Citi bank sneaks bonuses to worthless people!

[Joanne98]

LONDON -- Treasury Secretary Timothy Geithner is set to unveil his much-anticipated guidelines on investment banking pay this week. But he may be too late to influence the free-wheeling pay practices at Citigroup, which has been a big recipient of taxpayer funds worth $45 billion and counting.

In a bid to attract talent, Citigroup ( C - news - people ) has been paying traders in London guaranteed bonuses totaling millions of dollars. Among the lucky recipients are Rachel Lord, an executive in Citi's equities group, and Stefanos Bitzakidis, who is listed on Bloomberg as global head of exotic equity derivatives. The two received a total of roughly $3 million in guaranteed bonuses to join Citigroup from Morgan Stanley this year, says a person familiar with the situation. They are among a number of traders in Citi's equities division who have received guarantees to join the firm in recent months.

Lord and Bitzakidis could not be reached for comment via email and calls to their offices.

Critics say the guarantees paid by Citi underscore the problems with Wall Street pay practices. Many of the traders were hired months ago when the markets weren't as buoyant, raising questions about whether Citi really needed to dangle the bonuses to draw in the talent. Add in the fact that employment on Wall Street has been sliding over the past year, leaving the planet awash with out-of-work traders.

"Paying retention bonuses in the face of unlawfully terminating women who were making money for the company and were highly qualified is completely outrageous," says Douglas Wigdor, a New York attorney who is representing five women suing Citi over their layoffs late last year.

Citi says that its November 2008 reduction in force in its municipal securities division was a continuation of last year's firm-wide restructuring program which was done "fairly and lawfully and was based on legitimate business reasons unrelated to gender.'' It said many of the allegations from the former employees are either "inaccurate or incomplete.''

Still Wigdor says he is surprised by the Citi payments. "In this economy, I would imagine they would be able to recruit talent without having to pay huge bonuses."

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http://www.forbes.com/2009/06/09/geithner-compensation-citigroup-markets-equity-streetwise.html?feed=rss_popstories

[sreid01]

1. Very Unfair

This is absolutely crazy. Hurry up Tim with those guidelines because Wall street is headed nowhere except handing over bailout money to CEO's and executives that don't know anything about turning this economy around. All they want to do is pay each other huge salaries and while they continue to bring down the economy while showing little results. http://www.goarticles.com/cgi-bin/showa.cgi?C=1667108">Pink Laptops

[dkf]

2. Are you kidding? Citi could hire without having to pay bonuses?

For what reason would anyone join Citi? That's so clueless its funny.

Brokers and traders always jump from firm to firm just for the bonuses. For what other reason would they move?

[Coyote_Bandit]

3. Bonuses

are a standard practice in this industry.

The practice should be prohibited throughout the industry. But nobody wants to talk about that. They just want to criticize the practice at some companies.....

Right now, paying those bonuses is the only way the company can attract and keep the talent required to compete on the same level as there competitors.

[LiberalFighter]

4. I wouldn't have a problem with bonues or any other compensation.

It is the amount that is wrong. There should be limitations.

Limitations such as salary not more than 30 times the lowest paid full-time worker for companies with 200 or more full-time employees. Not more than 20 times the lowest paid full-time worker for companies with more than 50 but less than 200 full-time employees. Not more than 10 times the lowest paid full-time worker for companies with less than 50 full-time employees.

Bonuses, pensions, severances and other benefits would be based on the same formula as above. If the lowest full-time worker does not receive any of the above than no one can. Bonuses cannot be more than 20% of their salary. Pensions cannot be more than 80% of their average salary over the last 10 years if they worked 30 years. Not more than 70% if they worked 20 years but less than 30. Not more than 60% if they worked 10 years but less than 20. Not more than 50% if they worked less than 10 years.

Oh... and all of their salaries and benefits has to be taxable otherwise they don't get it.

[Coyote_Bandit]

5. I don't disagree with you but

the simple fact is that these kinds of bonuses are standard in this industry.

I'd gladly support a maximum wage law that also limits payments of various kinds of bonuses, pensions, benefits, etc. My personal opinion is that all forms of direct and indirect compensation ought to be fully taxble (including health care) - and the highest paid ought not exceed the lowest paid by mre than a pre-determined ratio.

But until those kinds of reforms are implemented companies have to pay whatever is necessary to secure the talent necessary to compete.

[Wednesdays]

6. K&R

:kick:

[unblock]

7. all i wanna know is where were these guaranteed bonuses when *I* worked for investment banks??

:shrug:

maybe the problem was that i was competent. apparently it's only the incompetents who get the guarantees. at least they're the only ones we hear about.


truth of the matter is, guaranteed bonuses are NOT MERIT-BASED by definition. they're all about expectations, and clearly the people who doled these out were easily conned.