Despite Layoff Freeze, CEO Salary Raises? ... 'Wall Street Salary Queen'

[Asia Economy Reporter Yujin Cho] Citigroup, a major U.S. bank that has embarked on high-intensity restructuring, raised its CEO's salary by nearly 10% last year. While other major U.S. banks such as Goldman Sachs and Morgan Stanley voluntarily cut their CEOs' salaries by up to 30%, Citigroup alone increased its CEO's pay, drawing criticism.

According to a disclosure submitted by Citigroup to the U.S. Securities and Exchange Commission (SEC) on the 21st (local time), CEO Jane Fraser received a total annual salary of $24.5 million last year, including a base salary of $1.5 million and a bonus of $23 million. This represents an approximately 8.9% increase compared to the $22.5 million she received in her first year in 2021. Citigroup explained the reason for the CEO's salary increase by stating, "Despite macroeconomic and geopolitical challenges, under Fraser's leadership, Citigroup has made solid progress on each priority."

This news of the CEO's salary increase came amid company-wide restructuring due to management difficulties. Citigroup's annual net profit plunged 32% last year. The decline in new mortgage loan volumes due to high interest rates, along with a sharp drop in profits from mergers and acquisitions (M&A) and initial public offerings (IPO), which had driven high earnings, dealt a blow to performance. Bloomberg reported, "The increase in loan loss provisions to prepare for uncertainties caused by the recession further widened the earnings decline."

This salary increase is also unrelated to Wall Street's pay practices, which link compensation to corporate performance and stock prices. Citibank's stock price fell 25% last year, a larger decline than the S&P 500 index's annual drop of 19%.

Citigroup is the only major U.S. bank to raise its CEO's salary amid worsening business conditions. Other major banks have either voluntarily cut or frozen their CEOs' pay. Goldman Sachs CEO David Solomon reduced his salary by 30%, the largest cut. Morgan Stanley CEO James Gorman cut his by 10%, and Bank of America CEO Brian Moynihan cut his by 6.3%. JPMorgan's Jamie Dimon and Wells Fargo's Charlie Scharf kept their salaries at the previous year's level.

Fraser's salary is lower or comparable to competitors such as JPMorgan ($34.5 million), Morgan Stanley ($31.5 million), Goldman Sachs ($25 million), Bank of America ($30 million), and Wells Fargo ($24.5 million), but Fraser is the only female CEO among major U.S. banks.

[Image source=UPI Yonhap News]

On Wall Street, the worst workforce restructuring since the 2008 global financial crisis is ongoing. Major U.S. banks, which rapidly expanded during an unprecedented boom fueled by excess liquidity during the pandemic, have turned to mass layoffs amid concerns over a deepening recession. The New York Post reported, "Over the past two years, explosive capital inflows into the markets for mergers and acquisitions (M&A), initial public offerings (IPO), and special purpose acquisition companies (SPACs) have led major banks to excessively expand their workforce, but they are now reversing course with mass layoffs."