Citigroup Inc (C): How I Voted – Proxy Score 33

citigroupCitigroup Inc $C, is one of the stocks in my portfolio. Their annual meeting is coming up on 4/22/2014. had collected the votes of no funds when I checked and voted on 4/15/2014.  I voted with management 33% of the time.  View Proxy Statement. Why an index with no links? That seems so basic. Perhaps Citi doesn’t want to make reading the proxy easy?

Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003. 

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs

Citi’s Summary Compensation Table (page 71) shows CEO Michael Corbat, was the highest paid named executive officer (NEO) at about $17.6M in 2013. I’m using Yahoo! Finance to determine market cap ($146.5B) and Wikipedia’s rule of thumb regarding classification. Citi is a large-cap company. According to Equilar (page 6), the median CEO compensation at large-cap corporations was $9.7 million in 2012, so Citi is well over median. In such cases it is my general policy to vote against the pay plan (also the advice of Glass Lewis), as well as the Personnel and Compensation Committee as follows: Michael E. O’Neill (Chair), Judith Rodin, Diana L. Taylor and William S. Thompson, Jr. Citigroup is an exceptionally large and complicated company, so I also voted against the follow for being on too many boards (which I judge to be three for Citigroup directors): Dr. Franz B. Humor, Ernesto Zedillo Ph.D., Joan E. Spero, and Robert L. Ryan.  


The GMIAnalyst report I reviewed gave Citi an overall grade of F for several reasons, including concerns about possible securities fraud, other high impact governance events, related party, transactions, board integrity, overboarded non-exec directors, severance vesting, revenue recognition, accounting investigations, restatements or special charges and other social investigations.

With regard to shareowner proposals, I voted in favor of Kenneth Steiner’s proposal that senior executives retain a significant percentage of shares acquired through equity pay programs until reaching normal retirement age and to report to shareholders regarding the policy before our Company’s next annual meeting. Adoption of this policy will incentivize such executives to work for the long-term. 
I am also delighted to vote in favor of CtW’s proposal that Citi prepare a report of lobbying activities and payments, as well as tax-exempt organizations that write and endorse model legislation. Absent a system of accountability, Citi’s assets could be used for objectives contrary to our long-term interests.
I also voted in favor of John Harrington’s proposal, which asks for a review of current policy and possible consideration of amending Company Bylaws to make it more practical to deny indemnification when appropriate, such as criminal actions.  We have had enough scandals to last a life-time. Blanket indemnification just encourages illegal behavior.

Of course, I also voted in favor of my own proposal for proxy access. See Take Action: Vote Proxy Access at Citigroup (C) for the rationale. We need a dramatic change of culture at Citi to reflect high moral standards. Proxy access will allow shareowners to place our own director candidates on the proxy. Vote for change; vote for proxy access.

How I voted (CorpGov) below and in bold where against the Board’s recommendations:

1aElect Director Michael L. CorbatFor
1bElect Director Duncan P. HennesFor
1cElect Director Franz B. HumerAgainst
1dElect Director Eugene M. McQuadeFor
1eElect Director Michael E. O’NeillAgainst
1fElect Director Gary M. ReinerFor
1gElect Director Judith RodinAgainst
1hElect Director Robert L. RyanAgainst
1iElect Director Anthony M. SantomeroFor
1jElect Director Joan E. SperoAgainst
1kElect Director Diana L. TaylorAgainst
1lElect Director William S. Thompson, Jr.Against
1mElect Director James S. TurleyFor
1nElect Director Ernesto Zedillo Ponce de LeonAgainst
2Ratify AuditorsFor
3Advisory Vote to Ratify Named Executive Officers’ CompensationAgainst
4Approve Omnibus Stock PlanAgainst
5Stock Retention/Holding PeriodFor
6Report on Lobbying Payments and PolicyFor
7Amend Director Indemnifications ProvisionsFor
8Adopt Proxy Access RightFor

Mark your calendar:

Under SEC Rule 14a-8, a stockholder who intends to present a proposal at the next Annual Meeting of stockholders and who wishes the proposal to be included in the Proxy Statement for that meeting must submit the proposal in writing to the Corporate Secretary of Citi at the address on the cover of this Proxy Statement. The proposal must be received no later than November 12, 2014. The proposal and its proponent must satisfy all applicable requirements of Rule 14a-8.

  Looking at, special meetings can only be called by shareholders holding not less than 25% of the voting power. I’d like to see that brought down to 10%.

From Yahoo! Finance, Citigroup Inc.’s ISS Governance QuickScore as of Apr 1, 2014 is 2. The pillar scores are Audit: 10; Board: 4; Shareholder Rights: 2; Compensation: 2. Brought to you by Institutional Shareholder Services (ISS). Scores range from “1” (low governance risk) to “10” (higher governance risk). Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are based on specific company disclosures.

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