Interesting to see Bob Rubin giving up his big title, chairman of the executive committee, at Citigroup (C). His new title: senior counselor. Citi contends that Rubin's day-to-day duties, which center on advising the company's board and executives, remain the same and that eliminating the executive committee is just an administrative change to simplify things. The committee's power, which was to act for the board between meetings, now transfers to the board's nominating and governance committee, headed by former Time Warner (TWX) CEO Dick Parsons.
Not to make much ado about nothing, but the change clearly says something about the importance of Rubin, uber-risk counselor and former U.S. Treasury Secretary, in the ever-evolving Citi structure. If you believe that pay indicates clout (and doesn't it usually?), Rubin's clout is waning since the days when Sandy Weill ran Citi, or even since Weill's failed successor, Chuck Prince, was in charge. If you look at Citi's 2007 proxy statement, you'll see that Rubin earned 2006 pay of $17.3 million, second only to then-CEO Prince, who made $26 million. This year's proxy doesn't even list Rubin's pay. It apparently was so low that he didn't even make the lineup of Citi's eight highest-paid executives.
You have to be a detective to figure out Rubin's actual compensation, but thanks to help from my colleague Carol Loomis, we know much of it. Rubin, who turns 70 this Friday, received no bonus last year. He would have been eligible for a bonus under Citi's executive performance plan, but the bank's 2007 performance was so bad that no one got these bonuses.
Rubin also could have received a retention bonus, as other senior managers did. (Michael Klein, chairman of Citi's Institutional Clients Group and a highly-valued dealmaker, received the highest retention award: $19 million in deferred cash and deferred equity. Klein quit in July after 23 years at the company, a sure sign that retention awards don't always work.)
Rubin, as the 2008 proxy explains, chose not to accept a retention bonus: "Mr. Rubin expressed his view to the committee that at this stage in his career and in these circumstances, retention compensation was not necessary for him in this cycle and that such grants were better awarded to others at different stages in their careers at Citi. The committee considered Mr. Rubin's request and did not award Mr. Rubin retention compensation in January 2008." So Rubin's comp was limited, apparently, to $1 million in salary (the salary he'd received in previous years, under his contract) and no doubt a few perks. Say, a limo (but no plane since in 2006, he'd made a deal with Citi to reimburse the company for personal use of the corporate jets).
Good for Rubin for giving up a few million. But doesn't it seem probable that he knew he would be attacked in the press if he got very high pay for 2007? Especially given that, by last November when Prince was out and Rubin reluctantly stepped up to interim chairman, it was clear that writedowns of Citi's collateralized debt obligations (CDOs) and other subprime-related securities would be enormous? Citi's writedowns this year total $33 billion already. New CEO Vikram Pandit is struggling mightily to stem the losses (he's reduced headcount by 16,000 this year), but investors are ever-skeptical. Over the past year, Citigroup has lost more than $100 billion in stock-market value.
Rubin could, of course, follow the long parade of senior Citi execs who have left in recent years -- including Bob Willumstad, who had hoped to be CEO of Citi and is now trying to shore up beleaguered AIG (AIG) instead. If Barack Obama makes it to the White House this November, Rubin could take a post in Washington. But it's hard to imagine him becoming Secretary of the Treasury again, given his disappointing run at Citi.
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