The new chief of human resources at Citigroup, in one of his first official duties since ascending to the position last week, announced in an internal memo Monday, December 1, that the firm would eliminate certain forms of severance pay for U.S. workers.
The memo, sent to U.S. employees by HR head Paul McKinnon, who replaced 30-year company veteran John Donnelly last week, said Citigroup would no longer provide additional weeks of base pay beyond its standard severance formula to employees who have 10 or more years of service.
Citigroup has been among the hardest hit by the financial meltdown this year. The company announced in November that it would lay off 52,000 employees and said it wants to reduce employee compensation by 25 percent, though Citigroup spokeswoman Shannon Bell wouldn’t say whether the new guidelines were part of that effort.
Citigroup has posted more than $20 billion in net losses in the past year.
Last week, Citi received assurance from the federal government that it would guarantee protection against $306 billion worth of bad assets, in addition to $20 billion in bailout money from the government’s Troubled Asset Relief Program. The latest bailout came with not-yet-defined conditions on executive compensation.
It was unclear whether these efforts were related to meeting the government’s conditions.
Bell declined to comment and instead referred to McKinnon’s memo to employees: “As you know, we’ve continued to review our policies and practices to ensure that they support our overall business objectives and remain competitive with industry standards,” McKinnon wrote. “As a result, a decision has been made to amend the Citigroup Separation Pay Plan (SPP) for U.S. employees.”
The new policy will apply to any employee laid off on or after January 15, 2009.
McKinnon also wrote, “The basic severance benefit available to eligible employees—two weeks of base pay for each full 12 months of service to a maximum of 52 weeks of base pay—remains unchanged.”