If you are a company that has received government aid, particularly billions of dollars worth of it, you must never ever let your name appear in a newspaper headline anywhere near the words "bonus" or "payments" or anything like them. Not these days. Every precaution has to be taken to prevent it from happening. When reporters call to ask questions about this sort of thing, say it's a wrong number and hang up the phone. Or pretend it's a bad connection. Whatever you do, don't decline comment because that will suggest they're on the right track. If they say they're running the story anyway, find out what day. Go to newsstands and buy every copy of every paper. As for that pesky Internet? Unplug all computers you come across.
Sadly, I didn't have a chance to offer that advice to Citigroup ( C). In case you didn't see it, The Wall Street Journal published this Wednesday: Citi Seeks Approval to Pay Out Bonuses. Exactly the elements I warned against above. That was followed by several paragraphs about why the bank was asking the Treasury Department if it could give some of its key workers special payments. What probably happened is that no one at Citi had heard anything about the headaches that bonus flaps have caused for AIG ( AIG) and Merrill Lynch, now part of Bank of America ( BAC). I don't know how else to explain it. I mean, there it was in black and white. As an aside, guess who got the attribution for sharing this information? You know it. The people familiar. Almost managed to get it in under the radar, too, considering we also had news on the shrinking economy, a Federal Reserve statement, BofA's shareholder meeting and more on swine flu. A lot going on, and a fairly good day for something like this to break, if it has to break.
Listen, I understand. There's no question that Citi wants to hang on to its most valuable employees, what I'll call MVEs. It certainly doesn't want them going to work and making money for its rivals. Can't blame the company there. Trying to right the ship and all. The problem is that Citi is facing more government scrutiny over what it pays, and it's bidding to figure out a way to stop its crucial people from bolting for some place that doesn't have those worries. Every firm needs to try to retain its MVEs, and let's not be upset with Citi for doing that. Last year one of those MVEs, the head of Citi's energy trading division Phibro, got what the Journal article referred to as a "roughly $100 million windfall." Clearly, anyone commanding that kind of payday is worth a lot to his or her employer. If a worker like that threatens to leave and go get paid $100 million somewhere else, you do everything you can to stop it. You want Deutsche Bank ( DB) or UBS ( UBS) enriching your former colleagues for goodness sake? Please. That'll be the day, you tell them. Time was Citi could pretty much simply pay bonuses. Now, though, what with the thing where the feds are going to control a large chunk of the company, it's not quite that easy. Unfortunately, or fortunately, for Citi, once the public and the public's best friend, the U.S. Congress, has time to become sufficiently outraged, this whole bonus issue might very well be scuttled. So learn your lesson, corporate America: If you have to or want to pay bonuses, then pay bonuses. Just make sure it stays out of the papers, digital or otherwise.