Oct. 16, 2012
Pandit Resignation Signifies Importance of New Shareholder Pay Vote
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen
The resignation by Citicorp CEO Vikram Pandit highlights the power of the new “say-on-pay” reform tool, where shareholders vote on CEO pay. Pandit dramatically lost such a vote last spring and now has suddenly decided to leave his post. Although he has not said why he is departing the company, we consider it inconceivable that Pandit’s pay was unrelated to his departure. Of course, he can prove that theory wrong by leaving his $50 million paycheck for 2011 at the door on his way out.
Say-on-pay helps shareholders exercise the prerogative of any owner: control. Until the passage of the groundbreaking Wall Street reform bill, shareholders were unable to exercise that right. The important say-on-pay reform has enabled shareholders to oppose CEO overpayment. The say-on-pay referendum has already led to significant reforms, such as at General Electric, where the company instituted changes on the eve of a threatened adverse vote by shareholders.