Citigroup changes peer group, jacks up exec compensation

The big paychecks earned by Citigroup CEO Vikram Pandit and the other top executives have generated lots of discussion.

The bank paid Pandit a $5.3 million cash bonus and stock options valued at $7.8 million for his 2011 work. That's in addition to the $1.7 million in salary. There was also a lucrative incentive plan separate from all this.

Recall that for 2010, the CEO took a salary of $1 and no bonus. The high compensation was a reward for returning the bank to profitability, though some noted that the high pay came as shareholders continued to suffer. The stock was down more than 40 percent in 2011.

Crain's New York notes that the board altered its peer group comparison recently for compensation purposes. As previously disclosed in filings, the bank altered its peer group "to reflect Citi's growing focus on consumer and global payment systems."

That meant that for pay purposes, the bank was comparing itself to the likes of America Express and Wells Fargo, which have fared better and thus paid its executives more than the likes of HSBC, to whom the bank no longer compares itself.

"The switcheroo has left some banking and compensation experts shaking their heads." One expert and former Citigroup banker was quoted saying that,  "I'm surprised they're playing musical chairs. A cynic would say executives are manipulating information to make it look like they're getting paid a fair wage."

The cynics will not likely make their voice heard unless progress flags in 2012. It's been a rocky start in some regards, though the failed stress tests was hardly a disaster.

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