CitiGroup to forgo bonuses... raise pay

[Dredly]

So it looks like they are able to get around the bonus payouts by raising pay rates.

I didn't get a raise this year... primarily due to the loss my company experienced in Germany (Deutch Telecom), they also didn't get 45 BILLION in tax payer funds.

So why the hell should a company that is running on welfare being giving their people raises?

The whole purpose of bonus is an incentive to do well and make the company money, the company then shares the money with the employees... if the company didn't earn money then they shouldn't get bonus.

Raises are long term pay increases to reward individual performance and tenure... they should not be used to dodge laws about bonuses that the company accepted by taking the gov't handout!

http://www.reuters.com/article/GCA-C...55N0KP20090624

Citi to boost employees' base pay by up to 50 percent: report
Wed Jun 24, 2009 8:12am EDT Email | Print | Share | Reprints | Single Page [-] Text [+]

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(Reuters) - Citigroup Inc intends to raise employees' base salaries by as much as 50 percent this year to offset smaller annual bonuses, the New York Times said, citing people with direct knowledge of the plan.

With an eye on retaining employees and neutralizing a drop in the value of their stock holdings, Citi also plans to award millions of new stock options to employees, according to the paper.

Citigroup officials declined to discuss the issue on the record with the New York Times, but told the paper the changes would bring the bank's compensation plan in line with the general Wall Street view that bonuses are a form of deferred salary and not one-time payouts.

In a statement emailed to Reuters, Citigroup said it is continuing to examine ways to ensure its employee compensation practices are competitive.

"Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders," Citigroup said.

"Any salary adjustments are not intended to increase total annual compensation, rather to adjust the balance between fixed and variable compensation," Citigroup said in the statement.

The New York Times added that the Obama administration's new "pay czar" Kenneth Feinberg held introductory meetings this week with Citigroup executives and their counterparts at several other companies that have received federal bailout funds.

Feinberg has the authority to set compensation for only the top 100 employees at troubled companies, according to the paper.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)

[wa3ra]

Just to play devil's advocate for a minute: although the bonuses are too damn high, many contracted employees get an annual salary of a token amount (think $1) and their pay IS their bonus.

[Posit]

In many companies / positions, salary is a token amount; employees are expected to earn via bonuses and commissions. Its a motivational technique - nothing difficult about the concept. Also read today Citi's net compensation costs/payments will be reduced under the revised concept. All well and good, unless the change creates the undesired effect of lower performance --

[Dredly]

Just to play devil's advocate for a minute: although the bonuses are too damn high, many contracted employees get an annual salary of a token amount (think $1) and their pay IS their bonus.

And if your company loses a fortune and takes 45 Billion in gov't bailout funds... should you be getting a raise?

Now I agree, there are some people that should be getting money if their division did well and its in their contract. However generally speaking... no, if the company is on the verge of bankruptcy you don't get bonuses.

You get commisions, you get salary, you get PROMISED bonuses if certain criteria are met. you do not get raises and you do not get company bonuses

[dc dalton]

Little torn on this one.

1. I do know for a fact many account managers and salesman work for minimal salaries and really live off their bonuses.

BUT

2. There really should be some accountability on salaries for companies that did stupid things and then came running for bailout money.

What I REALLY don't get is they said on the TV tonight that ALL employees would be getting the raise ... something is wrong with that

[Halftrack]

All well and good, unless the change creates the undesired effect of lower performance --

heh. Who is John Galt?

[Chuck1981]

I think the important question is (that wasn't asked) why is CITI forgoing the bonuses? It sounds like the plan is for the money they planned on giving in the "bonus program" is now just going to be given in straight pay, no more and no less.

Honestly, seems kinda fishy to me, something does not make sense.

[Halftrack]

I think the important question is (that wasn't asked) why is CITI forgoing the bonuses? It sounds like the plan is for the money they planned on giving in the "bonus program" is now just going to be given in straight pay, no more and no less.

Honestly, seems kinda fishy to me, something does not make sense.

Agree, and I think that's the point. They are barred from giving the bonuses, but they still want to make sure everybody makes the same amount of money they would if given a bonus. It stinks, but that's typical. It's just a way to give the bonus without technically giving a bonus.

They can call it whatever they want, but it's still theft of taxpayer money, given out to the higher level employees.

It's simply better spin and makes them look like "good guys" if the reports say they're not giving out bonuses. It blows me away that a lot of people buy this nonsense without question.

[Posit]

Such cynicism (sigh). Again, the net amount of compensation, including the amount spent on salarys, will be lower than in the past. And OBTW, the rules relating to receiving assistance from the government only apply to top execs; this move affects thousands of employees.

As a "back door" stockholder, I hope the company does well. Then they can repay the loans from the Fed, maybe we even make a little to help reduce the deficit (which is increasing every day).

[Chuck1981]

Well that is really my point. The way the article reads, this pay increase is company wide and isn't just for the top people of the company. Why would the peons of the company (Don't mean any disrespect, but you know what I mean) not be able to attain a bonus at the end of the year, or however the bonus program usually worked, if they preformed their duties well? This isn't an executive pay issue, so why this change also?

Is this being forced onto the company by the government, another occurrence of the law of unintended consequences? Or is this an idea of how better to treat the employees? Give them they're money, they deserve it no matter how well they perform?

That is why this is not making any sense, same as with the AIG bailout and screamfest over bonuses. Yes, AIG should have failed, we all know we're only staving off the inevitable. But if I remember correctly, most of those bonuses went to the peons also? Yes, I know there were a few bad apples, but the problem is your always going to have that in a free and open society. And lets face it, it only became a screamfest in order to look good for the 6 o'clock news.