Citi CEO’s $25 Million Bonus Is Excessive, Top Bank Analyst Mike Mayo Says

Citigroup CEO Jane Fraser speaks at a conference in May. (Patrick T. Fallon / AFP / Getty Images)

Key Points

• Citigroup’s board named CEO Jane Fraser board chair and granted her a $25 million equity award and 1.055 million stock options.
• Analyst Mike Mayo criticized the bonus, saying it is a sign of poor governance.
• Citi’s stock is up 38% in 2025 and 53% in the past year, outperforming the S&P 500’s 15% and 16% advances.

The retention bonus Citigroup is awarding Chief Executive Officer Jane Fraser “continues a long tradition of paying in excess—or in this case at least before—proper performance,” longtime banking analyst Mike Mayo says.

Citi’s board of directors voted Wednesday to name Fraser chair of the board and grant her a $25 million one-time equity award in the form of restricted stock units, a common type of executive pay that hinges on meeting certain conditions. Fraser is also receiving 1.055 million stock options, which would increase the award’s overall value over time.

Mayo views Citi as his top bank stock pick and rates it as Overweight. But the bonus reflects poor governance, he wrote on Wednesday, because it was awarded before investors have seen significant share-price appreciation.

A spokeswoman for Citi declined to comment.

The payment is set up to give Fraser, who is overseeing a firmwide overhaul after years of lagging investor returns and high-profile regulatory shortcomings, an incentive to keep running the third-largest U.S. lender. The restricted stock options will vest, and the options will be available to exercise, in waves after the third, fourth, and fifth anniversaries of the grant date.

Mayo, who covers bank stocks at Wells Fargo , wrote that while he agrees with most of the reasons the board cited as evidence of progress under Fraser’s leadership, “the outcome of these efforts have still not delivered results that are desired by shareholders,” or returns greater than 10%.

Citi said the award reflects Citi’s progress in revamping itself, with more than two-thirds of its so-called transformation programs at or near Citi’s targets, and some of the biggest overhauls already incorporated into operations. It also reflects Fraser’s actions to form a strong executive team, simplify Citi’s internal structure, and build on its strategy with its sale of a stake in the Mexican financial group Banamex, Citi said.

Fraser’s bonus is also thanks to Citi’s stock price outperforming peers since its investor day event in 2022, the bank said. John Dugan, Citi’s outgoing chair, said Fraser “has created meaningful shareholder value.”

Mayo disagrees. He wrote “that’s not the case—at least not yet—given worst-in-class efficiency and returns that remain below the cost of capital.” In addition, Mayo said, a 2020 consent order imposed by U.S. bank regulators over problems tied to insufficient internal controls, risk management, and data governance remains in place. Although he expects returns greater than 10% in 2026, “we still don’t think this will be ‘meaningful,” he said.

Citi’s stock is up 38% in 2025 and 53% in the past year, outperforming the S&P 500 ’s 15% and 16% advances, respectively. Since the market’s close on Fraser’s first day as CEO in March 2021, Citi’s stock has risen 39%, while the S&P 500 is up 73%.

“Citi is among the worst offenders of pay for lack of performance in history,” the analyst wrote. “From 2000-2009, CEOs at Citi were paid more than any other bank (ex- Goldman Sachs ) even though the stock declined by far more than any other firm.”

Fraser, a former McKinsey consultant, was named CEO four years ago after serving as the bank’s president and head of its global consumer- banking division. She joined Citi in 2004.

In addition to holding onto Fraser and rewarding her performance, Citi said the award reflects “developments in the market” for CEO pay.

Wells Fargo said in August that CEO Charlie Scharf would become board chair and receive a $30 million bonus in the form of restricted stock rights, plus 1.046 million stock options. That came after he led Wells’ successful effort to win the lifting of a cap on its assets that regulators imposed in 2018 after its fake-accounts scandal.

Scharf drove the stock to record highs, but an activist investor has challenged his appointment as chair.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com