Citigroup (C) is set to announce a very bizarre compensation scheme indeed, according to CNBC. Details are sketchy, but it sounds as though top brass will get paid based on something having to do with exotic metrics like performance and profitability. We’ll have to wait to learn more, but get this, if the firm’s fortunes continue to deteriorate, then execs may get reduced pay. Odd, right?
The plan calls for Citi’s most senior executives, including the CEO, to take the biggest hits in compensation when the firm’s bottom line suffers. Senior executives will receive much of their future cash and stock bonuses in a deferred fashion that is “vested” in three years time when the executive can claim ownership to the money.
The plan will also feature a clawback provision where the firm can recoup money from top executives if the performance of the firm sours after a big payday, in addition the top five executives at the firm will receive no severance if and when they leave.
Citigroup officials say the plan was developed internally by Pandit himself, but they confirm that they have been discussing executive compensation reforms with officials in the federal government, which have been increasingly more involved in Citigroup’s operations since the big bank asked for its most recent bailout.
Citi isn’t the first firm, where something’s gotten in the water. Morgan Stanley (MS) has also announced a bonus scheme that allows for clawbacks. Again, it all seems to be based on this idea that pay should somehow reflect how well one did at their job this year. Developing…