Citigroup would defer exec pay 10 years if bank breaks laws under shareholder proposal

NEW YORK (Bloomberg) - Citigroup Inc. shareholders will vote next month on whether to defer a chunk of top executives' pay for 10 years, using the money to cover fines if the bank breaks laws.

The proposal would put "a substantial portion" of total annual compensation for executive officers at risk, according to the measure submitted by Bartlett Naylor and included in the bank's proxy statement. Naylor, a financial policy advocate at Washington-based Public Citizen, cited the bank's US$7 billion settlement of mortgage-bond probes last year.

While Citigroup's board has strengthened its clawback policy to cancel pay for failing to supervise employees who break the law, it doesn't go far enough, according to Naylor. Under the proposal, executives would sacrifice money even if they weren't deemed responsible for legal violations. Citigroup advised shareholders to reject the move.

"Adopting a proposal that inhibits Citi's ability to attract and retain talented executive officers would be detrimental to Citi's long-term business objectives and to its stockholders," the firm said in the proxy for its April 28 meeting in New York. The 10-year deferment and broad penalties for executives who may not have direct culpability would put it at a disadvantage to competitors, it said.

Citigroup said its current policy already is stronger than the proposal because the firm can claw back pay for bad judgment that harms its business, even if laws aren't broken or fines paid.