Shareholders Strike Back
At Citigroup's annual meeting, owners of the stock voted 55 to 45 against a $50 million executive pay package, including $15 million for CEO Vikram Pandit.
This is all thanks to the Dodd-Frank financial overhaul law.
Buried in its 2,300 pages is a requirement for public companies to hold "say on pay" votes for executive compensation.
Now, the vote is non-binding, but the chairman of Citigroup Dick Parsons said he took it seriously, and promised the board would consider it carefully.
Shareholders have every right to be upset with Vikram.
Over the last decade, Citigroup has had the worst stock price performance of the big banks, but consistently had some of the highest executive compensation.
Citi shares up slightly today, but they're down more than 80% since the financial crisis hit.
They're down 93% from 2006.
Last year, Pandit got a $1.7 million salary, plus a $5.3 million cash bonus, and he got a $40 million retention package that pays out through 2015.
Getting a bonus should be a piece of cake for these execs, too, since the standard for the payout is an earnings track record half of what it was in 2009 and 2010 when the economy was in the tank.
Whoa! Don't get too ambitious!
Look, to be fair to Pandit, for 2009 and 2010, he accepted just a buck in salary.
But to be fair to shareholders, Citi's quarterly dividend is one penny.
At the start of this week, Citigroup announced its first-quarter profit had fallen two percent from a year earlier on a paltry one percent rise in revenue.
The Federal Reserve turned the company down on its request for a share buyback or dividend after Citi flunked the central bank's stress test in March. And don't forget the bank was one of many bailed out during the financial crisis.
Some people bridle at anyone earning millions of dollars a year, but not me.
If you can grow sales, boost the bottom line, raise the share price, then by all means you've earned a fat paycheck.
But what we can't do is reward mediocrity and failure.
There's a lot not to like about Dodd-Frank - about 2,299 pages' worth if you ask me - but shareholder "say on pay"? That's OK with me.
Last year shareholders voted down just two percent of executive pay plans. Maybe this is the start of a new trend.