Lest you think corporate America has become too hard on employees....too unforgiving and impatient......consider its treatment of one Charles Prince. I'm referring to CitiGroup CEO/Chairman Chuck Prince, of course.
In this post, late last month, I discussed CitiGroup's situation vis a vis BofA. Many media pundits were all a-twitter that the latter was about, and apparently did, overtake the former in terms of market value.
However, as I pointed out in that piece, the important measure to observe is consistent total return. In the charts contained in that post, you will see how Prince has steered CitiGroup into a dead-calm pool of a virtually flat, that is to say, zero, total return for his tenure as the firm's CEO and Chairman.
Now, such dismal performance might, you would think, merit dismissal. How many line VPs or SVPs of a major money-center bank would still be in their jobs, if they failed, for three straight years, to achieve their objectives? While their competitors outperformed them?
Not many, I'd wager. But, it's different for CEOs. First, they get paid a lot more, regardless of their inadequate performance for years at a time.
Mr. Prince's FY2005 compensation is detailed here, courtesy of Forbes Magazine. According to Forbes, with confirming information from Reuters, here, Prince was paid roughly $13MM in 'direct,' cash-like compensation last year, and an additional $10MM in various options and longer-term compensation.
Second, CEOs get a lot more time to perform. Prince has been CEO at CitiGroup for three years, and COO for two years prior to that. Word was, after the company's recent analysts meeting this week, that Prince has 'only another year' to 'fix things.'
Wow, that's pressure, eh? Only four years, at something north of $13MM cash compensation per year, to mismanage one of the nation's largest banks.
Where does the line form to replace him, come next January?
The way I figure it, with Prince's lack of operating background, and four-year record of failure, the requirements for the job should be pretty minimal. Nearly anyone, apparently, can satisfy Citi's board as competent to lead the banking firm.
Wouldn't you volunteer to risk your career in order to get a shot at $50-100MM in total compensation over four years, knowing termination after year four is the penalty?
Life at the top is tough, friends.....very, very tough indeed.
NOT!
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