The Huffington Post
By Mark Gongloff
Posted: 04/17/2012 11:49 am
Updated: 04/17/2012 5:40 pm
Citigroup’s terrible, horrible, no good, very bad year continues.
The big bank last month suffered the ignominy of having the Federal Reserve nix its plan to raise its dividend from the nominal penny per share. And on Tuesday Citi shareholders rejected its pay plan for top executives, including nearly $15 million in pay-and a $40 million bonus–for CEO Vikram Pandit.
The say-on-pay vote, a feature of the Dodd-Frank financial-reform law, isn’t binding on Citigroup. But that slap on the face, with only 45 percent of investors approving Citi’s pay plan, stings nonetheless.
Easing the pain, Citi stock actually gained more than 3 percent today, thanks to anupgrade from world-famous bank-stock analyst Meredith Whitney. She made her bones before the financial crisis accurately predicting Citi would cut its dividend, and has been down on Citi stock ever since, all the way up until last month, when she said she would have to grow “a new brain” before she would ever get positive on it. Apparently the brain transplant went well, because she has upgraded the stock to “hold” from “sell.”
Also soothing has been Wall Street’s positive response to the bank’s first-quarter earnings, released on Monday. Profit was down 2 percent from a year ago, but that seemed to be good enough to satisfy investors who have already driven the stock price up 33 percent so far this year.
But Citi shares have still not fully recovered from a 44 percent beating last year — the year in which CEO Vikram Pandit got a pay increase from a symbolic $1 to $14.9 million. That, along with the Fed’s rejection of Citi’s plan to increase its dividend, may have inspired shareholders to reject Citi’s pay plan — which included a $40 million retention bonus for Pandit, notes Jessica Silver-Greenberg of the New York Times.
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- This is what’s really behind the fuss about Pandit’s excessively generous pay (news.efinancialcareers.com)
- Citigroup shareholders reject fat executive pay package (usatoday.com)
- Citigroup shareholders seem to have had enough (shortformblog.com)
- “Citigroup’s Shareholder Revolt” (economistsview.typepad.com)