UK: THE DAVIDSON INTERVIEW - PETER MIDDLETON. - An ex-monk and former head of Lloyd's, he is now chief executive of Salomon Brothers in Europe. How, asks Andrew Davidson, can a man with such a zigzagging career keep this 'maverick' US bank on the straigh

Last Updated: 31 Aug 2010

An ex-monk and former head of Lloyd's, he is now chief executive of Salomon Brothers in Europe. How, asks Andrew Davidson, can a man with such a zigzagging career keep this 'maverick' US bank on the straight and narrow?

You could accuse Peter Middleton of many things, but being dull is not one of them. Now chief executive of Salomon Brothers in Europe, and formerly head of Lloyd's of London and Thomas Cook, he has, in his time, been an ardent Middlesbrough football fan, a monk in Devon, a philosophy student in Paris, a Foreign Office diplomat and a Midland banker.

He has also, apparently, almost been a university lecturer (politics), an Olympic runner (400 and 800 metres) and an author (chosen subject: the definitive history of the 20th century) but somehow such projects slipped by in the onrush of his ambitions. And, if that weren't enough, at 56, an age when many of his peers are plotting their retirement, he has found his love life - or, let's be precise, the fact that he broke up a 25-year marriage and took on a 26-year-old girlfriend - the stuff of tabloid news.

Then there are the rumours about the vast size of his Salomon pay packet ($1 million a year? $5 million over three years? $10 million? - all have been cited), whether he jumped or was pushed from Lloyd's, and why he hopes to take a stake in the Chelsea Village project which runs Chelsea Football Club. Enough for now? If the Middletons were ever to consider a new family motto, the Latin for 'no stranger to controversy' would presumably go to the bottom of their shield.

And you suspect he doesn't give a fig what anyone thinks. Pacing the floor of a meeting room high above Salomon's dealing room in London's Victoria, his silver-grey suit matching his short silver-grey hair, Middleton exudes a bulky, intellectual menace which belies his blunt openness. As he lights up cigarette after cigarette (around 12 in two hours), he looks and sounds, at times, the very picture of the brusque northern politics don he almost became. He also, it has to be said, bears more than a passing resemblance to Mike Reid, the comedian and EastEnders actor.

Beneath him, on the dealing-room floor, row upon row of earnest young men and women sit staring intently at banks of screens or, off-duty, lounge, feet up on their desks, lobbing paper balls at each other. Rather different types, you imagine, from the jowled, pinstriped underwriters who haunt Lloyd's of London, Middleton's last home. But the two establishments have their similarities.

For Lloyd's was in crisis after a string of underwriting disasters in the '80s when Middleton joined towards the end of the decade. And Salomon, the US investment bank renowned for its aggressive bond dealing, is only just recovering its balance after a trading scandal in 1991 and the collapse of the bond market in 1994. For both companies, Middleton's role could be described as that of management fixer. He did the same at Thomas Cook in the late '80s, too, transforming the neglected and underperforming travel company, then a Midland Bank subsidiary, into an early success story for the 1990s.

Middleton's style is one of high-profile leadership - lots of press interviews, internal communication, clear objectives and responsibilities - combined with a common-sense approach to discord. It may or may not have sorted out the mess at Lloyd's. Only time will tell as Middleton, having put a recovery plan in place, did not hang around to see it through but jumped ship even before last year's Christmas decorations were up.

His brief at Salomon, where he started in January, is to settle nerves and build on existing foundations, widening the range of the bank's activities in Europe, which account for one third of the company's worldwide turnover and profit, and, at the same time, to instil some team spirit into a place famed for fostering maverick individuals. The average Salomon employee, it is said, is focused on only one end: his or her personal cut of the bonus pool at the end of the trading year. Except, of course, that there's no such thing as an average employee at a company like Salomon.

his might explain why Middleton has been so warmly welcomed at the bank's Victoria headquarters, now home to over 1,200 staff. First morning in, he was out on the floor, among the troops, introducing himself, asking who does what and what people want. By all accounts, staff love the fact that he rides a 800cc Suzuki into work from his Fulham house, and has his love life plastered all over the Daily Mail. 'You haven't really made it at Salomon in New York till you've had at least one divorce,' one enthusiastic insider told me. After the whispering complexities of Lloyd's, with its arcane relationships between syndicates, agents and Names, Salomon's brash snappiness is probably something of a relief.

