Ethical Analysis of Citigroup

Company Assessment: An Analysis of CitiGroup 1 Aggregation Assessment: An Analysis of CitiGroup Accession With origins dating aback to 1812, Citigroup (Citi) is a all-around adapted cyberbanking casework captivation aggregation accouterment both individuals and institutions with a ample ambit of cyberbanking articles and services. These casework include; chump cyberbanking and credit; accumulated and advance banking; balance brokerage; transaction services; and abundance management. Headquartered in Manhattan, NY, Citi currently has over 260,000 advisers application 200 actor chump accounts in added than 160 countries about the globe. Citi is organized into two divisions; Citicorp and Citi Holdings. Citicorp manages the chump and institutional amount applicant business, while Citi Holdings manages the allowance and asset administration divisions. Based on cyberbanking abstracts acquired from the Citi website, the amount st business (i. e. Citicorp), represents 92. 9% of the $19. 4 billion ($US) of the 1 division 2012 revenue. The absolute revenues of Citicorp are geographically adapted above the apple with North America apery 40% of the total, Asia at 22%, Latin America at 20% and Europe, Middle East and Africa (EMEA) accounting for the actual 18% (Citi Financials, 2012) Over its 200 year history, Citi has been a arch innovator in cyberbanking casework starting in the 1920’s by acceptable the aboriginal aloft U. S. coffer to activity admixture absorption on accumulation accounts. Also, through the accretion of Second National Bank, Citi has the acumen of actuality the aboriginal coffer in New York to accommodate abstracted cyberbanking casework for women. Further innovations include; alms apart claimed loans and chump blockage accounts in 1928 and 1936 appropriately (Citi Timeline, 2012). Citi’s aboriginal mission of alms acceptable cyberbanking casework acquired as they grew, however, aback the cyberbanking crisis of 2008, Citi has been affairs off abounding of the non-core operations to refocus on the acceptable cyberbanking model. The refocused mission as declared on the accumulated website is: “We strive to actualize the best outcomes for our audience and barter with cyberbanking solutions that are simple, artistic and responsible. (Citi, 2012) The purpose of this cardboard is to conduct a analysis and all-embracing ethical appraisal of Citi which will accommodate an overview of the mission, eyes and values, belief and acquiescence codes, leadership, accumulated amusing albatross as able-bodied as the accumulated babyminding structure. Mission, Eyes and Belief Clicking on the “Our Company” articulation of the Citi website, you are anon fatigued to the bolded argument advertence the accumulated vision: “160 Countries. 1 Vision. Citi works endlessly to accommodate consumers, corporations, governments and institutions with a ample ambit of cyberbanking articles and services. We strive to actualize the best outcomes for our audience and barter with cyberbanking solutions that are simple, artistic and responsible. ” (Citi, 2012) It is bright that Citi has a eyes that places them as the all-around coffer focused on applicant service, accession and cyberbanking responsibility. Expanding aloft the eyes account is the mission account of Citi and the attempt that adviser them. The Mission account is: “Meeting the World’s Challenges. Seizing its Greatest Opportunities” (Citi Mission, 2012). The four key attempt that adviser the aggregation as they endeavor to bear on their eyes and mission are; Common Purpose; Ingenuity; Leadership; and Amenable Finance. Based on the declared vision, mission and principles, in my opinion, Citi can be declared as a focused team, adored based on aptitude and merit, operating in an avant-garde adeptness with one bright ambition to bear cellophane and advisable cyberbanking articles globally. I accede the accounting vision, mission and allegorical attempt of Citi to be absolutely inspiring. Ethics and Acquiescence Codes In aboriginal 2005, Charles Prince, again CEO of Citi arise a adventurous activity to transform the cyberbanking behemothic that was Citi. His plan, accepted as the “Five Point Belief Plan”, was advised to; advance ethical training; focus on aptitude and development; accommodate belief into achievement appraisals and compensation; advance communications; and strengthen ethical controls. (Restoring Ethics, 2012) As the almsman of Sandy Weill, who, Johnson (2012) suggests typifies the ethically aloof baton (p. 19), Prince faced ample skepticism on whether his plan could assignment in such a ample and circuitous alignment that had a history of cogent authoritative scrutiny, and was affiliated to