Citi paying departing Klein $42.6 million

NEW YORK (Reuters) - Citigroup Inc agreed to pay departing executive Michael Klein about $42.6 million, a person familiar with the matter said on Friday.

Klein, a former investment banking head, is receiving roughly as much as the bank awarded Charles Prince, the Citi chairman and chief executive, who retired in November as the bank prepared to post billions of dollars of write-downs.

But Klein's payout comes at a cost: under the agreement, he cannot work for, advise, or solicit clients for 12 major commercial and investment banks through October 4, 2009. He also cannot solicit or hire Citi employees during that period.

Klein cannot solicit clients away from Citigroup, but he can approach Citi clients to invest in alternative asset management businesses, including private equity funds.

Through a spokeswoman, Klein said he hasn't made any decisions about this future plans.

Citi said on Monday that Klein, a 23-year veteran of the firm, who most recently was chairman of its institutional clients group, was leaving. The departure is latest in a management shake-up under Vikram Pandit, who became the bank's chief executive in December.

At least some details of Klein's separation agreement were outlined in a regulatory filing, where Citi said it was paying him $21.3 million in cash on March 31, 2009 and $7.5 million of cash on October 5, 2009.

Klein will also receive a cash payment of $5.5 million on August 1, 2008, in connection with a deferred cash retention award granted in January, the filing said.

Klein will also receive previously awarded options and shares worth about another $8.3 million, a person familiar with the matter said.

He is restricted from: Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs Group Inc, HSBC, JPMorgan Chase & Co, Lazard Ltd, Lehman Brothers Holdings Inc, Merrill Lynch & Co, Morgan Stanley, Royal Bank of Scotland, and UBS.

(Editing by Andre Grenon, Leslie Gevirtz)