) Chief Executive Officer (CEO) Michael Corbat received a 25% pay
hike in his total compensation package, according to
. His annual salary has been increased to $14.4 million in 2013
from $11.5 million, according to a Securities and Exchange
Commission (SEC) filing on Thursday.
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The CEO's pay package includes a base salary of $1.5 million and
78,528 deferred stock awards worth $3.88 million for 2013. He has
also received $5.17 million as cash bonus and $3.88 million of
performance share units. Notably, the deferred stock is valued at
the closing price of Feb 18.
In addition to this, Citigroup's senior executives'
deferred-stock awards were disclosed. Co-President - James
Forese, managing the unit serving institutions, received shares
worth $4.03 million, while head of the consumer operations,
Manuel Medina-Mora was awarded $2.67 million.
Moreover, Chief Financial Officer (CFO) - John Gerspach received
$2.09 million of shares and franchise risk and strategy manager
got $2.54 million. However, these stock awards are vested over
four years, which are revocable if the company reports losses.
Among other banking giants,
JPMorgan Chase & Co.
) chief Jamie Dimon has received a 74% hike in pay, which totaled
$20 million in 2013, while
) chief James Gorman has been conferred with stock bonus of $4.9
million in 2013, up 88% year over year. Moreover,
Bank of America Corp.
) has rewarded its CEO, Brian Moynihan with a pay raise of 17% to
$14 million in 2013.
As per the new pay plan adopted in Feb 2013, Corbat has received
40% incentive awards in cash, while the remaining pay is split
between deferred stock and the performance share units (PSUs).
Moreover, 70% of the pay package is dependent on financial
metrics while 30% is based on strategic goals. Notably, value of
the CEO's compensation can vary in shareholder proxy, depending
on the pricing of stock awards.
The pay hike of executives at Citigroup came on the back of
certain factors, including the company's financial performance in
2013. The company's net income climbed 85% to $13.9 billion in
2013. Moreover, the company reported revenues of $76.4 billion,
up 10% year over year.
Notably, in the stress test results for 2013 Citigroup emerged
triumphant. The company has not only managed to clear stress test
but has outperformed other major banks. In its 2013 capital plan,
Citigroup received approval for $1.2 billion worth of share
repurchases through the first quarter of 2014.
All these have caused investors to become more confident about
Citigroup's growth prospects. Notably, the company's share price
rose nearly 26.4% in 2013 following a 39.8% increase in 2012.
Corbat has also been adept in strategically evaluating the
various facets of Citigroup's major businesses. Besides
announcing numerous cost cutting initiatives and divestment of
non-core units, the CEO has handled several legal settlements.
We believe Corbat's pay hike will prove to be a major morale
booster. Even though Citigroup's fundamentals remain highly
promising with a diverse business model and a strong balance
sheet, regulatory issues, including lawsuits and the fundamental
pressures on the banking sector are anticipated to pose as
headwinds to profitability.
Citigroup currently carries a Zacks Rank #5 (Strong Sell).