NEW YORK - Citigroup Inc. Chairman and Chief Executive Officer Sanford I. Weill, the highest-paid Wall Street executive, told directors he'll forgo a bonus because of a 25 percent decline in the company's share price last year.
Weill instead received options to buy 1.5 million shares of Citigroup in addition to his $1 million salary, the bank said yesterday. Last year, he received options to buy 450,000 shares. His 2001 pay totaled $30.3 million, including a cash bonus of $17 million, stock grants worth $8 million and a $1 million salary.
Shares of Citigroup, the world's biggest financial company, slumped in 2002 amid probes into claims of biased research and charges in shareholder lawsuits that the bank helped bankrupt energy trader Enron Corp. hide loans. Citigroup agreed to pay $400 million in a $1.4 billion settlement between regulators and the 10 largest securities firms over the research claims.
"I'm certainly in favor of paying him less," said Christopher M. Bingaman, who helps oversee $120 million, including 9,300 Citigroup shares, at Diamond Hill Capital Management Inc. in Columbus, Ohio.
"It's logical that his compensation for 2002 would decline based on all that happened."
The 69-year-old CEO may be steeling employees at Citigroup's Salomon Smith Barney unit for bad news today, when they are due to learn if they will receive bonuses.
"With the performance of the company last year and the difficulties they have had, from an outsiders' standpoint, there's some appropriateness" to Weill's giving up his bonus, said Marshall Front, who helps manage $1.5 billion, including 1 million Citigroup shares, at Front Barnett Associates in Chicago.
The options would provide a windfall in future years if Citigroup's shares rebound from two years of declines.
They vest, one-third at a time, in July 2004, July 2005 and July 2006.
"It may be less altruistic than it seems because if the stock recovers he can potentially make more on the options than from the bonus," said Paul Hodgson, a specialist in executive compensation at the Corporate Library, a corporate-governance research group.
Citigroup paid Weill $127.8 million in salary, bonus, stock and stock options for 2000. He also exercised stock options valued at $196.2 million.
Securities companies have reduced compensation and fired 68,800 employees during the past two years to cope with a drought in underwriting, mergers and stock trading and the industry's first back-to-back profit decline in at least 12 years, according to the Securities Industry Association.