Citi’s Michael Klein Gets $5.5 Million Retention Bonus on Departing

By Reuters Staff
March 26, 2009

Does Citigroup’s tone-deafness know no bounds? Last week it was the $10 million office renovation; this week, it’s retention bonuses paid, AIG-style, even to people who are leaving:

Mr. Klein, who headed Citigroup’s investment banking operations, was given a retention package in cash and stock worth $19.3 million. Even though he announced his departure a few months later, the board nonetheless paid him his full $5.5 million cash bonus in connection with that award. That was on top of nearly $28.8 million in two other cash payouts — one due on March 31, the other in October — for agreeing not to work for several Citigroup rivals.

Why do boards suddenly go all squishy when employees leave? They forgive loans; they throw in $5.5 million "retention bonuses"; they generally act as though the departing employee has them over a barrel. It’s very weird — and, in this case, it’s bound to come back to haunt them.

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