Vikram Pandit, Citigroup chief executive, will start drawing a pay cheque again next year, following two years of working for $1 while the bank recovered from the huge losses during the financial crisis.
The news came as Citi announced that its six most senior executives, excluding Mr Pandit, would receive a total of $37.6m in shares – a significant increase over last year. The stock awards are part of a pay structure agreed with the US government, which owns a 17 per cent stake in the bank.
The bank’s decision to resume payments to Mr Pandit, who received several million dollars when he sold his hedge fund to Citi in 2007, underlines the company’s confidence in its prospects.
In early 2009, Mr Pandit, who took the helm at Citi in December 2007, said he would forego salary and bonus, working for a token $1 a year, until the company returned to “sustained profitability”.
Dick Parsons, Citi’s chairman, said in a statement that Mr Pandit had again declined to be paid this year, but in 2011, “the board intends to compensate Vikram commensurate with the job of CEO”.
Citi has recorded two consecutive quarters in the black as losses on bad assets have declined and non-core businesses have been sold or wound down.
The government has pledged to sell all of its stake in Citi – received in return for a $45bn bail-out – by the end of this year. Until then, Citi is bound by restrictions on how it pays its top 25 executives.
Under guidelines issued by the government’s former “pay tsar” Kenneth Feinberg, a portion of pay has to be in stock, with bonuses limited to one third of total compensation.
The details of Citi’s pay plan came as the a US district court judge conditionally approved a settlement between securities regulators and the bank after the parties agreed to toughen conditions of the deal.
Judge Ellen Huvelle expressed deep dissatisfaction with the original terms of a $75m settlement over claims that Citi failed to properly disclose $40bn in subprime-related investments to shareholders in 2007. While she said the financial penalty was “reasonable,” she criticised the Securities and Exchange Commission, which brought the complaint, for not including remedies to fix what it referred to as a “flawed system”. Instead, the agreement only compelled Citi to obey securities laws in the future.
The SEC and Citi revised their settlement by agreeing not to alter changes to their risk management procedures in the wake of the probe.