Citigroup raises salaries to offset lower bonuses

NEW YORK – Citigroup Inc. is increasing the base salaries of many employees – reportedly by as much as 50 percent for some workers – as it restructures their compensation amid government restrictions on bonuses.

The higher salaries are not the equivalent of annual raises because bonuses are being lowered, according to a person familiar with the matter who requested anonymity because the plans have not been made public.

Employee compensation at financial companies, particularly in the form of bonuses, has brought criticism after the government gave the banks hundreds of billions in bailout dollars. Citi and the other companies who still hold bailout funds face limits on bonuses as part of a new government compensation oversight plan. The Treasury Department had no immediate comment about Citi’s change in compensation plans.

The person said the changes would not affect the amount of an employee’s compensation. By shifting the mix in compensation packages, the change could allow Citi to pay most employees as much as they received in 2008 while adhering to bonus caps.

A New York Times report Wednesday said some employees’ salaries will rise by as much as 50 percent because of the change.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee and critic of financial companies’ compensation, said of Citi in a statement, “They just don’t get it.”