There’s an excellent piece in the NYTimes chronicling the many times Citigroup has risen and fallen over the last decade.

I do remember, in fact, when Sandy Weill, head of Travelers (which many of you may not realize actually evolved out of an old-style manufacturing company, American Can), proposed the idea of a financial supermarket. Naysayers and proponents butted heads, but Citicorp was born. (full disclosure: I thought it sounded like a nifty idea at the time)

Well, apparently the company has fallen on its face — correction: was about to fall on its face, except we taxpayers caught them — many times in the last decade. And while it’s profitable now, naysayers and fans are again butting heads about whether it’s a viable institution or one that is destined to fall again.

I have no opinion on that — I truly don’t know enough about CDOs and such to say whether Citigroup has a handle on them. And I have gone on the record a million times now, that I want to reenact Glass Steagall and to use existing antitrust legislation to break up any institution that is too big to fail.

But this Citigroup story also proves my point(s) about the sheer stupidity of retention bonuses at faltering companies.

Point one: Why do you want to pay extra to hold onto those executives who drove you into the ground in the first place? I love this quote from a one-time insider:

Still, the unfortunate truth about the bank during the last several years, according to analysts and former insiders, is that it was managed horribly. “They just blew it,” said one former Citigroup executive, who like many others interviewed for this article requested anonymity because of pending lawsuits and a desire to preserve relationships with former colleagues. “It’s really hard to drive the car if you don’t have the headlights on.”

Point two: Throwing money at people — which Citigroup has certainly done as much as its colleagues and competitors — makes them rich, but doesn’t make them loyal. Otherwise, how do you explain these statistics?

In the last decade, for instance, Citigroup has had four chief executives, six chief financial officers, seven heads of consumer banking and eight investment banking chiefs.

Bank of America, by contrast, has had two C.E.O.’s, four chief financial officers and one chief operating officer during the same period — though that relative stability didn’t spare the bank from mistakes and pain in the crisis.

Way I see it, Citigroup’s revolving door proves that retention bonuses don’t retain, and BankofAmerica’s stable executive suite proves that executive continuity doesn’t guarantee anything.
Time for a shareholder revolt!