So: Citi is under contract to pay five former senior executives millions in severance payouts, but what it’s decided to do instead is not make those payments. Despite promising Michael Klein, who was the co-head of IB, Kevin Kessinger, who manned operations and technology, and a bunch of other most likely now irate boys $100 million or so (half of which has already been paid out), the Big C has chosen to inform the group that it shouldn’t count on the remainder of the cash money. Supposedly it’s out of fear of AIG-style backlash, which, sure, we buy. Nobody wants to be compared to AIG, on either side (Citi preferring to not be the ones throwing money out the window during these troubled times, and the execs hoping to avoid being on the receiving end of death threats for taking the cash).
What we’re not falling for is the notion that the bank doesn’t want to dole out the bonuses, and isn’t in fact encouraging the former employees to put baby Vikram in a corner via lawsuit. This is the best scenario for Pandidto and Friends– they come off as responsible stewards of shareholder value, as people who put their foot down and say “enough is enough” (and not as people who would even consider spending millions on a Zen garden), but still get to reward the former Citi dwellers handsomely, if/when they’re backed against a wall. It’s actually the sort of genius we wouldn’t have expected from the upper echelons of Citi management but are extremely pleased to see. They’re learning (or have a GS-consultant on staff).
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
instead of defaulting on our account holders we default on our employees – if that isn’t customer focus…
Contracts are so 2008.
Capitalism is founded on property rights and and contracts. The govt has no right to break standing contracts simply because they take an ownership stake. This should be fought all the way to the Supreme Court and all you fucking commy, pinko, socialist, democratic, freeloading, ignorant, 4-flushing, knob slobbering, low 40′s IQ, subway seat fart sniffing, needle dicked, wooden toothed, cockeyed, sister banging, vacuous, cock nosed, maloderous perverts who think otherwise should be castrated and sterlizied to prevent any further contamination of the gene pool.
@3- did you read the article? “Government officials didn’t demand that the bank end its payouts, according to a person familiar with the discussions.”
But contracts are sacred!!!!
~Bonehead AIG Trader
Golden Parachutes are so 2008. Cement shoes are where it’s at.
Citi loves the MAC clause. Didn’t know they put them in employment contracts.
Excellent analysis Bess. I hope EP didn’t read this article and jump out the window before you had a chance to explain it to her.
@8- huh?
Reeeeeally? Hey Pandit/Havens/Leach…how about clawing back your lousy ass Old Lane hedge fund proceeds. You know….the cool $800 million you boys were paid for something with a negative NPV to Citi? Ah, didn’t think so.