'My first real surprise was just how nice people are here,' says Middleton gruffly. He had expected rather more of the brusque, 'rip-the-ass-off-a-bear' spirit immortalised in Liar's Poker, Michael Lewis's famous book about Salomon. But times have changed, perhaps in response to the 1991 scandal (one trader was imprisoned and three senior executives had to leave after the manipulation of US Treasury bond auctions) which damaged Salomon's reputation worldwide.

Now part-owned by billionaire investor Warren Buffett (through the holding company Salomon Inc), and run from New York by a British chief executive, Deryck Maughan, the organisation is stressing goals like teamwork and coordination. It wants to be understood, as well as respected, in order to build its client business. Hence the poaching of an open management leader like Middleton, who appears comfortable to explain, in the full glare of publicity, what the company is about in Europe and where it is going.

Yet isn't it a bit unusual for a senior businessman to give interviews just three months into a new job as chief executive - especially since, until recently, Salomon's bosses were not exactly queueing up to see the press? Middleton looks uncomfortable for a splitsecond but then brushes the query aside. Part of his brief, he explains, is to give the European arm a sense of identity and a say in its own strategy, which it can then communicate to clients. 'We're serious in developing the client business and I hope clients will notice the change,' he says. One way of doing this is through a presence in the press. It also helps in conveying the message internally and to potential recruits. For the past two years the company has been expanding its equities and investment banking arms, poaching analysts, sales specialists and bankers, many of whom will need reassuring that Salomon's maverick spirit, typified by its bond dealers, has been tempered with a bit of judicious management nous.

Consequently one of Middleton's first moves was simply to get the senior managers - the 40-odd managing directors who have similar status to partners in a law firm - to meet face to face and recognise each other (many didn't).

It is all, he admits, basic management stuff, but vital for an operation where even insiders admit there hasn't really been a culture of management.

Now the managing directors are having to write annual business plans, follow a minimum of five days' management training a year, and talk to each other about how their various needs overlap.

'I think there is a recognition that there has been a certain absence of management skills here. Despite all the talented people we have, we just weren't being as effective and profitable as we could be because we weren't leveraging their skills in harmony. That's what we have set out to redress,' says Middleton.

here's also the question of those controversial bonuses. Maughan's attempts to cut back on the annual multi-million dollar handouts - provoked, doubtless, by the near $1 billion loss Salomon took in 1994 - has prompted a few senior New York executives to walk. In London, too, some have found their takings from the annual bonus pile smaller than expected. 'We made it clear that the company was going to take a tight view on bonuses for 1995.

Obviously some people were disappointed, but they didn't leave,' says Middleton. They were particularly disappointed, perhaps, because profits started to climb again in 1995 - indeed with a second half net income of $436 million, it was almost one of the most profitable six months in the bank's 86-year history.

Middleton claims he has no problem with the system as it works on simple market forces, although he admits that the large sums paid out even in lean times have angered Salomon shareholders. But, he argues, if someone makes a contribution to profits that is several times greater than their salary, they are entitled to their bonus. You cannot expect them to go unrewarded just because others have done badly, he continues, and, anyway, staff do care about profitability because a lot of their remuneration comes in stock.

This all sounds like he is carefully sitting on the fence, for now, yet there is little doubt that he already feels very much at home in Salomon.

Friends point out that the US company's meritocratic, relatively non-hierarchical ethos will probably suit him to a T.

or Middleton is no great respecter of British business's more traditional ways. One friend remembers Middleton's first day as head of Thomas Cook, when he was apparently appalled to find three dining facilities in operation for different levels of staff. Legend has it that Middleton went to the workers' canteen and plonked his tray of pie and chips on a table next to the postroom staff. When he told them he was the new boss, they refused to believe him, partly because, in his trademark V-neck jumper and slacks, he didn't look like a boss, nor, with his flattened Teesside vowels, did he sound like one. So he took them back to his office for coffee, and from then on, says Nigel Hards, retail director at Thomas Cook and an old Middleton ally, he had the workers' hearts and minds. 'He is a great orator to the masses,' adds Hards, 'but he's also as comfortable talking to government officials as he is to mail boys.'

