Citi to hike base salaries for workers: report
Troubled financial major Citigroup will increase the base salary of its rank-and-file employees by as much as 50 per cent this year to compensate for smaller bonuses, said a media report.
"Citigroup intends to raise workers' base salaries by as much as 50 per cent this year to offset smaller annual bonuses," the The New York Times reported quoting people with direct knowledge of the plan.
The report further said that most Citigroup employees would make as much money as they did in 2008, although some might earn more and others less.
The company, which has received three bailouts from the government, also plans to award millions of new stock options to employees in an effort to retain workers and neutralise a precipitous drop in the value of their stock holdings, it added.
Other financial majors — Morgan Stanley and Bank of America — have made similar changes to their compensation system to try to shift attention away from bonuses and curb excessive risk-taking.
The Citigroup proposals, discussed internally this week, present a crucial test for the Obama administration, which has vowed to rein in runaway compensation at companies that have received large taxpayer-financed bailouts.
The report stated that despite Washington's new role at Citigroup, and public anger over big paydays on Wall Street, administration officials have little power to prevent the company and others in the industry from raising salaries for rank-and-file employees.
According to The New York Times, Kenneth R Feinberg, the administration's new "pay czar," has the authority to set compensation for only the top 100 employees at troubled companies.
The remaining about three lakh employees at Citigroup can be paid as executives see fit, provided any increase does not rank them among the 100 most highly paid workers, it added.
The report said that this week Feinberg held introductory meetings with Citigroup executives and their counterparts at several other companies that have received two federal bailouts.
He would start reviewing pay packages for the 25 highest-paid employees, as well as compensation formulas for the next 75, in the next two months, the report added.