With a 2021 pay increase of 32% after she became CEO of Citigroup, Jane Fraser is getting an 8% pay increase for 2022 with her 24.5 compensation package. This makes Citigroup an outlier, as the other major US banks have not officially increased the pay for their CEOs. An 8% pay raise is a good start for minimizing the effects of inflation that plagued many across the globe.
It should be noted that former Citigroup CEO Michael Corbat was paid 24.2 million in 2018 (after 6 years as CEO), which is just under 27.5 million in 2022 dollars (using the BLS CPI Calculator). At the time Michael Corbat defended his paycheck on CNBC’s “Squawk on the Street” stating that “I started at our firm in 1983 at $17,000 a year.” For better context, $17,000 in 1983 dollars equated to $52,000 in 2023 dollars. It had the same buying power as $44,500 at the time of his statement in 2019, when his salary was 486 times that of his median employee ($49,766).
Corbat’s point about having CEO salaries as extravagant as they are in order to inspire his lower level employees to be more motivated to work hard and strive for climbing up the corporate ladder, implies that those who made it to the top somehow possess superior qualities or outperformed those that did not. By definition, a pyramid has less room on the top than at its base. The kind of thinking demonstrated by Michael Corbat ignores those who are deliberately placed at stagnant positions where they reliably and efficiently serve the needs of their direct supervisors and managers. There is not much of an incentive for managers to promote someone that makes them look good in front of their own higher ups and risk losing their golden goose (who may later surpass them). Rather, such hardworking, brilliant, and dependable employees may be stuck in their current roles with no avenues for moving up the career ladder. Ignoring corporate politics and other less than ideal realities must be done whenever making such over-simplistic statements regarding as to why CEOs (whether at Citigroup or elsewhere) are entitled to such lavish compensation.
More information about Jane Fraser:
from The World Economic Forum: LINK HERE
from the Council on Foreign Relations: LINK HERE
