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Citigroup Former IT Chief Won't Get Millions He Was Promised
Citigroup former head of technology and operations Kevin Kessinger is one of five former Citi top-level executives who were promised severance packages totaling $100 million but will receive only about $50 million because of the company's concern over "a public backlash," the <i>Wall Street Journal</i> reports. Question: does Citi have a contractual right to make such a move?
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Citigroup former head of technology and operations Kevin Kessinger is one of five former Citi top-level executives who were promised severance packages totaling $100 million but will receive only about $50 million because of the company's concern over "a public backlash," the Wall Street Journal reports. Question: does Citi have a contractual right to make such a move?Kessinger received a "lucrative" severance package when he left Citi last year, "including periodic cash payments," the Journal says. And while Citi was paying out a total of about $50 million to the five former executives including Kessinger, it was taking in $50 billion from the U.S. government to help stabilize it during the financial crisis of the past 9 months.
So, to the question above, Citigroup is apparently contractually bound to comply with the terms of the severance agreements and it is possible or even probable that a court would find it must pay Kessinger and the other four former executives the remaining $50 million it owes them. But in these days of massive governmental involvement and even ownership in (formerly) private industry, such things as contracts mean a lot less than they used to - just ask Chrysler's bond-holders. Or Kevin Kessinger.
But company officials recently decided not to proceed with the remaining payments, concluding that they wanted to avoid even the possibility of a public backlash over the money, people familiar with the situation said.
Fresh in the minds of Citigroup executives was this spring's ire over American International Group Inc.'s retention bonuses to employees in its financial-products division.
But here's the real kicker:
But bank officials essentially are wagering that the former executives will conclude that it would be publicly embarrassing for them to file lawsuits against the struggling, taxpayer-backed company seeking the money. Reneging on the severance agreements is the latest example of the unusual steps being taken by banks, securities firms and other financial institutions to avoid uncomfortable scrutiny of their spending habits.
So - and I realize this is a stretch - perhaps this can serve as an insightful lesson for how CIOs can do more (and I mean a LOT more) with less. Here's the plan: 1. Arrange for your company to take a loan from the federal government. Sure, you'll feel like a stiff for a while, but you'll get over it. The way things are going, pretty soon you can say, "What's the problem? Everybody does it!" 2. Once that happens and you're a member of the new protected class to which the rigors of contract law no longer apply, call up all your IT vendors and say, "Contract, schmontract! I know our deal says I owe you $10 million for the year, but I'm government-subsidized now so how's about we knock the zero off that 10 and make it $1 million?" 3. If they push back, threaten them with your Big Gun: public backlash! 4. MAJOR EXCEPTION: Don't try this with any IT vendors that have also got their snouts stuffed in the public trough -- instead, use this apparent stalemate to go back to the federal government for more money for both of you.
Kevin Kessinger, if you're out there, we'd love to hear your side of this story.
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