Citigroup to Pay $579M To Employee Under KEPSPs
Northern, WI 03/05/2013 (gdpinsider) – Despite receiving loads of critique from the shareholders Citigroup Inc (NYSE:C) is all geared to disburse the profit share to its key executives under the KEPSP (key executive profit share plan) for the FY 2010 to 2012. The said incentive plans failed to receive the shareholder accord in the annual general meeting for 2011 after which the lender is starting to phase out the schemes.
The bank will be paying as much as $579 million in respect of executive’s profit share for the last three years. Other lenders competing at par with the bank do not have any such plans in force currently. Out of the total payment to be made $285 is in respect of profits earned by the bank in 2011 while another $48 million will be paid for 2010 entitlement.
Profit share incentive is in addition to salaries and bonuses granted to key executives. To qualify for 2010 plan the bank units had to earn $17.5 billion in pre tax profits. The plan for year 2011 offered payment of pretax profit’s share to employees if the cumulative profit for the two year exceeded $12 billion.
Employees will receive 2/3rd of the total entitlements by March 15th this year while remaining will be disbursed in the next year.
Paul Hodgson, who is an independent employee compensation analyst, said the plans are “bit of a blunt instrument” because they are not well structured. The linking of pretax income to remuneration means the bank is setting the bar too low and that is not a “good enough” measure of profit.
Citigroup Inc (NYSE:C) shares were up 1.21% and currently trading at $43.46.