Citi execs forgo bonus
CEO Pandit and chairman Bischoff say it's 'fair' in light of past year - when Citi stock fell 75% and bank took $20 billion from taxpayers.
NEW YORK (CNNMoney.com) -- After a shockingly tumultuous year, Citigroup said Wednesday that its top executives will forgo their usual annual bonus.
In a letter to employees, Citigroup Chief Executive Vikram Pandit said the bonus structure would change for all employees. Pandit said he and Win Bischoff, the bank's chairman, will receive no bonus.
"Win and I believe this is fair, in light of the challenges of the year and the need for compensation elsewhere in the organization," Pandit wrote. "Unfortunately, the harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower than last year."
Pandit also said the bonuses for the company's other top executives would be "reduced substantially."
The letter said Robert Rubin, a Citigroup advisor and former Treasury secretary, would also decline a bonus.
Pandit took over as head of Citi on Dec. 11, 2007. In 2007, he received $2.5 million in bonuses, stock options and other awards. Other Citi executives took home between $6 million and $20 million, according to the company's annual report.
In 2006, Citi CEO Charles Prince was awarded nearly $24 million, including a bonus of $13.2 million.
Citigroup, recently the recipient of a $20 billion government bailout package, saw its stock plummet over 75% this year, as the bank was forced to write off billions in losses related to the meltdown in the subprime mortgage sector. The government has already injected $25 billion into Citigroup as part of the $700 billion bailout passed by Congress in October.
As a condition for receiving government money, lawmakers made companies reel in bonuses after a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firm received taxpayer money sparked outrage among the general public.
"During the investment process, we presented to the Treasury Department the approaches to executive compensation that we developed," Pandit wrote Wednesday. "I am very pleased to say that the government found them to be consistent with their objective as an investor in Citi."