Citi strikes again!

[CARLHAYDEN]

Citi boosting salaries to offset lower bonuses

By STEPHEN BERNARD
AP Business Writer
 
NEW YORK (AP) -- Citigroup Inc. is increasing base salaries for many of its employees - reportedly by as much as 50 percent for some workers - as it restructures its compensation program amid new restrictions on bonus payments.

The increased salaries will offset lower bonuses, according to a person familiar with the matter who requested anonymity because the plans have not been made public. The higher salaries are not the equivalent of annual raises, the person added.

Citi faces restrictions on bonuses as part of a new government compensation oversight plan because the bank received bailout funds from the Treasury Department.

By shifting the mix in compensation packages, it will allow Citi to pay most employees as much as they received in 2008 while adhering to bonus caps.

"Citi continues to examine ways to ensure its employee compensation practices are competitive in this very challenging market environment," Citi said in a statement Wednesday. "Any salary adjustments are not intended to increase total annual compensation, rather to adjust the balance between fixed and variable compensation."

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

The New York-based bank has been among the hardest hit by the credit crisis and ongoing recession. Citi has reported six straight quarterly losses totaling nearly $30 billion. But, it would have posted a profit in the first quarter had it not been for dividend payments on preferred stock. In recent months, the bank has been reducing staff and selling assets in an attempt to streamline operations and return to profitability.

The bank has received $45 billion in loans 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.

Bonuses awarded to employees at financial firms that received government bailouts have come under heavy scrutiny in recent months. Earlier this year, American International Group Inc. came under fire for bonuses it paid to employees at one of its most troubled divisions. AIG was rescued from the brink of collapse by the government last fall.

The Obama administration has blamed compensation plans for encouraging excessive risk-taking that pushed the financial services sector into chaos last year.

The administration recently named Kenneth Feinberg a "special master" to oversee compensation packages awarded to the seven companies that have received the most government support, including Citigroup. Feinberg can reject pay plans he deems excessive and review compensation for the top 100 salaried employees at those companies.

Charlotte, N.C.-based Bank of America Corp., which received $45 billion in government support, is among those facing additional scrutiny about bonuses and executive compensation.

Bank of America was not immediately available to comment on whether it also is planning to alter its compensation program.

Ensuring compensation for employees by increasing salaries could be a move banks facing government restrictions take to avoid losing workers to competitors. Some banks that received government loans during the mushrooming credit crisis last fall have already paid back their debt, and are no longer subject to compensation oversight. That could allow them to offer lucrative deals to entice employees away from banks where restrictions are still in place.

Aside from the boost in salary to offset the lost bonuses, Citi is also planning to award new stock options to employees to help ensure they remain at the bank, according to the Times report.

 

[Grumpier Than Uncle Joe]

Is "top talent" really gonna take their ball and bat and go down the street and make substantially more from another bank or financial services firm if Citi doesn't up the salaries?

In the past, you bet, but today?  I don't think so.

[Associate Justice PiT]

Is "top talent" really gonna take their ball and bat and go down the street and make substantially more from another bank or financial services firm if Citi doesn't up the salaries?

In the past, you bet, but today?  I don't think so.

     Pretty much. Anyone would be happy for any work they can get in this economic climate.

[Swing low, sweet chariot. Comin' for to carry me home.]

Is "top talent" really gonna take their ball and bat and go down the street and make substantially more from another bank or financial services firm if Citi doesn't up the salaries?

dude, anyone understanding the composition and valuation of derivatives can get a job any day of the week and twice on Sundays.

[memphis]

tax money well spent

[CARLHAYDEN]

Is "top talent" really gonna take their ball and bat and go down the street and make substantially more from another bank or financial services firm if Citi doesn't up the salaries?

dude, anyone understanding the composition and valuation of derivatives can get a job any day of the week and twice on Sundays.

Of course the "people" at Citi are so knowledgeable about derivatives that they ran their company into insolvency.

[12th Doctor]

Is "top talent" really gonna take their ball and bat and go down the street and make substantially more from another bank or financial services firm if Citi doesn't up the salaries?

dude, anyone understanding the composition and valuation of derivatives can get a job any day of the week and twice on Sundays.

Of course the "people" at Citi are so knowledgeable about derivatives that they ran their company into insolvency.

