Bloomberg reports that Citigroup recently awarded CEO Mike Corbat $15.5 million in compensation, a 6.1 percent decrease from 2015, after the firm’s profits declined. In addition to salary, Corbat received a $4.2 million cash reward and $9.8 million in shares.
Following Donald Trump’s victory in the 2016 election, Citigroup managed to reverse a 3.6 percent decline to reach a year-end gain. Despite the end-of-year turnaround, Citigroup was unable to meet expectations. Corbat’s pay cut came when Citigroup experienced a 14 percent decline in profit. Despite the stock’s 15 percent gain, it still fell behind the 26 percent advance of the 24-company KBW Bank Index. CLSA Ltd. analyst Mike Mayo criticized management for missing certain goals, preventing investors from being able to hold the company accountable.
Corbat received his largest compensation package in 2015, a 27 percent increase to $16.5 million, despite shares dropping 4.4 percent. This prompted proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. to recommend investors to vote against the compensation plan.
Citigroup’s board responded by imposing a payout cap on Corbat’s equity award linked to Citigroup’s stock return. If the bank’s shareholder return is negative, the CEO won’t receive more than the target number of shares. Despite this, shareholders still voted against the program.
Meanwhile, Bank of America CEO Brian Moynihan received a 25 percent increase in compensation. Both CEOs received a $1.5 million salary. Bank of America awarded Moynihan his pay increase for his cutting costs as well as resolving legal matters left over from the financial crisis. In 2016, he raised profits by 13 percent, and promises to cap expenses at $53 billion by the end of 2018, a $2 billion drop from last year. Bank of America shares rose 31 percent in 2016, which Bloomberg attributes to investor expectations that President Trump’s administration will result in less regulation and lower taxes.