What happened?
Citigroup (C +1.77%) is reaching a bit deeper into its vault this year to compensate its CEO Michael Corbat for his performance in 2015. In a filing with the Securities and Exchange Commission, the bank revealed that it will award Corbat $16.5 million, 27% higher than the pay package he was granted for 2014.
Of that total, "only" $1.5 million is base salary -- the same level as the previous year. The remainder is variable compensation, the bulk of which will be company stock.
In the filing, the banking giant wrote that its decision to lift its chief's pay package was based on "Citi's solid operating performance in 2015 and progress toward Citi's financial targets and the execution priorities Mr. Corbat has established."
Does it matter?
Neither the total amount of the package nor the size of the raise is out of line with current standards in big banking.
JPMorgan Chase awarded CEO Jamie Dimon a total of $27 million for 2015, a 35% raise over the previous year. Meanwhile, Bank of America CEO Brian Moynihan is getting a 23% bump with a package worth $16 million.
Citigroup faces many of the headwinds that JPMorgan Chase and Bank of America do at the moment, but it also has unique challenges. To mention but one, it has a big global presence, with a great many units around the world. Not only does this make it a tough beast to wrangle but it also exposes the bank to sluggish economies abroad and a higher degree of currency risk. It's not doing a bad job of coping with these, so stockholders shouldn't be too upset that Corbat's getting some more frosting for his efforts.
Meanwhile, Citigroup investors are more concerned with the bank's continued recovery from the financial crisis (it still has not fully climbed back to its old share price). So, as with JPMorgan Chase and Bank of America when their 2015 CEO pay envelopes were revealed, we shouldn't expect too much impact on Citigroup stock from the news of Corbat's new compensation.
