Boston: Citigroup on Thursday said it has rewarded CEO Vikram Pandit with an over 16 million dollar 'retention award' for his 'outstanding job' of steering the financial giant to profitability and executing a strategy for sustainable growth.
Pandit has been taking home a token one dollar salary from Citigroup since 2009.
The three-part multi-year retention award will accrue to Pandit if the company meets certain performance goals, New York-based Citigroup said in a filing with to the Securities and Exchange Commission.
"Vikram has done an outstanding job since coming on board as the financial crisis began. Under his leadership, the management team has navigated Citi through the crisis, returned Citi to profitability and is executing a strategy for sustainable growth," the Chairman of Citigroup's board of directors, Richard Parsons, said.
Parsons said the "long-term, multi-year, performance-based structure of this award is designed to retain Vikram as our CEO and reward him for future performance benefiting the company and our shareholders."
The first part of the retention award is deferred stock valued at $10 million. Pandit will receive the stock in three equal installments in December of 2013, 2014 and 2015 only if the company determines that he has satisfied objectives in three areas central to Citi's future success.
These areas are meeting regulatory considerations such as maintaining capital levels, harnessing an organisational culture focused on responsible finance and conducting business with integrity and lastly focusing on talent development such as the quality of succession and development plans across a broad group of senior managers.
The award, approved by the personnel and compensation committee of the board of directors at Citigroup, is designed with an appropriate balance of short, medium and long-term goals with an emphasis on sustainable shareholder value creation and risk management.
Each component of the retention award has performance conditions and the ultimate value that Pandit will receive will depend on the successful execution of strategies.
The second component of the retention award is the 'Key Employee Profit Sharing Plan', under which the India-born CEO will get $6.65 million in cash payments.
Pandit will receive the payments in two installments, based on pre-tax income for 2011 and 2012 combined. However, to be entitled to the $6.65 million payment, the combined income for the two years has to be at least $12 billion.
The initial two-thirds of Pandit's $6.65 million award will be payable on May 17, 2013, and the remaining will be payable a year later.
The third component of the total compensation is 500,000 performance-linked stock options, worth about $6.5 million dollars. These stock options can be exercised in three equal annual installments starting next year and have a 10-year term.
Pandit took over as Citigroup CEO in December, 2007. In the wake of the financial crisis, in which Citi also suffered massive losses, Pandit pledged before the US Congress in February, 2009, that he will take only a token salary of $1 till the financial major returns to sustainable profitability.
He received no bonus or stock awards last year. Citi had received $45 billion in taxpayer aid during the financial crisis.
Citigroup reported net income of $10.6 billion dollars for 2010, the first profitable year for the bank since Pandit took over.