Citigroup has let its employees know how they fared in the Great Salary Hike of 2009. Traders saw their salaries doubled, investment bankers got a 50% increase, others got a 25% hike, according to a person familiar with the matter.
The pay-hikes at the mega-bank were first reported last week. Citigroup hopes that the increased base salaries will prevent employees from fleeing, and may help it get around rules about bonuses at banks on government aid.
Bonuses are expected to be lower this year. Overall, total compensation is expected to amount to what it was in 2007–at the height of the boom! As we said last week:
Let’s break this down in the simplest terms: this is a disaster. Without taxpayer guarantees and funding, Citigroup would be unable to give its employees higher base salaries. The best employees would leave for other firms. This market process would further diminish Citi and enhance its better managed competitors. Everyone, except Citi shareholders and some of its senior management, would be better off. Instead, taxpayer funds are being used to block this market process, trapping talent inside a failed firm and rewarding management’s worst mistakes.
That’s crying over spilled milk we suppose. So we’ll move on. Congratulations to our friends at Citi. Spend that money wisely.