Citigroup Inc.'s $4.7 billion pretax writedown of its Morgan Stanley Smith Barney stake probably won't reduce a profit-sharing plan's award for Chief Executive Officer Vikram Pandit that could total $24 million.

That's because the plan doesn't count losses at Citi Holdings, the division of unwanted assets that includes the Smith Barney brokerage, a regulatory filing shows. The exclusion may mean more pay for Pandit this year even as the board considers cuts in his 2011 compensation package, which shareholders rejected in April amid criticism that he collected millions of dollars in rewards too easily.

"I can't see any good reason to exclude that from an assessment of the group's performance except to ring-fence his bonus," said Paul Hodgson, a researcher at GMI Ratings, a corporate governance consulting firm based in New York. "It seems somewhat disingenuous to exclude potential catastrophic losses from anything Smith Barney might have done from the cumulative net income that he was being judged on."

Citigroup's board, led by Chairman Michael O'Neill, promised to discuss Pandit's 2011 pay with top shareholders after 55 percent of the votes cast rejected the package. The CEO's profit-sharing award, which is tied to 2011 and 2012 results, would add to more than $10 million in multiyear stock awards and the $15 million pay package he received for 2011, when the New York-based bank's shares tumbled 44 percent.

If no changes are made, Citigroup will have paid Pandit about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.

The latest charge was triggered last week after Citigroup, the third-biggest U.S. bank by assets, agreed to sell its 49 percent stake in the brokerage joint venture to its partner, New York-based Morgan Stanley. The two owners, which had disputed the unit's worth, finally valued the venture at $13.5 billion -- about 40 percent less than Citigroup's estimate two months ago. The agreement forced Citigroup to write down its stake by $4.7 billion, or $2.9 billion after taxes.

The decline won't affect Pandit's profit-sharing payout, according to terms of a package offered last year to dissuade Pandit from leaving, a May 2011 filing shows. The plan gives Pandit 0.05543 percent of pretax profit for 2011 and 2012 excluding results at Citi Holdings, whose assets such as overdue U.S. mortgages and toxic securities are more prone to losses.

Moshe Orenbuch, an analyst at Credit Suisse Group AG, has estimated that Citi Holdings could lose $12.4 billion before taxes for the two years, not including the writedown on Smith Barney. The $4.7 billion Smith Barney charge would bring pretax losses to about $17 billion.

Since those costs aren't counted in the profit-sharing formula, Pandit could get about $24 million from the plan, according to calculations by Bloomberg based on the company's profit for the past six quarters and Orenbuch's earnings estimates for the rest of 2012.

The Smith Barney writedown alone would shave about $2.5 million from the payout if it was counted, while total Citi Holdings losses, including the writedown, would reduce the payout by more than $9 million, the calculations show.

Pandit said in a June interview that directors are discussing his pay with shareholders and that he expects some resolution by year-end. The board's personnel and compensation committee members are meeting with shareholders to "fully understand their concerns," Shannon Bell, a spokeswoman for the bank, said in a Sept. 13 e-mail.

"They could go back and change this and not exclude the potential loss on the Smith Barney sale," Hodgson said. "However, it's been my experience that changes to compensation plans as a result of negative say-on-pay votes are typically to future plans, rather than past."

Citigroup shares jumped about 9 percent since the sale of the stake was announced through Sept. 14, more than triple the advance of the Standard & Poor's 500 Index. The bank surged 32 percent this year. Pandit took a $1 annual salary for 2010 and much of 2009.

Morgan Stanley Smith Barney was created on Jan. 13, 2009, when Morgan Stanley paid Citigroup $2.75 billion for 51 percent of the brokerage and the right to buy the rest over time. Pandit described the resulting venture as a "peerless" business that provided "tremendous value" for his bank, according to a statement. The deal enabled Citigroup to keep a stake in a company that had "real growth opportunities," Pandit said.

Three days later, the Smith Barney stake was among more than $600 billion of unwanted investments that Pandit shunted into Citi Holdings as part of plan to help the bank recover from its $45 billion U.S. bailout in 2008.

Pandit and other Citigroup executives who oversaw the Smith Barney deal had wagered in 2009 that the value of the brokerage would increase before they had to sell their stake, according to David Knutson, a credit analyst with Legal & General Investment Management America. The bank said in a filing this year that it didn't plan to sell if the brokerage was carrying an "impairment."

The global economy, capital markets and interest rates rebounded slower than Citigroup anticipated at the time of the deal, Moody's Investors Service said today in a report. This undermined the bank's valuation of the brokerage as revenue and assets under management suffered, the ratings company said.

While the gambit didn't work out, Smith Barney's disposition "shouldn't be excluded from management's reward or punishment," Knutson said. "Citi Holdings is part of Pandit's grand plan. He designed it. He promised to wind it down in a timely and cost-efficient manner and he has responsibility for it, good or bad."

Pandit's retention package included the profit-sharing, $10 million in deferred stock and options worth more than $6 million, a person familiar with the matter said at the time the compensation plan was announced.

Other Citigroup executives already were part of the same profit-sharing plan, including Chief Operating Officer John Havens, 56, Chief Financial Officer John Gerspach, 59, and consumer banking head Manuel Medina-Mora, 62. The board may have developed the plan for managers who weren't responsible for Citi Holdings before adding Pandit "as an afterthought," said Hodgson, the GMI Ratings analyst.

"If they created the plan for executives that didn't have direct responsibility for what was going on at Citi Holdings, then that's fine," Hodgson said. "But Pandit's the CEO. You can't make that claim about him."

O'Neill, 65, who became chairman in April, is a member of the compensation committee and was among those who approved Pandit's compensation package. Other members at the time included Parsons, Diana Taylor and Alain Belda. Taylor is the companion of New York City Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP.

The board probably will review the profit-sharing plan before making any payments linked to it, Frank Glassner, a partner in San Francisco with executive compensation consulting firm Meridian Compensation Partners LLC, said in a phone interview.

"The compensation committee, especially under the new chair Michael O'Neill, will likely exercise board discretion," Glassner said.

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