The rich will not get richer off of Citigroup.
The embattled bank has decided not to make good on millions of dollars in severance payments due to five former executives who recently left the company, The Wall Street Journal reports.
The company has already paid out more than half of the nearly $100 million it had promised to the five top executives, but now the company is reneging on the rest of the money because it does not want to incite the same type of public ire aimed at American International Group this Spring.
In March, AIG suffered through damaging public scrutiny because of its decision to pay retention bonuses to many of its top employees from its financial-products division.
Citigroup, which recently accepted $50 billion in government funds, is not denying the severance pay because of any government intervention, a source tells the Journal. The decision was made in-house and the Treasury Department, which will soon own a 34% stake in the company, has been informed of the move.
Though Citigroup is still contractually obligated to pay the severance, bank big-wigs are betting that the former executives would be embarrassed to try and recover the money from a taxpayer-backed company through litigation, especially considering the populist outrage over the current economic crisis.
Citi is not only limiting former executives’ compensation agreements, they’re also limiting future packages as well. The company has barred any executive who left the company after March 31, 2009 from receiving most exit payments.