One reason for this could be his eclectic background. Middleton's father was an ICI labourer on Teesside, his grandfather a ganger in the steelworks there. Educated at St Mary's College, the local hothouse for bright Catholic boys (Steve Gibson, the haulage millionaire who has transformed Middlesbrough Football Club, is another old boy), Middleton shunned university to become a monk, following some friends down what was quite a well-trodden St Mary's career path. He gave it up after three years, and says he has been asked so often why he did so that he is not even sure if his answer is correct now. 'It was just part of the climate to go,' he says, before pointing out that he couldn't really stick the monastery's strict rule of obedience.

He moved from there to study philosophy in Paris, staying in a boarding house run by monks, before travelling back to London and working as a labourer and lorry driver. 'Then I decided I was going to write the definitive history of the 20th century, and to do that I needed to study economics and social studies, which I did at Hull University.' He also started to run seriously, and believes only an Achilles injury kept him out of the British Olympic team heading for Mexico in 1968.

In 1969 Middleton was offered a lecturer's post at Coleraine University in Ulster but turned it down, perhaps sensing it was not going to be a good time for a Catholic to hit the career path in Northern Ireland. He never wrote his book either. Instead he joined the Foreign Office, which was then on a drive to recruit non-Oxbridge entrants. Something of a culture shock? Middleton lights up another cigarette while considering the question.

'I thought I might not get on with people from different backgrounds to mine, but if I didn't, it was more to do with my perceptions than theirs.' He worked in Dar es Salaam and Jakarta, and at the British embassy in Paris, moving in just as another promising civil servant, Howard Davies, now deputy governor of the Bank of England, was moving out. He helped deal with Africa's leaders over the Rhodesian problem, and Europe's leaders over the British problem, and was, by all accounts, a pretty sharp diplomat.

So sharp he caught the eye of one of the French executives running Midland Bank International, who promptly poached him.

From there his career went into overdrive, yet with hindsight it seems such an odd succession of leaps. Foreign Office to banking? Middleton shrugs. In France such public to private sector moves happen all the time.

Then, in 1987, from banking to a specialist operation like Thomas Cook?

'What surprised me (about all these posts) was that the things you needed to manage are mostly natural. You need to be open with people, you need to get on with people, to be able to say, "Sorry I screwed up," when you have, and to be able to think clearly.' He adds that giving yourself time to consider problems properly, rather than just endlessly moving paper, is a key task for top managers. His study of philosophy combined with his Foreign Office training helps provide that clarity of thought, he claims.

lear thinking, philosophy and the FO are not concepts you would normally group together, but, in Middleton's case, probably because of his gregarious nature and broad range of experience, they gelled. His time at Thomas Cook is judged by most observers as a good example of how to revive a tired and forgotten brand and instil new drive into a demoralised workforce.

'He turned the company upside down,' says Hards, who points out that anyone predicting anything different when Middleton went into Lloyd's hadn't done their homework. For Middleton, like many late starters in business, is a man who seems to move in a hurry.

Which begs the question as to whether Lloyd's got what they expected when they hired him. His exit from the insurance market in November last year was dogged by rumours of a rift with his chairman, David Rowland.

Certainly, Middleton was far too sympathetic to the Names claiming compensation for some insiders' liking. Hence he left damned with faint praise. 'Peter was good with the press and at making speeches,' one leading underwriter told Lloyd's List when he left, 'but he never seemed to get into a position where he got things done.'

Well? Middleton sighs. There has always been, he says, something of a misconception about his role at Lloyd's. 'The idea that I was the new broom trying to sweep it clean and David was the old-style guy trying to stop me is just not true. He was heading the original taskforce that wanted reforms.'

Did he get too close to the Names? 'You have to understand,' he says, 'that there is a difference between being chief executive and chairman of Lloyd's. The chairman has to be seen to be even-handed with all sections of the membership and David was spot-on at doing so. My job was trying to see if a settlement could be negotiated, and it seemed to me to be right for the chief executive to pay a lot of attention to what the groups were saying, because if they didn't support the settlement there simply would not be one.'

