Will Citi bailout end fancy pay?

Citigroup's top executives could forego some of their compensation as a condition of the bank’s bailout, but that may not satisfy critics who want firm limits on the earnings of leaders at companies getting government help. Citigroup, the latest financial institution lining up for federal help to shore up its finances, must submit an executive pay plan for government approval as part of its rescue. The plan should focus on rewarding long-term performance and contain “appropriate limitations,” the bailout agreement says.

A Citigroup spokesperson, Stephen Cohen, said on Monday that details of the pay plan were being worked out, and that no deadline for its submission has yet been announced. He declined to comment on which executives from the bank, which is getting $20 billion in new capital and an agreement from the government to shoulder the bulk of potential losses from $306 billion of toxic assets, would be subject to the pay rules.

Government officials have said more details on the compensation arrangement would be available next week. Citigroup’s chief financial officer, Gary Crittenden, said on CNBC television on Monday that the pay plan would affect 2008 compensation for some executives but offered few other details besides saying, “I know it will be done the right way.”

Source: Reuters