Direct Line executives treble their earnings: Burton Group pays pounds 846,000 in compensation to two former board members

Click to follow
The Independent Online
TWO OF the top earners at Direct Line, the Royal Bank of Scotland insurance subsidiary, more than trebled their combined pay this year from pounds 230,000 to pounds 775,000, according to the company's annual report yesterday.

Peter Wood, the founder, announced last month that he had earned an pounds 18m bonus and another pounds 24m buyout of his contract, as the company's profits soared.

The report disclosed that the next highest paid director is not in the same league but still managed a rise from pounds 180,000 to pounds 450,000. The director on the third-highest pay earned pounds 325,000 against pounds 50,000 in the same position a year earlier.

Direct Line's three executive directors apart from Mr Wood are Mike Flaherty, Lyn Thomas and Andrew Dodsworth, who have all been with the firm since it was founded. Mr Dodsworth only joined the board this year.

A spokeswoman said their rewards were on a different basis from those of the founder, Mr Wood, whose pay has been linked to the growth of the capital value of the company. 'They are rewarded for how well they and the company are doing,' she added, but refused to disclose further details.

Direct Line made a pre-tax profit of pounds 50m in the year to September, after paying Mr Wood's pounds 18m bonus - more than three times the pounds 15m profit in 1992. Mr Wood will return to a normal salary arrangement after the buyout of his contract is approved by shareholders next month. The buyout includes pounds 17m in further bonuses and a pounds 7m payment into his pension fund.

Meanwhile Burton Group, owner of Debenhams and Top Shop, has paid pounds 846,000 in compensation to two directors - the third year in which it has made large payments to former executives.

Geoff Powell, the operations director who left after just 13 months with the group, and John Davies, the company secretary who joined in 1986, shared the payment between them. The individual amounts were not disclosed, but both were on three-year contracts.

It is believed that the two men left following a reorganisation of the group at the start of the year. That demoted the post of company secretary from the main board, while the position of the operations director was abolished.

Last year the group paid pounds 1,830,000 in compensation, including a pounds 773,000 payoff to Laurence Cooklin, chief executive for just 15 months. In the previous year pounds 3,174,000 was paid, largely to Ralph Halpern who got pounds 2m and a pounds 456,000 pension for life.

The accounts also show that John Hoerner, who replaced Mr Cooklin as chief executive, was paid pounds 624,000, including pounds 171,000 in bonuses. In the previous year, the highest-paid director received pounds 392,000, although that was not the chief executive as Mr Hoerner and Mr Cooklin shared the job. Mr Hoerner was head of Debenhams and remained on that salary until the beginning of this year.

View from City Road, page 24