Dive Brief:
- Citi’s top executives received smaller bonuses in 2024 related to slower-than-expected progress on resolving data, risk and control issues amid the bank’s wide-scale overhaul.
- Sluggish progress in that area affected metrics and resulted in smaller payouts in the last round of a three-year transformation bonus program, Citi said in its proxy filing Tuesday.
- The payout value for the third tranche paid to senior leaders at the bank was 53% of 2024’s target, compared with 80% in 2023 and 94% in 2022. But that 53% figure jumped to 68%, when factoring in the performance of the bank’s shares.
Dive Insight:
“Citi has acknowledged that, despite making good progress in simplifying our firm and remediating the Consent Orders, there were areas where we have not made progress quickly enough, such as in our data quality management related to governance and regulatory reporting,” the bank said in its proxy filing.
That was pointed out last July, when the Office of the Comptroller of the Currency and the Federal Reserve hit the bank with $135.6 million in new fines over insufficient progress toward resolving data quality, risk management and internal control issues identified in 2020.
Citi executives have called the “Transformation” the bank’s top priority. The Citi board’s compensation committee approved the creation of the transformation bonus program in August 2021 “to incentivize effective execution in connection with the Consent Order programs and to drive change in Citi’s risk and control environment and culture,” the proxy filing noted.
Apart from Citi CEO Jane Fraser, all executive management team members when the program was adopted, and about 250 other employees deemed critical to executing on the consent order programs, were eligible to participate.
For the bonus program, performance has been based on “the collective achievement of metrics in various categories, rather than on individual performance, in order to foster a unified, collective focus on achieving key transformation goals and ensure consistent leadership throughout the multiyear effort,” the proxy filing said.
2024’s performance achievement rated 53%, but the performance of the bank’s shares lifted the third tranche’s value to 68%. That was based on a five-day average closing stock price of $83.31 as of Feb. 19, the bank said in the proxy. The starting value for that calculation was $70.37, from a five-day stretch in October 2021.
Performance metrics – the same for the third tranche as they were for the second – include timely execution of specific actions management needed to take, execution quality and culture change, which was based on an employee survey, the filing said.
Fraser is not part of the bonus program. But she received $34.5 million in compensation in 2024 – a 32.7% raise over the $26 million she received in 2023.
Fraser’s pay reflects the compensation committee’s “belief that [her] strategic and other priorities are sound and that she is executing on them promptly and thoughtfully, with an eye toward enhanced safety and soundness, improved returns and laying the foundation for long-term sustainable growth.”
Citi also credited Fraser for her role in helming the 2023 reorganization, which the bank said has “enhanc[ed] … leadership accountability.”
Citi CFO Mark Mason declined to accept his transformation bonus for 2024, Bloomberg reported, citing unnamed sources.
As Citi strives to keep spending under control, Mason said at a conference this month that the bank’s 2025 expenses should be just under $53.8 billion. Citi executives know the bank has to keep investing in the transformation and around data and regulatory reporting, but “we should also be finding efficiencies to fund that,” he said.
