Citigroup's Indian American CEO Vikram Pandit and its directors have been sued by a bank shareholder over a compensation package that was contested by investors in a rare failed "say-on-pay" vote.
A lawsuit filed in Manhattan on Friday by shareholder Stanley Moskal says Pandit and directors breached their fiduciary duties by awarding more than $54 million of compensation in 2011 to the executives.
That pay included $15 million to Pandit, which as the suit says "represented a raise of 1,499,999,900% over his 2010 compensation", in a year when the bank's share price fell 44%.
Pandit, 55, had the 45th highest compensation among CEOs last year, according to Equilar, an executive compensation research firm. He had an annual salary of $1 for most of 2009 and 2010 while the bank dug out from a government bailout.
The suit follows Tuesday's vote by Citi's shareholders at the bank's annual meeting in Dallas after critics complained Pandit and other top bank officials enjoy high pay that's not well connected to increasing shareholder value.
Friday's suit is filed under the "say on pay" provision of the Dodd Frank reform act which gives shareholders the right to vote on executive pay.
Citi says the suit is baseless and plans to seek its dismissal.
At issue is what shareholders believe are undeserving compensation packages despite poor performance. In addition to its stock taking a big hit in 2011, Citi failed the Fed's stress test this year.
In an earning call with analysts Pandit said he wasn't sure yet about whether or not the bank would resubmit its capital plans or just wait for the 2013 round of stress tests.
The pay proposal received just 45% of votes cast and followed Citigroup's announcement on Monday that profit fell 2% to $2.9 billion from a year earlier, missing analyst expectations.