March 13, 2012
In my November Post ” Its November, but Risk Off “ I stated the common belief the Fed was keeping rates low to allow Banks to repair their balance sheets by borrowing at 0% and lending at 19% to you and me. And, I also stated ” so you can be certain there will be repair BUT also huge performance awards at year end . Wait and see ! “
Yesterday the Citibank compensation committee indicated that CEO Vikram Pandit will receive an awards package of $14.6 million for 2011 compared with a salary of $ 1.00 and no bonus in 2010. This was done to recognize his “shepherding “ Citicorp to eight consecutive quarters of profitability.
Something is wrong here ! I can guarantee you any Citibank junior officer could have done the same job with such low interest rates to borrow, almost zero, and 19% to lend. I can also guarantee ( from personal experience and knowledge ) that Citibank junior officers get paid almost like shepherds!
I would love my employee, Mr Pandit ( with the help of his pals on the compensation committee ) to explain to Citicorp owners, ( you and me ), exactly what specific and exceptional decisions he has made, or actions he has taken, to add value to the CEO job sufficient to justify this HUGE bonus.
The truth is that CEOs and their compensation committees are hijacking the corporations we own. This isn’t capitalism. Its what are you going to do about it ? …ism. Proxy statement ? ……spare me !
And now…( March 14 ) we learn that Citicorp is being denied the right to pay dividends based on its stress test result. Based on that report card, I can’t see how anyone could be brazen enough to accept a $14 million performance award ! Again, Wait and See !!
Richard Maurice Gore
April 17,2012 ….Update….
It has been reported that Citibank shareholders have voted down ( 55% nay ) the pay package proposed for Pandit and his 5 top managers. Although the vote is not binding, it is being described as a warning to other banks benefiting from the Fed sponsored pay zero percent interest /charge 19 percent interest meant to help the banks repair their balance sheets. This shareholder vote is based on the “Say on Pay ” provision of Dodd Franks legislation which gives shareholders a voice in executive compensation. It has been reported that last year only 2% of proposed corporate executive pay plans were voted against. Citibank is notorious for awarding the highest compensation for the poorest shareholder returns.
I have the sense that non- emotional shareholders, including pension funds and other institutional investors, are beginning to see how excessive executive compensation has become a brazen obsenity crying out for REFORM. Thank you Occupy Wall Street and thank you Dodd Franks for having the courage to confront this injustice. And to the six top execs at Citibank,…… better luck on your next attempt to pass the Stress Test !