Citigroup Agrees To Limit Exec. Pay

Bank, Which Received $45B From Fed, Will Eliminate Bonuses, Severance For Top Officers

(AP)  The recipient of a $45 billion infusion from the federal government, Citigroup Inc. on Wednesday said it would place strict limits on management's compensation, including no severance for its top five executives.

Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay "that over time proves to be based on inaccurate financial or other information."

The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.

Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.

Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.

In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.

In the memo, Pandit announced measures that will tie executive pay more closely to performance.

"We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results," Pandit said.

The most senior leaders will be affected the most, Citi said.

Pandit said he and Bischoff thought it "fair" to forgo their bonuses "in light of the challenges of the year and the need for compensation elsewhere in the organization," the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.

Pandit added that senior leadership committee members will see their bonuses "substantially reduced," while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.

As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.

Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.

New York-based AIG has received a roughly $150 billion rescue package from the federal government.

Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.

[rsplendorio]

I may agree that many of the compensation agreements between companies and CEOs need adjustment it concerns me when it becomes a matter of public policy. Those most effected by the CEOs performance are the stockholders. They should be the ones who demand and get better and more long term performance guarantees. That being said it is also true that he who pays the band picks the songs they play. Once the banks take public money they open themselves up to many unintended consequences that may lead us to socialized banking. I fear we are moving down a road to a longer and deeper recession if the government indirectly socializes our economy further than it already has.

[unlresources]

This should''ve been a common sense the moment Citi took federal money. All the MBA''s running around out there need to realize if you run a company into the ground you shouldn''t and won''t be paid. This whole situation is sickening since golden-parachutes need to be paid back to the shareholders. Pompous CEOs.

[antoniof123]

So are you nut jobs out there still saying it is the unions fault.

In the 80''s the exec''s from the big 3 went to Japan and ask the quesiton what can we do to make it better and they were told to take less for the execs. Of course that didn''t go over with the exec''s here so they blew them off and blamed the unions. Now they along with the GOP are still trying to blame the unions.

Sorry most American''s see that Honda pays $30 dollars per hour and the UAW workers in Ohio get less so why is there a problem.

Just another neocon lie to try to bust the unions. And now people like me who aren''t union are sticking up for them.

So neocon shills take it and shove it where the sun doesn''t shine.

[enriquecaliente]

Can someone explain to me, how the very companies that we''''ve given money to from the TARP, are allowed to offshore jobs. Offshore/outsource, it''''s still the same. I work for a financial company that has moved high paying American jobs to India. It is also known that the government gives these very same institutions tax breaks for creating jobs, here in America, which they do not do. Here is what I say would be fair. For every American job lost due to off shoring, collect the lost tax money from that company. As far as I''''m concerned, in the current economic environment any job moved out of this country is tantamount to treason. Also get the credit card companies in line. The card companies should be made to reduce their interest rates to the current low rate. The banks and the millionaires get all the breaks and we the people are getting screwed.

[cusefan21]

Ohh big freakin deal i want to know how much they are going to get paid period!!!! As for the severence pay they should get compensation based on seniority not everyone in the upper exec gambit had anything to do with the downfall and shouldn''t be jacked because of it

[walt1944-2009]

Citicorp has announced it will "reign in" corporate executive pay and perks in an effort to show that it is "fiscally responsible" to use the $45 billion handed to them by the "3 stooges" of financial bailout, the supposedly-Great Emperor Bush II, "Fuzzy Face" Bernanke, and "Old Baldy" Paulson.

After all the years that Citicorp has been stealing money from its customers by charging huge "usuary" fees on loans, credit cards, banking fees, etc., you would think their corporate executives could have retired long ago. The fact that they are still around shows that GREED begats MORE GREED.

Absolutely NOTHING "trickles down" to the average person, it all "FLOATS UP and STAYS UP"!

And if anyone believes that Citicorp''s highly-paid, highly-perked, and absolutely GREEEDY corporate executives are going to be "hurting" because of this, I am sure the corporate world will think of something so that they can still get their raises, bonuses, and perks. They will just call it something else!

SIG HEIL, US RICH AND POWERFUL ARE THE MOVERS, SHAKERS, AND DESTROYERS OF THE ECONOMIC WORLD!!!, BUSH!!!

[hober_mallow]

OK, Bank of America execs, are you watching ???

-- Bank of America stock dropped 67% in 2008.

-- Bank of America had to pay out $8,000,000,000 due to Countrywide lending practices.

-- Bank of America expects to lay off 35,000 workers.

Bank of America shareholders (myself included): Do the Bank of America top execs deserve fat bonuses ???

[dragyn30]

This is a good start! Now it is time to make folks earn their keep!

The welfare rats that keep breeding just to get the money and those who do not want to get off their lazy behinds and work should be cut off! Next should be the illegals! Sorry to those who will lose their lawn service or landscapers, but if they want to stay they MUST do the work and pay just like the rest of us have to!

It is tough enough for legal businesses to pay insurances and all of the legal required filing to stay in business when an illegal can get away with paying nothing and disappear when they cause damage.

Wake up America we are the land of the Free, not the Freeloaders!

[trillion1]

$700 billion to the greedy and not a penny to the needy.

[jwninil]

they should have given the 700bn. to the U.S. population and then they wouldn''t have all these other problems!!

[ballpen1]

I don''t know if these restrictions are going to work. Citibank is weak, a takeover is very possible, if not likely. In that case the new owners could compensate the (eagerly cooperating) Citibank top five in any way they like, even if they had signed a similar agreement with the Fed (because it wouldn''t be _their_ top five, just "some employees"). For me this looks like another Paulson style loophole, like the limit on bonuses for banks that auctioned off troubled assets and then no auction was ever held...

[oldnugly1]

I go along with the verbage of dividing the 700 billion with the legal american public and let them start the spending to get this country back on track.

I would wager that there would be some top companies that would hit the road with the lack of trust, that the people hold with them.

[aldon61]

Hey, Citi, I''m actually proud of you. I worked for you from 1979 until 1989 and am currently drawing a small pension from that service. I was proud of you under Walter Wriston and John Reed''s leadership but have been very disappointed in the past few years. Remember that your customers, NOT your shareholders are who you should be working for and everything else will work out right. This is a good first step, now lead the banking industry back into making wise and prudent financial decisons. There might be hope for us yet.

[engineer1503]

Senior leadership with bonuses "Substantially reduced"! Deferred compensation!

How terrible, I know just how they feel.

My bonus was substantially reduced this year, to zero! Along with my salary for 2 months until I found a new job! Guess I''ll get my deferred compensation when H*ll freezes over.

[debinok1]

The clawback option is a joke. How are they going to recoup pay from someone who has no liquid assets.

[terrorislame]

Citi-Group Has One of The WORST REPUTATIONS


IN THE BUSINESS WORLD !
CORPORATE CRIMINALS ,
Is the best description I have heard mentioned.

[tawpdawg111]

You know, there is an opportunity here staring CITI, Wells and others right in the face if they were only smart enough to seize it.