Senior KPMG partner earned pounds 740,000
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Your support makes all the difference.Colin Sharman, senior partner of KPMG, was paid a total of nearly pounds 740,000 in the year to September 1995, according to the first publication of a leading accountancy firm's financial results.
The package was made up of "executive remuneration" of pounds 438,000 for doing the job of senior partner, pounds 125,000 of pension contributions and "proprietorship profit" of pounds 176,753. Some speculation had put Mr Sharman's earnings rather higher, with some suggesting that the figure might be more than pounds 1m.
Details of the pay scales are disclosed for the first time today in the firm's accounts. These showed one person receiving executive remuneration of between pounds 350,000 and pounds 375,000 and two receiving between pounds 325,000 and pounds 350,000.
The average pay package for each of the 565 partners was pounds 180,000 - made up of pounds 125,000 in executive remuneration, plus proprietorship profit of pounds 31,000 and pounds 24,000 in pension contributions. Pre-tax profits at the firm fell 28 per cent, to pounds 17.9m, in the year on revenue up 6.8 per cent at pounds 588.7m.
The firm said the fall in profits reflected "the competitive nature of our marketplace and our continuing investment in people and services". The cost of professional indemnity insurance cover had also gone up, while future profits would be hit by the costs of incorporation, particularly having to pay National Insurance contributions on partners' earnings, it added.
The publication of the accounts is part of KPMG's plan to make its audit arm a limited liability company in an attempt to stave off a bankruptcy- threatening legal action.
Mr Sharman accepted that most people would feel that his earnings were high and said he did not want to suggest that he and his colleagues were paupers. But he added that he thought many would have expected the figures to be higher. "This is not a bonanza," he said, pointing out that the proportion of staff earning more than pounds 100,000 a year - between 500-600 out of a total of 8,500 - was a much smaller proportion than in merchant banks, for example.
Equally, it is generally accepted that senior lawyers' pay is much higher. According to the latest estimates from Legal Business magazine, profits per partner at two City firms are nearly pounds 400,000.
One factor holding back the partners' take-home pay that is not fully explained in the accounts is the capital contributions they have to make. These start from the time a partner is appointed and eventually reach six figures.
The money is repaid on the partner's retirement - but without interest.This means that partners do not enjoy the opportunities for capital growth available to directors of merchant banks or public companies, who can benefit from stock options.
Mr Sharman believes that this is one reasons increasing numbers of partners at accountancy firms are leaving to become finance directors of banks and other corporations. Though KPMG had lost four such people in recent months, changing the ethos of the organisation would take it away from the key role of providing a service.
Comparative Earnings
Leading commercial barrister
pounds 1m-plus
Top City solicitor
pounds 500,000
Merchant banker
pounds 700,000
Chief executive of large UK company
pounds 375,000
KPMG partner (average)
pounds 180,000
KPMG senior partner
pounds 740,000
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