New Northern Rock chief to pocket £1.2m

A BUMPER pay packet that includes £1.2 million in compensation for Northern Rock's new chief executive has been attacked by opposition politicians, who say the reward is unjustified for someone running a "zombie bank".

Gary Hoffman, the group vice chairman and executive director of Barclays, will join the nationalised bank on 1 October, becoming Britain's highest paid public servant.

He will replace Andy Kuipers, who will leave on 31 August after 20 years at the Newcastle-based lender.

Mr Hoffman will collect £400,000 the day he sits at his new desk at the nationalised bank.

He will receive two more payments of £400,000 the following two years, on top of his annual pay, to compensate him for lost earnings from Barclay's incentive scheme.

He will also be eligible to take part in Northern Rock's incentive scheme when it starts later this year. Mr Hoffman's basic pay at Barclays was £625,000.

Politicians have questioned why he will need such high rewards when Northern Rock is a "zombie bank" with debts of £26 billion.

Vince Cable, the Liberal Democrat Treasury spokesman who has called for the nationalisation of Northern Rock, yesterday said the bank's employees did not need the same incentives as other expanding organisations.

"Parliament has agreed that Northern Rock should operate on a commercial basis without political interference, but this is absolutely ridiculous. It has to be asked what on earth this man is being paid for.

"Northern Rock has made a deliberate decision to run down its mortgage-lending activity in order to be able to pay back the taxpayer.

"There is no commitment to expanding the business. Why does this man have to be paid so much to run a zombie bank?" Mr Cable said.

Northern Rock is to cut 2,000 jobs by 2011 and reduce residential mortgage lending by half.

Mr Hoffman's pay is modest compared with that of Sir Fred Goodwin, the chief executive of RBS, who is on a basic pay of £1.29 million, and the HBOS head Andy Hornby, who earns £975,000, but it is still three and a half times the Prime Minister's salary.

A spokesman for the Treasury last night denied that taxpayers were liable for the pay of the chief executive, saying that the public were simply shareholders in the company.

PROFILE

Name: Gary Hoffman

Date of Birth: 21 October, 1960

Previous Employment

1982-present: Barclays plc.

July 2006-present: Barclays Group vice-chairman.

Other roles in the bank include: Chairman of UK Banking and chairman of Barclaycard; five years as chief executive of Barclaycard; responsibility for services and sales to retail customers; set up Barclaycall (phone banking service); launched internet banking.

2001: Appointed to Barclays Group executive committee.

2004: Appointed as an executive director to the board of Barclays and Barclays Bank.