Citigroup Holders Approve Pay Plan -- WSJ

By Telis Demos Features Dow Jones Newswires

Citigroup Inc. shareholders cast 95% of their votes at Tuesday's annual meeting in support of the bank's compensation plan for top executives, following a jump in the stock price and a pay cut for Chief Executive Michael Corbat.

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That reversed tepid support last year when the bank's annual "say on pay" resolution received 64% of votes cast. The average bank in the S&P 500 index received 91% support, according to proxy advisory firm Institutional Shareholder Services Inc.

In contrast to a rancorous Wells Fargo & Co. annual shareholder meeting that also took place Tuesday, Citigroup's conclave was relatively placid. But it wasn't totally uneventful: There was one major interruption when a group took the stage at the Cooper Union hall in New York City for a few minutes to protest the bank's lending related to the controversial Dakota Access Pipeline.

Otherwise, Citigroup shareholders backed the bank's overall strategy, overwhelmingly rejecting a breakup proposal. The current board of directors also received more than 98% support from voters. The breakup measure got 2.5% of votes cast, down from 3.5% last year.

A more extensive debate on the bank's performance could await Citigroup in July when it will hold its first investor day meeting in several years.

The bank succeeded in tamping down the major concern at last year's meeting, executive pay. Following last year's say-on-pay vote -- which isn't a binding measure, but an indication of shareholder support -- Citigroup's board made a handful of changes.

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For one, it cut Mr. Corbat's pay. For 2016, Mr. Corbat is expected to receive total compensation of $15.5 million, a 6% decrease from the previous year.

That helped the bank match up more favorably with its stock performance and peers. The cut came despite Citigroup stock generating a 16% total return in 2016, from negative 4% in 2015, when Mr. Corbat's pay rose.

Last year, proxy advisory firms Glass Lewis & Co. and ISS recommended that shareholders vote against the say-on-pay resolution. This year, both firms recommended voting in favor, citing the measures the bank took after last year's vote.

"The board has demonstrated sufficient responsiveness," ISS said in a report this month.

Like most big banks, Citigroup's stock has jumped since the U.S. presidential election, in part on hopes that the Trump administration will give firms a wider berth to return capital.

Citigroup returned $11 billion to shareholders last year, and expects to increase that number. Mr. Corbat told shareholders that Citigroup pressed the case for a bigger payout when the bank made its 2017 stress-test submission to regulators.

The company made other changes after the 2016 vote, including shifting more pay from cash to stock, and basing future performance-based stock grants in part on 2019 return on capital and profitability.

Mr. Corbat acknowledged that the bank fell short on several measures in 2016, such as a decline in net income and a drop in return on assets. He said that was driven by decisions to make new investments in several areas, including credit cards, consumer banking in Mexico, and stock trading, which will generate faster growth and capital return.

"We have a clear path to producing better returns in the future," he said.

Write to Telis Demos at telis.demos@wsj.com

Corrections & Amplifications Citigroup returned $11 billion to shareholders last year. An earlier version of this article incorrectly stated that it returned $2.2 billion. (April 25)

(END) Dow Jones Newswires

April 26, 2017 02:48 ET (06:48 GMT)