Telecom analyst Jack Grubman is gone from Salomon Smith Barney, but there's a good chance he's still sitting under the Citigroup ( C) umbrella.

Corporate lawyers say the $30 million severance package the one-time star analyst is leaving Citigroup with indicates that Grubman and his former employer are parting on essentially friendly terms, despite the swirl of controversy surrounding the analyst's bad stock picks and close ties to a number of telecom companies.

"It doesn't look like he is going to hold a grudge against Citi," says Marcel Kahan, a securities professor at New York University School of Law.

The lawyers say large severance deals are not uncommon in situations where a company and a departing executive are embroiled in litigation and that it's in both parties' interests to maintain a common defense strategy.

One attorney likened it to a "mutual non-aggression pact" between Citigroup and Grubman, who has become the poster boy for Wall Street analyst conflicts of interest. Another lawyer says the severance deal is Citigroup's way of telling Grubman that "he's taken care of."

And right now, Grubman and Citigroup executives have a lot reasons to keep a lid on whatever hostilities they may harbor toward each other.

At last count, nearly four dozen arbitration claims and lawsuits have been filed against Grubman and the nation's largest financial services firm, many of which allege Grubman had a conflict in touting stocks of companies such as WorldCom because of his ties to executives of those companies.

Citigroup has acknowledged that Grubman attended more than a dozen corporate board meetings for some of the companies he covered, including WorldCom. And the firm has acknowledged that Grubman offered advice in some mergers those companies were doing. Grubman even served as an official proxy solicitor in WorldCom's heated battle to buy MCI Communications -- the deal that turned the small long-distance carrier into a major player.

More troubling, Citigroup and Grubman face continuing investigations into those potential conflicts by the New York State attorney general's office and the National Association of Securities Dealers. Some say securities regulators are itching to levy a huge fine against a big financial institution like Citigroup, in order to send a strong message to investors that it will no longer be business as usual on Wall Street.

Both Citigroup and Grubman have denied any wrongdoing in their dealings with the firm's investment banking clients.

But several corporate lawyers say it makes sense for Citigroup and Grubman to continue putting up a united front. The lawyers -- many of whom didn't want to be identified because their firms provide legal services to Citigroup -- say that if Citigroup had wanted a hostile rather than an amicable split, it would have taken a much tougher stance in negotiating the severance deal. One attorney even suggested that an overly cushy package could give rise to a shareholder lawsuit on the grounds that Citigroup is "giving away corporate assets."

In fact, roughly half of the severance package represents the proceeds from a $15 million loan Grubman received from Citigroup, as part of five-year contract he signed in 1998. Citigroup agreed to forgive the loan and interest if Grubman completed the terms of his contract. But with Grubman resigning a year before the contract expires, it's arguable whether Grubman has fulfilled his obligation.

The remainder of the severance includes $1.2 million in salary and Citigroup's cashing out of options and restricted stock it gave Grubman at the time of the contract.

A Citigroup spokeswoman declined to discuss the specifics of the severance package. Grubman's attorney, Lee Richards, could not be reached for comment. One issue that remains unclear, however, is whether Citigroup also has agreed to pay all of Grubman's legal bills. The bank wouldn't confirm a report in The New York Times that it had agreed to that arrangement.

The lawyers, however, say it may not matter since Grubman, as a former Salomon managing director, may be covered by the investment bank's insurance policies for directors and officers. Those policies typically cover any legal costs incurred by a high-ranking corporate executive, even after he's left a job, as long as the executive isn't later found guilty of fraud.

But some say Citigroup needs to do a lot more explaining about Grubman's severance package. Jacob Zamansky, a New York lawyer who represents a Salomon customer who has filed an arbitration claim against Grubman, says Citigroup should disclose whether it's picking up the tab for Grubman's legal defense.

"I think they need to disclose to the public," says Zamansky. "Are they going to indemnify him and pay his legal fees?"

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