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News: Citigroup Said to Use More Stock for Investment Banker Bonuses


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Source: http://www.bloomberg.com

Citigroup Said to Use More Stock for Investment Banker Bonuses

By Donal Griffin – Jan 31, 2011 11:21 PM ET Tue Feb 01 04:21:56 GMT 2011
Citigroup Said to Use More Stock for Investment Banker Bonus

“We are working around the world with all the regulators, with a lot of our people, to see what are the right kind of incentives to serve our customers,” Chief Executive Officer Vikram Pandit said in December. Photographer: Andrew Harrer/Bloomberg

Jan. 31 (Bloomberg) — JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, Citigroup Inc. CEO Vikram Pandit and Bank of Israel Governor Stanley Fischer talk about discussions over banking regulation in Davos. This report also includes comment from Barclays Plc’s CEO Robert Diamond, Bank of America Corp. CEO Brian Moynihan, U.K. Chancellor of the Exchequer George Osborne, French Finance Minister Christine Lagarde, Swedish Finance Minister Anders Borg, World Bank President Robert Zoellick and Bank of Canada Governor Mark Carney. They speak at the World Economic Forum meeting in Davos, Switzerland. (Source: Bloomberg)

Jan. 27 (Bloomberg) — Wall Street firms’ soaring pay pushed traders to disregard risk and limited regulators’ ability to lure top talent to police banks, according to a panel probing the origins of the financial crisis. Stock-option bonuses motivated financial firms to use leverage to boost returns, and traders were given “aggressive incentives” to dissuade them from defecting, the Financial Crisis Inquiry Commission wrote in a 545-page book outlining its findings. Bloomberg’s Peter Cook reports. (Source: Bloomberg)

Jan. 24 (Bloomberg) — Workers at big Wall Street banks took modest cuts in pay last year even as financiers continued to outpace other professionals in earnings, a gap that regulators and lawmakers are working to narrow. Goldman Sachs Group Inc., Morgan Stanley, and JPMorgan Chase & Co.’s investment bank spent an average of $330,212 on salaries, bonuses and benefits for each of their 124,556 workers in 2010, according to financial reports released since Jan. 14. Bloomberg’s Jon Erlichman reports. (Source: Bloomberg)

Jan. 19 (Bloomberg) — Christopher Wassermann, president of the Zermatt Summitt, an event which promotes ethics in business, talks about the outlook for bankers’ bonuses in 2011. He speaks with Maryam Nemazee on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Citigroup Inc., the lender that got a $45 billion bailout from U.S. taxpayers, is using stock for a larger portion of bonuses paid to employees, including investment bankers and traders, people briefed on the shift said.

The New York-based bank aims to pay some recipients as much as 50 percent of 2010 bonuses in shares, compared with about 40 percent a year earlier, one of the people said, declining to be identified because the plans aren’t public. The percentages are guidelines and individual awards vary, three people familiar with the matter said.

U.S. banks are under pressure from regulators and lawmakers to rein in bonuses. Soaring compensation and excessive cash payouts were cited in a November study by the Council of Institutional Investors as encouraging Wall Street traders to disregard risk in the pursuit of profit that led to the financial crisis.

“We are working around the world with all the regulators, with a lot of our people, to see what are the right kind of incentives to serve our customers,” Chief Executive Officer Vikram Pandit said at a branch opening in New York in December. “Citi will be adhering and hopefully leading some of the best structures on the street when it comes to compensation.”

Spokeswoman Danielle Romero-Apsilos declined to comment on the size of the bonus pool. JPMorgan Chase & Co. paid its traders, deal makers and other investment banking personnel an average of $369,651 in 2010, according to a filing. That’s 2.4 percent less than New York-based JPMorgan’s 2009 average.

Investment Banking Fees

Citigroup reported a $10.6 billion profit for 2010. Revenue from fixed-income trading tumbled 34 percent from a year earlier to $14.1 billion. Fees from investment banking, which includes advising on mergers and acquisitions as well as managing equity and debt offerings, fell 20 percent to $3.83 billion. The lender’s shares have gained 1.9 percent this year to $4.82.

The bank’s 15 top executives, excluding Pandit, will share in almost $50 million worth of stock bonuses for 2010, according to disclosures made Jan. 20. Six of the executives, including Chief Operating Officer John Havens and consumer banking chief Manuel Medina-Mora, also had “stock salary” last year worth more than $37 million on an annualized basis.

Pandit took a $1 annual salary in 2009 and 2010, and declined a bonus last year. The bank increased his 2011 base salary to $1.75 million on Jan. 21.

To contact the reporter on this story: Donal Griffin in New York at Dgriffin10@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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