Responding to anger over executive pay, Citigroup is changing the way it calculates the bonuses given to top executives. It said last week that part of the $11.5 million in compensation awarded to the new chief executive, Michael Corbat, would be closely tied to performance.
So far, though, the changes are affecting only a small portion of Citigroup’s executive compensation packages.
The changes come less than a year after Citi shareholders voted against a $15 million pay package for Vikram Pandit, then the chief executive. That vote was the first time shareholders had united to oppose compensation at a giant financial firm.
In April, the bank’s chairman, Michael O’Neill, took the reins of a five-member committee on executive pay. He said in a regulatory filing Thursday that the committee had come to its new formula after meeting with investors who hold more than 30 percent of the bank’s total outstanding shares.
A portion of the pay packages given to Citi’s executive will now be linked to the company’s performance relative to other big banks. “When our shareholders spoke last year about Citi’s compensation structure, we listened,” O’Neill said in the filing.
Nell Minow, a shareholder advocate at GMI Ratings, said the new approach was “far from perfect, or even good, but it’s less terrible than it used to be.”
Citi’s board members will continue to approve base salaries, cash bonuses and deferred stock given to top Citi executives. But now a new segment of the pay, called performance share units, will be linked to the new metrics.
For 2012, Corbat was awarded $3.1 million in performance share units. That amounts to 27 percent of his total $11.5 million package.
The new formula still puts Corbat at a similar compensation level to his peers.
Corbat is being paid the same amount for 2012 that JPMorgan Chase recently said it was handing to its chief executive, Jamie Dimon.