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By IEVA M. AUGSTUMS

AP Business Writer

CHARLOTTE, N.C. - The recipient of a $45 billion infusion from the federal government, Citigroup Inc. on Wednesday said it would place strict limits on management's compensation, including no severance for its top five executives.

Under pressure from lawmakers, Citigroup Chief Executive Vikram Pandit and Chairman Win Bischoff opted to forego their 2008 bonuses. The company's new executive pay limits also feature a clawback provision in which Citigroup can recoup executive pay "that over time proves to be based on inaccurate financial or other information."

The compensation restrictions come as the New York-based bank signed an agreement with the federal government to receive an additional $20 billion on top of the $25 billion it received in October. Restrictions on expenses, including the use of corporate aircraft and costs related to entertainment or holiday parties, also will be put in place.

Part of the $700 billion bailout program authorized by Congress, the capital infusions to Citigroup and dozens of other banks are the government's main tool for attempting to stabilize the financial services sector and spur lending between financial institutions and to customers.

Citi said it will issue $20 billion in preferred shares to the Treasury Department, and warrants to buy about 188.5 million shares of common stock at a strike price of $10.61 a share, according to a filing with the Securities and Exchange Commission.

In doing so, members of the company's senior leadership and executive committees will see pay cuts and limits on severance packages, according to a memo sent to Citigroup staff Wednesday.

In the memo, Pandit announced measures that will tie executive pay more closely to performance.

"We are fully committed to paying for high-performance people at all levels of the organization and at competitive rates, in the context of the company's overall financial results," Pandit said.

The most senior leaders will be affected the most, Citi said.

Pandit said he and Bischoff thought it "fair" to forgo their bonuses "in light of the challenges of the year and the need for compensation elsewhere in the organization," the memo said. Robert Rubin, a Citigroup adviser and former Treasury secretary, also will decline a bonus.

Pandit added that senior leadership committee members will see their bonuses "substantially reduced," while executive committee members will have larger proportions of their bonuses in deferred compensation than other employees.

As a condition for receiving government money, lawmakers are making companies reel in bonuses. The congressional backlash and public outrage followed a series of high-profile cases involving Wall Street executives walking away with millions of dollars after their firms received taxpayer money.

Last month, American International Group Inc. said it would be limiting how much it pays its top executives, including granting a $1 salary for 2008 and 2009 to its CEO Edward Liddy.

New York-based AIG has received a roughly $150 billion rescue package from the federal government.

Shares of Citi fell 9 cents to $6.71 Wednesday. The company's stock shed more than three-fourths of its value in 2008.

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