|
GUARDIAN |
||
|
|
Special report: Executive pay |
|
|
|
In the bulge bracket
Jill Treanor, Thursday August 30, 2001 Sir George Mathewson, the chairman of Royal Bank of Scotland,
raised eyebrows earlier this year when he proclaimed the £2.5m bonus he
shared with his boardroom colleagues "wouldn't have given you bragging
power in a Soho wine bar". It was Sir George's way of explaining that, while his
bonus was revealed for public scrutiny, there were other pay deals around which
were bigger but only ever gossiped about. The Square Mile has always been known as the place where pay
packets are the stuff of legend. The "bulge bracket" institutions
are stuffed with bankers who advise on takeovers and mergers and traders who
speculate on the various markets. Increasingly top lawyers, accountants and management consultants
find themselves commanding big pay packets without the need to disclose how
much they take home every year. The size of pay packets for many in the Square Mile would make
most people's eyes water. For instance, City sources believe it would be
quite possible for the bankers who advise on big corporate takeovers -
similar to Sir George's takeover of NatWest - to command bonuses in the
region of £5m. Each. And that would be their reward for clinching just one of
the many deals they handle every year. The hottest gossip always focuses on high profile City professionals,
such as Guy Hands of Nomura. Mr Hands, who uses the Japanese bank's money to
buy assets ranging from pubs to army houses, is rumoured to take home £40m a
year, although he is in the process of renegotiating his arrangement with the
bank. City insiders insist, however, that deals such as these
are far from the norm and during a year in which the financial sector is enduring
a sharp downturn in business, multi-million pound bonuses are not likely to
appear. The accountancy profession is just starting to open its
books up to the scrutiny it demands from public companies. Damian Wild, editor of Accountancy Age, says that two of
the big firms, Ernst & Young and KPMG, have revealed the pay of their
senior partner - the closest they have to a chief executive. Nick Land at
E&Y earns £1m and Mike Rake of KPMG takes home £1.5m. "Given that Pricewater houseCoopers is twice the size
of KPMG I'd be surprised if Kieran Poynter, the senior partner, didn't earn significantly
more than either of these two," said Mr Wild. PwC, though,has yet to say
what Mr Poynter gets paid – allowing speculation to spread that he receives
£3m a year. In the legal profession, a survey by The Lawyer found that
senior partners at Link-laters & Alliance took home more than £1m last year.
Partners at Freshfields Bruckhaus Deringer struggle with less - £960,000 -
while their peers at Clifford Chance manage with just £855,000 a year. This kind of openness will be some comfort to executives
under attack for their huge pay deals - many of whom privately seethe over
criticism that they are fat cats. What may be more galling is that many of
their City critics rarely disclose how much they are paid. The wages of fund managers at big City investment firms –
who are charged with keeping boardroom excesses in check - are a closely
guarded secret. |