But Citigroup investors may be getting a bargain, and the bank's approach to executive pay may also point the way forward in the rest of the banking industry, with many features that will please politicians, regulators and investors.
Pandit essentially donated his time during 2010 while leading Citigroup into the later stages of its resuscitation by using a "good bank/bad bank" strategy to shed non-core assets. The new pay package has the potential to reward Pandit handsomely over the next four years, while also including plenty of safeguards to encourage strong performance, and clawback features, in the event of another calamity.
|Citigroup CEO Vikram Pandit|
According to data provided by SNL Financial, Pandit in 2010 forwent salary and bonus, with his take-home pay of $1.3 million representing only the value realized on the vesting of stock options.In comparison, Bank of America (BAC) CEO Brian Moynihan's take-home pay was valued at $2.3 million during 2010 according to SNL, including a base salary of $950,000, $270, 234 in perks and other compensation, and $1,039,287 in value realized when stock options vested. During 2010, Wells Fargo (WFC) CEO John Stumpf's take-home pay was valued at $6.6 million, including a base salary of 3.2 million, $3.3 million in non-equity incentive plan compensation, and a relatively small amount of perks. JPMorgan Chase (JPM) CEO James Dimon took home a cool $42 million, including a $1 million base salary, a $5 million bonus, $579,624 in perks, $22.9 million in value for excercised options and $12.5 million in value realized on the vesting of stock options. Pandit's package addresses investor anger over the general lack of clawbacks from executives of so many failed and bailed-out banks and investment firms over the past few years, while rewarding Pandit for steering the company through its transformation through the crisis, capital raises to repay bailout funds received through the Troubled Assets Relief Program and return to profitability. All three components of Pandit's new package are all tied to performance thresholds. The $10 million deferred stock award will vest in three equal installments at the end of 2013, 2014 and 2015, only if the board's compensation committee determines that the CEO has satisfied regulatory criteria, such as maintain strong capital ratios; maintained a "an organizational culture focused on responsible finance, conducting business with integrity and serving Citi's customers, measured through performance metrics; and maintain and develop executive talent, including succession plans across senior management.
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