Hoffman becomes chief exec of the nationalised bank after 26 years at Barclays, where he had been vice chairman since 2006. He stands to earn £2m over the next two years in his new role – a basic salary of £700k, plus three payments of £400k each over two years as compensation for his long-term Barclays incentives.
But before we start bemoaning another heaving fat cat salary, Hoffman is, of course, going to have his work cut out. Currently occupying the in-tray are the not inconsiderable tasks of halving Northern Rock's £100bn mortgage book, repaying the £25bn Bank of England loan by 2010, and releasing the Government from its £75bn of guarantees the following year. Oh, and making a third of the 6,000-strong workforce redundant.
Northern Rock was nationalised in February after the credit crisis forced the bank to seek emergency funding from the Bank of England last autumn. It’s expected to remain nationalised for at least three years. At which point Hoffman will be able to judge whether his role, which he’s currently describing as ‘compelling and exciting’, has lived up to his expectations.
Few would consider heading the beleaguered lender a dream job. Indeed, if the government was ever going to get anyone to do it they were always going to have to pay big.
But pay is a sensitive subject when it comes to Northern Rock. Clive Briault, the most senior head to roll at the Financial Services Authority (FSA) in the wake of the Northern Rock debacle, walked away with a £612,000 farewell package – plus a £30,000 ‘performance-related bonus’. Who knows what he would have got if it hadn’t collapsed.