$12 mn incentive for top Citi officials!

The new Citigroup plan will start if the banking company earns a pre-tax profit of more than USD 12 billion in 2011 and 2012 — less than the level of its current performance,the report noted. In 2010,Citi earned a profit of USD 13.2 billion before taxes.

The payments will be tied to the performance of Citicorp,the group’s core operations and exclude the earnings or losses recorded by Citi Holdings,the unit that houses non-core assets and businesses to be divested.

John Havens,Citi’s second-in-command below Chief Executive Vikram Pandit,stands to earn at least USD 5.2 million if Citi hits the profit target,while Manuel Medina-Mora,the head of the bank’s consumer unit and Latin America operations,could earn USD 2.7 million,the daily noted.

In addition,Alberto Verme,the Chief Executive of Citi’s operations in Europe,the Middle East and Africa,is in line for a USD 2.3 million pay-out,while John Gerspach,the finance chief,could get USD 1.7 million,it added.

The report further said that the executives will receive two-thirds of the payout in cash in January,2013,with the remaining third deferred by a year.

The report quoted Citi as saying,”The scheme further aligns compensation with the long-term performance of Citi. It balances incentives and risk to align executives’ interests with those of Citi’s stockholders with the goal of (motivating) and retaining Citi’s management team.”

Some corporate governance experts questioned whether USD 12 billion in Citicorp’s pre-tax profits was a high enough bar for the pay-outs.

Many of Citi’s rivals,such as Morgan Stanley,Goldman Sachs and JPMorgan Chase,also tie executive compensation to financial performance.