Citigroup Says No to Bonuses; Pigs Fly on Wall Street « The Washington Independent
Wait, what’s this? Citigroup’s top executives are giving up their annual bonuses this year, according to the Financial Times. CEO Vikram Pandit and senior advisor and director Robert Rubin are among those foregoing the usual end of the year cash awards.
Vikram Pandit, Citigroup’s chief executive, wrote in a company-wide memo on Wednesday that because of its poor earnings performance, the bank’s bonus pool was dramatically lower than last year. As a result of that and last month’s government rescue, the bank’s compensation policies have been overhauled.“The most senior leaders should be affected the most,” Mr Pandit wrote, referring to himself and Win Bischoff, the bank’s chairman. “That is why Win Bischoff and I will receive no bonus for 2008. Win and I believe this is fair, in light of the challenges of the year and the need for compensation elsewhere in the organisation.“Meanwhile, Mr Rubin, a former US Treasury secretary, told the board that, under the circumstances and at this stage of his career, he felt the funds that would have been used for his bonus could be better spent on other employees, Mr Pandit wrote. Mr Rubin, who has earned more than $115m since joining Citi in 1999, also waived his bonus last year.
I’d be the first in line to pat these guys on the back, but consider this: A global bank proves itself to be nearly insolvent, triggering a government bailout to the tune of $300 billion – and the idea of bonuses was even on the table? Was Citigroup even thinking of rewarding performance this year? And based on… what, exactly?
It’s a smart move politically for the bank to give up those bonuses. I’m just wondering if Citigroup would do the same, if no one were watching. The fact that foregoing bonuses wasn’t off the table long ago makes me more than a little skeptical.