Citigroup, one of a litany of American banks bailed out by U.S. taxpayers at the height of the financial crisis in 2008, was sued in Manhattan Federal Court Thursday by a shareholder angry at $54 million in compensation doled out to executives last year.
The suit, brought by shareholder Stanley Moskal against CEO Vikram Pandit and the board of directors, comes in the wake of the Citigroup annual meeting on Tuesday, where some 55 percent of shareholders (in a non-binding, advisory vote) rejected the executive pay scheme, which included $15 million for Pandit.
The vote “has cast doubt on the board’s decision-making process, as well as the accuracy and truthfulness of its public statements,” reads the complaint. “Absent this (lawsuit), the majority will of the company’s stockholders shall be rendered meaningless.”
While Citigroup said the lawsuit was without merit, the third-largest bank by assets in the United States did attempt to sympathize with shareholder anger.
“The board takes the shareholder vote on executive compensation very seriously and will consult with representative shareholders to better understand their concerns,” said Citigroup spokeswoman Shannon Bell. The ability to cast a shareholder vote on executive pay at publicly-traded companies stems from the 2010 Dodd-Frank financial reform bill.
Citigroup has bounced back since its collapse, gaining market value and posting significant — if underwhelming — profits in 2011. The culture has not changed enough to assuage the concerns of shareholders frustrated at its low stock price and vulnerability to European debt troubles, however.
Copyright 2012 The National Memo