Why Northern Rock's Hoffman is worth his £1.1m extra cash

He should also be given the £400,000 payment he was promised as part of his package for leaving Barclays in 2008 but which he deferred last October.

In fact, he should be promised vastly more than that for this year if he manages to return the Crock to profit and sell it off to the benefit of the taxpayer by the end of this year.

Hoffman is a classic example of why banking and bonuses work together. It is important that this is recognised because at the moment he is working primarily for you and me: the taxpayer.

Let me put this in context.

Hoffman did not get Northern Rock into the mess it is in today, unlike some of his rival bank chiefs who have also forgone their bonuses for 2009.

He joined Rock on a straightforward contract with basic pay of £700,000 and three annual payments of £400,000 to make up for share options he left behind at Barclays. He is fully entitled to his contractual rights. Hoffman and his management agreed targets with HM Treasury at the start of 2009 and knocked them into a cocked hat.

In effect he is returning £500 million to the taxpayer a year earlier than anyone might have expected. A £700,000 bonus out of that is peanuts.

His total entitlement for 2009 is less than the pay and pay-off Adam Applegarth, the architect of Crock's downfall, received when he quit.

Applegarth was paid £1.4 million in 2006 and received a £760,000 pay-off in 2007 and collected a £2.2 million pension pot.

Hoffman should be as heavily incentivised as possible to ensure that Northern Rock plc eventually sells for considerably more than it has borrowed from the taxpayer.

Something like 1% of the difference between a target price set by the Treasury now and the actual realised price would seem to be reasonable.

After all that is no more than the investment banks working on the sale will be demanding.