Citigroup is asking the U.S. Treasury for permission to pay employees bonuses in order to make up for their stock losses.
You know I can’t help but feel that these companies are living in a world completely disconnected from all rational reality. This ‘please, may we’ request comes just hours after the Wall Street Journal reported that Citigroup [Citibank] may be one of the banks that will need additional funding, perhaps even more tax payer money if it can’t raise the capital on its own.
Citigroup Inc., soon to be one-third owned by the U.S. government, is asking the Treasury for permission to pay special bonuses to many employees, according to people familiar with the matter.[...]
[...]Citigroup is trying to get U.S. approval for special bonuses for many employees in the rest of the company. In a meeting earlier this month with Treasury Secretary Timothy Geithner, Citigroup Chief Executive Vikram Pandit made the case for the stock-based bonuses. Executives are describing the bonuses as “retention” awards designed to perk up demoralized employees who the company worries are vulnerable to poaching by rival firms, people familiar with the matter said.[...]
[...]Citigroup has already gotten its own share of criticism for excessive spending, thanks in part to its aborted plans earlier this year to buy a new corporate jet. The company has received $50 billion in taxpayer aid, and the U.S. government is protecting Citigroup against most losses on $301 billion of its assets. The Treasury is poised next month to become Citigroup’s largest shareholder, owning as much as 36% of its common stock.[...]
[...]Citigroup executives say they are worried that employees, who have seen much of their past bonuses, paid largely in stock, wiped out by the collapse of Citigroup’s share price, will jump to banks that aren’t tethered by federal pay restrictions. Those fears have intensified as healthier rivals such as Goldman Sachs Group Inc. rush to pay back their taxpayer investments.[...]
[...]Citigroup’s stock price has lost about 95% of its value since peaking around $55 in May 2007. That has taken a severe toll on the fortunes of employees, who hold a total of about 245 million stock options, warrants and rights to buy shares, with a weighted average exercise price of $41.84, according to Citigroup’s latest proxy statement. With the stock below $3 a share, most of those awards are essentially worthless.[...]
Source: WSJ
Hey Vikram Pandit.. what about all of the ‘other‘ share holders who you left holding the bag, going to make up for their losses too?
Cry me a freaking river…
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