Citi’s Prince Next For Bumper Pay Off
by Stewart Douglas
Story link: Citi’s Prince Next For Bumper Pay Off
The outgoing chief executive of Citigroup Chuck Prince could be in line for a substantial pay packet, as the latest in a long line of paid-off investment executives in the wake of the sub-prime sector crash of the summer months.
Chuck Prince resigned from his position at the bank last Sunday, after mounting pressures from shareholders and within the industry calling for his dismissal as reflecting of his role in the sub-prime losses sustained by the bank.
The news comes off the back of abysmal third quarter results for the bank which saw writedowns of around $8 billion against devalued sub-prime investment securities, forcing the bank to admit it would continue to make substantial losses in the near future.
However it is thought that Mr Prince will receive a package valued at over £45 million as a result of his resignation from the company, comprising both cash payments, shares and share options in the bank just days after a similar pay-off at rival investment group Merrill Lynch.
Merrill Lynch also lost their executive Stan O’Neal over the sub-prime losses it sustained, seeing a package worth over $161 million offered to the outgoing executive officer at the bank that was likewise forced to publicly admit substantial losses, highlighting poor risk diversification strategies.
The move is the latest example of substantial retirement packages being offered to bosses involved in the sub-prime disaster. However many analysts have criticised the drive to oust top level officials as being too much a short term goal, without regard to correcting the underlying investment problems experienced at the time.
Meanwhile, Chuck Prince’s departure and the subsequent speculation of his pay off deal has led to significant sell-offs of Citigroup stock, which has seen its share price fall consistently for over a week in open trade. It remains to be seen how quickly Citigroup can recover from the embarrassing and difficult situation.
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