Make us your home page
Instagram

Government oversight of Citigroup salary increases promised

WASHINGTON — Citigroup Inc. is increasing the base salaries of many employees — reportedly by as much as 50 percent for some workers — as it restructures their compensation amid government restrictions on bonuses.

The Obama administration reacted by pledging to aggressively implement a new law governing compensation at companies like Citigroup that have received billions of dollars in taxpayer-funded bailout support.

Administration officials, however, refused to say whether Citigroup had informed the government in advance of its decision to restructure salary levels.

Citigroup has received $45 billion from the government. A portion of those funds will soon be converted to common stock, giving the government a 34 percent stake in the bank.

The higher salaries at Citigroup are not the equivalent of annual raises because bonuses are being lowered, according to a person familiar with the matter who requested anonymity because the plans have not been made public, who also said the changes would not affect the amount of an employee's compensation.

New York-based Citi said Wednesday that it's examining "ways to ensure its employee compensation practices are competitive in this very challenging market environment."

By shifting the mix in compensation packages, the change could allow Citi to pay most employees as much as they received in 2008 while adhering to bonus caps. The person said the employees included traders, who tend to be compensated more heavily with bonuses, and middle- and lower-level managers whose compensation is more heavily weighted toward salaries.

Before the financial crisis, top traders and investment bankers typically earned $125,000 to $250,000 in annual base salary and $1 million to $5 million in bonuses, said Alan Johnson, managing director of compensation consulting firm Johnson Associates.

A New York Times report Wednesday said some employees' salaries will rise as much as 50 percent because of the change in compensation structure.

The administration said its point person on the issue, Kenneth Feinberg, had begun the process of reviewing compensation at the seven firms receiving the most assistance from the $700 billion bailout fund Congress passed in October.

"Companies will need to convince Mr. Feinberg that they have struck the right balance to discourage excessive risk taking and reward performance for their top executives," the statement said.

Feinberg, a lawyer, was selected by the administration to be its "special master" to oversee compensation packages awarded to the seven companies, including Citigroup. He can reject pay plans he deems excessive and review compensation for the firms' top 100 salaried employees.

The 100 highest-paid employees at Citi will not be part of the bank's revised compensation program because of the government's additional review over that group's pay.

Sen. Christopher Dodd, D-Conn., a critic of financial firms' compensation practices, said the salary decision showed Citi executives "just don't get it" at a time when the country is mired in a deep recession with rising layoffs. He called Citi's compensation changes "pay hikes."

Government oversight of Citigroup salary increases promised 06/24/09 [Last modified: Wednesday, June 24, 2009 9:40pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Black entrepreneur says city stiffing him on project after he endorsed Rick Baker

    News

    ST. PETERSBURG — A prominent African-American resident says his endorsement of mayoral candidate Rick Baker has led city officials to freeze him out of a major construction project along the historic "Deuces" stretch of 22nd Street S.

  2. Sen. Nelson urges FEMA to examine high number of denied flood claims

    Banking

    Sen. Bill Nelson urged FEMA on Tuesday to ensure fairness, proper oversight and transparency in processing Hurricane Irma aid following a report by the Palm Beach Post that 90 percent of Irma claims under the National Flood Insurance Program had been denied.

    Sen. Bill Nelson is calling for FEMA to ensure the flood claims process post-Hurricane Irma is fair and ethical following reports that 90 percent of claims under the National Flood Insurance Program were denied. | [Times file photo]
  3. Amazon expands in Tampa with Pop-Up shop in International Plaza

    Retail

    TAMPA — A new retailer known largely for its online presence has popped up at International Plaza and Bay Street.

    Shoppers walk past the new Amazon kiosk Tuesday at the International Plaza in Tampa. The kiosk, which opened last month, offers shoppers an opportunity to touch and play with some of the products that Amazon offers.
[CHRIS URSO   |   Times]

  4. Study: Florida has fourth-most competitive tax code

    Banking

    Florida's tax code is the fourth most competitive in the country, according to a study released Tuesday by nonprofit group Tax Foundation.

    Florida has the fourth-most competitive tax code, a study by the Tax Foundation said. Pictured is  Riley Holmes, III, H&R Block tax specialist, helping a client with their tax return in April. | [SCOTT KEELER, Times]
  5. Trigaux: On new Forbes 400 list of U.S. billionaires, 35 now call Florida their home

    Personal Finance

    The latest Forbes 400 richest people in America was unveiled Tuesday, with 35 billionaires on that list calling Florida home. That's actually down from 40 Florida billionaires listed last year when a full 10 percent listed declared they were Floridians by residence.

    Edward DeBartolo, Jr., shopping center developer and  former San Francisco 49ers Owner, posed with his bronze bust last year during the NFL Hall of Fame Enshrinement Ceremony in Canton, Ohio. DeBartolo remains the wealthiest person in Tampa Bay according to the Forbes 400 list released Tuesday. 
[Photo by Joe Robbins/Getty Images]