Citi shareholders voted against executive pay plans

In what could be an embarrassing decision for troubled Citibank, the executive management can rest knowing that the "say on pay" vote is nothing more than a suggestion. On the campaign trail in 2008 Obama promoted this idea and it was eventually included in the Dodd-Frank legislation. The concept of an advisory vote has never been appealing to me since the track record is not impressive.

Let's also think back to the fact that all of the US banks - Goldman Sachs included - were dead following the crisis and had to be rescued by US taxpayers. There were pay restrictions since they all had to be saved but that never really worked since there were so many loopholes and exit possibilities. Some of the biggest gamblers of other people's money (Goldman) managed to slip by virtually untouched, laughing all the way to the bonus payouts.

So besides some public embarrassment for the incompetent Citi executive team, this is not a defining moment. Citi CEO Pandit received $39 million last year, despite never having to pay back anything that he made when Citi was busy booking garbage business during the run up to crashing in 2008. A one time bonus last year valued at $34 million was rather extraordinary considering that sorry state of affairs for Citi.

If the bank could shove through something that outrageous last year, why should they care about an advisory vote this year? Even if the bank chooses to accept the vote, it's only a matter of time until they find a sneaky way around it and fork over mega pay for their team.