Citigroup has significantly increased Chief Executive Jane Fraser’s compensation, awarding her $42 million for , a move signaling strong confidence in her leadership as the bank continues a sweeping restructuring. The substantial raise, representing a nearly 25% increase from her pay of $34.5 million, places her among the highest-paid executives in the banking sector.
The compensation package, detailed in a regulatory filing on Thursday, comprises a $1.5 million base salary and a $40.5 million bonus. This follows a award of a $25 million retention bonus designed to vest over five years, further cementing the bank’s commitment to Fraser’s long-term vision.
The increase positions Fraser close to the top echelon of Wall Street leadership. She is now just $1 million shy of JPMorgan Chase’s Jamie Dimon, who received $43 million in . This reflects a notable shift in Fraser’s standing, having previously earned less than her peers at institutions like Wells Fargo and Morgan Stanley.
Citigroup’s decision to bolster Fraser’s pay comes as the bank nears the completion of a large-scale overhaul aimed at simplifying operations and improving profitability. The restructuring, announced in , is projected to result in approximately 20,000 job cuts by year-end. Despite the difficult decisions inherent in such a transformation, the bank’s stock has experienced a rally over the past year, reaching levels not seen since the financial crisis.
The timing of the pay increase is particularly noteworthy. In , Fraser received a 6% pay bump to $26 million, even as Citigroup reported a 38% decline in profits. The board justified the increase at that time, citing their belief in the soundness of Fraser’s strategic priorities and her prompt, thoughtful execution of the restructuring plan. However, the increase demonstrates a more substantial endorsement of her progress.
The announcement also highlights a broader trend of rising executive compensation within the financial industry. In , all CEOs of the six largest U.S. Systemically important financial institutions (SIFIs) earned over $30 million. Fraser’s 32.7% pay increase in was among the highest of her peers, exceeding the increases seen by leaders at Goldman Sachs (25.8%), JPMorgan Chase (8.3%), and Bank of America (21%). Only Ted Pick, the new CEO of Morgan Stanley, potentially saw a larger percentage increase, though his compensation was complicated by a one-time bonus received upon his appointment.
Citigroup’s exit from its Mexican consumer banking business is a key component of Fraser’s restructuring efforts. The bank is also heavily investing in technology modernization, aiming to streamline operations and enhance its competitive position. These initiatives are intended to drive long-term sustainable growth and improved returns, justifying the board’s confidence in Fraser’s leadership.
The substantial pay increase for Fraser underscores the high stakes associated with the ongoing revamp of Citigroup. Investors are closely watching the bank’s progress, and the board’s decision to reward Fraser with a significant raise signals their belief that she is successfully navigating a complex and challenging transformation. The bank’s performance in the coming quarters will be crucial in validating this confidence and demonstrating the long-term benefits of the restructuring plan.
While the restructuring involves significant job losses, the bank’s focus on streamlining operations and investing in technology suggests a long-term strategy aimed at improving efficiency and profitability. The rally in Citigroup’s stock price, outperforming its peers with a nearly 8% gain so far this year, provides early evidence that the market is responding positively to Fraser’s leadership and the bank’s strategic direction.
