The Shareholder ForumTM


"Say on Pay" Proposals

Forum Home Page

"Say on Pay" Home Page

Program Reference


Financial Times, December 4, 2008 article


FT Home


Citi executives set to waive bonuses

By Francesco Guerrera in New York

Published: December 4 2008 02:00 | Last updated: December 4 2008 02:00


Citigroup's top executives, and Robert Rubin, a director and senior adviser, are set to forego their bonuses this year amid growing internal and external pressure to atone for the company's huge losses and a $300bn government bail-out.

People close to the situation said last week's government rescue made it virtually impossible for Citi's board to award cash bonuses to its executives, led by chief executive Vikram Pandit, and Mr Rubin, a former US Treasury secretary. Under the deal, the government has to approve Citi's executive compensation plan, including bonuses and long-term awards. People familiar with the situation warned no formal decision on bonuses would be taken until January, but added that Citi's executives had to make a significant gesture to defuse criticism.

Rising dissent among employees - many of whom face lay-offs - has also weighed on Citi's deliberations. Citi declined to comment yesterday.

Citi shares have lost 75 per cent of their value since January as the company reported billions of dollars in writedowns and credit losses and laid off thousands of employees.

A fortnight ago, Goldman Sachs became the first US bank to announce its executives had waived their 2008 bonuses. Rivals such as Morgan Stanley are widely expected to follow suit.

Citi's position on executive compensation has been closely watched because last year neither Mr Pandit, who became chief executive in December, nor Mr Rubin received bonuses. Mr Rubin has earned about $115m in compensation since joining Citi in 1999 as chairman of the executive committee. He lost that title earlier this year when the committee was scrapped but remains an influential voice in Citi's boardroom.

Despite having no operational responsibilities, Mr Rubin was instrumental in both Chuck Prince's appointment as chief executive in 2003, and his departure and replacement with Mr Pandit last year. Mr Rubin's pivotal role has exposed him to criticism from external observers and employees.

Mr Rubin declined to comment yesterday but in recent interviews he defended his conduct and said a financial crisis of this magnitude could not have been predicted.

Under Citi's executive compensation plan, bonuses can only be paid if the company's annual return on equity is more than 10 per cent. Citi is likely to miss that target this year.

Separately, people familiar with the situation said Citi was making progress on a new compensation plan for top managers in its investment banking and securities division. Under the plan, first revealed by the Financial Times in October, a large portion of these bonuses will depend on how well they interact with colleagues during meetings of the division's management committee.




This Forum program is open, free of charge, to anyone concerned with investor interests relating to shareholder advisory voting on executive compensation, referred to by activists as "Say on Pay." As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was supported by Sibson Consulting to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of performance leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.