Latest Outrage: Citi Increases Salaries to Circumvent Bonus Restrictions 4 comments
June 25, 2009
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It was divulged today that Citigroup (C), a zombie bank that required massive government bailouts to stay afloat, will be increasing the salaries of select employees by as much as 50% to circumvent the bonus restrictions placed on it when TARP funds were disbursed. What Citi is looking to do is essentially keep their employees at the same pay level as prior years while still adhering to the government's restrictions.
I'm more annoyed at the pols than Citi to be honest. If you're Citi and you're trying to stay afloat and retain employees that are jetting for the "good" houses like Goldman, who can repay TARP funds or hedge funds - both of which pay their employees the going market rate (much higher), wouldn't you do everything within your power to retain them? Since what they're doing is legal, can you blame them?
What I find to be especially outrageous and annoying, is our politicians. First, there were the AIG bonuses and the feigned outrage (like nobody saw that coming). Now, there's Citi. No doubt, by the time you read this, there will be editorials galore and the blogosphere aflame over bigger salaries to the guys at Citi that "wrecked the country". To that, I say, you're right to be annoyed - in my company, if we have a lousy year and don't meet our company objectives - no bonus. However,
As time goes on, people will continue to look back with dismay at our inept politicians with their focus on sound bites and questioning over whether executives fly a jet or drove a plane to a big auto hearing (with continued bailouts down a rathole for GM that I called months ago) instead of taking an introspective look at THEIR role in the loosening of lending standards, lack of oversight, market collapse and then, the generational debt they've burdened our children with. This Citi issue shouldn't even get much press - but I know it will, so I figured I'd get a contrarian view out there before the pundits and pols jump all over those greedy capitalist pigs.
I'm more annoyed at the pols than Citi to be honest. If you're Citi and you're trying to stay afloat and retain employees that are jetting for the "good" houses like Goldman, who can repay TARP funds or hedge funds - both of which pay their employees the going market rate (much higher), wouldn't you do everything within your power to retain them? Since what they're doing is legal, can you blame them?
What I find to be especially outrageous and annoying, is our politicians. First, there were the AIG bonuses and the feigned outrage (like nobody saw that coming). Now, there's Citi. No doubt, by the time you read this, there will be editorials galore and the blogosphere aflame over bigger salaries to the guys at Citi that "wrecked the country". To that, I say, you're right to be annoyed - in my company, if we have a lousy year and don't meet our company objectives - no bonus. However,
Couldn't they have predicted this would happen? If yes, they're disingenuous liars. If no, they're inept. Neither is particular appealing. Neither would surprise me. Are these the same geniuses approving trade deals with other countries and legislation that impacts everyday Americans? These are our best and brightest officials overseeing what kind of obligations the Fed and Treasury are placing on various entities involved in the bailouts? I recall that the day I heard about the bonus restrictions, I joked to myself, "they'll just increase the salaries to maintain par with the market". Any novice saw this coming and yet, today, we have politicians already taking to the pulpit with "outrage".What the heck was the government thinking when they imposed these restrictions?!?
As time goes on, people will continue to look back with dismay at our inept politicians with their focus on sound bites and questioning over whether executives fly a jet or drove a plane to a big auto hearing (with continued bailouts down a rathole for GM that I called months ago) instead of taking an introspective look at THEIR role in the loosening of lending standards, lack of oversight, market collapse and then, the generational debt they've burdened our children with. This Citi issue shouldn't even get much press - but I know it will, so I figured I'd get a contrarian view out there before the pundits and pols jump all over those greedy capitalist pigs.
Disclosure: No position
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This article has 4 comments:
The problem here isn't trying to raise salaries as much as it is when they are trying to raise them, and there is also the question of who is getting a raise.
C is still in dire straits; they don't smell quite so bad now because of accounting rule changes, but they really need to be using their money efficiently elsewhere just to stay in business. Who cares if a few jump ship to competitors, because a competitor can only absorb a finite number of people if they are doing their job properly. New specialty houses, lol, good luck with that. Those willing to work and invest in their own company will get payback enough IF the company survives and their stock regains some value.
As for who gets raises, give everyone 5% (only if the company can afford it). Someone pulling down 200K still gets a lot more out of that than those on the front lines, but the front lines keep the business running and they are the ones having to worry about such trivial things as gas prices and eating.