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Two Cheers For The Citigroup Raises

There seems to be a lot of tooth-gnashing about this Times story today, but I don't see how the raises described in the piece are a bad thing (except insofar as it'd be nice if you and I didn't have to pay for them by virtue of our owning a third of Citi):

For some Citigroup investment bankers and traders, the changes could mean salary increases of as much as 50 percent, depending on their position. Legal and risk management employees, as well as those in the credit card and consumer banking units, whose pay is typically skewed toward salary, rather than bonuses, are expected to receive smaller increases.

It may look bad at first glance. But it sounds like we're really just taking the people who got ridiculous bonuses, which created all sorts of perverse incentives for reckless short-term behavior, and shifting some of their compensation toward their base salaries, which should give them a slightly stronger interest in seeing the company survive into the intermediate-term.

If you really want something to get outraged over, compensation-wise, take a look at this choice Jack Welch reflection, courtesy of The Economist (via Felix Salmon):

This columnist once heard Mr Welch tell a chief executives’ boot-camp that the key was to have the compensation committee chaired by someone older and richer than you, who would not be threatened by the idea of your getting rich too. Under no circumstances, he said (the very thought clearly evoking feelings of disgust), should the committee be chaired by “anyone from the public sector or a professor”.

--Noam Scheiber