Say on Pay at Citigroup

Description

This case examines the failed Advisory Vote on Executive Compensation (Say on Pay) for Citigroup and Vikram Pandit in April 2012. The general objective of the case is to help students understand executive compensation packages. As specific objectives, the case is intended to help students: i) Understand the components of executive compensation packages ii) Estimate the economic value of executive compensation packages iii) Judge whether the level of compensation provided by the package is appropriate This case also gives the opportunity to discuss the role that the Board of Directors, proxy advisors and shareholders play in Say on Pay.

Learning Objective

This case study is intended for courses in managerial accounting at the MBA level to discuss the level of executive compensation packages and understand the agents in SOP and the importance of SOP in corporate governance. The MBA case study can be structured into one or two sessions. The first session may focus on the level of compensation and what is necessary in the structure of a compensation package in order to win shareholder approval. The second session could follow up this discussion by exploring the importance of SOP votes and the various actors involved, their interests and responsibilities: more specifically, the role of the Board of Directors, shareholders and the proxy advisors who give voting recommendations to many institutional investors. Questions for Discussion For the preparation of the case, I would suggest the following questions: 1. Estimate the economic value of Pandit's compensation in 2011. Do you think that this value was excessive? 2. Was Pandit's compensation appropriate before 2011? 3. If you were a board member of Citigroup, what would you say at the board meeting after the SOP defeat?

Keywords

Board of Directors Executive compensation proxy advisors Say on Pay shareholders vote