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Citi To Give Raises Instead Of Bonuses!

From an apoplectic New York Times:

Citigroup Has a Plan to Fatten Salaries

By ERIC DASH

June 24, 2009

After all those losses and bailouts, rank-and-file employees of Citigroup are getting some good news: their salaries are going up.

The troubled banking giant, which to many symbolizes the troubles in the nation’s financial industry, intends to raise workers’ base salaries by as much as 50 percent this year to offset smaller annual bonuses, according to people with direct knowledge of the plan.

The shift means that most Citigroup employees will make as much money as they did in 2008, although some might earn more and others less. The company also plans to award millions of new stock options to employees in an effort to retain workers and neutralize a precipitous drop in the value of their stock holdings.

Like Citigroup, financial companies, like Bank of America and Morgan Stanley, are raising employees’ base salaries to try to shift attention away from bonuses and curb excessive risk-taking. So are banks like UBS and other European competitors.

The Citigroup proposals, discussed internally this week, present a crucial test for the Obama administration, which has vowed to rein in runaway compensation at companies that have received large taxpayer-financed bailouts. Citigroup has gotten not one but two rescues from Washington. Soon the government will assume a 34 percent stake in the company, whose share price has plunged nearly 84 percent in the last year.

Despite Washington’s new role at Citigroup, and public anger over big paydays on Wall Street, administration officials have little power to prevent the company and others in the industry from raising salaries for rank-and-file employees.

Kenneth R. Feinberg, the administration’s new “pay czar,” has the authority to set compensation for only the top 100 employees at troubled companies. The rest — which at Citigroup, means fewer than 300,000 people — can be paid as executives see fit, provided any increase does not rank them among the 100 most highly paid workers.

Outsize pay on Wall Street, particularly the industry’s bonus culture, is widely seen as having encouraged the risk-taking that led to the gravest financial crisis since the Depression. But industrywide, total compensation is expected to rise 20 to 30 percent this year, approximately to the levels of 2005, before the crisis, according to Johnson Associates, a compensation consulting firm. Total industry pay would still be below the record levels of 2007, but only a bit.

“You can say it is outrageous,” said Alan Johnson, the president of the firm. “But maybe it’s a little like the canary in the mine, and you say that things are getting better.”

Mr. Feinberg, the special master for compensation, is the person who ensures that companies receiving federal bailout money are abiding by executive pay guidelines. This week, Mr. Feinberg, who oversaw the federal government’s compensation fund for victims of the Sept. 11, 2001, terrorist attacks, held introductory meetings with Citigroup executives and their counterparts at several other companies that have received two federal bailouts. He will start reviewing pay packages for the 25 highest-paid employees, as well as compensation formulas for the next 75, in the next two months. He declined to comment on Tuesday…

This is outrageous. Apparently, Mr. Obama has refused to let CitiBank hand out bonuses, as they requested back in April.

So now they are wantonly trying to get around the will of the people Mr. Obama and the law his diktat in such a fashion?

Surely this cannot stand. Surely, as the article hopes, Mr. Obama’s ‘Pay Czar’ will put an end to such a nefarious practice.

Are we a nation of laws or men?

This article was posted by Steve on Wednesday, June 24th, 2009. Comments are currently closed.

11 Responses to “Citi To Give Raises Instead Of Bonuses!”

  1. Chinnubie says:

    I am thrilled to see American Ingenuity finally coming through. This only makes me realize maybe, just maybe we are going to be able to get through this nightmare administration with some positive things to talk about. The only worry is how the press will not let this go until something is done about this righteous indignation. Good for CITI I’m freaking proud of them for standing up to the government that made them take this money in the first place. Wasn’t the CEO of this company a big democrat supporter, but quit before the sh** hit the fan?

    For movie fans of “Goodfellows” this reminds me of the part where Joe Pesci’s character Tommy is told to “Go F*** Yourself” by the kid serving drinks at the poker game. Everybody at the table starts telling the kid good job don’t take sh#* from nobody, then Tommy puts 4 holes in the kid. The government is Tommy in this situation, so we’ll see some kind of reprisal. They’ll send ACORN out to visit the employees at their homes I’m sure.

  2. Steve says:

    Mr. Limbaugh is discussing this article as we speak.

  3. proreason says:

    What I don’t understand is why these bankers aren’t just let go, and the positions filled with Obamy supporters now making less money with Acorn and as McDonald’s fryer tenders and order takers, or with laid-off UAW riviters..

    They should be making these hundred thousand dollar salaries, not the greedy Wall Street bankers.

    After all, social justice is far more important than some overhyped business activity like banking.

    • Colonel1961 says:

      I agree, PR. Fire ’em all and let some of those highly-skilled UAW workers run the banking industry. There’s obviously nothing to it – even Obama could do it!

