Investor sues Citigroup over compensation to Pandit and directors
21 April 2012
A Citigroup shareholder is suing Citigroup CEO Vikram Pandit and the bank's directors over a compensation package that investors rejected in a rare failed "say-on-pay" vote this week. (See: Citigroup shareholders reject Vikram Pandit's pay package)
Stanley Moskal, a Citi shareholder, filed the lawsuit on Thursday in a New York federal court, in a bid to force Pandit and the directors to pay damages to the bank and to improve internal controls, according to Reuters.
Citigroup shareholders voted to reject the company's executive compensation plan during an annual stockholders meeting in Dallas on Tuesday, following complaints by critics that top officials including CEO Vikram Pandit enjoyed high pay that was in no way commensurate with increasing shareholder value.
Only 45 per cent of votes cast favoured the pay proposal. The lender had earlier on Monday said that profit was down 2 per cent to $2.9 billion from a year earlier, falling short of analyst expectations.
According to some analysts, "say-on-pay" lawsuits against companies do not survive the motion to dismiss in court and it was quite likely that Citigroup may be hit with more lawsuits, if the company went ahead with its pay package.
They say if Citigroup were to act quickly and significantly it might reduce that likelihood or makes an impact.
They say one factor that could be important was how the financial giant moved forward with its executive package was how CEO Pandit responded.