Walter Scott wage bill tops £36m as funds total soars

A STRONG year for fund manager Walter Scott & Partners has reinforced its status as one of Scotland’s best-paying firms, with its wage bill topping £36 million, an average of more than £340,000 for each staff member.

Walter Scott, founder of the eponymous firm, often insisted on kilts being worn by his staff during meetings. Picture: David Moir

Latest accounts also show that the highest-paid director at the Charlotte Square-based business received £4.5 million last year, an increase of £92,700.

A £40m dividend was paid to parent Bank of New York Mellon – up from £11.57m in 2011 – after assets under management soared by 20 per cent to more than £36 billion last year.

While the company employs 106 staff, together with pension payments and National Insurance costs, the total staff costs came to £43.7m, up from £40.8m in 2011 when average staff numbers were 101.

The workforce at the firm has risen steadily from about 60 in 2006 when it was acquired by Mellon from founder Walter Scott and other shareholders.

In total the ten directors received £17.2m last year, up from £16.5m. Although turnover rose by 11 per cent to £160.3m, pre-tax profits dipped slightly by £1m to £93.1m after costs rose.

In a brief review of business operations in the directors’ report, the company noted it had “continued to operate profitably and there have been no significant changes in its operations in the past year”.

The business specialises in managing global equities on behalf of institutional investors around the world. It targets long-term compound returns of 7-10 per cent a year for the portfolios it manages.

“The business has consistently applied the same investment philosophy and investment process throughout its entire history,” the directors added.

Last year’s accounts highlighted an issue with a liability in connection with an unnamed director’s contract under which they were entitled to post-retirement benefits linked to future fee income of the business.

The net liability for the arrangement reported in the latest accounts rose to £24.3m from £20.6m.

This year’s accounts also reported a provision of almost £12m which has been recognised in relation to a potential overseas fund tax liability.

“The board has considered the likelihood of a material outflow of economic resources and provided for its best estimate of costs.”

It added that “discussions with the UK tax authority are ongoing and the expected outcome and timing are therefore not known”.

Mellon reportedly paid £400m to take control of Walter Scott in 2006. The takeover valued the 70 per cent stake held by the company’s eponymous founder at around £280m.

A former star of the Ivory & Sime business, Scott founded the business in 1983 and was renowned for wearing a kilt to meetings with US clients. The nuclear physics graduate left the business in 2007.

Earlier this year, Ken Lyall, the first employee of Walter Scott & Partners, who had served as its chairman since 2007, died aged 64.

He had joined the firm soon after it was founded, having worked for several years with Arthur Andersen in Glasgow and London.