Despite the global pandemic and its financial consequences, some companies remain unaffected by the downturn. Citigroup, for example, recently reported a 6% increase in profits at the end of 2020. In light of their success, they have decided to grant CEO Jane Fraser a 4% salary increase this year. While other Wall Street firms are struggling to survive in the current climate, it raises questions as to why Citigroup is able to stand firm and still give their CEO a raise. In this article, we’ll discuss what has allowed Citigroup to stay afloat amid uncertain times and what this means for Fraser’s salary increase going forward.
Citigroup’s recent financial struggles
Citigroup’s recent financial struggles have been well-documented. The company has been embroiled in a series of lawsuits and investigations, and its stock price has suffered as a result. Despite all of this, Citigroup’s CEO Jane Fraser has still seen her salary increase by 7% over the past year.
This raises a lot of questions about Citigroup’s priorities. Is the company really putting its shareholders and customers first? Or is it more concerned with rewarding its executives?
It’s hard to say for sure, but one thing is clear: Citigroup’s recent track record does not inspire confidence.
Jane Fraser’s new salary
Citigroup’s CEO Jane Fraser is getting a raise, even as the bank reported disappointing quarterly results.
Fraser’s base salary will increase to $2 million, up from $1.5 million, according to a regulatory filing on Friday. She will also be eligible for an annual bonus of up to $12 million and long-term incentives worth tens of millions more.
The raise comes as Citigroup reported a drop in quarterly profit and warned that full-year earnings would be below expectations. The bank has been struggling with low interest rates and weak demand for loans.
Still, Fraser has been credited with steering the bank through the pandemic and she is widely seen as a potential successor to current Chairman and CEO Michael Corbat.
Other high-paid CEOs
In spite of the current economic situation, Citigroup has increased its CEO Jane Fraser’s salary. This is not an isolated incident, as other high-paid CEOs have also seen their salaries increase even as their company’s stock prices have tanked.
The median CEO salary at S&P 500 companies was $12 million in 2019, up from $11.7 million in 2018, according to Equilar data. The highest-paid CEO in 2019 was David M. Zaslav of Discovery Inc., who earned $129.4 million.
At a time when many Americans are struggling to make ends meet, it may seem tone-deaf for CEOs to be receiving such large payouts. However, it’s important to remember that these individuals are running large organizations and are often responsible for thousands of employees’ livelihoods.
What do you think? Are CEO salaries justified, or are they simply too high?
Pros and cons of increasing a CEO’s salary
There is no question that Jane Fraser, who became Citigroup’s first female CEO in March 2020, has had a difficult year. She took the helm of the bank just as the Covid-19 pandemic was beginning to upend the economy, and she has been navigating Citi through choppy waters ever since. But despite all of the challenges that Fraser has faced—and will continue to face—in her role, the Citigroup board recently approved a significant salary increase for her.
On one hand, it’s understandable why Fraser would receive a raise after such a trying year. She stepped into her role at a time when many banks were struggling, and she has helped to stabilize Citigroup and keep it profitable. In addition, her base salary is still lower than that of her male peers at other major banks. So in some ways, this raise could be seen as an effort to bring her compensation more in line with her counterparts.
However, there are also some drawbacks to increasing Fraser’s salary at this time. For one thing, it sends a signal to employees that top executives will be rewarded even when the company is facing challenges. This could create resentment among workers who have been asked to make sacrifices during the pandemic (such as taking pay cuts or working from home). In addition, it could further alienate shareholders who are already frustrated with Citigroup’s performance on Wall Street.
Ultimately, whether or not this salary
The role of the board of directors
The board of directors is tasked with overseeing the management of the company and ensuring that it operates in the best interests of shareholders. In addition to approving the appointment of senior executives, the board also sets their compensation.
In Citigroup’s case, the board has come under fire for approving a significant salary increase for CEO Jane Fraser despite the fact that the bank has been struggling in recent years. Critics argue that this is further evidence of a “pay for performance” culture on Wall Street that rewards failure.
Citigroup’s board defended the decision by saying that Fraser had performed well in her first year on the job and that she deserved to be paid commensurate with her experience and accomplishments. They also pointed out that her salary is still below those of her peers at other major banks.
What do you think? Is Citigroup’s board justified in awarding Fraser a significant raise? Or are they out of touch with reality? Let us know in the comments!
What shareholders think
Citigroup’s shareholders are largely pleased with the bank’s decision to increase CEO Jane Fraser’s salary. Many feel that she has done an excellent job in her first year as CEO, navigating the bank through the COVID-19 pandemic and the volatile stock market. They believe that she deserves to be rewarded for her performance.
There are a few dissenting voices, however. Some shareholders feel that increasing Fraser’s salary is unnecessary given the current economic climate. They believe that Citigroup could use that money to help employees who have been affected by the pandemic or to invest in other areas of the business.
Overall, though, most shareholders seem to be supportive of Citigroup’s decision to give Fraser a raise. They believe she is a competent and effective leader who has earned it.
Conclusion
Despite the significant financial struggles faced by Citigroup and its shareholders, CEO Jane Fraser saw a salary increase in 2020. It is evident that this decision was made due to her stellar leadership and commitment to the organization despite unprecedented economic times. While it is easy to criticize such an action, we must also recognize that Fraser’s hard work has paid off in allowing the company to weather tough storms and make progress towards long-term goals. With more executives striving for excellence, perhaps other organizations will be able to follow suit in rewarding premium performance with fair compensation packages even during challenging times.
