The bank reported a pre-tax shortfall of £257.5 million for the 12 months to December 31, compared with a £1.36 billion loss in 2008.
Northern Rock, which completed its restructure into "good" and "bad" banks at the turn of the year, said the bonus payment came after staff met agreed objectives over the year.
Chief executive Gary Hoffman waived his entitlement to a bonus under the scheme and the bank said it was designing a reward scheme for him that would take into account the performances of both of the newly created banks.
The bonus payments for Northern Rock staff include a £1.5 million pay-out under the Chancellor's one-off windfall tax, as 32 employees received rewards of £25,000 or more.
Senior management will receive their 2009 bonuses in three equal annual instalments, beginning this month, and will be subject to clawback.
Mr Hoffman said the bank's results were "encouraging", with underlying pre-tax losses of £383.3 million bettering Government targets by £500 million.
"There is no reward for failure," he said.
"I understand that we are still loss-making but we have beaten the target and we have substantially improved financially."
He added that while it was right that most of the improvement goes to the taxpayer, some should be given to staff.
Mr Hoffman said most of the Northern Rock workers to benefit were on average salaries of £20,000 to £25,000 in Newcastle and Sunderland.
He said unemployment and house prices would remain key in determining loan impairments in the future, but he said there had been signs of improvement in both areas towards the end of last year.
Charges for soured loans were £1.04 billion for the full year as unemployment and falling house prices took their toll, but Northern Rock said improving economic trends reduced the level of impairments in the second half.
Northern Rock said the number of its mortgages in arrears continued to rise but the rate of increase slowed during the third quarter and has stabilised, reflecting debt management efforts and better affordability because of low interest rates.
At the end of the year 4.28% of its portfolio was more than three months behind with payments, compared with 2.92% a year before. The industry average was 2.38% in December.
The bank's Together mortgage - which lent up to 125% of the value of a home before being pulled in February 2008 - saw its arrears rate rise to 6.93%.
Northern Rock said the increase in the arrears rate over the year partly represents the firm's efforts to keep households in their homes.
The number of repossessed properties held by the bank halved from the 2008 peak and was 2,061 at the end of last year compared with 3,620 a year before.
Northern Rock met its state requirement and increased mortgage lending to £4.2 billion last year, from £2.9 billion in 2008.
But on a net basis lending was down £6.3 billion as people repaid their loans.
Mr Hoffman said this was to be expected with such a large mortgage book, which stood at £60 billion at the end of 2009.
He said record low interest rates had helped those in employment afford their mortgages, in comparison with previous recessions when the cost of borrowing was much higher.
Unemployment has not risen as much as the bank expected, while house price rises last year also helped the outlook.
"I think we have more stability than people were expecting a year ago but it is still very uncertain and tough times for lots of people," he said.
The Rock has been in public ownership since February 2008 after being bailed out by the taxpayer in the early stages of the credit crunch.
Recently, financial conditions have stabilised enough for the Treasury to be able to remove the 100% guarantee on savings deposits at the end of May.
Since the results period the bank has been split into its two separate entities, entailing an increase in its Government loan by £8.5 billion, to £22.8 billion.
The "good bank" - which has taken £10.3 billion of the mortgage book and £19 billion in retail savings - is set to return to the private sector and speculation is rife over who will buy it.
National Australia Bank was said to be sounding out advisers over a possible bid earlier this year, while Virgin Money - which almost succeeded in acquiring the business before it was nationalised - is also thought to be in the frame.
Today Mr Hoffman said while informal talks were being held, there is "no process, no timetable and no rush" over securing a sale.
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