How on earth is Vikram Pandit supposed to make loans to Americans and do other important banker things when he is constantly being pestered by you people about his pay?
It has only been 74 days since the Citigroup CEO had his 2011 compensation package rudely smacked down by shareholders, and yet everybody keeps hounding the man and his bank with questions about what they plan to do.
Just last night, for example, the Wall Street Journal's David Reilly came around knocking on the doors and peeping in the windows, looking for answers.
"In April, Citi's shareholders voted 55% to 45% to oppose the compensation plan for the bank's top executive," Reilly wrote. "More than two months later, there is still silence from the bank on how it will respond."
Yeesh, give it a rest, Reilly. These things take time. Possibly the rest of the entire year, according to a Bloomberg report last week.
Citi doesn't have to respond at all, you know. Dodd-Frank only gives shareholders the right to register their unhappiness with banker pay, but not the power to actually do anything about it.
But out of the goodness of its heart, Citi is going to humor inexplicable shareholder frustration with the fact that it jacked Pandit's pay up to $14.8 million last year, even as the bank failed to get its act together enough to get Federal Reserve approval for its capital plan. The bank told the WSJ:
"The personnel and compensation committee of the board has engaged an experienced compensation firm that will assist the board in its review, and members of the committee have been meeting with representative shareholders to fully understand their concerns."
Which sounds to Reilly like the bank maybe doesn't plan to do a single thing about Pandit's pay in 2011! Instead, the bank might just be trying to rejigger its pay formula for 2012. Such rejiggering is probably not a bad idea. But any decision to ignore the shareholders' vote 74 days ago, and the long delay in getting anything at all done, might well make these persnickety shareholders unhappy yet again. And yet again, tough luck, shareholders, Reilly writes:
Shareholders frustrated by this have little recourse but to bide their time and make their displeasure known come next year's proxy season. That underscores the weakness of the current, nonbinding nature of say-on-pay votes, which were mandated by the Dodd-Frank Act--they give gave shareholders a way to bark, but not to bite.
Why can't Citi shareholders just be like the other complacent shareholders at the big banks, most of whom have rubber-stamped CEO pay packages, in what has been a fairly disappointing proxy season for shareholder activism? Bank CEO pay at the 15 biggest U.S. and European banks rose, on average, 12 percent in 2011, according to a recent Financial Times study, even as profits and stock prices have fallen broadly. These shareholders know the deal: It's no picnic running a bank when you're constantly being pestered about your pay and derivatives losses and Libor rigging and the like.