Shareholders delivered a sharp rebuke yesterday to Citigroup, voting down a $15-million pay package for chief executive, Vikram S Pandit, which was the first time that stock owners united to oppose an outsized compensation at a financial giant.
The shareholder vote, which comes in the backdrop of a raging national debate over income inequality, is seen as a pointer to the anger over pay for chief executives spreading from Occupy Wall Street movement to wealthy institutional investors like pension fund and mutual fund managers. Around 55 per cent of the shareholders voting were against the plan that laid out compensation for the bank's top five executives, including Pandit.
According to Brian Wenzinger, a principal at Aronson Johnson Ortiz, a Philadelphia money management company that voted against the pay package, CEO's deserved good pay but there was good pay and there was obscene pay.
While the vote at Tuesday's annual meeting in Dallas was far from binding, it served to drive home a point to other banks that had increased the pay of their top executives this year despite ordinary performance.
Following the vote, Richard D Parsons, who was retiring as Citigroup chairman, said that he took the vote seriously and Citi's board would consider it carefully.
According to Mike Mayo, an analyst with Credit Agricole Securities, this was a milestone for corporate America. He added, when shareholders spoke up about issues on which they had been complacent, it was definitely a wake-up call. He added, the only question was what took so long.