Citigroup

Yesterday's post was on shareholder value. Here is another example of a company who values the shareholder (and themselves) above their employees.

Citigroup (C) announced a massive restructuring earlier last week. The headline from this restructuring is 17,000 job cuts! Wow, is this because the company has been mismanaged for so long? So one day you need 17,000 employees and the next day you don't? The company rids itself of "back office" employees like they are some sort of a disease. These same people are the workhorses that make people like the CEO, Charles Prince, as rich as he is.

So, who is going to do the work that is left behind? They certainly didn't get rid of all that work overnight, did they? 17,000 full time employees equates to 35,360,000 hours a year. It begs the question, what were these people doing and how will it effect the customer? Work doesn't just disappear. Less people doing the same, or even close to the same amount of work means mistakes and inefficiencies. With these mistakes come increased costs of doing business. Of course Citigroup won't tell you this. For them, it is all about the stock price.

Why all the job cuts? Well, Charles Prince was quoted as saying "nobody is more upset about the stock price than I am". I wonder why. He owns 1.6 million shares worth about $83 million. Maybe he is trying to get to $100 million. Why not upset 17,000 lives in the process to squeeze a few extra million to line his pockets.

Prince may get his wish in the short-term as the fools rush in to buy on the promises of the company. But will this provide long-term value to the investor? Does owning 1.6 million shares affect the decision making ability of a CEO? What do you think?