The average man on the street would view giving up millions of dollars in bonus money for a hard year of work as a tremendous sacrifice.
Vikram Pandit, CEO of Citigroup (C), chairman Win Bischoff, and perennial board member Robert Rubin have all agreed to give up their incentive compensation for 2008. Given that the federal government takes a dim view on bonuses at banks it has bailed out and that Citi’s shares are down 77% this year, it really isn’t much of a concession, and may not even be voluntary. The board probably told the group that they were lucky to still be working.
Beyond that the three executives are phenomenally rich, unless they put their money with Madoff. According to Bloomnberg, "Pandit got $165 million from Citigroup in 2007 when he sold Old Lane Partners LP, the hedge fund he co-founded and ran. Citigroup closed New York-based Old Lane in June and took a $202 million writedown on its $800 million investment."
By most estimates, Rubin has made over $150 million sitting on the Citi board, depending to some extent on how his stock option grants are accounted for.
The long and short of it is that taking money away from remarkably rich people who do not deserve it is hardly a penalty at all.
The Citigroup board compensation committee is run by former AT&T (T) CEO C. Michael Armstrong. Richard Parsons, former Time Warner (TWX) CEO, also sits on the committee. Those in charge of governance should share some of the blame for the bank’s fate. They should, at the very least, ask Pandit, Rubin, and Bischoff to work for $1 a year. It would be a good gesture and each of them could afford it.
Douglas A. McIntyre