Citigroup CEO Vikram Pandit just got a compensation deal
that could be worth as much as $42 million. All he has to do is meet
low-ball profit numbers for the next two years.
Now, pre-tax income for 2011 and 2012 could total nearly $47 billion. At
that rate, Pandit’s compensation is literally a drop in the bucket.
But Pandit also presided over $29 billion in losses from bad mortgage
deals. And that figure doesn’t include shareholder losses from a devastated
stock price and canceled dividends.
Even now, Citi is only allowed to pay shareholders a measly 1 penny
dividend. A penny!
I will also remind readers that the majority of current earnings are coming
from loan loss reserves being brought back to the positive column of the
balance sheet. That may make the numbers look better, but it also has the
potential to backfire if Citi suffers more asset price impairment.
As far as Citi goes, there’s no real way to know what kind of risk the bank
is still sitting on. Changes in accounting rules have allowed the bank to
reclassify assets that might otherwise be considered toxic.
It’s not like that at the banks that avoided the kind of reckless investing
that led to the financial crisis. In fact, there’s one bank that never took
a dime of bailout money, and it’s rewarding its shareholders with a +8%
If you’re ready for reliable profits from a finance institution, then
please read on for details…