Thursday, April 19, 2012
Vikram Pandit
In what has been described as a corporate milestone, shareholders of Citigroup rejected the new compensation package, valued at $15 million, for CEO Vikram S. Pandit.
The decision marked the first time stockowners voted against a multi-million dollar pay plan for a chief executive.
“This is a milestone for corporate America,” Mike Mayo, an analyst with Credit Agricole Securities, told The New York Times’ DealBook. “When shareholders speak up about issues on which they’ve been complacent, it’s definitely a wake-up call. The only question is what took so long?”
The vote, in which 55% opposed the pay of Pandit and four other executives, was required by a provision of the Dodd-Frank Act. However, it is not binding. Citigroup’s board could still approve the plan.
But to ignore the vote would run the risk of a shareholder revolt. Some of those opposing the package felt strongly about putting a stop to excessive compensation, particularly because the value of Citigroup’s stock is still 80% below its pre-financial crisis level.
Brian Wenzinger, a principal at Aronson Johnson Ortiz, a Philadelphia money management company that voted against the pay package, said CEOs “deserve good pay but there’s good pay and there’s obscene pay.”
Pandit took over as CEO of Citigroup on December 11, 2007.
-Noel Brinkerhoff
To Learn More:
Citigroup’s Chief Rebuffed on Pay by Shareholders (by Jessica Silver-Greenberg and Nelson D. Schwartz, New York Times)
Citi CEO Vikram Pandit Gets Rejected Again (by Halah Touryalai, Forbes)
Citigroup Has Few Options After Pay Vote (by Steven M, Davidoff, New York Times)
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