"Citigroup is planning to overhaul its bonus system for hundreds of top managers in an effort to increase co-operation and minimise in-fighting among the disparate parts of the sprawling financial services conglomerate," the Financial Times reported.
Citi, which has incurred losses of about $15 billion in the past two quarters, is expected to witness further billions of dollars of write-downs, related to the subprime crisis.
Recent media reports said that Citi would slash 10 per cent of its 65,000-strong investment banking workforce globally.
According to the Financial Times, the move is part of Pandit's plan to restore the group's battered fortunes by harnessing synergies between its investment banking, commercial banking and wealth management divisions.
The Financial Times said that Pandit has rebuffed calls to break up Citi and vowed to eliminate barriers between the firm's businesses to fully exploit its universal banking model.
Quoting a Citi executive, the newspaper said, "The new compensation plan is absolutely crucial to put teeth behind Vikram Pandit's strategy," and added, "We have to put a premium on partnership-like behaviour."
Further, quoting people close to the situation, the UK daily noted that Pandit wanted to change the way bonuses were calculated to reward co-operation across different divisions and the performance of the company as a whole.
Currently, bonuses at Citi are largely dependent on the results of a manager's division and individual performance.
"People familiar with the matter said the ultimate goal was to link bonuses of senior managers and junior employees to Citis over all performance. However, they added that the first stage was likely to involve skewing bonuses to take into account how much shared business each manager generated," the Financial Times said in an article published in its online edition on Sunday.
Citi employees already get paid for referrals, when, for example, a wealth management adviser helps a client open a credit card or a checking account. However, Citi insiders say those sums are modest, the report said.
Pointing out that a change to Citi's compensation structure could face internal resistance, the newspaper said that many senior managers may object having their pay tied to businesses outside their control, especially when they are as volatile and cyclical as investment banking.
"However, Mr Pandit has told his senior colleagues he wants a new system in place by the end of the year, when annual bonuses are decided. John Donnelly, head of human resources, has been asked to draft detailed plans during the next few weeks," it added.
