NEW YORK, USA - Citigroup intends to raise employees' base salaries by as much as 50 per cent this year to offset smaller annual bonuses, The New York Times said, citing people with direct knowledge of the plan.

With an eye on retaining employees and neutralising a drop in the value of its stock holdings, Citi also plans to award millions of new stock options to employees, said the paper.

Citigroup officials declined to discuss the issue on the record with the Times, but told the paper that the changes would bring the bank's compensation plan in line with the general Wall Street view that bonuses are a form of deferred salary and not one-time payouts.

In a statement e-mailed to Reuters, Citigroup said it is continuing to examine ways to ensure its employee-compensation practices are competitive.

'Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders,' Citigroup said. 'Any salary adjustments are not intended to increase total annual compensation, (but) rather, to adjust the balance between fixed and variable compensation.'

The New York Times said that the Obama administration's new 'pay czar', Mr Kenneth Feinberg, held introductory meetings this week with Citigroup executives and their counterparts at other firms that have received federal bailout funds.

Mr Feinberg has the authority to set compensation for only the top 100 employees at troubled companies, said the paper.