It took until June, 2009, but finally some banks are starting to get a handle on the politics of the financial crisis. The bank has decided to halt the payout of millions of dollars in promised severance to ex-execs, hoping to avoid an AIG-like brouhaha.
So is there some loophole that allows them not to pay out the cash?
WSJ: Under the terms of exit agreements with the departed executives, Citigroup is contractually obliged to make the payments. But bank officials essentially are wagering that the former executives will conclude that it would be publicly embarrassing for them to file lawsuits against the struggling, taxpayer-backed company seeking the money.
This is probably a pretty good gamble on the company’s part (though on the other hand, so much for Wall Street’s sanctity of contract). And even with the embarrassment, we wouldn’t be that surprised if some did actually fight for the millions they’re owed. We would.
Among the ex-execs not getting paid, according to the article, are former investment bank head Michael Klein and Kevin Kessinger, former head of technology and operations. Klein was owed a $21 million payment in March, and another $7 million in October.
Again, if someone were holding out $28 million from us that we were promised, then obviously we’d sue for it.