Citi, 16 others overpaid top executives during crisis: Report
Citigroup, Bank of America and 15 other bailed-out financial services companies overpaid their top executives by $ 1.6 billion during the height of the financial crisis, a review by the US government on top executives' compensation has found.world Updated: Jul 25, 2010 18:31 IST
Citigroup, Bank of America and 15 other bailed-out financial services companies overpaid their top executives by $ 1.6 billion during the height of the financial crisis, a review by the US government on top executives' compensation has found.
Kenneth Feinberg, who was appointed last year by the US President, Barack Obama, to oversee the pay policies at the companies that received the greatest government support, began in March his latest inquiry into top executives' compensation from late 2008 to early 2009, a report by Financial Times has said.
While the payments were legal at the time, Feinberg said they would have fallen foul of restrictions the government set for participants in its Troubled Asset Relief Programme (TARP).
According to the publication, Citi topped the list on excessive pay, thanks in large part to the compensation of several star employees at the bank's Phibro commodities trading unit, Citi sold the business to Occidental Petroleum last year.
"Getting our compensation structure right is a priority for us. Since the crisis, we have done a lot of work to make sure it is performance-based and we look forward to reviewing the special master’s recommendations," the report quoted Citi spokesperson as saying.
The other companies cited by the special master were: American Express, American International Group, Boston Private Financial Holdings, Capital One Financial, CIT Group, JP Morgan Chase. M&T Bank, Morgan Stanley, Regions Financial, SunTrust Banks, Bank of New York Mellon, Goldman Sachs, PNC Financial Services Group, US Bancorp and Wells Fargo, the report said.
While Feinberg no longer had the authority to police compensation at those that had paid back the government's investment, he used a "look back" provision in the statute to ask for more information about their pay during a window between the start of the Tarp and when new restrictions on executive pay took effect.
Feinberg reviewed what the 419 companies, that received government assistance before February 2009, had paid their top 25 executives. The institutions were required to submit details on employees who earned more than $ 500,000.
Eleven of the 17 companies cited by the special master have repaid the government for its assistance during the crisis.