Clever Vikram Bandit is clever. Upon realizing that his company’s ability to pay bonuses would be severely limited, he sat down and took a long, hard look at Citigroup’s books. No, he didn’t have a major revelation that the company was nearly insolvent and shouldn’t have ever agreed to egregious compensation packages, or have a long, dark night of the soul about the ethics of accepting the title of being too big to fail and the endless bailouts that go with it. No, he had a light bulb go on about employee compensation.

In general:

Total Compensation = Base Salary + Bonus

Using this equation, the assumption is that your base salary is the incentive to come in every day, and the bonus is your incentive to do something productive while you are there.

However, if your company can’t award bonuses for some reason, the equation becomes:

Total Compensation= Base Salary

The Bandit, using the old adage that lower total compensation will enable banks that aren’t immersed in fail to steal away their employees, came up with the grand strategy of increasing base salary to the level of total compensation, thus effectively turning bonuses into salaries, and GUARANTEEING Citi employees the same fat package o’ comp they always had, now irrespective of performance:

Bailed out financial giant Citigroup said Wednesday it is going to the raise base salaries of its employees, although it is not planning to increase their total compensation.

“Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders,” said Citigroup, in a statement.

The company insisted that total compensation, however, will remain constant — indicating that year-end bonuses and other special payments will be cut when pay is raised.

Conservatives who opposed restrictions on bonus compensation are probably enjoying a big fat I-told-you-so right about now.  On the other side of the aisle… pitchforks? Anyone?