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Was it only last year that Citigroup executives and board members were dealing with angry shareholders at the bank’s annual meeting? At this year’s gathering, there was still concern from investors (video) at Citi’s lagging performance. But at least they didn’t revolt like last year. The bank’s shares even went up today.
In 2012, shareholders voted down the bank’s proposal to give then CEO Vikram Pandit a nearly $15 million pay package despite a lagging stock price. It was a major setback for the bank and a rare defeat for a compensation proposal. Last October, Pandit stepped down as CEO and Michael Corbat, who had been head of Citi’s Europe, Middle East and Africa region, replaced him.
Since then, Corbat has been working to improve the financial health of the bank, which took government bailout money during the financial crisis. Citi has been cutting jobs and shedding assets. It seems to be on the mend and beat analysts’ profit expectations when it reported first-quarter earnings earlier this month.
Earlier this year, Citi instituted a compensation structure that is more tied to the bank’s performance. Today at the annual meeting, shareholders overwhelmingly approved Corbat’s $11.5 million package. And Citi talked about the possibility of returning more capital to investors and getting rid of more assets, which was no doubt partly behind the stock’s rise today of almost 2%.
Investors were still unhappy, though, about the bank’s share performance, which has been largely stagnant or on the decline since 2009. Corbat was also asked about the London Whale trading scandal that caused a more than $6 billion loss for JP Morgan. Corbat said that scenario was unlikely to occur at Citi because “the way we run our institution is different from JPMorgan.”
Investors also asked Corbat and Citi board chairman Michael O’Neill about breaking up the bank, a question that has been consistently asked of all the big banks since the financial crisis. O’Neill seemed to dismiss that possibility, saying that breaking up Citi “in an uneconomic way is not in the best interest.”
Obviously, Citi still has a lot of work to do to get to the right size and right mix of businesses. But Corbat so far seems to be on the right track. At the very least, shareholders showed today they were willing to give him a chance.