Durlacher replaces Stainforth in boardroom row over bonuses

Durlacher, the boutique investment bank, replaced its chief executive Christopher Stainforth yesterday after a boardroom row about fees paid to Mr Stainforth and his allies within the company.

Durlacher, the boutique investment bank, replaced its chief executive Christopher Stainforth yesterday after a boardroom row about fees paid to Mr Stainforth and his allies within the company.

Relations have become strained between Mr Stainforth and some investors after it emerged that a small group of senior figures within the company received generous bonuses for working on Durlacher's £10m money raising in March.

Almost £400,000 went to about six individuals, including £200,000 that Mr Stainforth himself collected.

While the bonuses were approved by Durlacher's remuneration committee, they were frowned upon by investors, who challenged Mr Stainforth about them when he held meetings with major shareholders after announcing six-month results two weeks ago.

The payments were viewed to be part of a general escalation of expenses, according to some shareholders who were dismayed to see in the company's six-months results that annual costs were running at £8.7m. That overshot the £6.5m target which Durlacher had said it was aiming for.

Durlacher said in a statement that Mr Stainforth would be replaced by Simon Hirst, who was recruited by Mr Stainforth from Commerzbank in November 2002 to head the corporate finance business. Mr Hirst's twin, Julian, who also works for the company, will take over that role.

Mr Stainforth had created a mixed impression as the head of Durlacher, which he joined in April 2002 when the business was on the verge of running out of money.

Some said the company, which had earlier focused on investing in technology companies and whose fortunes had mirrored the boom and bust of the dot.com bubble, had been successfully returned to health by Mr Stainforth.

Others, however, said he had made some unpopular hiring choices and there has been general discontent at the level of executive salaries at a company which has only just begun to stem losses and break into profit.

Tony Caplin, the chairman of Durlacher, said: "The board would like to thank Christopher for his hard work since April 2002, during which time he has been instrumental in restructuring and refocusing the company." The company would not comment further on the change of management.

Mr Stainforth is no stranger to controversy. He worked at UBS Philips & Drew when the bank advised the employment agency Blue Arrow on a controversial £837m fund raising in the late 1980s. The deal was later investigated by the Department of Trade and Industry and a number of individuals were put on trial for allegedly trying to cover up to what extent the fund raising flopped. Mr Stainforth was acquitted.