Citi's Pandit Is 'Forgoing' His Bonus: Was There an Alternative?

Let me see if I have this straight. Citigroup (C) lost over $10 billion over the first nine months of 2008. The company received not one but two capital infusions from the federal government last year. Plus, the feds had to guarantee over $300 billion in Citi assets to prevent the company from going tapioca altogether.

All of which is to say, Citigroup had the worst year last year a financial institution can reasonably expect to have short of insolvency. And yet the press reports that Vikram Pandit and Win Bischoff will “forgo” their bonuses this year, while Pandit himself tells Citi employees that Bob Rubin “has elected to take no bonus” for 2008.

Forgo? Elected not to take? What pot of money are these people dreaming of that they are now so magnanimously declining to take a scoop from? I’ll grant you, Pandit didn’t have a hand in creating the problems that brought Citi low. (Bischoff and Rubin, not so much.) But Citi lost an enormous amount of money last year. Of course top management won’t get paid. I’m at a loss why Pandit & Co. are acting as if they have any choice in the matter.

Comments

[ResourceWise:]

Tom, you have touched on a very important nuance of the bonus culture. When bonuses become ‘deferred compensation’ instead of ‘profit sharing’ it is easy to understand why there is a sense of entitlement that these gentlemen will ‘forgo’. As you know, in financial services businesses the ‘masters of the universe’ model pays bonuses based on league tables and deal pipelines – neither of which have a direct correlation to profits. It underscores the yawning gap between where we are and where we need to get in reforming practices in the financial services – particularly because of the systemic risk they pose to the well being of society. Maybe ‘forgo’ is a start!

Jan 06 07:18 AM

[Roger Knights:]

Congratulations on spelling "forgo" correctly. ("Forego" means to precede.)

Jan 06 11:07 AM