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Select Committee on Treasury Written Evidence

Letter from the Chairman to the Chairman of Northern Rock

  The Treasury Select Committee has asked for further details on the recent changes to the board of Northern Rock announced on 16 October 2007. Given the ongoing support being provided by the taxpayer to Northern Rock, and our inquiry into the events surrounding the need for such support, it is important that we and the public remain informed about the current management of Northern Rock.


  The changes announced on the 16 October 2007 see four non-executive directors retire, but two remain with the Board of Northern Rock. Under what criteria did non-executive board members resign or were allowed to stay with the Board of Northern Rock? Have any financial incentives or payouts been given to retiring members of the Board of Northern Rock?


  Adam Applegarth has resigned from the position of chief executive, yet remains with the company until the end of "the second phase of the strategic review process". By remaining with the company until this time, will Mr Applegarth receive any additional benefits or payouts that might not have accrued had he left early? Also, will Mr Applegarth receive a payout on leaving the company, and by staying until January 2008 will such a payout appear in the accounts of the company to be published in 2009, rather than those to be published in 2008?

  As well as this, Mr David Baker, Mr Keith Currie and Mr Andy Kuipers have been demoted from the Board of Northern Rock, yet remain officers of the company. What criteria were used to decide between demoting individuals and dismissing them? Has there been any decrease in pay or change in their terms of employment, in view of this demotion?

  I look forward to your comprehensive and prompt reply.

21 November 2007

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