Yeah, jmf, I am with Carl here.  I highly doubt CEO's and boardmembers at Citi actually know jack about the intimate financial working of the institution.  Most of these people aren't the kind of folks who dragged their ass up from working in the lower floors of the company.

[Swing low, sweet chariot. Comin' for to carry me home.]

Is "top talent" really gonna take their ball and bat and go down the street and make substantially more from another bank or financial services firm if Citi doesn't up the salaries?

dude, anyone understanding the composition and valuation of derivatives can get a job any day of the week and twice on Sundays.

Of course the "people" at Citi are so knowledgeable about derivatives that they ran their company into insolvency.

Yeah, jmf, I am with Carl here.  I highly doubt CEO's and boardmembers at Citi actually know jack about the intimate financial working of the institution.  Most of these people aren't the kind of folks who dragged their ass up from working in the lower floors of the company.

you don't understand to whom the term "top talent" refers.  It's refers to the traders and the analysts who support the traders.  The risk strategy that failed was the child of upper management.  But the folks who run the trading operations are the traders and their support, and they will NOT have any trouble finding greener pastures.

Citi has a large trading operation in Houston, and the other trading firms in Houston have raped the Citi-Houston office of much of it's "top talent".  In fact, my current client has raided Citi's staff and my group is made up of around 50% of Citi converts over the past year. 

[opebo]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

[TeePee4Prez]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

All "talent" means is you're a blue blood from a top school from "good stock."  It's a load of crap.

[opebo]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

All "talent" means is you're a blue blood from a top school from "good stock."  It's a load of crap.

That's what I figured.

[Swing low, sweet chariot. Comin' for to carry me home.]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

All "talent" means is you're a blue blood from a top school from "good stock."  It's a load of crap.

it always cracks me up when those OUTSIDE of my industry think they know more about my industry than I do.

[TeePee4Prez]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

All "talent" means is you're a blue blood from a top school from "good stock."  It's a load of crap.

it always cracks me up when those OUTSIDE of my industry think they know more about my industry than I do.

Explain how these overpaid executive bums ed up?

[Swing low, sweet chariot. Comin' for to carry me home.]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

All "talent" means is you're a blue blood from a top school from "good stock."  It's a load of crap.

it always cracks me up when those OUTSIDE of my industry think they know more about my industry than I do.

Explain how these overpaid executive bums ed up?

I already have:

you don't understand to whom the term "top talent" refers.  It's refers to the traders and the analysts who support the traders.  The risk strategy that failed was the child of upper management.  But the folks who run the trading operations are the traders and their support, and they will NOT have any trouble finding greener pastures.

Citi has a large trading operation in Houston, and the other trading firms in Houston have raped the Citi-Houston office of much of it's "top talent".  In fact, my current client has raided Citi's staff and my group is made up of around 50% of Citi converts over the past year. 

[○∙◄☻¥tπ[╪AV┼cVê└]

Can someone explain why these criminals are too big to fail, while California is not too big to fail?

[TeePee4Prez]

Do people seriously use the term 'talent' for something like this?  I'm sure anyone could do it with a few weeks training.

All "talent" means is you're a blue blood from a top school from "good stock."  It's a load of crap.

it always cracks me up when those OUTSIDE of my industry think they know more about my industry than I do.

Explain how these overpaid executive bums ed up?

I already have:

you don't understand to whom the term "top talent" refers.  It's refers to the traders and the analysts who support the traders.  The risk strategy that failed was the child of upper management.  But the folks who run the trading operations are the traders and their support, and they will NOT have any trouble finding greener pastures.

Citi has a large trading operation in Houston, and the other trading firms in Houston have raped the Citi-Houston office of much of it's "top talent".  In fact, my current client has raided Citi's staff and my group is made up of around 50% of Citi converts over the past year. 

And again many of these supposedly "talented" traders and analysts screwed up.  Come on, most business majors, even if they went to a bumblef**k college, can be one if they had inside information.  You an analyze P/E ratios and price movements all day and still screw up.  When I worked at a CPA firm I've seen numerous cases where brokers have lost millions for some clients I worked on yet still got pretty high investment fees out of them.   

[opebo]

Can someone explain why these criminals are too big to fail, while California is not too big to fail?

Great point as always, jfern.

