Citigroup CEO and directors sued over executive pay

Fri Apr 20, 2012 2:52pm EDT

Vikram Pandit, Chief Executive Officer, Citi, of the U.S., Co-Chair of the World Economic Forum Annual Meeting 2012, attends a session at the World Economic Forum (WEF) in Davos, January 25, 2012. REUTERS/Christian Hartmann

Vikram Pandit, Chief Executive Officer, Citi, of the U.S., Co-Chair of the World Economic Forum Annual Meeting 2012, attends a session at the World Economic Forum (WEF) in Davos, January 25, 2012.

Credit: Reuters/Christian Hartmann

(Reuters) - Days after being rebuked by shareholders, Citigroup Inc (C.N) Chief Executive Vikram Pandit and the bank's directors have been sued by a shareholder accusing them of awarding outsized pay to top executives.

The complaint, filed Thursday in Manhattan federal court, said directors breached 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," said the complaint, brought by shareholder Stanley Moskal. "Absent this (lawsuit), the majority will of the company's stockholders shall be rendered meaningless."

Citigroup spokeswoman Shannon Bell said the lawsuit is without merit and that the bank will seek its dismissal, "consistent with court rulings in similar cases."

"The board takes the shareholder vote on executive compensation very seriously and will consult with representative shareholders to better understand their concerns," she added.

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 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.

(Reporting By Jonathan Stempel in New York; Editing by Tim Dobbyn and Steve Orlofsky)

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Comments (2)
Tkdcorp wrote:
The man took $128,000 in 2009 and $1 in 2010, while all other failing companies paid in millions…GIVE the Citi team a break for not loosing your $millions invesment to 0…

Apr 20, 2012 4:23pm EDT  --  Report as abuse
rbe4free wrote:
The truth they don’t want the people to know is that fiat currency is worthless, it has no value, it is not backed by anything at all, no precious metals and hasn’t been for years. When a loan is created neither the principal nor the interest is printed, it exists only as numbers in a computer. It is in fact created from thin-air.

Don’t tell anyone though as the truth is so simple that noone would believe you.

When unemployment reaches 30% or more(we’re already at 20%) due to technological displacement and all those people lose their purchasing power in the current monetary system, how will the system survive? Simply put the system cannot sustain itself without the participation of the consumer. It is doomed to fail.

When will everyone wake up and realize that blaming a political puppet or switching to a new one, will not change anything, when the puppeteer remains the same.

The Federal Reserve Cartel: The Eight Families; The 1913 creation of the Fed fused the power of the Eight Families to the military and diplomatic might of the US government. If their overseas loans went unpaid, the oligarchs could now deploy US Marines to collect the debts. Morgan, Chase and Citibank formed an international lending syndicate.

Until this is disolved, there will never be any change for the better, except for the financial elite.

Everybody whines about the situation, but nobody offers any alternative solutions. Here’s one if you’re serious about a solution, check out The Venus Project. If you have questions about it check out the FAQ page. =)

Apr 21, 2012 7:21am EDT  --  Report as abuse
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