some of the bigger scandals in accumulated history (e. g. Worldcom). While Prince had some critics, he additionally had some support. In the January 28, 2005 archetype of BusinessWeek Online, Prince was declared as a smart, analytic thinker and accession adduce fabricated by an analyst was…“I acquire that non-charismatic Prince is activity to be a added absolute force at Citigroup than the alternative three absorbing CEOs activity aback to the 1960s. (Restoring Ethics, 2012) I acquire he eyes that Prince delivered afterwards demography over from Weill, continues to be accepted by the accepted Citi CEO, Vikram Pandit as able-bodied as the Lath of Directors. One of the key responsibilities of the Citi Lath of Admiral is to analysis and acquire the Citi Cipher of Conduct (the “Code”). The Cipher outlines Citi’s principles, belief and standards of convenance for all advisers of 2 Citi and as such can be beheld as Citi’s belief code. Advisers are accepted to apprehend and assurance the Code, not necessarily as a activity of employment, but as a formalized acceding to acquire by the standards of behavior categorical therein. Although not a academic arrangement of employment, the academic access to signing the Cipher can be beheld as actuality chip into HR practices. A point of absorption is that Citi additionally strengthens the abettor claim to acquire by the cipher by advertence that alike if an abettor doesn’t acknowledgment a alive copy, they are still apprenticed by its agreement and conditions. In fact, in the accession to the Code, Citi is bright that abortion to attach to the Cipher can aftereffect in actual abortion of employment. The latest afterlight to the Cipher was fabricated in 2011. The cipher is accessible in 26 altered languages. While in the past, advisers had alternate training on the Code, it appears that the training was ad hoc, but according to the Accumulated Citizenship Report, in aboriginal 2012, Citi formed out a formalized belief training affairs for all employees. In accession to the Cipher that exists for all employees, there is an added Cipher of Belief that applies alone to the chief cyberbanking admiral (CEO, CFO, etc…) and cyberbanking authoritative staff. While it may arise that this is a assurance of a college ethical accepted at Citi, as with the NYSE claim for a firm-wide cipher of ethics, Sarbanes Oxley mandates a claim for a abstracted Cipher of Belief for chief executives. In account both the firm-wide Cipher as able-bodied as the Cipher of Belief for the chief executives, it’s absorbing to agenda that the Cipher of Belief reads like a actual acquiescence based document, while the firm-wide Cipher reads added like a alarm to activity for all advisers to act with the absolute integrity. In fact, the chat candor appears 9 times in a about abbreviate document. In all candor to Citi, they do specify that the Cipher of Belief should be advised a supplement to the firm-wide Cipher and they accommodate a articulation to the Cipher as allotment of the document. Citi additionally has a set of ethical attempt that applies to suppliers. In short, Citi expects that suppliers attach to the aforementioned aerial standards of convenance that governs Citi. The key areas that the attempt administer to are; ethical business practices (Integrity, accurateness and association engagement); animal rights in the workplace; ecology sustainability; and administration systems and implementation. Further advice on these attempt is accessible at http://www. citigroup. com/citi/citizen/people/diversity/supplierprinciples. htm. One final point apropos the ethical behavior of Citi would be that they accomplish a 24/7 belief hotline breadth advisers can address ethical apropos and abide bearding to the admeasurement that the law will allow. While it is cryptic if the hotline is operated apart of Citi, (it appears as if it is not) there is a able focus on acquaintance and although I was clumsy to analyze the name of the individual, the Cipher identifies that Citi has an belief officer. Leadership It is the albatross of a baton to authorize and advance the authoritative climate. The leader’s adeptness to casting adumbration or afford ablaze will charge throughout an alignment and ultimately appearance the culture. In short, behindhand of who is called the academic belief officer, the baton of the alignment is answerable with that duty. Citi is managed by an controlling aggregation of 24 chief leaders from key regions and capacity above Citigroup's all-around network. While the indigenous origins of the controlling are not accurately mentioned, there appears to be a advanced ambit of indigenous backgrounds on the controlling committee. Unlike the Lath of Admiral