By David Henry
NEW YORK Feb 21 Citigroup Inc said on
Thursday it has overhauled the executive pay plan that
shareholders rejected last year as overly generous, revising it
to tie bonus payments more closely to stock performance and
The company also said in a filing that it is paying new
Chief Executive Mike Corbat $11.5 million for his work in 2012.
The new plan was crafted after board Chairman Michael
O'Neill and other directors met with "nearly 20" shareholders
representing more than 30 percent of Citigroup stock, according
to the filing.
Under the plan, 30 percent of the bonus for top executives
will be paid in cash based on how much the company earns on
assets and on total shareholder return compared with peers over
three years through 2015. Another 40 percent will be a simple
cash bonus and the final 30 percent will be deferred stock.
Citigroup's previous pay plan failed to win endorsement of
shareholders in a vote at the company's annual meeting in April.
"When our shareholders spoke last year about Citi's
compensation structure, we listened," O'Neill said in the
The 2012 pay for Corbat, who was named CEO in October, was
based partly on the new pay plan which was being developed last
Compensation analysts had criticized the previous plan for
giving directors too much discretion to set pay. Investors and
firms that advise shareholders on proxy votes had blasted the
bank's past profit-sharing plan for the low bar that bank
executives had to clear to receive high payouts.
Under the rejected compensation plan, if the company earned
more than $12 billion before taxes over two years, senior
executives could receive large payouts.
The new plan "more strongly connects compensation with
performance," O'Neill said. The company said bonuses will be
determined based on performance against goals set for each
executive at the start of the year.
Paul Hodgson, an independent corporate governance analyst in
Camden, Maine, said Citigroup's reformed pay structure likely
will be enough to win approval from shareholders at its next
annual meeting. New long-term performance targets and metrics in
the plan will likely be well-received, he said.
But Hodgson said he believed the plan could be better.
They have done enough to check the boxes, basically,"
Corbat's pay for 2012 was based on his work as CEO and on
his prior performance as head of the Europe, Middle East and
Africa region, the company said. The board's compensation
committee noted that Corbat had quickly moved to finalize the
2013 budget, including a restructuring plan to save $1.2 billion
Of the $11.5 million of pay for Corbat, $1 million is base
salary, $4.18 million is cash bonus, $3.14 million is deferred
stock and $3.14 million is in new "performance share units"
which deliver cash payments depending on profits and stock
The company has not yet disclosed pay for other top
executives. It did, however, say that performance share units
valued at $3.14 million had been awarded to Manuel Medina-Mora,
the co-president, and that $1.95 million of the units had been
awarded to CFO John Gerspach.