NEW YORK Citigroup Inc (C.N) said on Thursday it has overhauled the executive pay plan that shareholders rejected last year as overly generous, revising it to tie bonus payments more closely to stock performance and profitability.
The company also said in a filing that it is paying new Chief Executive Mike Corbat $11.5 million for his work in 2012.
The new plan was crafted after board Chairman Michael O'Neill and other directors met with "nearly 20" shareholders representing more than 30 percent of Citigroup stock, according to the filing.
Under the plan, 30 percent of the bonus for top executives will be paid in cash based on how much the company earns on assets and on total shareholder return compared with peers over three years through 2015. Another 40 percent will be a simple cash bonus and the final 30 percent will be deferred stock.
Citigroup's previous pay plan failed to win endorsement of shareholders in a vote at the company's annual meeting in April.
"When our shareholders spoke last year about Citi's compensation structure, we listened," O'Neill said in the filing.
The 2012 pay for Corbat, who was named CEO in October, was based partly on the new pay plan which was being developed last year.
Compensation analysts had criticized the previous plan for giving directors too much discretion to set pay. Investors and firms that advise shareholders on proxy votes had blasted the bank's past profit-sharing plan for the low bar that bank executives had to clear to receive high payouts.
Under the rejected compensation plan, if the company earned more than $12 billion before taxes over two years, senior executives could receive large payouts.
The new plan "more strongly connects compensation with performance," O'Neill said. The company said bonuses will be determined based on performance against goals set for each executive at the start of the year.
Paul Hodgson, an independent corporate governance analyst in Camden, Maine, said Citigroup's reformed pay structure likely will be enough to win approval from shareholders at its next annual meeting. New long-term performance targets and metrics in the plan will likely be well-received, he said.
But Hodgson said he believed the plan could be better.
They have done enough to check the boxes, basically," Hodgson said.
Corbat's pay for 2012 was based on his work as CEO and on his prior performance as head of the Europe, Middle East and Africa region, the company said. The board's compensation committee noted that Corbat had quickly moved to finalize the 2013 budget, including a restructuring plan to save $1.2 billion a year.
Of the $11.5 million of pay for Corbat, $1 million is base salary, $4.18 million is cash bonus, $3.14 million is deferred stock and $3.14 million is in new "performance share units" which deliver cash payments depending on profits and stock performance.
The company has not yet disclosed pay for other top executives. It did, however, say that performance share units valued at $3.14 million had been awarded to Manuel Medina-Mora, the co-president, and that $1.95 million of the units had been awarded to CFO John Gerspach. (Reporting by David Henry in New York and Ross Kerber in Boston; Editing by Gary Hill, Richard Chang and David Gregorio)