however, the controlling lath has alone 1 woman, Cece Stewart who is the admiral of US, Chump and Commercial Banking. Citi maintains a advantage aesthetics that attempts to adjust advantage with their all-embracing Mission statement. The key objectives of this aesthetics are to; enhance actor value; allure talent; accept contributions; administer risk; accommodate absolute oversight; and accurateness to all stakeholders. You can appointment http://www. citigroup. com/citi/investor/data/comp_phil_policy. df? ieNocache=340 for added advice on Citi’s advantage policy. Some affirmation to abutment the candor of Citi’s advantage practices would be that, according to the 2011 Proxy Statement, as allotment of the activity for authoritative allurement awards for 2011, the Claimed and Advantage lath advised the April 2011 “say on pay” vote which accustomed as 92. 9% favorable. Perhaps the vote was biased upwards as a aftereffect of Pandit’s accommodation to alone acquire a “total” advantage amalgamation of $1 for 2010, and best of 2009? While I was clumsy to acquisition any abridged abstracts that represents the pay gap amid the top admiral and the advanced band employees, I am appealing assured that for all of 2010, and the bigger allotment of 2009, the CEO was the everyman paid abettor of Citi. The table on the afterward folio provides some advantage abstracts for the accomplished 3 years for the key chief admiral of Citi. 3 Change in Amount of Deferred All Alternative Advantage Compenstion ($) ($) 0 0 0 73,047 51,995 49,117 0 0 0 0 14,700 0 3,750 14,700 9,800 14,700 14,700 9,800 14,700 14,700 Controlling Affiliate Year Bacon ($) 1,671,370 1 125,001 500,000 500,000 416,667 500,000 500,000 500,000 500,000 Bonus ($) 5,331,452 0 0 2,200,000 Banal Awards ($) 0 0 0 Option Awards ($) 7,839,581 0 0 Absolute ($) 14,857,103 1 128,751 7,160,916 4,728,462 5,063,817 12,984,481 9,509,800 11,276,454 11,354,536 0 0 11,446,900 10,116,895 10,400,007 Vikram Pandit CEO John Gerspach CFO John Havens COO Brian Leach Chief Accident Administrator Manuel Medina-Mora CEO Latin America 2011 2010 2009 2011 2010 2009 2011 2010 2009 2011 2,333,333 2,039,836 4,166,667 4,583,333 4,750,000 2,719,781 9,000,000 10,327,374 434,380 5,400,000 2,039,836 5,000,000 3,400,000 2011 2010 2009 546,966 546,966 546,966 4,181,214 0 0 3,998,939 2,719,781 7,450,911 0 9,328,010 361,984 2,119,018 163,047 0 0 0 Source: taken from the 2011 Citi Proxy Address While on the surface, multimillion dollar advantage bales may arise egregious, however, for anniversary of the admiral above, about 50% of the absolute advantage amalgamation is deferred and/or exists beneath a multiyear vesting accouterment that is not alone angry to administration at Citi, it is anon angry to the achievement of the organization. For 2011, there does arise to be a “traditional” pay gap amid the CEO and the alternative “C’s” and I doubtable that the gap widens decidedly as you move bottomward to the advanced band workers. By attractive at aloof the absolute banknote (salary and bonus) basic of the advantage bales that ambit from a low of $2. 5 actor to a aerial of $7 million, abounding bodies will assuredly feel several of the alternative accusatory emotions. But to add a little perspective, for 2011, Citi’s accommodating giving was added than 2 times the amount of the absolute (cash and deferred) controlling advantage of the individuals above. Also, at a absolute of $6. 4 billion, the 2011 charge to altitude change initiatives represented over 8% of Citi’s 2011 revenues, and about 60% of net income. I charge admit, besides a little wallet envy, I feel mostly account for the work, both amusing and bread-and-butter that the administration of Citi has done that started in 2005, was batty during the cyberbanking crisis, and has affiliated over the accomplished few years. Based on this evidence, I would claiming an affirmation that the accepted administration is accession rewards at the amount of all alternative stakeholders. When Prince took over administration of Citi in 2005, his calm, bookish address was absolutely the adverse of the “larger than life” absorbing CEO that preceded him. Since demography over from Prince in 2007, Pandit appears to accept followed by archetype and has approved some arresting altruistic accomplishments as he navigated Citi through the bigger cyberbanking crisis aback the Great Depression. Admitting the critics of the cyberbanking industry, Citi, through complete leadership, ranks able-bodied on the amateur basal band accounting metrics that forms the foundation of Accumulated Amusing Responsibility. Accumulated Amusing Albatross (CSR) One of the bigger criticisms of CSR advertisement is that it is artlessly a accessible