Citigroup investors reject higher executive pay deal

Published:  19 Apr at 6 PM

As reported by the BBC, during a rare demonstration of investor discontent, Citigroup shareholders have gone against granting top executives a higher pay deal. The deal, which had raised CEO Vikram Pandit's salary to $15 million (£9 million), was backed by only 45% of shareholders.

The board of Citigroup said it would meet with shareholders to talk about what it dubbed a "serious matter". The issue of high executive salaries has come into the limelight following the world financial crisis.

Citigroup, along with several other banks, was rescued during the 2008 financial crisis, receiving $45 billion in funds from the US government. Jeffrey Sonnenfeld from Yale University's School of Management called it “an embarrassment” for the bank directors, who now must clarify the compensation metrics they are using.

The vote by the shareholder is not legally binding on the bank, however. A variety of issues have piled up to prompt shareholders to question the sum of money being paid to top executives.
On Tuesday, Citigroup announced that its net income had declined by 2% to $2.9 billion (£1.3 billion) during the first three months of 2012, as compared to the same period in 2011.

The bank's shares also took a beating, slipping by 24% during the past twelve months, with stocks losing over 90% of their value during the past five years.