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By Michael Wood, Third and State
In the news today, a couple of instances of CEOs being taken to task by shareholders over excessive pay.
Citigroup Centre in London. Photo by Harshil Shah.
USA Today reports that at Citigroup, 55% of shareholders rejected or abstained from rubberstamping a $25 million payday for their CEO Vikrom Pandit. The vote is only advisory, unfortunely, but is still described as being “historic” for Wall Street firms in the aftermath of the recession. The report notes:
Wall Street’s massive compensation packages have raised the ire of shareholders for years, especially when they appear to have little relation to the performance of specific executives. …
“Citigroup is one of most egregious example of disconnect between incentives of top management and value creation of shareholders,” said Mike Mayo, bank analyst at brokerage firm CLSA and author of the book “Exile on Wall Street.”
“The owners of the big banks, namely the shareholders, are finally taking a greater amount of responsibility by speaking up.”
Closer to home, the Pittsburgh Post-Gazette has a story this morning about discontent at Pittsburgh-based EQT’s annual shareholder meeting. Again, executive compensation seems to be at the heart of this dispute — as well as unease about natural gas production.
Even though the Buffett Rule failed to get a vote in the U.S. Senate earlier this week, it seems that income inequality is on the minds of many Americans right now — as it should be. (In case you missed it, check out the Keystone Research Center and Pennsylvania Budget and Policy Center’s fact sheet on the Buffett Rule and what it means to Pennsylvania.)
3 Comments
I may be wrong, but I think that the vote on high-level corpse officer compensation is always just advisory. The purpose is to get a positive vote for the compensation committee to shower gold on the officers. A negative vote can be ignored by saying that the stockholders just don’t understand the necessity of showering money on these brilliant people, even if the compensation goes up in the face of the company being destroyed.
Despite the vote is advisory I hope this decision will be made.It really seems that income inequality is on the minds of many Americans right now-last year CEO pay rose slightly, while workers struggled to find jobs and were used to apply for faxless payday loans .Executive compensation is under fire, but CEOs are still enjoying perks such as company jets, personal security, financial planning advice and club memberships but as we can see from this message, soon the situation will change because shareholders have made a decision.
Ahhhh, so the elites are getting ready to battle the elites. Can’t say it couldn’t happen to a more deserving bunch of folks! After outsourcing and doing everything to dismantle anything that might benefit workers for literally years I don’t imagine there will be a ton of people sympathetic to the plight of someone who can screw up a company and still extract millions in compensation.