relations apparatus advised as window bathrobe to advance image. After the cyberbanking crisis of 2008, no alternative industry would accept as abounding critics as the cyberbanking industry. To accommodate a little affirmation of the candor of an organization’s CSR claims may advice st allay the critics. Aback the aboriginal allotment of the 21 century, Citi has been consistently been a basic aggregation of the Dow Jones Apple and North America Sustainability Indexes as able-bodied as the FTSE 4Good Index, and in 2011, Citi additionally became a basic of the STOXX All-around ESG Leaders indices. It is bright that the CSR activities of Citi are actuality accustomed alfresco the alignment and may accept a little added believability than window dressing. Citi defines its Accumulated Amusing Albatross framework as All-around Citizenship. The three key focus areas of their citizenship efforts are; accustomed cyberbanking solutions at affordable costs, comestible the ambiance 4 and account Citi employees. Progress arise these three focus areas are provided as a arbitrary folio aural the All-around Citizenship report, but additionally as abstracted advertisement (attached as Addendum A). There are four key metrics for Cyberbanking Inclusion achievement indicator. First, they accommodate accommodating contributions (Strategic Giving), which at $121. 9 actor for 2011 (1. % of net income), and represents an boilerplate anniversary advance amount of 13% aback the end of the cyberbanking crisis in 2008. Second, is Small Business Lending, which at about $8 billion for 2011, has developed by 75% aback 2009, and absolutely surpassed the 2011 ambition of $7 billion. nd The third metric is the accouterment of affordable apartment lending, which at $2. 0 billion, places Citi, for the 2 after year, the top affordable apartment lender in the US. The final metric beneath Cyberbanking Inclusion is All-around Microfinance. In 2011, Citi has provided microloans to about one actor lenders of which 92% of loans breadth to women. Under comestible the ambiance achievement indicator, Citi includes metrics for e-communications, apple-pie energy, greenhouse gas emissions and application ESRM screening belief for cyberbanking transactions. As one of the world’s arch acclaim agenda companies, Citi’s movement arise paperless statements has, at 29% assimilation (2011), angled aback 2008. Beneath the apple-pie activity metric, in 2007, Citi arise a 10 year, $50 billion charge to activities directed at mitigating altitude change. As of the end of 2011, 5 years in to the program, 73% of the absolute has been committed. Under the greenhouse gas emissions metric, in 2005, Citi arise a 10 year plan for a 25% abbreviation in greenhouse gas emissions. As of 2011, there has been a 13. 6% percent abridgement aback the 2005 baseline. In 2011, the affiliation of ecology and amusing factors into the acceptable accident administration screens for activity costs covered over 400 projects globally. Citi appears to accept a cogent focus on ecology apropos through accounting behavior and statements as able-bodied as absolute action. Added advice on Citi’s position on the ambiance and their ESRM polices can be begin at http://www. itigroup. com/citi/environment/ The final breadth covered beneath the address agenda is the metrics that awning the way Citi belief their employees. The key metrics are; training; satisfaction; diversity; and abettor volunteering. Citi has a actual assorted workforce, and admitting 61 arrangement groups consisting of 15,000 abettor associates in 18 locations about the world, Citi encourages abettor assortment and support. Abettor achievement has been accretion aback the end of the cyberbanking crisis and at 73% achievement for 2011; it represents an all-embracing 10% access aback 2009. It is cryptic whether the access in a aftereffect of artlessly blessed to accept a job in a boxy economy, or accurate job satisfaction, in any event, Citi appears to accept a added annoyed workforce. Abettor training has apparent a arresting access aback the 2008 cyberbanking crises. Training activities awning areas such as, leadership, management, artefact and acquiescence and aback 2008; training hours accept added by over 80% at 38. 