KPMG chief's pay leap to £2.4m

THE top man at accountancy giant KPMG has become one of the best paid bosses in Britain with his remuneration shooting up by a staggering 45% to more than £2.4m.

The pay rise for Mike Rake, easily Britain's best-paid number cruncher, comes in a year of flat revenues saved only by significant growth in audit work on the back of the post-Enron crackdown on companies' financial reporting.

KMPG's annual report and accounts, out today, reveal that Rake receives base pay as UK senior partner of £1.8m, an increase of nearly 20% on last year. For additionally chairing KPMG International, Rake receives a further £602,000.

That puts him well ahead of his nearest rival in the accountancy firm pay stakes and makes him one of the City's elite earners.

Keiron Poynter of PricewaterhouseCoopers got just over £2m last year, though 25% of that came from the proceeds of PwC's sale of its consulting practice.

It also means that Rake is earning nearly twice as much as his counterpart at Ernst & Young, Nick Land, even though E&Y is more profitable on a per-partner basis. Land is paid nearly £1.3m.

The other boss of the so-called Big Four accountants is Deloitte's John Connolly. Deloitte is refusing to detail its annual profits and pay figures, though Connolly is reckoned to have been paid more than £2m last year, including bonus payments for Deloitte taking over the majority of the defunct firm of Andersen in Britain.

KPMG reported today that its UK firm made operating profits of £233m, up about 10% on revenues which were marginally worse at just over £1bn in the year to the end of last September.

Average profits payments for partners - effectively the owners and shareholders of the firm - rose by 13% to £449,500 apiece after a cull last year of partner numbers by around 7% to 568.

While turnover was tumbling in both tax and general advisory work for its clients, revenues from audit work rose by 9%.

John Griffith-Jones, KPMG UK's chief executive said: 'Are we happy with these results? We are never happy but we believe that is an OK result in a difficult market.

'The growth in audit comes from more work around Sarbanes-Oxley issues while the tax environment was very tough and the market for non-discretionary spend and transactions was very tough as well.'

Sarbanes-Oxley is the US legislation enacted after the Enron scandal and which among other things demands a tightening in internal financial and audit controls for companies and more-accountable quarterly reporting.