KEY POINTS:
Citigroup chief executive Vikram Pandit and chairman Win Bischoff will forgo 2008 bonuses after the bank lost three-quarters of its market value and got a US$45 billion ($78 billion) bailout, Pandit has said in a memo to employees.
Robert Rubin, the former US Treasury Secretary who serves as
an adviser to the New York company, declined a bonus for a second straight year, said the memo sent to Bloomberg News by Citigroup spokesman Michael Hanretta. Senior leadership committee members would get smaller awards than in the previous year, the memo said.
"The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower," Pandit said.
Year-end bonuses, which typically account for two-thirds of Wall St compensation, are being cut after banks and brokers racked up more than US$1 trillion of losses worldwide since 2007 and the US Government passed a US$700 billion financial-rescue plan.
Chief executives Lloyd Blankfein of Goldman Sachs Group and John Mack of Morgan Stanley are among executives not getting bonuses.
Citigroup, the biggest recipient of US bailout funds, completed an agreement for a US$20 billion Government investment, Pandit said. That was on top of an earlier US$25 billion and a US guarantee on US$306 billion in troubled assets.
Pandit is cutting 52,000 jobs worldwide after four straight quarters of losses tied to bad loans and failed investments.
Citigroup expected "major challenges" to continue into 2009, he said.
The bank would institute a "clawback" policy to recoup executive compensation based on financial reporting that is later shown to be inaccurate, Pandit said.
Exit pay would be restricted and "the five senior executives whose compensation is listed in our proxy statement no longer can receive severance", said Pandit, who became Citigroup chief executive in December 2007.
The affected executives are Pandit, Bischoff, chief financial officer Gary Crittenden and vice-chairmen Lewis Kaden and Stephen Volk.
Pandit, 51, received one million shares from Citigroup as part of a "sign-on" bonus in January, in addition to a US$2.5 million "retention equity award," the company said in March. He was paid US$250,000 in salary in 2007.
Pandit got US$165 million from Citigroup in 2007 when he sold Old Lane Partners, the hedge fund he co-founded and ran.
Citigroup closed New York-based Old Lane in June and took a US$202 million writedown on its US$800 million investment.
- BLOOMBERG