Yet, having drawn up a renewal and reconstruction plan, which involved piling the bad debts into a new company, Equitas, it seems odd that Middleton should have chosen to leave Lloyd's before the plan is seen through. Was it the money at Salomon?

'No,' says Middleton. 'When Salomon first started talking to me, I knew there were very few jobs I would accept and this was one I was very attracted to.' Middleton also hit it off immediately with Maughan, who happens to be another Clevelander, from Darlington, just up the railway line from Middlesbrough. Yet, intriguingly, Middleton never told Rowland about the approach from Salomon, informing the director of personnel at Lloyd's instead. When I point this out, Middleton squirms slightly and ums and ers. 'Well, er, I, um, I think it depends. There are, er, no universal rules. I would be called by headhunters every 10 days with offers. Most of the time I would say, "Sorry, I've not got time to talk". This one came at the first time I was comfortable we had recruited the team that was going to be the next phase of Lloyd's ...'

Friends suggest intrusive press coverage also played a part in his decision to leave. Once the tabloids got wind of the fact that the racy Lloyd's boss (Who's Who recreations: motorbikes and Middlesbrough FC) had split from his wife and was being seen around town with a woman half his age, reputedly the daughter of a Lloyd's Name, he was fair game, especially given middle-class interest in the plight of the aggrieved Names. 'Poor Peter couldn't even go for a jog without a press pack following him,' says one friend.

Yet this presents a bit of a conundrum, for there is a side to Middleton that obviously enjoys the publicity. He says the press coverage didn't affect him. 'In terms of writing about me, it's what journalists are there to do. If their opinion is that I have screwed up, they are entitled to their views and it doesn't bother me. I am not a person who is sustained in any way by external reputation. I don't think it is a good way of life.'

And, if he were as press-sensitive as friends suggest, he would hardly have put so much effort into brokering a truce between Matthew Harding and Ken Bates, the feuding directors at Chelsea Football Club whose antics regularly fill the back pages of national newspapers. Here Middleton says his role has nothing to do with his work at Salomon and everything to do with the fact he lives round the corner from the ground.

o is he, as some people suggest, on an ego trip? It's a rude question but he takes it on the chin. 'I don't see it as a criticism because in one sense chief executives are on an ego trip. What would be unacceptable to me would be if people thought all I was interested in was me, and it didn't matter which company I was at. It's absolutely not the case. I wouldn't work as hard as I do if it was.'

His challenge now, he says, is to show the company that he is not just a management fixer, but a builder, too, and that, under his leadership, Salomon Europe can achieve steady growth.

Will he be staying there long? He chooses his words carefully. 'I'd like to be here for five to eight years.' Well into the next century then.

He grins. 'Actually, I think it's going to be a lot of fun.'

Biographical Notes


Born 10 February, Withernsea, near Hull Educated St Mary's College, Middlesbrough; University of Paris; University of Hull


Second secretary, Jakarta, Her Majesty's Diplomatic Service


First secretary, Dar es Salaam


Joins British embassy staff, Paris


Joins Midland Bank


Head of banking operations, Midland


Group chief executive, Thomas Cook


Chief executive, Lloyd's of London


Chief executive, Salomon Brothers in Europe, member of the management board, Salomon Brothers Inc.

What People Say

'Peter's very good at recognising different cultures and other people's points of view. He is a great orator to the masses, but he's also as comfortable talking to government officials as he is to mail boys.'

Nigel Hards, director of retail at Thomas Cook and a former colleague of Middleton's

'One of the problems here is that there has been no culture of management. Peter has come in and really turned people's heads.

It is his to blow.'

A Salomon executive on Middleton's first three months

'I am very disappointed. Mr Middleton has said publicly several times that he would stay until reconstruction and renewal was completed next summer. By doing this he has put his personal interests before those of Lloyd's.'

Anthony Cooper of Wellington Underwriting, the biggest managing agency at Lloyd's, on the timing of Middleton's exit

'Middleton was a very good hired gun, and he got hired elsewhere at a different price.'

Damon de Laszlo, a Lloyd's Names leader, on Middleton's move to Salomon.

'Peter was good with the press and at making speeches but he never seemed to get into a position where he got things done.'

A leading underwriter quoted in Lloyd's List.

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