SHAREHOLDERS in Citigroup dealt a blow to the bank’s management by voting down its executive pay proposals yesterday.
Although the vote is advisory rather than binding, it is a major embarrassment to chief executive Vikram Pandit and reflects investors’ fury that his promise to deliver a rise in the firm’s dismal one cent dividend has not yet been fulfilled.
Just 45 per cent of shareholders voted for the remuneration report, meaning that under new Dodd-Frank regulations, the final tally is a 55 per cent vote against it.
Pandit was blocked from increasing the bank’s dividend pay-out by the Federal Reserve, which said that although the bank had passed its stress tests, it was not sufficiently secure to start increasing shareholder rewards.
And Pandit suggested yesterday that it might not be possible to increase the dividend until next year. Despite that, his own pay was restored. He had been symbolically working for just $1 per year to demonstrate his commitment, but that was thrown out in 2011, when he was awarded a $15m pay package.
The vote at Citi’s annual general meeting in Dallas is a warning shot to other banks.