Pandit's preposterous pay landslide

Four more years! Four more years!

That's what Citigroup's (C) board was inexplicably chanting this week as it signed up for another term under Vikram Pandit, the CEO whose signal accomplishments include repaying a giant government bailout and executing a reverse stock split that rescued Citi from penny stock purgatory.

Many unhappy returns

That's not much of a record, but Citi is grateful anyway. It signed Pandit to a deal that will hand him more than $20 million in retention payments as long as the bank doesn't blow up.

That's in addition to whatever compensation he'll earn in normal course. The board this year boosted his salary to $1.75 million after a year and change at an outrage-placating $1.

Predictably, Citi painted the awards as having been earned through stellar performance.

"Vikram has done an outstanding job since coming on board as the financial crisis began," chairman Dick Parsons said. "Under his leadership, the management team has navigated Citi through the crisis, returned Citi to profitability and is executing a strategy for sustainable growth."

But Pandit was able to navigate Citi through the crisis mostly because Tim Geithner et al. decided that propping up the banks at all costs would lead to a faster recovery. And while the government made a $12 billion profit on the Citi bailout, it is clear that taking that course had its pluses and minuses.

It's impossible to say for sure what would have happened if the government had taken the likes of Citi to the cleaners, throwing out management and all. But with the banks still shrinking their loan books at a time when unemployment is at 9%, it is hard to make the argument the decision was a winner for taxpayers.

Things sure worked out well for Pandit and his cronies, though. Under the incentive plan Citi adopted this year for its top five executives, the bank stands to hand out $18 million in pay if Citi simply stays on its current profit track, which has so wowed investors that the bank recently resorted to a 1-for-10 reverse stock split.

And he'll get 500,000 stock options, mostly at the recent stock price of $41 and change -- which itself represents a 10% or so decline from this time last month. Citi's selloff may well be overdone, as Deutsche Bank analysts contend in a recent note, but certainly no more so than the weakling bank's top-heavy pay structure.