SHAREHOLDERS rebuked Citigroup’s board yesterday, voting against a pay plan that promised tens of millions of dollars for Citi chief executive Vikram Pandit and his fellow directors.
Some 55 per cent of shareholders either went against the plan or abstained at Citi’s annual meeting in Dallas in a non-binding vote, the company said. It became the first big US bank to suffer majority dissent in a “say-on-pay” vote and only the 12th SP 500 company to lose such a ballot.
Richard Parsons, the outgoing chairman of Citi, described the result as “a serious matter” and said directors would meet shareholders to discuss their objections.
Corporate governance advisory groups had recommended a No vote.
Sarah Wilson, chief executive of the UK-based proxy voting agency Manifest, said: “Shareholders have been giving banks some time to find their way and do the right thing on pay, but I think patience is running out.”
Mr Pandit received $15 million (€11.4 million) last year, comprising $1.7 million in salary, a cash bonus of $5.3 million, deferred stock of $4 million and deferred cash of $4 million. He is in line to receive millions more in a performance plan which has been criticised for including profit targets that are too lax.
Analyst Mike Mayo said Citi had a decade-long track record of poor stock price performance and high executive pay. “The level of the hurdle [for the bonus scheme to pay out] is ludicrous. This is part of the mosaic that leads me to feel that Citigroup is not a company that can be fully trusted because the management incentives, their pay cheque, is not well enough aligned with the value creation,” he said. “The only question is why it took shareholders so long.”
The two main shareholder advisory firms, Glass Lewis and ISS, recommended that investors vote against the plan. – (Copyright The Financial Times Limited 2012)
