ABBA NETWORK

Citigroup plans to announce a new executive compensation system in which the top executives at the firm will see sharp reductions in their yearly pay packages if the firm’s fortunes continue to sour, people close to the firm tell CNBC.

The plan comes just weeks after Citigroup (NYSE: C) receive a second, $20 billion injection of capital from the federal government and promises to cover more than $300 billion of the megabank’s exposure to toxic mortgage-backed securities.

Investor fears about Citigroup’s balance sheet recently sparked a runt on Citigroup’s stock that sent shares reeling to close to $3, before recovering to just above $6 following the bailout from the Feds.

Under the plan, CEO Vikram Pandit will receive no bonus for the 2008, nor will chairman Win Bishoff, based on Citi’s dismal performance this year, where the firm announced multiple quarters of losses stemming from its bad bet on mortgage debt.

The plan calls for Citi’s most senior executives, including the CEO, to take the biggest hits in compensation when the firm’s bottom line suffers. Senior executives will receive much of their future cash and stock bonuses in a deferred fashion that is “vested” in three years time when the executive can claim ownership to the money.

The plan will also feature a clawback provision where the firm can recoup money from top executives if the performance of the firm sours after a big payday, in addition the top five executives at the firm will receive no severance if and when they leave.

Citigroup officials say the plan was developed internally by Pandit himself, but they confirm that they have been discussing executive compensation reforms with officials in the federal government, which have been increasingly more involved in Citigroup’s operations since the big bank asked for its most recent bailout.

Wall Street executives have been under tremendous pressure from Congressional leader to scale back bonuses paid to top executives since the federal government made direct capital infusions into the nation’s biggest banks and brokerage firms that have been teetering amid the financial crisis.

It’s unclear if other firms will follow Citi’s example, which will be more fully described in a public filing this afternoon, but already CEOs of big firms like Morgan Stanley’s (NYSE: ms) John Mack and Goldman Sach’s (NYSE: gs) Lloyd Blankfein have said they won’t take bonues this year.

Both Goldman and Morgan announced fourth quarter losses; for Goldman it was the first quarterly loss since it became a public company in 1999.

On graduating from college I was reeling under the burden of debt. I knew that with my college degree, I would be able to get stable employment as well as a hefty salary. And then came that first credit card. I took it up without even sparing a glance at the costs involved.

Within two years of working as an executive assistant, I was already drowning in credit card debt and have not been able to pay off my mortgage and insurance premiums. I even coined a nickname for myself, debt delinquent.

Most people initially react by avoiding their creditors. If they can’t reach you or find you, you’re safe, right? WRONG! This tendency to avoid the lender is a bad one as one loses out on possible ways of fixing one’s credit situation.

If only I had taken the time to talk to any one of my creditors, I would have been given a chance to pay them off instead of filing for bankruptcy. Eventually, however, I did learn my lesson.

Remember that your lender is looking forward to repayment. Your bank will want some of the money that you spent on your holiday sprees. Your lender could easily give you some leeway so as to make it easier for you to pay off the loan. They are not as evil as you think they are. In fact, lending institutions can save you from falling into poverty — or bankruptcy at least.

Your credit card issuer will mostly likely give you amnesty, if you promise to pay them back with a span of time. In fact, you might even be able to convince your lender to do away with some of the fees. By talking to them, you will have a lot more options on how to settle your balance than by hiding out in the mountains until you think they have surely forgotten about you.

But during this time, your credit card accounts might be closed as they do not want you accumulating more debt while trying to pay off your balance.

If you have unpaid loans from various institutions, they will almost certainly advice you to join a debt management program or refer you to a debt counselor. If you are currently struggling with a major burden of debt and have multiple loans to pay, go in for debt consolidation.

With consolidation, all of your debt will fall under one loan. As a result, there will only be one loan installment that you will have to take care of. Do not worry so much about your credit score at this time, focus on paying off your debts. Once you finish paying off your outstanding debts, you can once again begin to concentrate on fixing your credit score. Just one point to remember is that student loan consolidation works differently and it does not affect your score.

Reaching out to creditors gives them the impression that you want to pay them back and you’re willing to do it on terms that are beneficial to both parties. This is a good way to impress upon potential creditors that you made the effort to repay your debts despite your financial troubles.