4 hours per year per employee. Advisers of Citi provided about 800,000 hours of volunteering activities during 2011, about 30% advance over 2010. It seems that giving aback to the association not alone is apparent by cyberbanking metrics but additionally by the employee’s action. Although Citi’s key achievement indicators focus on; Cyberbanking Inclusion; Ecology Sustainability; and Account our Employees, the All-around Citizenship address is absolutely all-encompassing and can be beheld as a supplement to the Citi Anniversary Report. In accession to the three key focus areas covered above, the address additionally covers accumulated governance, which is covered in the area that follows, as able-bodied as, how Citi serves the chump and maintains acceptable and assorted accumulation alternation relationships. The address outlines both Citi’s achievements as able-bodied as the challenges they face and break bottomward Citizenship on a bounded basis. In allegorical their citizenship activities, Citi uses a stakeholder assurance access to and account their stakeholders as; Customers; Investors; Employees; Regulators; Suppliers; Association Leaders; Non-Governmental Organizations (NGO’s); Socially Amenable Investors; Media; and Competitors. The advice approach acclimated for anniversary stakeholder and examples are included as Addendum B. Corporate Babyminding Accumulated Babyminding has been authentic as “The framework of rules and practices by which a lath of admiral ensures accountability, fairness, and accurateness in a company's accord with its stakeholders (financiers, customers, management, employees, government, and the community). ” (Governance, 2012). As an addendum to the anniversary proxy statement, Citi provides the Citigroup Inc. Accumulated Babyminding Guidelines. Consistent with the all-embracing accumulated mission, the accumulated babyminding mission is…”Citigroup Inc. the “Company”) aspires to the accomplished standards of accumulated babyminding and ethical conduct: accomplishing what we say; advertisement after-effects with accurateness and transparency; and advancement abounding acquiescence with the laws, rules and regulations that administer the Company’s businesses. ” (Citi Governance, 2012). This absolute certificate outlines the guidelines and behavior with account to the responsibilities, term, accepted qualifications, and advantage of the Lath and the committees thereof. Of notable acknowledgment in the babyminding activity would be the brake adjoin chain directorates, the claim for claimed banal ownership, and the anniversary analysis and appraisal of lath achievement conducted by the Nomination, Babyminding and Accessible Affairs Committee. 5 One arrears of the activity would be the abridgement of any set appellation for a lath member. While there are two schools of anticipation with account to anchored appellation appointments, in my opinion, the advantage of bringing in beginning account with new lath associates would outweigh any abeyant accident of ability that would avenue with an accepted lath member. I acquire staggered lath accessories with anchored appellation would be an accessory to the Citi accumulated babyminding policy. As mentioned in the Belief and Acquiescence Codes area above, as a claim to account on the NYSE, a aggregation is appropriate to accept a academic cipher of ethics. In accession to this requirement, the NYSE additionally requires a minimum accepted for the ability of directors. To accommodated the regulation, Citi would charge a minimum of 9 absolute directors. At the end of 2011, 11 of the 13 affiliate lath were independent. The two affiliated associates were Pandit, and the Citi Chairman, Michael O’Neill. The actual lath associates abide of a assorted accumulation of alive and retired business professionals, a altruistic foundation president, a aloft accompaniment federal assets coffer official, a baton from the advance administration association as able-bodied as Ivey alliance academics. Although alone 3 of the lath associates are women, about 40% of the associates are arresting minorities which additionally includes the Chairman and the CEO of Citi. Artlessly put, the Lath of Admiral of Citi is comprised of a actual absolute representation of their stakeholder groups as articular in Addendum B. As of 2011, there are 5 continuing committees of the Board: Audit; Accident Administration and Finance; Executive; Personnel and Compensation; and Nomination, Babyminding and Accessible Affairs. A abstracted Charter exists for anniversary lath that outlines the mission, duties and requirements apropos ability of the lath members. The Audit and Accident administration lath is comprised of all absolute directors. O’Neill is the accepted Chair of the Controlling as able-bodied as the Personnel and Advantage Committees (non-voting) and he sits as a voting affiliate of the Nomination, Babyminding and Accessible Affairs Committee. Among alternative roles, the Nomination, Babyminding and Accessible Affairs Lath is amenable for the ecology sustainability and stakeholder assurance activities of Citi. Aback 2005, non-employee admiral accept $75,000 per year additional a deferred banal accolade admired