Home > Compensation, Uncategorized > Citi Ceo paid 27% more in 2015

Citi Ceo paid 27% more in 2015

In an advance to proxy materials to be delivered in March, the bank has announced its decision on its Ceo`pay. Mr. Corbat, has been recognized a right to a total $ 16.5 m, only 1.5 m out of that in fixed salary.

 A total $6m will be inmediately paid as a cash bonus. And an additional 9 million will be deferred, subject to the bank`s clawback and key performance metrics observed in the deferral period. The deferral is a must today in pay decisions for financial institutions, as a measure to curb excesive risk-taking by managers, so that profits today are not rewarded inmediately when decisions are yet to produce good or bad results for a certain period.

 Mr. Corbat will receive 50% of that in stock under a performance-vesting deferred stock awards program.

 The other half will be granted in Performance Share Units, subject to a three-year Relative TSR comparison with a 8 peers group, where the median is used to build the performance grid.

 The bank has been very concious of the need to take into account performance when deciding its Ceo pay. Apart from the fact that deferred payments are performance vesting tools, the big payout in 2015 (and its increase) is the result of certain previously established metrics:

  •  Net income; it has reached $17.2m, the highest since 2006.
  • Return on Assets, where significant progress has been made, according to the disclosure delivered to the SEC.
  • Return on Tangible Equity: Tangible Equity is calculated deducting from its book value certain concepts: goodwill, intangible assets, and preferred equity. All these amounts are deemed not to be useful to compensate losses eventually suffered by a financial entity.
  • The use of part of accrued Tax deferred assets (generated by previous years losses) as a result of a satisfactory Before Taxes Income result.
  • Its efficiency ratio.

 Other measures, such as clawbacks applied to part of the rewards in certain cases, (accounts restatement, etc), are introduced in order to avoid pay connected earnings or other metrics` manipulation.

You can consult the disclosure here (http://www.sec.gov/Archives/edgar/data/831001/000114420416083265/v432203_8k.htm) and also a press comment here (http://www.nytimes.com/2016/02/19/business/dealbook/citigroup-raises-chief-executives-pay-27.html?ref=dealbook).

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