Wood's pay may be raised to pounds 15m

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The Independent Online
DIRECT Line Insurance, the cut-price insurance arm of Royal Bank of Scotland, should report a rise in pre-tax profits for its last financial year, ending in September 1993, from pounds 15m to up to pounds 50m, and an increase in pay for its chief executive, Peter Wood, from pounds 6m to pounds 15m, writes John Moore.

The announcement, due on Thursday, will cause further embarrassment to one of the fastest-growing companies, which last year revealed that Mr Wood received a bonus of more than pounds 6m, equivalent to pounds 2,780 for every working hour, assuming he works 45 hours a week for 50 weeks a year. At the time it compared with average pay of about pounds 18,000 a year.

Following the comment about his remuneration package, Mr Wood and RBS decided to renegotiate his terms, which are based on the growth in Direct Line's value. His remuneration is likely to be brought more into line with conventional packages.

In doing so, RBS is rumoured to be prepared to offer him a one-off payment of pounds 50m to buy him out of his lucrative contract.

Spokesmen for RBS and Direct Line said they could not comment on speculation at the weekend. But Direct Line's results will be announced against the background of persistent rumours in the City that the insurer is to be floated on the stock market.

RBS is understood to be concerned at the size of Mr Wood's remuneration. Mr Wood is also believed to be concerned about the persistent attention shown to his earnings. When his original contract was drawn up Direct Line was not expected to grow as quickly as it did.