Lloyd's pays pounds 400,000 for hard work

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Lloyd's of London yesterday defended the decision to award a pounds 400,000 bonus to its chairman, David Rowland, claiming the money was in recognition of his efforts to push through the insurance market's pounds 3.2bn reconstruction package.

The award, agreed last week by Lloyd's appointments and compensation committee, comes on top of Mr Rowland's pounds 450,000 salary package.

His bonus is one of several to be made to senior executives. Ron Sandler, chief executive at Lloyd's since the resignation of Peter Middleton last year, will receive pounds 100,000 in addition to his pounds 250,000 salary. Both awards will be paid by the market's central funds.

The payments come as Lloyd's names face a pounds 1.3bn cash call following a decision this month to accept the reconstruction package painstakingly negotiated over a two-year period.

Lloyd's is still chasing about 1,850 names who have not yet signed up to its rescue plan and owe about pounds 500m to the market. Plans to collect the money include the potential seizure of homes, possessions and bank accounts.

One name, who refused to be identified, said yesterday: "I think this is a disgrace. I have been nearly driven to suicide by continuing financial demands on me over the past few years. My family and I have lost almost all I have worked for in the past 30 years and this man, who is already massively paid, is given this huge amount of money. I just don't know how they can get away with this."

However, a spokesman for Lloyd's said: "David Rowland was appointed chairman in 1993 and since that time he waived his right to any salary increase or bonus. In the past three years he has worked tremendously hard to put together the package needed to rescue Lloyd's. In all that time, he said he did not want to take anything out. This is not a decision he requested in any way."

It is understood that Mr Rowland's bonus package was agreed by the committee in recognition of his efforts. The committee includes Michael Deeny who was the chairman of Gooda Walker, which successfully fought Lloyd's for compensation on behalf of its names, before he joined the insurer's ruling council.

Mr Deeny is believed to be receiving a fee from the action group worth about pounds 500,000 in recognition of his own efforts.

However, the spokesman said Mr Deeny and other leaders of action groups were not being rewarded by Lloyd's itself. Several leaders had "success fees" written into contracts agreed with their own action groups.