Citigroup chief executive, Jane Fraser, has defended a bonus programme for senior executives after it came under fire from a prominent banking analyst for lacking clarity on targets.
The US bank laid out plans for a bonus of up to $5m each for key executives including its institutional client group chief, Paco Ybarra, if the bank stock price hits targets and they successfully carry out a “transformation” of its risk and control functions. But specific targets were not outlined.
Mike Mayo, a banking analyst at Wells Fargo and a long-time critic of Citigroup’s performance relative to its Wall Street peers, said the new bonus scheme was like “charging us for dinner before we know if we’re getting hot dogs or caviar”, Bloomberg reported on 12 October.
In response to a question from Mayo during the bank’s third quarter earnings call, Fraser said that she was holding senior leaders accountable for the transformation’s success.
“I’m certainly driving this programme with urgency,” she said. “And I also need to retain key talent because it’s a pretty tight talent market right now. To hold people accountable and drive the outcomes, we need both carrots and we need sticks.”
Mark Mason, Citigroup’s chief financial officer, and and enterprise operations and technology head Mike Whitaker are other potential beneficiaries of the new programme, but Fraser is not.
“The main message for me there will be consequences if we fall short of what is expected,” said Fraser.
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