  4. Petronius says:

    “Mr. Feinberg . . . will start reviewing pay packages . . . as well as compensation formulas . . . .”

    The devine Nerobama and the Destroyer-crats have succeeded in dividing Americans into two castes, the eaters and the eaten. On the one hand there are the taxpayers––the producers, builders, businesses, employers, honest workers, thrifty savers, prudent investors, the independent men and women, the individualists, the thinkers, the doers and the carriers, those who bring home the bacon, the bitter clingers. They––the Liberals teach us––are the bad people, the exploiters. They are to be enslaved. On the other hand there are the tax-eaters––the moochers, freeloaders, thieves, loafers, slackers, the imprudent, deadbeats, free-riders, vandals, looters, the leeches, parasites, cannibals, and blood-sucking vampires and Bolshevik thugs. They–-we are told––are the good, the needy, the deserving, the entitled ones.

    According to Liberal doctrine, it is immoral to live by your own work, but moral to live off the work of others.

    • proreason says:

      “According to Liberal doctrine, it is immoral to live by your own work, but moral to live off the work of others.”

      Hear, hear!

      and I love this part as much: “the moochers, freeloaders, thieves, loafers, slackers, the imprudent, deadbeats, free-riders, vandals, looters, the leeches, parasites, cannibals, and blood-sucking vampires and Bolshevik thugs”. When you look up Democrat in the dictionary, that must be what you see.

  5. Liberals Demise says:

    How many Americans does it take to unscrew an Obama screw up?

  6. tranquil.night says:

    I agree Steve, this isn’t going to sit well with the big dogs (Goldman Sachs). Looks like a task perfectly suited for COI. Citi will just be another tentacle of the government mob soon enough. Salary caps should fix this.

    Rush is talking a lot about Goldman right now, here’s a small compendium:

    From S&L Mar. 24, 2009:
    http://sweetness-light.com/archive/waters-exposes-goldman-sachs-conspiracy

    Goldman Sachs (chief rival of AIG, Lehman Brothers) the facts:
    – $5 billion invested in September of 2008 by Warren Buffett and has already made a $1 billion return.
    – Strong holdings by Soros, including a 40% increase made between October – December of last year.
    – Has a company history of leaning left, endorsing global warming alarmism, making donations to Nature/Rainforest conservancy groups and other initiatives such as Jesse Jackson’s Organization.
    – Was blamed for the Depression using similar tactics in the The Great Crash, 1929 by economist John Kenneth Galbraith
    – Voluntarily received $9.8 billion in TARP for one of its faltering Hedge Funds (which it has vowed to pay back to escape the grasp of the regulators crushing their competition)
    – Paying $11 billion in bonuses this year (AIG incurred populist outrage and employee death threats over $1.2 billion)
    – On track for it’s best year ever (Lehman bankrupt, AIG 79% government owned; former CEO Maurice Greenberg “was bewildered by the situation and was at a loss over how the entire situation got out of control as it did.”)

    – Former Goldman board member Ed Liddy current government appointed CEO of AIG (His salary: $1. His personal investment in Sachs: $3 million)
    – Henry Paulson, architect of TARP, former CEO of Sachs.
    – Robert Rubin, Clinton Treasury Sect., architect of Community Reinvestment Act that brought forth the Sub-prime bubble, former CEO of Sachs.
    – Lil’ Timmy Geithner, President of the Fed who helped Paulson position Goldman on the throne, and who also helped cripple Bank of America with Merrill Lynch.

    There’s others of course as well. You can call it a shadow government, pseudo-illuminati, whatever, but GS is the financial arm of it, not the ideological one. You might call Sachs the left’s cookie jar, which is why it’s funny to see Buffett (the financialist) criticizing cap and trade, a Soros bill (the energy “philanthropist”). It’s also funny because it was the left that has pushed elements of this very same conspiracy on neo-conservatives ‘zionists’ in the past. It’s been them the entire damn time in their arrogance telling us exactly how they were going to do this. Why? Because they hate the US and had enough confidence in their media to spread the lies even when they arrogantly told the truth.

    But that’s the problem with leftist thinking: even they can’t ultimately agree what’s ‘best’ for everyone. You just end up with a bunch of rich and powerful men who think they’re gods and it inevitably becomes a clash of the titans. Is it about justice or power or naturalism or spirituality or or or..? And the free people are just like ‘uh, what? It’s freedom, stupid.’ Freedom from the grasp of people like them.

  7. pdsand says:

    “Despite Washington’s new role at Citigroup, and public anger over big paydays on Wall Street, administration officials have little power to prevent the company and others in the industry from raising salaries for rank-and-file employees.”

    That’s never stopped them before, why should it be any different this time?

  8. MinnesotaRush says:

    Betcha they’re not going to get to go for hot dogs on the 4th!

    o-blah-blah’s gonna be mad.


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