Andrew Ross Sorkin, Editor-At-Large of Dealb%k and author of the best seller, “Too Big To Fail”, reports that in a rare case of clear minded thinking “Citigroup shareholders rebuffed a $15 million dollar compensation package for CEO Vikram S. Pandit, marking the first time that shareholders have united in opposition to outsized compensation at a financial giant…The votes are part of the Dodd-Frank financial overhaul that mandates that public companies include “say on pay” votes for shareholders to express their opinions about compensation.” The vote is not binding but sends a clear message to management. Enough is enough!
Citigroup is a prime example of everything that went wrong in the financial calamity of 2007-2008. Poor management, excessive compensation corruption…you name it they did it. “Citigroup was terribly managed, and whatever could be done wrong, they did wrong.” said David Dreman money manager for $400,000 worth of Citigroup shares. Yet in spite of management’s irresponsible behavior the Citigroup directors recommended a $15 million dollar compensation package for their executive officer. “CEO’s deserve good pay but there is good pay and there is obscene pay.” said Brian Wenzinger, a principal at Aronson Johnson Ortiz, a money management firm that voted against the pay package.
Excessive compensation packages have been an issue in this country since the dotcom bubble in the nineties. Buoyed by the inflated profits generated by tech companies who made millions out of thin air, chief executives have seen their earnings skyrocket while the average wages of working class Americans have grown stagnant. Execs who run companies into the ground get golden parachutes while working stiffs get pink slips. While we don’t object to executive officers being handsomely compensated for a job well done; the thought of paying $15 million to the chief executive of a bank whose mismanagement and corruption was at the very epicenter of the financial crash is beyond the pale.
Economists say that corporate America is generating greater profits today than they did in the years prior to the crash. Corporate executive salaries continue to skyrocket while the middle class suffers through declining wages and rampant unemployment. We can only hope that the actions of the Citicorp shareholders mark the beginning of a societal movement toward fairness and accountability.
Next up…the Bank of America’s shareholder’s meeting on May 9.