Obscene Pay and the Masters of the Universe

By Charles P. Pierce, Esquire Magazine

18 April 12

ell, now isn't this special? It seems that Vikram Pandit, the CEO of Citigroup, went to his stockholders about his compensation, and his stockholders essentially told him to pound sand:

The shareholder vote, which comes amid a rising national debate over income inequality, suggests that anger over pay for chief executives has spread from Occupy Wall Street - to wealthy institutional investors like pension fund and - mutual fund - managers. About 55 percent of the shareholders voting were against the plan, which laid out compensation for the bank's five top executives, including Mr. Pandit. - "C.E.O.'s deserve good pay but there's good pay and there's obscene pay," said Brian Wenzinger, a principal at Aronson Johnson Ortiz, a Philadelphia money management company that voted against the pay package. Mr. Wenzinger's firm owns more than 5 million shares of Citigroup.

(It is once again that time on the blog where I point out what a shame it was that the Occupy movement didn't have a "coherent set of principles" so that it might have a lasting effect on the way business is done in this country, in and out of politics.)

Now, the New York Times blog goes out of its way to emphasize that Pandit wasn't the worst of the gombeens who wrecked the world economy and then stole what was left, but that is not setting a very high bar. Just to give us all an idea of the state of play, we learn that Pandit's compensation package for last year did not exactly have him selling apples on the sidewalks of Vesey Street....

Last year, Mr. Pandit's compensation included a $1.67 million salary and a $5.3 million cash bonus. In addition, he received a retention package valued at $40 million, to be awarded through 2015. In 2009 and 2010, as Mr. Pandit struggled to pull the bank back from the brink, he accepted only a $1 annual salary.

I suspect he managed to get by, however. Now, though, he apparently has decided that he needs $15 million to make up for those two years. Eight for salary and seven for moral witness, I guess. If this vote is an indication that stockholders are starting to shake off their fealty to the Masters of the Universe theory of high finance, then it's possible that a general revolt along these lines might take place.

It is also to be noted that the much maligned Dodd-Frank financial reform bill, which admittedly should have been stronger, and which every one of the Republican candidates for president promised to eliminate immediately upon taking office, was the vehicle through which this uprising took place. This is another reason why I'm increasingly viewing the Obama Administration as the Era of Pretty Good Starts.