New York: Citigroup Inc awarded Chief Executive Vikram Pandit $10.82 million of compensation in 2008, a year when the government propped up the bank with $45 billion of capital.
Citigroup also nominated four new independent directors to bolster the banking and financial expertise on its board, including Anthony Santomero, 62, a former president of the Federal Reserve Bank of Philadelphia.
The bank faces increased government pressure to right itself after more than $85 billion of writedowns and credit losses since the middle of 2007.
Pandit said in February he will accept a $1 annual salary and no incentive pay until the bank is profitable. His nearly $11 million of 2008 compensation included $7.73 million of sign-on and retention awards last January, the month after he took over.
“If I were a shareholder, $11 million would be hard to justify for a year where the company’s shares fell almost 80%,” said Walter Todd, a portfolio manager at Greenwood Capital Associates LLC in Greenwood, South Carolina. “But if he signed a contract, I guess it’s hard to argue.”
In 2008, the 52-year-old Pandit was awarded a $958,333 salary, $9.84 million of stock and option awards and $16,193 of other compensation, according to a summary compensation table included in a Monday proxy filing with the US Securities and Exchange Commission.
Some pay consultants and governance experts tabulate executive pay differently, saying the summary total may be imperfect because it counts options and stock as part of pay when they vest rather than when they are awarded.
The value of shares and options as recorded in the summary table of a company’s proxy filing typically reflects their value at the time they were granted. Their actual value now may be substantially lower, given that Citigroup’s shares, for example, dropped nearly 80% last year.
Wall Street compensation has come under intense scrutiny, especially at banks that, like Citigroup, received money under the government’s Troubled Asset Relief Program.
Citigroup got a $45 billion injection from TARP and the government agreed to share losses on $300.8 billion of troubled assets.
Pandit’s compensation was higher than the $9.96 million that Bank of America Corp, which has also received $45 billion of TARP money, awarded its CEO, Kenneth Lewis.
The other nominated directors are Jerry Grundhofer, 64, a former CEO of US Bancorp; Michael O’Neill, 62, a former CEO of Bank of Hawaii Corp and chief financial officer of a Bank of America predecessor; and William Thompson, 63, a former co-CEO of bond fund manager Pacific Investment Management Co.
If the nominations are approved, Citigroup’s board would have 14 members. Three of its 15 current members are not standing for reelection and two have reached retirement age.
The three directors stepping down are former Citigroup senior counselor and US treasury secretary Robert Rubin; former chairman Sir Win Bischoff; and Roberto Hernandez Ramirez, who chairs Citigroup’s Mexican unit Banamex.
Kenneth Derr and Franklin Thomas are leaving because of the retirement age.
Richard Parsons, Citigroup’s chairman, is the bank’s only outside director with top-level financial services experience, having once run Dime Savings Bank of New York. He is better known as Time Warner Inc’s former CEO.
Shareholders are expected to vote on the director nominations at Citigroup’s annual meeting on 21 April.