After spending years as one of Wall Street's lowest paid chief executives, Vikram S Pandit received a $23.2 million retention package that could catapult him to the top of the list.
Pandit earned a token annual salary of $1 as he steered Citigroup back into the black over the last two years. But on Wednesday, Citi's board awarded him $16.5 million in stock and options as well as a cash payment valued at more than $6.7 million as part of a special profit-sharing program for top executives.
The payouts will be spread over the next four years and are subject to Pandit's meeting certain performance goals. They will be in addition to his regular salary and annual bonuses.
The announcement comes as Citigroup recently posted its fifth consecutive quarterly profit and completed a reverse stock split that, with the stroke of a pen, ratcheted its share price to more than $40 from $4.
Just three years ago, Citigroup was in such dire straits that it twice needed to be rescued by the government. With the bank receiving more than $45 billion of federal aid, questions swirled about whether Pandit would remain at the helm. The large retention award seems to put those questions to rest.
"Vikram has done an outstanding job since coming on board as the financial crisis began," said Richard S. Parsons, chairman, Citigroup. "This award is designed to retain Vikram as our CEO and reward him for future performance benefiting the company and our shareholders."
The retention package also could signify the unofficial end of the post-bailout pay era.
Most banks made minor adjustments to compensation practices amid the uproar over bonuses, shifting more pay into stock from cash but still awarding hefty sums. Others like Citigroup and Bank of America, which accepted multiple government rescues, needed a federal pay overseer to formally approve the awards for their 25 highest earners. Pandit helped avert even more animosity toward his bankers when he pledged at a 2009 Congressional hearing to accept a mere $1 a year in salary until Citigroup turned a profit.