Dec. 31 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit and Chairman Win Bischoff will forgo 2008 bonuses after the bank lost three-quarters of its market value and got a $45 billion U.S. bailout, Pandit said today in a memo to employees.

Robert Rubin, the former U.S. Treasury secretary who serves as an adviser to the New York-based company, declined a bonus for a second straight year, said the memo sent to Bloomberg News by Citigroup spokesman Michael Hanretta. Senior leadership committee members will get smaller awards than last year, the memo said.

“The harsh realities of 2008, primarily our earnings results, mean that our bonus pool is dramatically lower,” Pandit said.

Year-end bonuses, which typically account for two-thirds of Wall Street compensation, are being cut this year after banks and brokers racked up more than $1 trillion of losses worldwide since 2007 and the U.S. passed a $700 billion financial-rescue plan. CEOs Lloyd Blankfein of Goldman Sachs Group Inc. and John Mack of Morgan Stanley are among executives not getting bonuses.

Citigroup, the biggest recipient of U.S. bailout funds, completed an agreement for a $20 billion government investment, Pandit said in the memo. That was on top of an earlier $25 billion and a U.S. guarantee on $306 billion in troubled assets.

Pandit is cutting 52,000 jobs worldwide after four straight quarters of losses tied to bad loans and failed investments. Citigroup expects “major challenges” to continue into 2009, he said today.

The bank will institute a “clawback” policy to recoup executive compensation based on financial reporting that is later shown to be inaccurate, Pandit said.

No Severance

Exit pay will be restricted and “the five senior executives whose compensation is listed in our proxy statement no longer can receive severance,” said Pandit, who became Citigroup CEO in December 2007. Those affected executives are Pandit, Bischoff, Chief Financial Officer Gary Crittenden and Vice Chairmen Lewis Kaden and Stephen Volk, Hanretta said in an e-mail.

Pandit, 51, received 1 million shares from Citigroup as part of a “sign-on” bonus in January, in addition to a $2.5 million “retention equity award,” the company said in March. He was paid $250,000 in salary in 2007.

Pandit got $165 million from Citigroup in 2007 when he sold Old Lane Partners LP, the hedge fund he co-founded and ran. Citigroup closed New York-based Old Lane in June and took a $202 million writedown on its $800 million investment.

Citigroup shares lost 9 cents, or 1.32 percent, in trading on the New York Stock Exchange today, closing at $6.71.

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net.

Last Updated: December 31, 2008 17:53 EST