Posted by: jhamon | June 24, 2009

Game Theory in Action: Citigroup Bumps Salaries

So, we’re going to have caps on bonuses, courtesy of an activist federal government?  Well how about this then?

June 24 (Bloomberg) — Citigroup Inc., the bank that got $45 billion in U.S. rescue funds, will raise base salaries by as much as 50 percent to help compensate for a reduction in annual bonuses, a person familiar with the plan said.  (more here).

This reminds me of an old joke I heard years ago in Boston when I first got out of college.  As a salesman was jumping on the back of a Green Line trolley, his hat blew off and under its wheels.  On his expense report, he itemized “1 Fedora hat – $25”  (this was when we were still on the gold standard apparently and had a real currency and people wore hats as they traveled to sales calls on street cars).

The comptroller called the salesman to his desk and asked him, “You don’t really believe you can expense a hat to the company, do you?”

The salesman replied, “Well I lost the hat while out on a sales call and it is a very necessary part of my business attire.” 

The comptroller disagreed.  “No hat reimbursement.”

A few days later the salesman submitted his revised expense report.  “Now that’s better,” said the comptroller with obvious satisfaction as he reviewed the form.”  I am certainly glad you lost the hat from your paperwork.”

The salesman answered, “I didn’t lose it.  Now it’s your turn to find the hat.”

Citi to Obama: “Your turn to find the hat.”

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