Tags: Reich | Citi | CEO | Pay

Reich: Citi Investors’ CEO Pay Snub a ‘Warning Shot’

Thursday, 19 April 2012 07:31 AM

Economist and former Secretary of Labor Robert Reich says the recent vote by Citigroup shareholders refusing to condone a $15 million pay package for CEO Vikram Pandit, as well as to the giant pay packages of Citi’s four other top executives, is a "warning shot across the bow of every corporate boardroom in America."

“The shareholders of Wall Street giant Citigroup are out to prove that corporate democracy isn’t an oxymoron,” Reich writes in his blog.

“Shareholders aren’t happy about executive pay,” writes Reich, now a professor of public policy at the University of California at Berkeley.

CEO pay at large publicly-held corporations is now typically 300 times the pay of the average American worker, notes Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton.

“It was 40 times average worker pay in the 1960s and has steadily crept upward since then as corporations have morphed into ‘winner-take-all’ contraptions that reward their top executives with boundless beneficence and perks while slicing the jobs, wages, and benefits of almost everyone else,” he says.

“Meanwhile, too many of these same corporations have failed to deliver for their shareholders.”

Citigroup, Reich points out, has had the worst stock performance among all large banks for the last decade but ranked among the highest in executive pay.

However, “the real news here is new-found activism among institutional investors – especially the managers of pension funds and mutual funds,” Reich says.

“They’re the ones who fired the warning shot.”

Reuters reports that activists looking to build on the Occupy Wall Street movement say they're turning to corporate shareholder meetings this spring to vent their anger over economic disparity in the United States and to promote an assortment of other causes.

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