Citigroup's (NYSE:C) annual shareholder meeting was held Wednesday in New York City. It was Michael Corbat's first since he took the reins as CEO last October.
Shareholders gave him a much better reception than they gave ex-CEO Vikram Pandit last year, easily approving an $11.25 million pay package for the new chief executive. All things considered, Corbat is worth it.
Now this is a mandate
Corbat's 2012 pay package received a 90% vote of approval, in stark contrast to last year's pay package, which was soundly rejected by shareholders, who weren't happy with Pandit's performance.
For this year, Corbat and chairman Michael O'Neill went back to the drawing board, revamping Citi's pay package so that pay is more closely tied to performance. Under the rules of the new package, stock can even be clawed back if the situation is serious enough.
Rock star, sports star, CEO
Yes, $11.25 million for one year's work is a lot of money. Is anyone really worth that? Are athletes? Are performers? In an absolute sense, no one is, but in a relative sense, Corbat is.
Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein will make at least $15 million in 2012. JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon will make $11.5 million for 2012 (his pay was cut in half as punishment for last year's London Whale trading scandal). Wells Fargo (NYSE:WFC) CEO John G. Stumpf will make more than $22 million in total compensation for 2012.
Now, is Citi performing at the level of a Goldman, JPMorgan, or Wells? No, but consider how far the bank has come since the financial crisis, when the only big bank that was more of a basket case was Bank of America (NYSE:BAC).
On that note, Pandit has to be given his due for stabilizing Citi in the immediate aftermath of the crash, but I just never had the feeling he had a handle on turning the bank around in the same way that Corbat does.
Corbat has made some courageous decisions in his short time as CEO, like opting not to increase Citi's dividend in the wake of impressive 2013 stress-test results, even though that would have curried serious favor with investors. He also stood up to investors at Wednesday's shareholder meeting by refusing to wind down Citi Holdings -- Citigroup's "bad bank" -- too quickly, so as to not to "destroy our capital simply for the sake of speed."
Foolish bottom line
Most of the time, you get what you pay for. Corbat is a pro who knows Citi inside and out (he's been with Citi for almost 30 years), and he's someone who puts the interests of the business first. By voting in approval of Corbat's 2012 pay package, shareholders also voted their approval of Corbat himself. And I think Citi's impressive first-quarter results are just the beginning of good things for the superbank under his watchful -- and fairly recompensed -- eye.
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