New York: Citigroup Inc said on Friday its board of directors would raise Chief Executive Vikram Pandit`s salary above the USD 1 he has earned for the past two years, in the latest sign that the bank is recovering from the financial crisis.
Pandit said in February 2009 that he would earn USD 1 annually until the bank returned to profitability.
"Beginning in 2011, the Board intends to compensate Vikram commensurate with the job of CEO of Citi," Chairman Richard D. Parsons said in a statement.
Pandit will earn USD 1 for all of 2010, the bank said in the statement.
Anton Schutz, president of Mendon Capital Advisors, which holds Citi shares, said, "Vikram has come a long way in terms of public perception ... I think his dollar compensation plays very well in Washington."
Citigroup spokeswoman Shannon Bell said, "Mr. Pandit feels very good about the substantial progress the team has made in turning around this institution, but wants to finish out the year with a USD 1 salary."
Other senior executives are collecting larger paychecks than Pandit, and in a regulatory filing with the US Securities and Exchange Commission (SEC) on Friday the bank said they would receive incentive pay for 2010 in common shares, as high as USD 9 million for one senior executive.
The road back
Citigroup has struggled to return to profitability after racking up more than USD 100 billion of credit losses and write-downs starting in the third quarter of 2007. The bank received more than USD 45 billion of US government bailout money, leaving taxpayers holding about a third of the bank.
Pandit has shed assets, laid off staff, and tried to focus Citigroup on its main businesses, including investment banking and retail banking for affluent customers globally.
Citigroup posted more than USD 7 billion of profit in the first two quarters of 2010.
The government`s stake in Citigroup is now closer to 18 percent, after dilution and share sales. The US is scheduled to finish selling off its shares by the end of 2010.
"By 2011, we should get an accurate picture of how Pandit has led this company. He has had a thankless task and has survived in a very difficult environment," said Matt McCormick, a portfolio manager and banking analyst with Bahl & Gaynor.
But, he said, "I am still not in the camp that this is clear sailing for Citi," McCormick said, adding that Pandit "should be paid fairly but not exuberantly."
On Friday, Federal Judge Ellen Segal Huvelle said she would approve a settlement agreement Citigroup made with the SEC in July once the bank made changes to ensure proper disclosures to investors in the future.
The action related to an agreement the bank made to settle SEC charges that it did not tell investors about the full extent of its subprime losses.
As long as the government holds a stake in Citigroup, the company is required under law to limit incentive pay to its top executives to one-third of their overall compensation.
The "stock salary" outlined in the filing is a holdover from the executive compensation standards set by former US pay czar Kenneth Feinberg.
The bank said in the filing that it would give John Havens, chief executive of Citigroup`s institutional clients group, USD 750,000 in shares per month, or USD 9 million for 2010. This is the highest level of incentives among the senior executives.
Chief Financial Officer John C Gerspach will receive USD 347,222 in shares for each month, or USD 4.6 million for the year. Vice Chairman Edward J. Kelly will get USD 500,000 per month, or USD 6 million for 2010, and North American Consumer Banking CEO Manuel Medina-Mora will receive USD 620,909 per month, or about USD 7.5 million for 2010.