Northern Rock will pay Gary Hoffman, its new chief executive, £1.1m a year plus a bonus for his first three years in the job, after luring him from Barclays.
The nationalised bank said Mr Hoffman would receive a salary of £700,000 a year plus three yearly payments of £400,000 to compensate him for leaving Barclays' long-term incentive plans. The deal will make him the country's best-paid public servant.
Mr Hoffman will join on 1 October when Ron Sandler, the bank's chairman, will hand over executive responsibilities to him. The 47-year-old is currently vice-chairman at Barclays.
Mr Hoffman has been out of hands-on banking at Barclays since becoming vice-chairman responsible for matters such as corporate sustainability, public policy and governance. He has worked at Barclays since 1982.
Mr Hoffman's salary last year at Barclays was £625,000, though his earnings were boosted by a bonus and other benefits to £1.15m.He will earn a smaller salary than Mr Sandler has pocketed since taking over in February. The chairman's £90,000-a-month deal will be reviewed after he hands over the executive reins to Mr Hoffman.
Mr Sandler said: "This is a major step forward for Northern Rock and I am delighted that Gary will join the Board as CEO. His skills, experience and overall track record make him an outstanding candidate for the role."
Mr Hoffman's main job will be to run the halving of Northern Rock's loan book to about £50bn so that the bank can repay the Bank of England's loan. He will also have to manage the worsening quality of the bank's loan book as defaults rise, and oversee the slashing of 2,000 jobs, which is already under way.
Andy Kuipers, the current chief executive, will leave next month. The Dutch former marketing head has been on a rollercoaster ride since the bank received Bank of England support in September. He was ousted from the board in November, only to be made chief executive less than a month later.Reuse content