Laughing Them Out of the Bank: Citigroup Wants to Give Bonuses?

by Deb Cupples |  A couple days ago, the New York Times reported that Citigroup CEO Vikram Pandit has asked U.S. Treasury officials for permission to give bonuses to employees.  The rationalization: that Citi employees are "demoralized" and might quit if they don't get bonuses.

Pardon me: I just laughed a stream of morning tea through my nose.  Give me a minute to clean off my desk....  

Aren't millions of Americans "demoralized" at this point -- especially those who were among the 5.1 million Americans who lost their jobs since December 2007?

Many of us who need and have jobs won't be getting even a cost-of-living raise this year, but we're still thankful to have a job.

If "demoralized" Citigroup employees quit, where will they find other jobs?  Thousands of banking-industry jobs have been cut since the financial meltdown started. 

Even those Citigroup employees willing to work in other industries would have a tough time finding employment -- given that our nation lost a combined 1.9 million jobs just in January, February and March of this year.

Then there are those "demoralized" managerial and executive-level Citigroup employees who've taken so many shareholder dollars over the years that they don't actually have to work if they quit Citigroup.

Speaking as a Citigroup shareholder (albeit a tiny one), I say "Good Riddance!"

First, they're the ones that drove our company into a ditch -- apparently because absurdly risky investments helped execs and managers secure huge bonuses for themselves during past years. Let's take a look at some of the higher execs' compensation.

Table: Pay for Top-5 Positions at Citigroup, 2006-08

Year	Total Pay
2008	$56.0 million
2007	$69.7 million
2006	$78.7 million
Total	$204.4 million

Data from company proxy statements (linked in table).  Note: the proxy statements list what seem to be the highest-paid five positions, but some of those positions were occupied by more than one person during a given year due to turnover. Some of the people who spent less than a year in a top-5 position had spent the other part of that year in another Citigroup position -- and compensation from that other position seems to have been added. 

During just the past three years, the people occupying at least one of the top-5 positions at Citigroup collectively snagged more than $200 million in shareholder funds.  None of those people need to find other jobs if they quit Citigroup.

I would venture to say that even numerous "demoralized" lower executives and managers who'd managed to snag "only" single-digit millions over the past few years don't actually need to find jobs if "demoralization" compels them to quit Citigroup.

A now-demoralized Citigroup exec or manager who put away even a lowly $3 million during his tenure at Citigroup could easily earn $67,500 just by putting that $3 million into a lowly,  2.25% Citibank CD.

Given that our nation's median income is only in the low $50,000s, millions of American families would manage to survive on a pre-tax $67,5000 a year -- especially without having to show up at a job.

Speaking as a tiny Citigroup shareholder, I think it would be worthwhile to let the company's demoralized execs and managers to leave, as their departure would make room for other folks who want jobs.

That and, given the current U.S. job market, the newcomers would likely work for far less than their predecessors.

Every dollar that we shareholders would save would be one more dollar that we could spend on paying down debts and offsetting losses.

And let's not forget us taxpayers, who have so far handed $50 billion to Citigroup in TARP funds.

Given that the current crop of Citigroup execs have no apparent desire to protect Citi's shareholders of the U.S. taxpayers, I hope that our representatives in Washington will encourage further "demoralization" of (and departures by) Citigroup's execs and managers.

Other Buck Naked Politics Posts:

* Real Bonuses Based on Fake Profits

* Bank of America Publicity Stunt: Lewis Off Board but Still CEO

* Are Bailout Funds Being Misused? 

* Execs Made Millions While Driving Companies into Ditch

* Save Jobs by Cutting Executive Pay

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Comments

[Steve B.]

Deb I love most of the work you do but I can't agree with this article.

"Speaking as a tiny Citigroup shareholder, I think it would be worthwhile to let the company's demoralized execs and managers to leave, as their departure would make room for other folks who want jobs."-deb

Are you serious? I mean wasn't it just a month ago that you guys did a story about how surprise! Surprise! Employees from banks that are going to be regulated heavier ARE leaving to work for other companies and smaller firms.

I totally agree that some of the top level executives in these companies, which you've been faithfully exposing for a while now, were involved in downright shady behavior but not everyone is responsible.

You make a lot of sweeping generalizations in this article that seemingly only can make their point by comparing the average American to people who clearly aren't. Less than 30% of American's actually have a college degree & only about 9% have a graduate or professional degree. So if you must compare apples to apples.

Before you begin to do any type of salary comparison you'll see how ridiculous it is to imply that someone who worked hard enough to differentiate themselves from the masses should be willing to survive on the income of the average. I dunno maybe you don't believe in a market driven economy but the reason why they still have the option of leaving is because they actually CAN get other jobs. The average employee can't because in this economy and the comparative skills they bring to the table they're interchangeable.

Furthermore, I love how you either ignored or forgot to report that the bonuses that Citigroup asked for would likely be stock that vests over about three years which clearly shows a pay for performance component to it. Even though a lot its operations lost money some actually made net profits. Are you honestly telling me that if you worked in one of those profitable sectors and other companies were willing to pay you more to work for them that you'd say no in the name of loyalty?

Haha you go on to say "Speaking as a Citigroup shareholder (albeit a tiny one), I say Good Riddance!” So you're saying that not only do you willingly hold stock in a company that you don't trust but if there was a mass exodus of employees you'd gladly watch your stock take a dive even further?

I used to be a liberal till I got a clue, but I love it when they make masterfully crafted illogical statements. They did the SAAME thing when they hammered execs for spending any money on retreats/conventions/sponsorships yet gave little consideration for the actual effects it would have on the economy. Months later all the jobs liberals claimed to be saving by not allowing them to spend cash on those events easily was mitigated by the fact that it KILLED Convention season much to the dismay/unemployment of workers in the hotel/restaurant/hospitality industry. It's the same mentality that I'm sure you supported during the Clinton years when he imposed a luxury tax on boats which consequently put thousands of your precious median income earners out of work when the people who can afford those toys stopped buying them.

You ended off by saying "Given that the current crop of Citigroup execs have no apparent desire to protect Citi's shareholders of the U.S. taxpayers, I hope that our representatives in Washington will encourage further "demoralization" of (and departures by) Citigroup's execs and managers" I'm sorry but that has to be the scariest thing I've heard in a loong time. As a shareholder and what I think of as an intelligent person why would you encourage Washington bureaucrats to force capable people out of an industry? If you don't like Citi's management encourage people to wait for it.....SELL THEIR STOCK! If revenge is what you really want (be careful what you wish for) then you have all the tools at your disposal to get the executives attention you don't need government to do it for you.

Haha and if irresponsible spending on keeping employees happy is what you seem so concerned about Deb why don't you talk about our government spending? Essentially, Obama is giving you a citizenship bonus w/ the FED's money yet you don't complain. Maybe you just have a bias against big bad industry....which you paradoxically still support.