Citigroup Using More Stock for Bonuses

Tuesday, 01 Feb 2011 02:33 PM

 

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Citigroup Inc., the lender that got a $45 billion bailout from U.S. taxpayers, is using stock for a larger portion of bonuses paid to employees, including investment bankers and traders, people briefed on the shift said.

The New York-based bank aims to pay some recipients as much as 50 percent of 2010 bonuses in shares, compared with about 40 percent a year earlier, one of the people said, declining to be identified because the plans aren’t public. The percentages are guidelines and individual awards vary, three people familiar with the matter said.

U.S. banks are under pressure from regulators and lawmakers to rein in bonuses. Soaring compensation and excessive cash payouts were cited in a November study by the Council of Institutional Investors as encouraging Wall Street traders to disregard risk in the pursuit of profit that led to the financial crisis.

“We are working around the world with all the regulators, with a lot of our people, to see what are the right kind of incentives to serve our customers,” Chief Executive Officer Vikram Pandit said at a branch opening in New York in December. “Citi will be adhering and hopefully leading some of the best structures on the street when it comes to compensation.”

Spokeswoman Danielle Romero-Apsilos declined to comment on the size of the bonus pool. JPMorgan Chase & Co. paid its traders, deal makers and other investment banking personnel an average of $369,651 in 2010, according to a filing. That’s 2.4 percent less than New York-based JPMorgan’s 2009 average.

Investment Banking Fees

Citigroup reported a $10.6 billion profit for 2010. Revenue from fixed-income trading tumbled 34 percent from a year earlier to $14.1 billion. Fees from investment banking, which includes advising on mergers and acquisitions as well as managing equity and debt offerings, fell 20 percent to $3.83 billion. The lender’s shares have gained 1.9 percent this year to $4.82.

The bank’s 15 top executives, excluding Pandit, will share in almost $50 million worth of stock bonuses for 2010, according to disclosures made Jan. 20. Six of the executives, including Chief Operating Officer John Havens and consumer banking chief Manuel Medina-Mora, also had “stock salary” last year worth more than $37 million on an annualized basis.

Pandit took a $1 annual salary in 2009 and 2010, and declined a bonus last year. The bank increased his 2011 base salary to $1.75 million on Jan. 21.


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