Place onions in large heavy saucepan and add water to cover. Heat to boiling. Reduce heat and simmer uncovered until barely tender, 7-10 minutes. Drain and let cool slightly. Slip off skins and trim root ends.
Melt butter in same saucepan over medium heat. Stir in sugar and increase heat to medium-high. Add onions and cook, stirring occasionally, until onions are glazed and golden brown, 5-8 minutes. Stir in vinegar and thyme; cook 1 minute longer. Serve hot.