Warburg directors join million club: Investment bank's figures confirm 1993 as bumper year for high-flyers Profits double to record pounds 297m

TWO DIRECTORS of SG Warburg, the London-based investment bank, were paid more than pounds 1m last year, confirming 1993 as a bumper year for City high-flyers. A third director earned just short of pounds 1m.

Falling interest rates and reviving stock markets drove up Warburg's profits, which in turn boosted total directors' annual bonuses from pounds 2.5m to pounds 6.3m.

Warburg's highest-paid director received pounds 1,518,000, including a bonus of more than pounds 1m. The bonus was divided between pounds 641,000 in long-term performance-related pay and an annual bonus of pounds 392,000. In 1992 the highest-paid director received less than pounds 515,000.

Total pay including pensions contributions for Warburg's 24 main board directors nearly doubled last year from pounds 5.7m to pounds 10.7m. Eleven directors were paid more than the highest-paid director in the preceding year.

According to Warburg's report and accounts for the year to March, published yesterday, nearly 500 staff participate in the long-term bonus scheme, which started in 1982 and is linked to the price of the bank's shares.

Only the directors' pay and bonuses have to be published in the report and accounts, but it is understood that none of Warburg's traders received more than the highest-paid director.

More than 2,500 Warburg employees received annual bonuses last year under senior executive bonus schemes. Total staff costs rose from pounds 335.7m to pounds 469.9m in the year to March.

Meanwhile, the earnings of the highest-paid director at Warburg's 75 per cent-owned subsidiary, Mercury Asset Management, fell by nearly pounds 100,000 to pounds 538,000. Bonuses to MAM's highest earner fell from pounds 425,000 to pounds 300,000, despite the fact that MAM's profits grew by a third to pounds 109.5m.

Warburg doubled its profits last year to a record pounds 297m on the back of rapidly recovering markets. The chief executive, Lord Cairns, who steps up as executive chairman in 1995, said that although total costs rose by more than 30 per cent to pounds 746.7m, the largest chunk of which was staff pay, expenditure is budgeted to rise again in 1994/5.

'Our expense/employee ratio is at the higher end of the range for UK investment banking firms but is low by comparison with our principal US competitors, reflecting frugality in some areas but also the need for additional investment in people and systems as the group expands into new markets and products.'

The US investment bank Goldman Sachs grabbed the headlines with its own multi-million- pound bonuses for its London staff, and it is in this environment that Warburg justifies its own pay- outs, in order to attract and keep the right quality of staff.

But Warburg's figures also come just weeks after the Government's white paper on improving business competitiveness, which attacked greed in the boardroom.

It said: 'Some recent pay awards to some senior executives of UK companies have been concern to many', adding that shareholders have received inadequate information to judge whether directors have earned their money.

Recent high-profile awards include: Peter Wood, chief executive of Direct Line, the insurance company ( pounds 18.2m); Lord Hanson, chairman of Hanson ( pounds 1.3m) and Bob Bauman, who was being paid pounds 2.1m as chief executive of SmithKline Beecham until he left last month.

Martin Taylor, chief executive at Barclays Bank, is being paid at least pounds 737,000 a year, more than twice as much as the man he succeeded, Andrew Buxton, when both chairman and chief executive.

View from City Road, page 27

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