The Chief Financial Officer (CFO) for Citigroup (NYSE:C), John Gerspach, stated unequivocally at a conference on Thursday that employees of the bank were paid competitively in 2009 and could expect to see similar pay in 2010. The statement came at a conference hosted by Credit Suisse, and comes at a time when the banking giant is pleading its case that it must pay large bonuses to retain current employees and remain competitive for new talent.
Gerspach also commented on the subject of employee compensation by noting that the bank is still under the same governmental oversight as many of its competitors. Some banking industry analysts have worried that Citigroup would have trouble attracting new talent if it had constraints on the amount of bonuses it would be able to pay out.
The Citigroup CFO responded to the concerns about the banks ability to pay competitive wages by stating “we’re not fighting with any hands behind our back”. Even though they repaid their $20 billion in TARP money in December 2009, the bank is still participating in the Federal Reserves’ program to review pay practices at major banking institutions in the US. In 2009 the bank was subjected to review of the compensation of its 100 highest paid employees by Kenneth Feinberg, the so called “pay czar” appointed by the Obama Administration.
The US government still owns just over a quarter of the banks outstanding common stock shares, about 7.7 billion shares, purchased for $3.25 per share, which is still below the current market price of $3.17 (opening price on Friday – see Google Finance for a current quote). The government has expressed dismay at the idea of selling the Citigroup shares at a loss and stated in December that it would hold the shares until at least April 2010.
Big banks have repeatedly played the “we’d be unable to attract top talent and retain our most valuable employees” card when attempting to avoid outside oversight on pay issues. What often times fails to get noticed is that the highly compensated brilliant minds employed by these banks are what got them into this mess in the first place. Time will tell if additional oversight helps or hurts banks like Citigroup in their ability to keep and recruit employees.
