Washington, Jan 1: Citigroup Inc. one of the US banking giant hit by financial meltdown on Thursday, Jan 1 announced that its Indian American CEO Vikram Pandit and Chairman Win Bischoff would forego bonuses for 2008. The announcement came after it formalised its bailout agreement with the US government.
Pandit said in a memo to Citigroup employeesthat the bonuses for other top executives will also be reduced substantially. Citigroup has received $45 billion in federal capital infusions and a government-financed arrangement to insulate it from hundreds of billions of dollars in potential losses after the bank lost three-quarters of its market value.
Pandit said, "The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower." Citi is one of the biggest recipient of US bailout funds and completed an agreement for a $20 billion government investment.
Citigroup is cutting 52,000 jobs all over the world after four straight quarters of losses tied to bad loans and poor investments with the last quarter alone accounting for a loss of $2.8 billion.
Vikram Pandit said that Citigroup expects major challenges to continue in 2009 also. He described the proposed actions by the banking giant as part of a major overhaul of executive compensation to confront the problems.
Pandit said the principles to guide the company's executive pay would include 'pay for performance' and 'meritocracy,' adding that 'compensation will vary based on each person's performance - again, relative to the overall performance of the company.' Severance compensation will be subject to 'significant new limitations' for executives and that the top five executives 'no longer can receive severance,' said Pandit, who became Citigroup CEO in December 2007.
Those affected executives are Pandit, Bischoff, Chief Financial Officer Gary Crittenden and Vice Chairmen Lewis Kaden and Stephen Volk.
In Jan Pandit received 1 million shares from Citigroup as part of a 'sign-on' bonus, in addition to a $2.5 million 'retention equity award.' He was paid a salary of $250,000 in 2007.
OneIndia News (With inputs from Agencies)