Citigroup Inc intends to raise employees' base salaries by as much as 50 percent 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 neutralizing a drop in the value of their stock holdings, Citi also plans to award millions of new stock options to employees, according to the paper.

Citigroup officials declined to discuss the issue on the record with the New York Times, but told the paper 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 emailed 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, rather to adjust the balance between fixed and variable compensation, Citigroup said in the statement.

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

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