NEW YORK Citigroup Inc (C.N) has awarded Chief Executive Vikram Pandit a $16.7 million retention bonus, plus stock options -- a far cry from the $1 salary he took during part of the financial crisis.
The deferred compensation package includes $10 million in deferred stock if Pandit meets certain criteria, like maintaining capital levels, developing "an organizational culture focused on responsible finance", and developing talent.
Compensation experts said those targets were difficult to measure and may not provide much immediate benefit to shareholders. "They're soft measures," said Robin Ferracone, the executive chair of the compensation advisory firm Farient Advisors.
She said it was unusual to have the bulk of an executive bonus tied to such "qualitative" goals, instead of to financial performance targets.
The third largest U.S. bank, which needed $45 billion in taxpayer money to survive the financial crisis, said in a regulatory filing on Wednesday the bonus was designed to retain Pandit as CEO.
He took over Citigroup at the end of 2007, as the bank started to recognize massive losses, and barely kept his job.
Pandit vowed in early 2009 to take a token $1 salary until Citigroup returned to sustained profitability.
In addition to the $10 million in deferred stock, Pandit will also be eligible for a cash bonus of approximately $6.65 million if the bank earns at least $12 billion before taxes over 2011 and 2012. It earned $10.6 billion after taxes in 2010 alone -- its first full-year profit since 2007.
Citigroup will also give Pandit 500,000 stock options, which can be exercised in three installments starting next year, and could add another $6.5 million to the package's overall value.
The retention bonus comes on top of Pandit's base salary for 2011 of $1.75 million.
The median household income in the United States is around $50,000.
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Pandit's deferred stock award will vest in three equal, annual installments starting at the end of 2013.
All three parts of the retention bonus are subject to clawbacks, meaning that the bank will not pay or vest any remaining portions of the award if Pandit knowingly provides inaccurate information relating to financial statements or violates any of the bank's risk limits.
And he could receive an even greater payout for 2011. The award disclosed on Wednesday is a long-term retention bonus and does not preclude Citigroup's board from granting Pandit additional compensation for 2011, according to spokeswoman Shannon Bell.
The bank posted its fifth straight quarterly profit in April, but is struggling to grow its revenues amid a volatile trading environment and a shrinking loan book.
Citigroup shares closed down 30 cents, or 0.7 percent, at $41.24 on Wednesday.
(Reporting by Maria Aspan; Editing by Tim Dobbyn)