Billions have to survive on less than a dollar a day, but in February Citigroup chief executive Vikram Pandit said he would work for $1 salary and no bonus until Citi is profitable again. We presume thatmeans $1 a year. Pandit may not be taking home much pay, but in the current economic climate he is looking good value for that $1 and has little risk of being undercut by possible competitors for his position.
On the plus side, it turns out Pandit was awarded $10.82m in total compensation for 2008, so no worries about the Pandit family bank balance for a while even if it is earning a lousy rate of interest. I have no idea what Citi pays on its checking accounts, but if Vikram wants to spend last years pay on a Citi 12 month CD, that will earn him $267, 254, which should keep the wolves from the door of his Manhatten apartment.
And it has to be said that the $10.82m looks pretty nifty when we remember that in 2008 Citi's share price fell through the floor and the US government paid in $45bn to bail out the group.
No doubt Pandit was pleased to announce that Citi has been profitable since the beginning of the year, and so he should. That extra $45 billion in Tier 1 capital would support the best part of $1 trillion in finance, and with credit spreads at an all time high, any fool with capital can make money in corporate lending in this market. Pandit should be looking to net at least 100 bp on any new business after all overheads, which means the government equity has pushed up his bottom line by about $10 billion.
If that doesn't earn Mr Pandit the largest percentage pay rise in corporate history in 2010, then... he will have been worth every penny of the $1 he takes home this year.