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A Citigroup shareholder is challenging an executive pay plan that promises tens of millions of dollars for CEO Vikram Pandit and his fellow directors.
A Citigroup shareholder is suing the company’s chief executive Vikram Pandit and his fellow directors over a compensation package that was rejected by most shareholders this week, Reuters reported today.
Stanley Moskal has accused Citigroup directors of breaching their fiduciary duties by awarding more than $54 million to executives — including $15 million to Pandit — last year when Citigroup’s share price slumped, Reuters said, citing documents filed in Manhattan federal court on Thursday.
Moskal wants the directors to pay damages to the bank and for Citigroup to improve internal controls.
The legal action comes after Citigroup shareholders on Tuesday rejected an executive pay plan at the company’s annual meeting in Dallas.
Fifty-five percent of shareholders voted against the package, marking the first time a major US bank had suffered majority dissent in a “say on pay” vote since the legislation was introduced in 2010 after the global financial crisis.
The vote is non-binding but Citigroup chairman Richard Parson said the bank took the “matter seriously” and would look to change the way it calculates top executives’ pay, the Guardian reported.
Brian Foley, a pay consultant and managing director of Brian Foley & Co in New York, said it was “highly likely” there may be more lawsuits against Citigroup if it proceeds with the compensation package, ABC News reported.
Pandit, who took the helm of Citigroup in 2007, pocketed $15 million in 2011, including a $1.67 million salary and a $5.3 million cash bonus. He also received a retention package valued at $40 million — all this in a year when the bank's shares fell 44 percent.
Bloomberg reported Wednesday that Pandit meanwhile hoped to make a tidy profit on the sale of his 5,623-square-foot, six-bedroom, six-bathroom home in Greenwich, Connecticut. The house is on the market for $4.3 million, about 5 percent more than Pandit paid for it 11 years ago.