Citi Shareholders Reject Executive Compensation Proposal

In a surprise move, Citigroup

shareholders voted down the board of directors' executive compensation proposal at the bank's annual shareholder meeting held in Dallas today. The Wall Street Journal reports that only 45% of votes cast approved the proposal. Since the law counts absentee votes as rejections, 55% of shareholders voted against the pay slate set forward for the bank's top executives. Citi Chariman Richard Parsons called the result, "a serious matter" and said that the firm's directors will consult with large shareholders to triangulate their concerns. The Journal reports that CEO Vikram Pandit received $14.9 million in cash and stock options last year, up from his nominal $1 salary at the height of the financial crisis. John Havens, Citi's president and head of the capital markets, made $13 million last year. The vote came as a surprise to many, as institutional investors often vote along with the recommendations of the board of directors. Today's outcome would have been impossible without a significant number of very large shareholders voting against the proposed pay slate. Characteristically, Pandit tried to paint what was another challenging year for shareholders in the best way possible. "This was a very meaningful year for Citi," Mr. Pandit said, while noting that the European sovereign debt crisis and an anemic U.S. recovery weighed on Citi shares. "I think we all can and should take pride in how well our company weathered those three serious storms in 2011." Despite the CEO's optimism, C shares have lost more than 20% over the last 52-weeks which compares to a gain of 5.44% for the S&P 500. For those keeping track, that is more than 2,500 basis points of under performance, which just doesn't cut it - and clearly Citi shareholders agree.