Citigroup (NYSE:C) Bankers Bonuses More Liquid Than Thought – Can Sell Common Stock in April

It seems from a recent news report that Citigroup (NYSE:C) has found a way to make their bonuses to their bankers more liquid than anybody thought when compensation was announced, as an unnamed source familiar with the situation stated that they could be able to sell their shares they’ve been awarded by as early as April 2010.

This is important because of the obvious sense that payout would be much further down the road and based on long-term success rather than short-term results, which is the way many feel the industry should practice and gravitate toward, rather than using bonuses as incentive to ramp up gains over the short term through “risky” investments made to generate big bonuses, regardless of the consequences that come from it.

While it’s not by far the entire or even major reason for the economic crisis, it is considered to have least contributed to the problem over the years, culminating in the difficult financial times we continue to face.

Concerning the Citigroup loophole, what the source revealed was the stock awarded to their people would be able to be sold if at the next annual meeting of the company in April shareholders approve of the action. Essentially that makes them almost as liquid as the cash given by the company to their people.

The question will be what the mood of shareholders will be at the time of the meeting and if they feel awarding the ability for bankers to sell their shares adds something of value to the company or not.

It also seems the company will have to walk somewhat quietly during that time in order not to give the appearance of arrogance which could turn off a lot of people who could decide the bonus issue.

If the vote goes in favor of the bankers, they would then be able to sell their shares in the company just like any other shares of a company they would have invested in.

This doesn’t mean the original announcement that Citigroup workers won’t be partaking in the restricted stock set to vest over a period of several years, it just means this is in addition to that, at least with their top-earning people, and will give them a much better liquid award than most thought they would.

A couple days ago Bank of America (NYSE:BAC) was reportedly going to partake in a similar deal with many of their people, giving them the opportunity to vest their stock over a short time period as well, with some able to sell their shares in August 2010.

The strict cash paid out by Citigroup for their people remains capped at $100,000.