Citigroup shareholders voted to reject the company's executive compensation plan during an annual stockholders meeting in Dallas on Tuesday after critics complained that top officials including CEO Vikram Pandit collect rewards all too easily.
The proposal received just 45 percent of votes cast and followed Citigroup's announcement on Monday it made $2.9 billion in earnings, or net income, during the first quarter, down 2 percent from a year ago, missing analyst expectations.
"This is a very historic action on the part of shareholders, and I think it's a rebuke of what has gone on in terms of the leadership at Citigroup," Eleanor Bloxham, chief executive officer of the Value Alliance Co., a board advisory firm in Westerville, Ohio, told Bloomberg.
Included in the compensation package detailed in Citigroup's 2012 annual proxy were multi-year retention award packages for the senior management team. Pandit's "executive long-term performance retention award," Pandit's could be worth $40 million, Bloomberg reported.
Citigroup's CEO Pandit, 55, had $15 million in compensation for 2011, which included a base salary of $1.7 million, a cash bonus of $5.3 million, almost $4 million in deferred stock and another near $4 million in deferred cash.
Pandit had an annual salary of $1 for most of 2009 and 2010 while the bank dug out from a government bailout.
Pandit, 55, had the 45th highest compensation among CEOs last year, according to Equilar, an executive compensation research firm. Tim Cook, CEO of Apple, had the highest pay at $378 million.
A spokeswoman for Citigroup said, "Citi's Board of Directors takes the shareholder vote seriously, and along with senior management will consult with representative shareholders to understand their concerns."
The spokeswoman said the Personnel and Compensation Committee of the Board "will carefully consider their input as we move forward."
Proxy advisory firms, which issue recommendations for institutional shareholders, have hit Citigroup for designing pay packages that don't do enough to increase shareholder value
Good to hear! Maybe the Dodd Frank act was worth something afterall?