The man in charge of Bradford & Bingley when it was nationalised in September was yesterday forced to defend the bonus structure that will see his replacement given a huge bonus this year.
Rod Kent, who was replaced by Richard Pym as chairman of the bank last week, told MPs on the Treasury Select Committee that the bank had to offer an attractive remuneration package to fill the post.
Pym admitted that he was guaranteed a taxpayer-funded payout of £326,000 on top of his £750,000 annual salary for running the failed lender.
Bradford & Bingley is keeping its bonus structure from last year to reward staff in 2008. So Pym – hired as chief executive in August – will receive between 50% and 150% of his salary as a bonus, while the average staff payout will be about 9%.
John McFall, chairman of the committee and MP for West Dunbartonshire, told the pair: “The public is pretty dumfounded by this.”
But Kent said: “This was not an amazingly attractive post. It was up to us to put together a remuneration package to attract someone of calibre.”
He added: “There will be no bonuses for executives in post at the time of the rights issue.”
Bradford & Bingley was taken into public ownership on 29 September as savers, worried about its exposure to worsening credit conditions due to its exposure in the buy-to-let market, rushed to withdraw their money.