Fresh on the heels of public outrage over AIG retention payments and Merrill Lynch bonuses, Citigroup is set to be the next financial behemoth to take the heat.
The financial services giant, which will soon be partially owned by the U.S. government, has been asking for Treasury Department approval to pay out special bonuses to employees, reports the Wall Street Journal.
The request comes as Citigroup is grappling with broad government pay restrictions that could break apart its legendary energy-trading unit. People at that unit, Phibro, are threatening to leave because of pay caps tied to the U.S. bailout of Citigroup. Phibro has been the source of hundreds of millions of dollars in profits for the bank, and has paid out hefty compensation to its employees, including a roughly $100 million windfall last year for the unit's leader, Andrew Hall.
Citigroup CEO Vikram Pandit met with Treasury Secretary Tim Geithner in early April to push the bonuses, reports the Journal,
The payments could take several different forms, reports Reuters:
In one plan the bonus would be largely stock that vests over some three years and be worth at least half the employee's cumulative pay over the last three years, the paper reported.
Financial blogger Henry Blodget understands why employees at the unit, which actually makes money for Citi, might have a desire to jump shift and work elsewhere, necessitating retention payments.
And we don't blame them. Why on earth would you work for Citi for chicken feed when, say, Deutsche Bank is happy to pay you $100 million a year?
Citi, meanwhile, doesn't want to see its Phibro prize walk across the street, so it's begging Tim Geithner to let it pay everyone a massive special bonus totalling 50% of their cumulative compensation for the past three years. (That would presumably be $75-$100 million for Hall, paid in stock that vests over three years).