Citigroup limits top executive pay, bonuses
The recipient of a $45 billion infusion from the U.S. 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 organisation and at competitive rates.” Pandit said.
AP
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