Citigroup pays CEO handsomely
Michael Corbat has only been CEO of Citigroup (NYSE:C) since October, but he's already being paid like a veteran CEO of a big bank.
CNBC notes that the board has awarded him $11.5 million for work rendered in 2012, which puts him in the same pay league as JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon, who made $11.5 million, and Bank of America (NYSE:BAC) CEO Brian Moynihan, who made $12.1 million. Citigroup has been in thick of an executive compensation mess that stems from last year's say-on-pay vote at the annual meeting, at which shareholders gave a resounding thumbs-down to then CEO Vikram Pandit's pay package.
Citigroup chairman Michael O'Neill says he took the vote seriously and has reached out to shareholders about their compensation concerns. The result is that new performance shares account for about 27 percent of Corbat's package. Performance shares are hardly a revolutionary tool, but they would be welcome in the banking industry as a way to better align performance with pay. The shares will vest only if Citigroup meets certain return on asset targets and stock appreciation targets. This would appear to be a step in the right direction, and on the surface anyway, it would appear to reduce the chances of another embarrassing thumbs-down vote on pay at the upcoming meeting.
The board after all scrapped a previous profit sharing plan, which had generated controversy as critics suggested that the board set targets that were easy to hit. It remains to be seen if boosting the bank's return on assets to 0.85 percent, which would allow all the units to vest, will be easy.
All in all, what governance activists really want are tight linkages to objective legitimate performance targets that are sustainable over the long-term. It remains to be seen if the new plan will be a huge hit at the upcoming annual meeting.
Not everyone is impressed. One shareholder rights advocate told the New York Times that new approach was "far from perfect, or even good, but it's less terrible than it used to be."
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