Citigroup CEO Jane Fraser’s pay soars

Citigroup has significantly boosted CEO Jane Fraser’s 2024 compensation to US$34.5 million, marking a 33% increase from the previous year.

The package comprises a $1.5 million base salary, a $4.95 million cash incentive, and the remainder in deferred stock incentives.

The raise reflects the board’s confidence in Fraser’s leadership as she steers the financial giant through a complex restructuring and performance-driven transformation.

Performance metrics justifying the pay rise

Under Fraser’s stewardship, Citigroup reported a 3% year-over-year revenue growth and a 37% surge in net income. The board cited these financial gains and peer benchmarking as key factors behind her pay adjustment.

Citigroup, however, remains under regulatory scrutiny, having closed a 2013 consent order related to money laundering while still addressing prior risk and data management shortcomings.

In 2020, the bank was fined $400 million for regulatory failures, and in July 2024, it incurred another $136 million penalty for insufficient remediation efforts.

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Outpacing rivals in market performance

Despite regulatory hurdles, Citigroup stock outperformed peers, climbing approximately 20% in 2024, following a 37% surge the previous year.

Investors responded optimistically to interest rate trends and shifting economic policies under the new US administration.

This market confidence underscores the impact of Fraser’s restructuring strategy, which involved streamlining Citigroup into five core divisions: services, banking, markets, wealth, and U.S. personal banking.

These segments collectively generated $81.1 billion in revenue, marking a steady 3% increase.

CEO compensation across Wall Street

Fraser’s pay hike aligns with broader trends among Wall Street’s banking elite. Goldman Sachs’ CEO David Solomon and JPMorgan Chase’s Jamie Dimon each took home $39 million, leading the compensation charts.

Bank of America’s Brian Moynihan followed with $35 million, while Morgan Stanley’s Ted Pick, in his first year as CEO, received $34 million.

Wells Fargo’s Charles Scharf received the lowest payout at $31.2 million as he continues a prolonged turnaround effort to rebuild trust after past scandals.

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Structure of Fraser’s compensation package

Like her counterparts, Fraser’s earnings are heavily stock-based, aligning her incentives with shareholder returns. Her base salary remains unchanged at $1.5 million, supplemented by a $4.95 million cash bonus.

The bulk of her compensation – $11.55 million – is deferred stock that vests over four years, contingent on meeting performance targets.

The remaining portion consists of performance share units tied to Citigroup’s return on tangible common equity (ROTCE), a key measure of profitability.

Fraser’s tenure has been defined by ambitious restructuring, but Citigroup faces lingering challenges.

While the bank has made strides in operational efficiency and regulatory compliance, it has scaled back its long-term profitability targets.

In January, Citigroup revised its ROTCE expectations to a range of 10%-11%, down from its prior goal of 11%-12%.

With Fraser at the helm of Citigroup’s transformation, her compensation reflects both the complexity of the task and the bank’s belief in her strategic vision.

A crucial test of her leadership in the years ahead, however, is whether she can fully deliver on the bank’s turnaround plan while navigating regulatory headwinds.

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