Citigroup's CEO Gets a 14,900,000 Percent Raise

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Vikram PanditBy Stephen Gandel, senior editor, Fortune

Vikram Pandit is officially no longer Citi's $1 man. Whether he should be a $15 million one is the question.

Yesterday, the bank disclosed that it paid its CEO nearly $14.9 million in cash and options in 2011. That was up from a dollar the year before. Back in 2009, Pandit said he would take a salary of $1 until Citigroup (C) returned to profitability. In fact, Pandit stuck with the meager check longer than he had to. Citi made money in 2010. So you can't really fault the guy for taking more this year.

Vikram Pandit

And Citigroup did have a pretty good 2011. It earned $11 billion, up 4% from the year before. Still, the bank has a lot to fix. And 2011 was a year in which Citigroup agreed to billions of dollars in fines to settle claims that it broke numerous rules in its mortgage operations, including an untold number of questionable foreclosures, many of which happened on Pandit's watch.

As I have said before, determining what a CEO should make isn't easy. That's how they can get away with such high pay. But Pandit's pay still looks rich. Back in 2006, Citi made $21.5 billion, or nearly double what the company made last year. By that measure, Pandit's pay should be half of the $25 million then-CEO Chuck Prince made in 2006, or $2.5 million less than what he was actually paid. But most studies show that CEOs are paid based on what investors think their company is worth, or market capitalization, not actual earnings. Since the end of 2006, Citigroup's market cap has plunged $180 billion or 64%. By that measure, Pandit should be making roughly $9 million, not $15 million. And all that is based on that fact that the Prince wasn't grossly overpaid, which, given that Citigroup had to be bailed out by the government, he clearly was.

Even more curious is the 2011 pay hikes for the rest of Citi's executive team. CFO John Gerspach's pay jumped 51% to $7.2 million. John Havens, Citigroup's president, took home nearly $13 million, up 36% from the year before. All told, the pay of Citigroup's top four executives excluding Pandit rose 34% to $43 million. All this comes in a year in which the rest of Wall Street saw their bonuses cut anywhere from 14% to 25% depending on who you believe. And Citigroup's own rank-and-file only saw a 5% jump in their pay.

What's more, Pandit's $1 pay at some level was always an illusion. When Citigroup hired Pandit in 2007 it bought out his hedge fund as well for $800 million. The hedge fund, though, turned out to be nearly worthless, and Citigroup closed it a year later. Nonetheless, Pandit pocketed $165 million on the deal.

Time to bring back the pay czar?

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Wayne Bradshaw

Do you know who is the prolocutor star of Louis Vuitton Handags now? It is the Sofia Coppola, she is well-know with the director of movies. Of course she like the LV very much ,especial the Louis Vuitton Wallet,but she never buy something from the Louis Vuitton Outlet, because she always get freely and show the newest louis vuitton items .

May 05 2012 at 11:50 PM Report abuse rate up rate down Reply
kastmaster2105

I need one of U rich folks to lend me some money, not much, to refurbish my old house here in 77563. $40k is all. Senior citizen needs help and.....well, its hell to be poor. I am 65...small pension and SS.....Ed in Tx kastmaster2105@aol.com...thanx

March 15 2012 at 11:42 PM Report abuse rate up rate down Reply
kastmaster2105

I need one of U rich folks to lend me some money, not much, to refurbish my old house here in 77563. $40k is all. Senior citizen needs help and.....well, its hell to be poor. I am 65...small pension and SS.....Ed in Tx kastmaster2105@aol.com...thanx

March 15 2012 at 11:40 PM Report abuse rate up rate down Reply
Richard

Nobody, and I mean Nobody, should be paid that kind of compensation, stock owned companies should be required to pay the shareholders who have rode a bumpy train for years, decent pay is all thats required, not this kind of stealing, also, when they comment we have to pay this or they will leave, let them leave, sooner or later, they will hit the wall and only receive basic pay, not this, stockholders should receive the lions share of profits, they took the risk,
change is coming, replace the board of directors, get in the real world.

March 13 2012 at 5:29 PM Report abuse +1 rate up rate down Reply
Richard

Nobody, and I mean Nobody, should be paid that kind of compensation, stock owned companies should be required to pay the shareholders who have rode a bumpy train for years, decent pay is all thats required, not this kind of stealing, also, when they comment we have to pay this or they will leave, let them leave, sooner or later, they will hit the wall and only receive basic pay, not this, stockholders should receive the lions share of profits, they took the risk,
change is coming, replace the board of directors, get in the real world.

March 13 2012 at 5:29 PM Report abuse +3 rate up rate down Reply
mrspelosi

I can't understand why no one is up in arms about me increasing my wealth last year by 62%. 62%!!! No one has launched an investigation, no media inquiries, no nothing. A lot of the wealth I have obtained over the years is due in part to all my insider trading. Any day I expect to awaken to the sounds of the occupier protesters out in front of my mansion.

March 13 2012 at 3:05 PM Report abuse -2 rate up rate down Reply
2 replies to mrspelosi's comment
Somey

You are entertaining.

March 13 2012 at 4:53 PM Report abuse rate up rate down Reply
Richard

Insider trading, your just the tip of the iceberg, Wal Steet is so crooked with this stuff, stocks one day soon will tank due to crooked traders, inside deals, hopefully, all will be caught, punished, sent to prison for 30 yrs.,
I would advise all to stay out of the stock market, it;s rigged against you, for the wealthy who are connected.

March 13 2012 at 5:35 PM Report abuse rate up rate down Reply
chicobombico

String these bastards up. Citi just finished screwing the amarican worker. hang them high

March 13 2012 at 2:17 PM Report abuse rate up rate down Reply
wstrvlr

There isn't a CEO in the whole world worth more than $50,000 a year! To "think" they deserve more is to show just what an egotist & narcissist they are!

March 13 2012 at 2:11 PM Report abuse rate up rate down Reply
dr659

I know someone who got a $14.90 a week raise

March 13 2012 at 2:11 PM Report abuse rate up rate down Reply
wstrvlr

There isn't a CEO in the whole world worth more than $50,000 a year! To "think" they deserve more is to show just what an egotist & narcissist they are!

March 13 2012 at 2:10 PM Report abuse -1 rate up rate down Reply