at $150,000 on the date of arising with a 2 year vesting period. With the claim to own banal of Citi, as able-bodied as the deferred vesting of the majority of the advantage they will receive, admiral of Citi are incented to act in the best absorption of the organization. SEC Investigations As a about traded, multinational, adapted cyberbanking casework organization, congenital in the U. S. , it should not arise as any abruptness that in the advance of their business dealings, both the alignment and the alone agents of Citi will be accountable to SEC litigations and investigations on a common basis. In fact, a chase on the SEC website (http://www. sec. gov/litigation. shtml), and clarification the chase ambit to accommodate alone “Litigation” and “Regulatory Actions” you will absolutely acquisition too abounding to list. In fact, aback January 1, 2005, there accept been a absolute of 284 Authoritative Accomplishments and 140 Litigations that has Citi named. It would be absolutely ambiguous to accompaniment that all litigations listed Citi as the defendant, about from my abrupt analysis of some of the chase after-effects there appears to be complaints accompanying to the accounting analysis of acclaim derivatives, fair amount misstatements of sub-prime mortgage exposure, abounding of which listed best of the cyberbanking casework industry. There was about one absorbing analysis fabricated in 2008 that questioned the ability of the Lath of Directors. While I can’t animadversion too abundant on the ethical administration of the close arch up to the cyberbanking crisis, affirmation such as the awful publicized investigations, forth with the captivation in Worldcom and alternative aloft cyberbanking collapses, absolutely casting a adumbration on the accomplished activities. However, during the administration of the accepted CEO, as able-bodied as his predecessor, the Lath of Admiral arise to accept addressed abounding of the aerial akin babyminding ethical shortcomings that were accomplished investigations by the SEC. Conclusion Perhaps the best difficult aspect of administering a analysis of an alignment is advancing to a absolute stance, based on accurate evidence, on the amount of ethical adeptness that exists central the organization. Without active central an organization, how can you accompaniment that ethical conduct permeates above all aspects of the close activities? Operating in an industry that has assuredly has the accomplished akin of accessible acrimony apropos ethical conduct, how could anyone booty the attitude that any cyberbanking casework aggregation array able-bodied from any ethical standpoint? Despite this challenge, my consequence from this analysis is that Citi does absolutely rank well. Aback demography over the close in 2007, accustomed on from Prince’s “Five Point Belief Plan”, Pandit, has advance the close aback on firmer cyberbanking arena by address abundant of the afflicted assets and refocusing the operation added arise a acceptable cyberbanking model. Admitting accommodating in the TARP and after advantageous aback all funds borrowed, beneath Pandit’s leadership, Citi has become one of the best capitalized banks in the U. S. He won aerial 6 acclaim from accessible appraisal by accepting a absolute advantage amalgamation of $1 for best of 2009 and all of 2010, acceptable undoubtedly, the everyman paid abettor of Citi. Those types of altruistic acts, admitting his claimed net worth, should be beheld as a assurance of an admirable administration style. The critics account that he doesn’t need/deserve the money is, in my opinion, antic and shouldn’t adumbrate what is a absolutely admirable action. An ethical adeptness starts with an ethical baton airish accessible to advance by archetype and in my opinion, by his example, Mr. Pandit ranks actual well. In accession to the accumulation motive, Citi approaches it business with a approved charge to ecology and amusing key achievement metrics, agreeable with all stakeholders, activity aloft and above the simple acknowledged requirements and acting as an abettor of moral access with suppliers. Adding to this ethical framework a actual committed CEO, a able lath apery stakeholders, and belief training, it’s adamantine to altercate that the close lacks a able-bodied ethical framework. It appears as if the eyes of Prince continues to be accepted by Pandit and Citi’s accepted leadership. While it may be a continued alley advanced in the cloister of accessible opinion, Citi appears to be on the appropriate clue to afford the amount of acrimony the cyberbanking industry has, but like best approaching outcomes, alone time will tell. 7 References

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