But I'd like to take exception to the 'too big to fail' stipulation.  Yes, of course it is true that many institutions are large enough that their collapse risks the destruction of our society.  California is an excellent example, and the fact that their expenses are not automatically being covered by the Federal printing press is astoundingly bad public policy.

Bu the real point is this - any and all such 'failures', of whatever size, are caused not by anything 'wrong' with the institution, but by the bad public policy of having a depression.  And, conversely, each such 'failure' offers a perfect opportunity for appropriate remedy, salubrious to the overall economy - namely, print up the money to fix the problem. 

Right now the Fed should print the money to cover the California budget shortfall.  It is that simple.  Create it electronically, and send it to the account of CA.

[Swing low, sweet chariot. Comin' for to carry me home.]

And again many of these supposedly "talented" traders and analysts screwed up.  Come on, most business majors, even if they went to a bumblef**k college, can be one if they had inside information.  You an analyze P/E ratios and price movements all day and still screw up.  When I worked at a CPA firm I've seen numerous cases where brokers have lost millions for some clients I worked on yet still got pretty high investment fees out of them.   

dude, the traders don't set the risk limits or determine what the overall position of a firm should be.  Also, you're forgetting Citi has trading branches that were and are profitable and have NOTHING to do with mortgages.

[CARLHAYDEN]

From the Philadelphia Inquirer:

Editorial: Party on, Citigroup!

When the federal government bailed out Citigroup to the tune of $45 billion, raising the salaries of reckless investment bankers wasn't what taxpayers had in mind.
Citigroup's actions contributed mightily to the near collapse of the banking system last fall. Its employees took irresponsible risks to boost its stock price, and their actions seriously damaged the system.

Given that behavior, President Obama was right to insist on caps on bonuses at Citigroup and six other financial firms under federal supervision. These banks needed the government to keep them afloat, and they should be forced to live by new rules.

But now word has leaked out that Citigroup intends to raise employee salaries as much as 50 percent. The change could allow most Citi employees to get paid almost as much as they did in the disastrous year of 2008.

You can see the logic of greed at work here: If they're losing their fat bonuses, why not make up the difference by hiking base salaries? Merely switching bonus dollars to regular pay isn't fooling anyone. It's the logic of a company that still doesn't get the message of the bailout.

Taxpayers are footing this bill. The federal government will soon have a 35 percent stake in the company.

Citigroup is a ward of the state because it took unacceptable risks in the name of profit. There should be consequences, and new rules, for that kind of bad behavior.

Officials at Citigroup say they need to pay higher salaries to keep talent. If the gene pool is so talented, how did the firm get into this trouble in the first place?

The Obama administration has named lawyer Kenneth Feinberg a "special master" to review compensation packages at Citigroup and the six other companies that received the most government support - AIG, Bank of America, General Motors, GMAC L.L.C., and Chrysler. He has the authority to reject pay plans that seem unreasonable, which is what he ought to do with Citigroup's proposal.

Firms that have received government money should make sure their salary policies strike the right balance. When those compensation packages get out of whack, it encourages the very kind of excessive risk-taking that plunged Wall Street into chaos.

If incentives must be given at all, it would be preferable to hold reasonable bonuses in escrow for a period of years, then pay them out when the bank's performance is validated.

This is the kind of government meddling in private industry that shouldn't be necessary. But Citigroup brought this scrutiny on itself. At least until it pays back the government, it needs to forget about the good ol' greedy ways of doing business.

[Swing low, sweet chariot. Comin' for to carry me home.]

Either Citigroup pays its best employees the going rate, or my clients will continue to raid Citi's talent - simply because Citi's talent is raidable - and the government will end up owning 35% of a company composed of janitors. 

It's all about bucks, kid, the rest is conversation...

[CARLHAYDEN]

Either Citigroup pays its best employees the going rate, or my clients will continue to raid Citi's talent - simply because Citi's talent is raidable - and the government will end up owning 35% of a company composed of janitors. 

It's all about bucks, kid, the rest is conversation...

Look,

Its real simple.

In free enterprise, and employer can pay an employee as much as he wants.

However, Citi is getting its money from the taxpayer.

So, NO, it may NOT pay its employees as much as it wants.

Let Citi pay back all they money it got from the taxpayers (with interest) and then let them pay their employees as much as they want.

[TeePee4Prez]

Either Citigroup pays its best employees the going rate, or my clients will continue to raid Citi's talent - simply because Citi's talent is raidable - and the government will end up owning 35% of a company composed of janitors. 

