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Is Citigroup (C) CEO's Pay Cut a Result of Tepid Earnings?

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Citigroup Inc. 's C Chief Executive Officer (CEO), Michael Corbat received about 6.1% pay cut in his total compensation package. His annual salary has been cut to $15.5 million in 2016 from $16.5 million, according to a Securities and Exchange Commission (SEC) filing last week.

The CEO's pay package includes a base salary of $1.5 million, cash bonus of $4.2 million and $9.8 million stock-related incentives for 2016.

The pay cut of the CEO at Citigroup came on the back of certain factors, including the company's financial performance in 2016 in relation to financial targets. The company's net income declined 13% to $14.9 billion in 2016. Moreover, the company reported total revenue of $69.9 billion, down 8% year over year.

Among other banking giants, Bank of America Corp.'s BAC Chairman as well as Chief Executive Officer (CEO) - Brian Moynihan - is expected to receive $20 million as total compensation for 2016, which reflects a rise of over 25% from the pay awarded to him in 2015. Further, JPMorgan Chase & Co.'s JPM Chief Executive, Jamie Dimon, earned $28 million in 2016, up 4%; while Morgan Stanley's MS Chief Executive, James Gorman, got a 7% increase to $22.5 million.

Notably, Citigroup has improved on capital return to shareholders since the financial crisis, investment in core businesses and passed regulatory tests. However, the board committee also "felt it was appropriate to reflect the firm's performance relative to its financial targets," according to the filing of the bank.

All positive factors have caused investors to become optimistic about Citigroup's growth prospects. Notably, the company's share price rose nearly 14.8% in 2016; underperforming the 19.4% growth for the Zacks categorized Banks - Major Regional industry, following a 3.4% decline in 2015.

Even though Citigroup's fundamentals remain highly promising, with a diverse business model and a solid balance sheet; regulatory issues, including lawsuits and fundamental pressures on the banking sector, are anticipated to pose as headwinds to profitability.

Citigroup currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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