Yesterday, Citigroup announced that it’s CEO Michael Corbat would be paid $11.5 million for 2012.Today, Dealbook has written about the fall-out from that announcement.
The verdict: Shareholders are still upset about the way Citi is calculating executive pay, despite assurances that a new calculation method would attach a larger portion of executive bonuses to bank performance.
Shareholder reaction here is more important than at any other bank on Wall Street. You may remember that last April, Citi’s board voted against then-CEO Vikram Pandit’s pay package totaling about $15 million. These votes are non-binding, but they send a pretty serious message either way.
Pandit (despite having take $1 as compensation for one year), was a pretty well-paid CEO. According to Bloomberg, Pandit was paid about $261 million in the five years since he became CEO, including profits the sale of his hedge fund, Maiden Lane, to Citi.
The board was hoping that with a new CEO, and after the agitation of the past year, there would be some change at Citi — and there was some change, but it doesn’t sound like enough.
Nell Minow, a shareholder advocate at GMI Ratings, said the new approach was “far from perfect, or even good, but it’s less terrible than it used to be.” Citi’s board members will continue to approve base salaries, cash bonuses and deferred stock given to top Citi executives, the same way they were in the past. But now a new segment of the pay, called performance share units, will be linked to the new metrics. For 2012, Mr. Corbat was awarded $3.1 million in performance share units. That amounts to 27 per cent of his total $11.5 million pay package.
A spokesperson for the huge pension fund, CalPERS (California Public Employees’ Retirement System) didn’t sound jazzed either.
“We’d like to make sure that the incentive structures aren’t focusing on revenues and returns without thinking about risk, because that’s how we got ourselves into the financial crisis,” said Ms. Simpson.
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