It's all about bucks, kid, the rest is conversation...

There's plenty of "talent" that's unemployed right now.  Faulty logic there buddy.

Basically every sector but the medical field has no "talent shortages" right now.  I was at an IRS Job Fair PACKED with MBAs, CPAs, and a plethora or financial field people with 10, 20+ years of experience.  Your "talent retention" argument is not floating, in fact it's crap.

[Swing low, sweet chariot. Comin' for to carry me home.]

Either Citigroup pays its best employees the going rate, or my clients will continue to raid Citi's talent - simply because Citi's talent is raidable - and the government will end up owning 35% of a company composed of janitors. 

It's all about bucks, kid, the rest is conversation...

There's plenty of "talent" that's unemployed right now.  Faulty logic there buddy.

Basically every sector but the medical field has no "talent shortages" right now.  I was at an IRS Job Fair PACKED with MBAs, CPAs, and a plethora or financial field people with 10, 20+ years of experience.  Your "talent retention" argument is not floating, in fact it's crap.

yeah, guess that is why I am sitting within a group composed of 50% of ex-Citi people that we lured away in the last 12 months.  Also, you don't even know what skill set we're talking about.  Go look up the term computational finance (or financial engineering), then you'll understand why mentioning terms like "MBAs" and "CPAs" is off target.  Instead, I'm talking about "quants" and "ETRM" and those experienced in the implementation and running of related systems. 

You won't find these people at any job fairs.  We are highly specialized - a niche industry, one you don't find a job fairs.  Most of us have consulted for many companies in the trading industry and its a highly networked and tightly integrated industry - which makes it all the easier to jump the fence for greener pastures.  I've worked for over a dozen Fortune 500 companies over the last 15 years (e.g. Enron, Dynegy, ExxonMobil, ConocoPhilips, BP, Shell, PG&E, Duke, Panhandle, El Paso, British Gas, etc, etc), but at any given client, half the people I'm working with, I've already worked with at several other client sites...so it only takes a few phone calls to land the next jig.

Citi has a large footprint within this ETRM community.  Their Houston ETRM shop is topnotch and profitable, but they are currently bleeding talent through the nose because of the restrictions on bonuses.

[TeePee4Prez]

Either Citigroup pays its best employees the going rate, or my clients will continue to raid Citi's talent - simply because Citi's talent is raidable - and the government will end up owning 35% of a company composed of janitors. 

It's all about bucks, kid, the rest is conversation...

There's plenty of "talent" that's unemployed right now.  Faulty logic there buddy.

Basically every sector but the medical field has no "talent shortages" right now.  I was at an IRS Job Fair PACKED with MBAs, CPAs, and a plethora or financial field people with 10, 20+ years of experience.  Your "talent retention" argument is not floating, in fact it's crap.

yeah, guess that is why I am sitting within a group composed of 50% of ex-Citi people that we lured away in the last 12 months.  Also, you don't even know what skill set we're talking about.  Go look up the term computational finance (or financial engineering), then you'll understand why mentioning terms like "MBAs" and "CPAs" is off target.  Instead, I'm talking about "quants" and "ETRM" and those experienced in the implementation and running of related systems. 

You won't find these people at any job fairs.  We are highly specialized - a niche industry, one you don't find a job fairs.  Most of us have consulted for many companies in the trading industry and its a highly networked and tightly integrated industry - which makes it all the easier to jump the fence for greener pastures.  I've worked for over a dozen Fortune 500 companies over the last 15 years (e.g. Enron, Dynegy, ExxonMobil, ConocoPhilips, BP, Shell, PG&E, Duke, Panhandle, El Paso, British Gas, etc, etc), but at any given client, half the people I'm working with, I've already worked with at several other client sites...so it only takes a few phone calls to land the next jig.

Citi has a large footprint within this ETRM community.  Their Houston ETRM shop is topnotch and profitable, but they are currently bleeding talent through the nose because of the restrictions on bonuses.

Did it ever dawn on you to try to I dunno get some people specialized if there are so many unemployed?  Still not buying it.

[Swing low, sweet chariot. Comin' for to carry me home.]

Did it ever dawn on you to try to I dunno get some people specialized if there are so many unemployed?  Still not buying it.

I don't understand the question.