When a megabank dumps its CEO, are they supposed to just give him some cheap watch?
How much should you pay when you hurt a guy's feelings?
There seems to be some uproar over deposed Citigroup CEO walking into the sunset with, well, who knows how many millions of dollars, or maybe tens of millions -- it's so hard to keep track when everywhere you turn there seems to be another, oh, $6-7M tied up in a nice bow. Apparently at Citigroup the stuff is just lying all over the place, waiting for some stray puppy of a CEO to be frog-marched off the premises.
Just to be clear, because I know it's hard to keep track, the $6.7M referred to in the headline below isn't Vikram's salary, or even regular bonus. It's an "incentive award" for . . . well, I'm not quite sure what for -- maybe for taking the company's profits, or maybe just for going away?
Now I know this seems a lot of money to give people you're hustling out the door. And I suppose the normal argument would have to do with the preciousness of Vikram's and John's gifts, and the scarcity of talent capable of doing what they did for their company, or to their company. If aspiring top-level execs couldn't trust that they'd be treated this well when they're booted out -- so the argument goes -- how could they be persuaded to take on those jobs in the first place? And then where would we be? (And don't forget that year when he only made $1 for the entire year. Hey, that's less than I make!)
ThinkProgress / News Report
Monday 12 November 2012
Citigroup CEO Vikram Pandit was pushed out the door of his company in October after overseeing a precipitous decline in his bank's value. Overall, Citigroup lost nearly 90 percent of its stock price during Pandit's tenure. But that won't stop Pandit from walking off with $6.7 million for his last year on the job:
Citigroup said Friday that the former CEO, who resigned last month in a management shakeup, will receive an "incentive award" of $6.7 million for his work at the bank this year. Former president and chief operating officer John Havens, who stepped down along with Pandit, is getting $6.8 million, according to a filing with the Securities and Exchange Commission.The company suffered a profit loss of 88 percent during the third quarter, when Pandit supposedly earned his "incentive award." During his time at Citi, Pandit made some $260 million in total compensation, even accounting for the year he took a $1 salary during the financial crisis.
The two men will also continue collecting deferred cash and stock compensation from last year, awards valued at $8.8 million for Pandit and $8.7 million for Havens.
Several Wall Street heavyweights have recently said that banks need to rethink the sky-high compensation they've been paying (which has helped exacerbate the nation’s income inequality). For instance, Morgan Stanley CEO called the financial industry "overpaid." "There's way too much capacity and compensation is way too high," he said.
This is certainly a persuasive argument, but I have a better one: the moral argument. Does anyone stop to consider how hurtful this whole process of getting the boot has been to Vikram and John? Just think of their kids being taunted on the playground with ruffianly chants of "profit loss of 88 percent during the third quarter, when your dad supposed earned his incentive award." You know how cruel kids can be.
Okay, I don't know if Vikram and John have school-age kiddies, and at this pay grade I'll be damned if I'm going to look it up. Surely you get the idea. Let's say the missus goes to the supermarket to pick up some meatloaf mix, brussels sprouts, and Diet Coke, and everywhere she wheels her cart there are chatty, catty housewives murmuring and pointing. I ask you, is that right?
It's easy to take the "high road" and say these men should be sent packing with a cheap flea-market watch (with at least a new battery installed, one hopes) and maybe an Applebee's gift certificate. But that would be wrong. There's a serious wrong that's been done here. I don't know that an extra $6.7M walking money begins to make it right.