Citigroup is not alone. But it has become a primal example of our vaunted system of American capitalism, once a meritocracy open to all, that has now been diminished, if not erased, into a cesspool of self dealing and outright unfairness. In May of this year, Vikram Pandit received a retention award that could reach a pay package of $42 million ("Pandit May Get a $42 Million Retention Award If Citigroup Meets Estimates" Bloomberg 05.19.11 ), which would make him one of the highest paid banking executives in a field littered with banking institutions who would not exist today were it not for bailouts, TARP programs, and so on, paid for and at the risk of the threadbare pockets of the federal government (for those who have forgotten or believe stratospheric compensation falls in line with the responsibilities at hand, please recall the President of the United States earns a $400,000 annual salary, along with a $50,000 annual expense account, a $100,000 nontaxable travel account and $19,000 for entertainment). Of these, Citigroup has led the pack with $45 billion alone of government succor, reimbursed in whole or in part to the nation's Treasury, but without the government's largesse and assumption of enormous risk at a critical moment, Citigroup and many of the other institutions would have gone under.
Vikram Pandit's payout will be spread over four years and is subject to meeting certain performance goals. And how do these benighted executives achieve these dollar and cent performance goals? Well, that's just the rub. The New York Times has just reported "Citigroup to lay Off 4500 Over Coming Months." Well, it's the new American way. You get paid more for hiring fewer people (and Pandit is not alone here), or putting those already employed on the unemployment roles.
Wall Street banks in general are laying off more and more people given the headwinds of the financial sector. But that is the point. How many of the laid off could have been kept on the payroll with just a portion of Pandit's paycheck? And for society to countenance an ethos where the more people you lay off, the more you get paid, is madness.
And this not the first time at Citigroup or with Vikram Pandit. In 2007/2008 just before becoming a tin cup institution, Vikram Pandit, after just six weeks on the job, was awarded $26.7 million stock bonus and 3 million in stock options while almost concurrently announcing that Citigroup's work force would be cut by 4200 employees (please see "Citigroup's Self -Immolation And The Beginning of the Eclipse of American Style Capitalism" 01.28.08) from which the following is quoted hereby:
While all these 'executives' (i.e. Pandit together with past Chairman Chuck Prince and eminence grise board member Robert Rubin) were wallowing in gravy, Citigroup had the effrontery to announce almost simultaneously that it was cutting 4200 jobs! 4200 jobs lost, 4200 families in distress. Shameless is hardly too strong an adjective. By proceeding with such unfairness, in such a one sided callous manner, Citigroup has become the poster child of so much that is wrong, and much of what is happening throughout corporate America.
And that was in January 2008, before the meltdown in September that same year, and before it took $45 billion in government funds to bail out Citigroup alone. This, only to revisit much of the same distortions near four years later.
A transliteration from a popular French proverb "Plus ça change, plus c'est la même chose" would not be out of place. "The more it changes, the more it stays the same."
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