Citi Says Government Stake Doesn't Impede Competitive Pay
In case you're wondering if the government's large holding of Citigroup shares blocks the bank from paying employees competitively, Citi says the answer is no.
"We're not fighting with any hands behind our back," CFO John Gerspach told investors at a Credit Suisse conference Thursday, according to Reuters. He says Citi's compensation was competitive in 2009 and it's now subject to the same pay oversight as major competitors.
Citi repaid $20 billion of TARP bailout aid in December, but the Treasury Department continues to own 27 percent of the company's shares. The repayment let Citi escape future supervision of its 100 largest individual pay packages by Treasury pay czar Kenneth Feinberg, as it had been throughout 2009. Still, some analysts have speculated that the government's continued stake could prevent the bank from paying large enough bonuses to induce big producers to come aboard or stay. The government has said it won't try to sell its remaining shares until at least April.
While Feinberg's 2009 decisions prompted Citi to limit the non-restricted cash portion of bonuses to $100,000 per employee, management reportedly eased the pain by allowing a significant part of the deferred equity compensation to be sold as early as April this year.
A separate review of pay practices at Citi and 27 other large, complex financial institutions is under way at the Federal Reserve.