director at AJ Bell, said: "Most of the corporate failings which led these payouts to be blocked involved pollution, and these firms have a long way to go to restore the faith of the public, regulators and politicians, for whom the sector's name is mud.

"Investors and other stakeholders will hope this action to hold back some of water executives' remuneration will help concentrate minds on the task at hand."

As at 1100 GMT, shares in United Utilities were unchanged at 1,199.5p.

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