No April Fool’s – Northern Rock bosses get rewarded for failure

Oh boy…
(An unrepentant communist reminded me to blog about this, by the way.)

You might recall this story from mid-November, as the crisis was ongoing:

MPs and small shareholders launched an attack yesterday on Adam Applegarth, chief executive of Northern Rock, for selling over £2.6m of shares at peak prices while still urging thousands of employees and investors to buy shares when the company was facing trouble. […]

Kevan Jones, Labour MP for Durham North, many of whose constituents work for the bank, said that he was astounded at the “short-termism” of Applegarth and his fellow directors in selling millions of pounds of shares “while encouraging employees and small investors to still put their money into the company”. Applegarth made two large share sales last year and this year, raising just over £2.6m. He was also paid £1.3m last year: half as a basic salary and half in bonuses.

Robin Ashby, a spokesman for some 100,000 small shareholders, who include the former police chief Lord Stevens and Sir Neville Trotter, the former Tory MP for Tynemouth, said: “While the directors were cashing in shares worth millions of pounds before the company got into trouble, they left small shareholders and employees who have remained loyal to Northern Rock for more than a decade facing financial ruin. They obviously had no long-term faith in the company.”

MPs have also criticised Applegarth’s lifestyle after alleging he used some of the cash to purchase luxury cars – an Aston Martin for himself and a Ferrari for his wife – as well as a Northumberland estate.

[…]

On one day last year, Applegarth sold 111,426 shares for £1.06m and in January he sold a further 135,963 shares for £1.62m at near their peak price of £11.98. Northern Rock shares have since slumped to a low of nearly £1; yesterday they closed at 139.2p.

Now we learn that as thousands of Northern Rock employees face losing their jobs – even though they’ve worked hard to make the bank a success – the man who crashed the business will be given a massive payout and will keep his generous pension.

From today’s Guardian:

Northern Rock came under fire yesterday from MPs, unions and investors for agreeing to give former chief executive Adam Applegarth a £760,000 “golden goodbye”.

Critics said they were incensed Applegarth would receive a full year’s salary, especially after the bank said last year he would be forced to accept less than half his contractual payoff.

One investor group said Applegarth, 45, should leave empty-handed. In the five years before the bank crashed he was paid almost £10m and accrued a pension worth £304,000 a year, up £40,000 in the last year. He also received £5,000 from the company to cover his legal bills, and continues to enjoy a discounted rate on part of his mortgage. Enhanced security on his home, costing almost £10,000, was also paid for by Northern Rock.

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