Walter Scott’s wage bill tops £43m after surge

Fund manager Walter Scott & Partners has cemented its position as one of Scotland’s best-paying firms after its wage bill topped £43 million, giving an average of more than £435,000 for each member of staff.

The Bank of New York Mellon paid a reported 400m for Scott in 2006

Latest accounts also reveal that the highest-paid director at the Edinburgh-based firm saw a total pay package rise to £6.5m in 2013, an increase of almost £2m on the previous year.

Walter Scott is led by managing ­director Jane Henderson – who has been with the firm for almost 20 years – and executive chairman Rodger Nisbet, who joined in 1993 after running his own property business.

Writing in its annual report, the firm’s directors said: “The company has continued to operate profitably and there have been no significant changes in its operations during the year.”

Pre-tax profits at the company soared 55 per cent to £144m in the year to the end of December, but the dividend paid to its parent group, the financial services giant, Bank of New York Mellon, reduced to £5m, from £40m a year earlier.

Although Walter Scott, run from its sole office on Charlotte Square, saw its average headcount decline by seven people to 99 during the year, costs for salaries and wages grew by almost £7m to £43.1m.

The firm provides global equity portfolio services to institutional investors around the world. Assets under management grew by 22 per cent to £44.6 billion, helping a 27 per cent increase in turnover to £203.6m.

“The company’s revenues are ­exposed to equity market risk and currency risk,” the annual report stated.

“The flexible cost base, with a ­relatively low percentage of fixed costs, ensures that profit margins can be ­sustained in times of market downturn.”

Accounts published at Companies House provided little explanation of the bumper figures, but in their report the directors said the firm’s success was based on investment performance.

“Walter Scott targets long-term compound real returns of 7 to 10 per cent per annum for the portfolios it manages,” the directors said. “This is most likely to be achieved by investing in companies with high rates of internal wealth generation, which in time translates into total return for the investor.”

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 about £280m.

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

• Sir David Howard, the boss of wealth manager Charles Stanley, is standing down after more than four decades in charge because of European rules that demand firms separate the roles of chairman and chief executive.

Howard became managing partner of the business in 1972, and then chief executive when the firm was incorporated in 1988. He has combined this with the role of chairman since 1999.

Charles Stanley said Howard “is ­willing to continue as non-executive chairman” and the group’s independent directors have been tasked with finding his successor as chief executive.