Citigroup CEO, Directors Sued For Outsized Executive Pay Packages

* Lawsuit follows rejection of CEO Pandit's pay package

* Directors accused of breach of fiduciary duties

April 20 (Reuters) - Days after being rebuked by shareholders, Citigroup Inc Chief Executive Vikram Pandit and the bank's directors have been sued for allegedly awarding outsized pay to top executives.

The complaint filed Thursday in Manhattan federal court accuses directors of breaching their fiduciary duties by awarding more than $54 million of compensation in 2011 to the executives, including $15 million to Pandit, though the bank's performance did not necessarily justify it.

At Citigroup's annual meeting on Tuesday, about 55 percent of shareholders participating in an advisory vote rejected Pandit's pay package. That marked the first time that investors had rejected a compensation plan at a major U.S. bank.

That vote "has cast doubt on the board's decision-making process, as well as the accuracy and truthfulness of its public statements," the complaint said. "Absent this (lawsuit), the majority will of the company's stockholders shall be rendered meaningless."

Spokeswomen for Citigroup did not immediately respond to requests for comment.

Shareholders won the right to vote on executive pay at most public companies under the 2010 Dodd-Frank Act. Many analysts remained skeptical the "say on pay" votes would matter much.

Richard Parsons, a Citigroup director retiring as chairman of the New York-based bank, called the rejection of Pandit's pay package a "serious matter" that the board would address.

Pandit was paid a symbolic $1 in 2010 and $128,741 in 2009. He had joined Citigroup in 2007 when the bank bought his hedge fund Old Lane Partners for $800 million. Citigroup is the nation's third-largest bank by assets.

Thursday's lawsuit was brought by Stanley Moskal, a Citigroup shareholder. It seeks to force Pandit, Parsons and other Citigroup directors to pay damages to the bank, and for Citigroup to bolster internal controls.

The case is Moskal v. Pandit et al, U.S. District Court, Southern District of New York, No. 12-03114.

Comments

[waterlilidove]

02:35 AM on 04/26/2012

They who cheat with you, will eventually cheat on you... If you do the firing for them, expect to be fired by them.

[pines15]

07:24 PM on 04/22/2012

no executive at any company that was rescued by the U.S. government should get a bonus until say 2025.Then only if the company hasn't been rescued again.

[cef911f1]

07:41 PM on 04/22/2012

No executive at any company is worth kind money they are paid these days, period.

[bordway]

02:36 PM on 04/22/2012

"Shareholders won the right to vote on executive pay at most public companies under the 2010 Dodd-Frank Act."

Funny, isn't this one of the many things Willard wants to repeal if elected President?

[fortressfountain]

11:27 AM on 04/22/2012

We are not being run by the best and the brightest but by the best vulture parasites in the world. Once upon a time we had a nation to be proud of and everyone had a common interest in serving the good of the individual as this made it better for the USA.

[becky bradshaw]

11:40 AM on 04/22/2012

Your use of the word "parasite" is true on multiple levels. Obviously the relationship between CEO and the company was parasitic, but more importantly, the relationship between Citibank and the U.S. economy has been parasitic. Citi has acted as a leech feeding on our country, funneling resources to Mr. Pandit's home economy in India. (http://www.nriinternet.com/NRIbanking/A_Z/P/Vikram_Pandit/index.htm)

[bordway]

02:40 PM on 04/22/2012

The most parasitic being those who have profited greatest from an infrastructure created to enable a growing economy, who feel they should pay the least to maintain it yet still expect unrealistic returns regardless.

[lilbuddyjoseph]

11:09 AM on 04/22/2012

who is bigger?! Citibank or Bank of America

[J T K]

01:22 AM on 04/22/2012

The system works. Everyone please note that this was done without government lawmaking, without regulation for "the common good", this was done because a shareholder thought the CEO was being paid too much. Now all we need is for companies to open up executive pay to a full shareholder vote and everything will be fine, although I'm not sure how that will be accomplished.

[GM1966]

02:02 AM on 04/22/2012

Your wrong. This was able to happen as a result of the Dodd-Frank act. Without the Dodd-Frank act, this could have never happened.

Pulled from the article: "Shareholders won the right to vote on executive pay at most public companies under the 2010 Dodd-Frank Act."

Please explain how this isn't government lawmaking as you state in your post as it is in fact "government lawmaking" that made it possible.

[oldcliche]

06:05 AM on 04/22/2012

Reading... READING the article you say? That is an absurd notion here on the Huff.

Though your comment is true enough.

[rottnkid]

10:06 AM on 04/22/2012

"The system works. Everyone please note that this was done without government lawmaking"

You must have COMPLETELY missed this line:

"Shareholders won the right to vote on executive pay at most public companies under the 2010 Dodd-Frank Act."

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[oldcliche]

06:06 AM on 04/22/2012

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[bordway]

02:43 PM on 04/22/2012

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[sunshines daily]

09:33 PM on 04/21/2012

Citigroup, Citimortgage. and Citibank all crooks and liars!

[rottnkid]

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[WALLSTREETSOLDIER]

07:54 PM on 04/21/2012

Citi management has shown continued bad judgement. They failed the stress test, earning have been poor and they may be get downgraded. It is time shareholders made their voices heard. Pandit already got paid when Citi bought his hedge fund. That was a good trade for him and a bad trade for Citi. The approximately $100mm he got paid for his failed hedge fund is compensation enough.. Good job shareholders... The lawsuit is well deserved.

[Hammer of Truth]

04:38 PM on 04/21/2012

Out of court settlement. Story on page 29 in 6 months.

[rtx47]

04:33 PM on 04/21/2012

The real shareholder voices that count are all those fund managers whose fund holds CITI stock. The same applies to all other stocks that are publicly traded. These fund-managers draw millions in salaries and bonus for a negative return on the fund they manage.

It is time we (the 99%) tell these fund-managers like those at Fidelity, Charles Schwab etc., etc., that we are very dissapointed with their overall performance and the mutual fund industry; that on the whole have yielded negative results over the last decade.

It is time the 99% start holding these people directly responsible rather that just taking our frustrations on non-perfoming politicians.

[Hammer of Truth]

04:48 PM on 04/21/2012

Hold on, our politicians perform real well for the banks. After all, they are paid real well by the banks to do so

[creativ786]

08:31 PM on 04/21/2012

LOL true

[J T K]

01:24 AM on 04/22/2012

For the most part I think you're mistaken. Most fund managers that I've heard of get a base salary and then a variable amount based on the fund's profits. I'd like to see you point to a case of a fund manager that get a ridiculously high amount of pay for losing the fundholders money.

[neolow]

04:09 PM on 04/21/2012

"Say on Pay" - nothing will come of it. Wall St will never let something like this happen again. Lobbyists are already writing legislation against it.

[bynddrvn5]

04:05 PM on 04/21/2012

Good it is about time these top executives stop robbing shareholders blind.

Most top executives pay packages greatly outweigh the actual value they bring to the company.

[hftank]

02:45 PM on 04/21/2012

Well this is exciting news. Now maybe all the corparations big shots will all be scared. Since it has been done once it will happen to all of them. Good job mr. Moskal bravo.

[xansam]

02:42 PM on 04/21/2012

Well done. Hope this goes all the way and he wins!