Rock forced to pay £2m for new boss
Northern Rock has announced the appointment of Barclays director Gary Hoffman as its new chief executive, in a deal worth more than £2m.
Hoffman, who will pull in an annual salary of £700,000, has been at Barclays since 1982, where he has held several senior positions, including chief executive and chairman of Barclaycard.
He stands to receive compensation from the loss of his Barclays incentive programmes in the form of three payments of £400,000 and could also benefit from a Northern Rock incentive scheme due later in the year.
He will replace current CEO Andy Kuipers, who took over the role after the departure of Adam Applegarth, from 1 October.
The appointment will also see chairman Ron Sandler revert to a non-executive role. Hoffman said: “I am excited by the prospect of leading the company back to a position of strength, delivering our plan and returning Northern Rock to private ownership as a thriving, stable business.”
Chancellor Alistair Darling nationalised Northern Rock in February after the credit crisis forced the bank to seek emergency funding from the Bank of England last autumn.
Under a plan to slash the bank’s assets and repay government loans, Northern Rock has stopped its proactive mortgage retention programme, with customers instead encouraged to transfer their mortgages to other lenders.
Staff numbers are being slashed from about 5,400 people to 3,400 by 2011, with most jobs going this year as Northern Rock restructures post nationalisation.
History of the Northern Rock crisis
- 14 Sep, 2007: Customers form queues outside branches in an old-fashioned run on the bank, as it emerges the bank has sought emergency funding from BoE.
- 17 Sep, 2007: As shares fall 40 per cent, Chancellor Alistair Darling agrees that the government will guarantee all deposits held by Northern Rock.
- 26 Nov, 2007: Consortium led by Sir Richard Branson’s Virgin Group is named as the preferred bidder. It plans to rename the bank Virgin Money.
- 12 Dec, 2007: Northern Rock is dropped from the FTSE 100. CEO Adam Applegarth leaves the company the next day.
- 21 Jan, 2008: Alistair Darling says the bank’s £25bn loan will be converted into bonds guaranteed by the government.
- 17 Feb, 2008: Northern Rock is nationalised, after bid proposals are rejected. Ron Sandler becomes executive chairman.
- 19 Mar, 2008: Job cuts of 2,000 are announced and residential mortgage lending is reduced by 50 per cent.
- 26 Mar, 2008: FSA admits a ‘lack of adequate oversight and review’ of the troubled bank, saying too few regulators had been tasked with monitoring it.