Middleton's pay 'may hit pounds 10m'

Lloyd's changeover: New chief executive sets out to quell fears in the market

Peter Middleton, who resigned abruptly from Lloyd's of London on Wednesday, could receive a pay package of up to pounds 10m for the first three years as chief executive for UK and Europe with Salomon Brothers, the US investment bank.

In his first year he will be paid pounds 1.8m, and this is sure to rise over the legnth of his contract. Banking sources say he will earn a minimum of pounds 5m, which could rise with bonuses to pounds 10m.

His first year's package will be more than five times what he earned as chief executive at Lloyd's. Salomon refused to comment.

Ron Sandler moved smartly into the chief executive position at Lloyd's yesterday, chairing an 8.30am meeting with the leading representatives of names' action groups. "There was a slight air of shock around, but it was business as usual, just another man in the top chair," said Alan Porter, an action group leader. "We didn't even discuss the succession. It was not on the agenda."

As the market digested Mr Middleton's sudden departure at a critical stage in Lloyd's efforts to negotiate a settlement to its massive problems, Mr Sandler, a 43-year old South African, sought to quell fears of delays and setbacks. "Unquestionably, in losing Peter Middleton, we are losing a lot of expertise in dealing with names. Having said that, the whole reconstruction and renewal programme at Lloyd's has been a team affair, in which Peter and I were at the centre, in each other's pockets. There is no need for a pause."

But Mr Sandler said a top priority was to establish a closer relationship with names' leaders, who saw Mr Middleton as their most sympathetic ally in Lloyd's management in the complex settlement negotiations. "I recognise the importance of moving in Peter's footsteps and building those relationships. But the gap is not as big as some make out," he said.

Mr Sandler's appointment met a broadly positive reception yesterday among leading names representatives, and a realistic appreciation of why Mr Middleton, whose relations with the Lloyd's establishment have been far from easy, had chosen to leave. "Middleton was a very good hired gun, and he got hired elsewhere at a higher price,' said Damon de Laszlo, a names leader. "But Ron Sandler is an excellent replacement, one of the architects of the reconstruction plan."

Michael Deeny, another names action group leader, said the changeover at the top of Lloyd's might protract the negotiations. "But ultimately this is not about personalities. We have lost billions of pounds. If Lloyd's gives us enough money, we shall settle. Who writes the cheques is less important."

One of the most urgent tasks of the moment, Mr Sandler said, was trying to raise more money for the overall settlement with names.