Citicorp chairman John S. Reed, head of the second-largest U.S. banking company, ranked only 20th among top bankers in 1997 compensation.

If he were already working for Citi-group, the pending $70 billion combination of Citicorp and Travelers Group, he would have ranked four places lower. Travelers chairman Sanford I. Weill and three members of his inner circle all made more money last year than Mr. Reed, who is to be co- chief executive officer with Mr. Weill.

Pay scales have long reflected management contrasts between commercial banks and other types of financial companies. But they seem particularly striking at the top rungs of Citigroup, which will be working to alleviate the inevitable clash of cultures.

"Harmonization will certainly be an issue," said David Berry, research director of Keefe, Bruyette & Woods Inc., of one pay discrepancy between a Citibanker and his Travelers Group peers.

An American Banker compilation of high-level pay data from proxy statements of publicly traded corporations showed Mr. Reed to be the only Citicorp representative among the top 50. His cash and cash-equivalent compensation, the principal benchmark, was $4.1 million last year.

Mr. Weill had 1997 compensation of $7.2 million, according to the Travelers Group proxy statement filed in February. If he were in the American Banker tables beginning on page 11, his annual pay would have been exceeded only by two recently retired CEOs: J. Carter Bacot of Bank of New York Co. ($8.5 million) and Gerry B. Cameron of U.S. Bancorp ($7.7 million).

The executives are ranked according to salary and bonus for the year, not including long-term stock grants and other rewards. With long-term pay, for example, Mr. Cameron's total would have been $10.1 million higher. It was not a factor for Mr. Reed, BankAmerica Corp. chairman David A. Coulter ($5.7 million cash compensation, No. 8), and several others.

Compensation experts said bonuses explain much of the difference between a Travelers and a Citicorp.

"Compensation at Wall Street firms is much more highly leveraged, using bonuses that are many multiples of the base salary," said Gregory Coleman, managing director and co-head of the financial institutions practice at the recruitment firm Korn Ferry International. "Far fewer people have the same reward opportunity at a commercial bank."

Commercial banks are more geared toward long-term stock grants. A Citicorp spokesman said Mr. Reed's policy "has been to align compensation with shareholder value."

Mr. Reed, for example, owns more than a million shares in his company.

"They have made a point of compensating with equity," said Mr. Berry. "It's more palatable to shareholders."

Wall Street-style banks like Bankers Trust Corp. and J.P. Morgan & Co.- which had five and three executives in the Top 50, respectively-tend to pay Wall Street-type salaries to compete in the talent race with firms like Salomon Smith Barney, a unit of Travelers.

"The traditional approach at investment banks is to give relatively smaller salaries and therefore have a big upside potential with the bonus," said Diane Posnak, a compensation consultant at Pearl Meyer & Partners. "Its a carrot and a stick."

Mr. Reed's base salary was higher than Mr. Weill's-$1.59 million versus $1.03 million. But Mr. Reed's bonus of $2.5 million paled against Mr. Weill's $6.2 million.

James Dimon, who is slated to be president of the new Citigroup, had 1997 compensation of $5.2 million, which would put him 12th on the banker list, a shade behind Chase Manhattan Corp. vice chairman William B. Harrison Jr. Mr. Dimon's bonus last year was $4.6 million.

Deryck Maughan, co-CEO of Salomon Smith Barney with Mr. Dimon, had 1997 compensation of $4.7 million. That would be just behind the No. 14 bank executive, MBNA Corp. president Charles M. Cawley. Mr. Maughan's bonus was $3.9 million.

Steven D. Black, vice chairman of Salomon Smith Barney, had $4.5 million, including a bonus of $4.3 million, ranking behind NationsBank Corp. CEO Hugh L. McColl Jr., No. 16.

Robert Lipp, chairman of Travelers Property and Casualty Co., had $3.58 million in pay last year, including $2.98 million in bonus, which would have displaced Bank of New York senior executive vice president Deno Papageorge at No. 23.

Analysts said big increases could be in the offing for Citicorp people to plug the earnings gap. That group could include Mr. Reed and Victor J. Menezes, the new president of Citibank NA, who is responsible for working closely with Mr. Dimon and Mr. Maughan to run Citigroup's global corporate banking business.

Mr. Berry said to overcome cultural imbalances, Mr. Menezes "would have to be treated in a similar fashion" as his counterparts at Salomon Smith Barney.

The American Banker data indicated strong stock performance and acquisitions benefited some top commercial bankers. Mr. Cameron of U.S. Bancorp, which was sold to First Bank System of Minneapolis, increased his annual pay by 339%.

Richard L. Lehmann, president of Columbus, Ohio-based Banc One Corp., saw his compensation jump 220%, to $4.7 million. Banc One chairman John B. McCoy had a 158% increase, to $7 million. Both executives received an extra bonus for stock performance, according to Banc One's proxy.

Conversely, executives at banks with weaker stock performance paid a price.

Roberto G. Mendoza, vice chairman of J.P. Morgan, had a 14% drop in pay, to $2.6 million. Another vice chairman, Kurt F. Viermitz, was down 9%, to $2.4 million. Douglas A. Warner 3d, Morgan's chairman and CEO, had a 6% drop, to $3.1 million.

Paul F. Hazen, chairman and CEO of Wells Fargo & Co., had a 3% drop, to $2.9 million. Wells Fargo shares also struggled last year as the San Francisco bank had trouble integrating the operations of First Interstate Bancorp, which it acquired in 1996.

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