Parsons blames Citi vote on failure to communicate
By Dave Clarke and David Henry
WASHINGTON (Reuters) - Richard Parsons, who chaired the Citigroup Inc board that lost a shareholder vote this week on executive compensation, said on Thursday that directors had failed to adequately explain to investors the methods they used to determine pay packages.
At Citi's (C.N: Quote) annual meeting on Tuesday, only 45 percent of shareholders endorsed the pay plan in an advisory vote required under the 2010 Dodd-Frank financial oversight law.
Under Parsons' chairmanship, the Citigroup board paid CEO Vikram Pandit $15 million in 2011. Outside proxy advisory firms used by institutional investors had criticized the pay plans for leaving too much room for director discretion and not adhering closely to measurements of Pandit's performance.
The "say on pay" vote was non-binding, but it was an embarrassing rebuke for the bank by its investors.
In an interview on Thursday, Parsons said he believes the issue can be dealt with through better communication. Parsons, who became chairman in 2009, announced in March that he would retire from the board after the meeting.
"I'm certain that the new board and the comp committee will engage in serious discussion with the representatives of the shareholders, particularly the institutional ones, and that this will not be a problem going forward," he said in Washington on the sidelines of an event hosted by the Rockefeller Foundation, a philanthropic organization.
The issue, according to Parsons, is shareholders' desire to have pay packages tied to very specific metrics.
The former chairman said the board should have done a better job explaining that it was using specific criteria to determine compensation. Continued...