Citi Says That Criticized Comp Plan Played Key Role In Return To Profitability

Michael Corbat Interview Pic

It always comes back to the compensation.

Citigroup has said that a profit- sharing plan, among pay practices shareholders rejected last year, helped return the bank to profitability by retaining leaders including CEO Michael Corbat.

Bloomberg reports that the plan was essential for the survival of the New York-based lender as 'important executives' were leaving for competitors, the bank said in an annual proxy filing.

The firm designed the awards in 2009 after it received a $45bn U.S. bailout to prevent its collapse amid the financial crisis.

Citigroup directors are seeking to explain compensation practices as a non-binding shareholder vote on 2012 executive pay approaches. Investors rejected profit-sharing payouts last year amid concern that they rewarded executives too easily and gave too much cash to former CEO Vikram Pandit. Top managers including Corbat, 52, still stand to collect about $579m from the plan, which began paying out earlier this year.

'The Key Employee Profit Sharing Plan helped retain Citi’s key leaders', the bank said in the filing. 'The new CEO, his leadership team, and other key executives remained with the firm and enabled Citi to return to sustained profitability'.

Hit the link below to access the complete Bloomberg article:

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