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Citi Seeks Obama Approval For Bonuses

From the Wall Street Journal:

Citi Seeks Approval to Pay Out Bonuses

By DAVID ENRICH and ANN DAVIS

APRIL 29, 2009

Citigroup Inc., soon to be one-third owned by the U.S. government, is asking the Treasury for permission to pay special bonuses to many key employees, according to people familiar with the matter.

The request comes as Citigroup is grappling with broad government pay restrictions that could break apart its legendary energy-trading unit. People at that unit, Phibro, are threatening to leave because of pay caps tied to the U.S. bailout of Citigroup. Phibro has been the source of hundreds of millions of dollars in profits for the bank, and has paid out hefty compensation, including a roughly $100 million windfall last year for the unit’s leader, Andrew Hall.

Citigroup is looking for ways to free Phibro from the federal restrictions, including a spinoff of the unit, according to people familiar with the matter…

Citigroup is trying to get U.S. approval for special bonuses for many of its employees. In a meeting earlier this month with Treasury Secretary Timothy Geithner, Citigroup CEO Vikram Pandit made the case for the stock-based bonuses. Executives are describing the bonuses as "retention" awards to perk up demoralized employees who the company worries are vulnerable to poaching by rival firms, people familiar with the matter said.

A person familiar with Mr. Geithner’s thinking said the Treasury hadn’t made a decision on whether to allow the bonuses. It is unclear how much Citigroup would pay out in bonuses if the government approved the move. A Citigroup spokesman declined to comment on details of the proposed compensation plans…

Citigroup’s stock price has lost about 95% of its value since peaking around $55 in May 2007. That has taken a severe toll on the fortunes of employees, who hold a total of about 245 million stock options, warrants and rights to buy shares, with a weighted average exercise price of $41.84, according to Citigroup’s latest proxy statement. With the stock below $3 a share, most of those awards are essentially worthless

Of course their request will be denied. And for their own good.

Mr. Obama has to protect the Cit-Group CEOs from the pitchforkers.

This article was posted by Steve on Wednesday, April 29th, 2009. Comments are currently closed.

2 Responses to “Citi Seeks Obama Approval For Bonuses”

  1. pdsand says:

    “Phibro has been the source of hundreds of millions of dollars in profits for the bank, and has paid out hefty compensation, including a roughly $100 million windfall last year for the unit’s leader, Andrew Hall.”

    Of course it begs repeating, if the man is in the business of energy trading at the behest of his employer philbro, then a bonus or pay from philbro is not a windfall, but compensation duly earned. Especially considering he has done a “legendary” job.

  2. proreason says:

    SG: “Of course their request will be denied. And for their own good. Mr. Obama has to protect the Cit-Group CEOs from the pitchforkers.”

    Perfectly stated.

    So, we will see an early example of how socialism rips apart private businesses and turns productive enterprises into goose-stepping factories of mediocrity.

    The handful of geniuses who mastered the trading discipline and made the billions that helped Citibank comply with Drooling Barney’s orders to burn money will now leave the company, and go to another owned by foreigners. The foreigners will collect the wealth this country is throwing away.

    But the achievers will have been punished and America’s losers, including The Moron, will have the satisfaction of seeing them be paid like peasants……and Obamaland will be singing about its revenge.


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