Snap Fact #170

The 111th Congress Act Has Allowed Stockholders To Say “NO” To Outrageous Corporate Compensation!
One of the landmark pieces of legislation that came out of the 111th Congress was bilateral Dodd-Frank Act. Today we are going to examine a success story that is a direct result of a key provision of this Act.

During his Presidency President Obama has talked repeatedly about the need for increased regulation and financial reform on Wall Street in light of the near fatal collapse of the financial system in the Fall of 2008 during the Bush Administration. President Obama has spoken especially about the need for reining in (curbing) outrageous, excessive CEO compensation. The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173) is a US Federal Statute in the United States President Obama signed into law on July 21, 2010.[1] The Act implements financial regulatory reform sponsored by the Democratically controlled 111th United States Congress and the Obama administration. Passed as a response to the late-2000s recession, the Act brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. 

One of the law's key provisions gave shareholders the right to "Say No" to outsized pay for the CEO's of a corporation. On April 17, 2012, 55% of Citigroup's shareholders did just that, rebuffing outsized executive compensation at the financial giant in light of the company's poor performance.
Citigroup's shareholders were the first shareholders in a U.S. corporation to vote against a 2011 compensation plan that awarded outrageous compensation to the bank's five top executives, which included CEO Vikram Pandit. Mr. Pandit was slated to receive14.9 million. Last year, Mr. Pandit’s compensation included a $1.67 million salary and a $5.3 million cash bonus. In addition, he received a retention package valued at $40 million, to be awarded through 2015. In 2009 and 2010, as Mr. Pandit struggled to pull the bank back from the brink, he accepted only a $1 annual salary. The shareholder vote, which comes amid a rising national debate over income inequality, suggests that anger over pay for chief executives has spread from Occupy Wall Street to wealthy institutional investors like pension fund and mutual fund managers. Citigroup was the first big bank and the largest company, by market capitalization, to get a thumbs down. investors say that it is too soon for the bank to start giving out generous pay packages again. “The company has been flatlining,” said Mike McCauley, a senior officer at the Florida State Board of Administration, which voted its 6.4 million shares against the plan. “The plan put forth reveals a disconnect between pay and performance.”


When you hear a candidate telling you how advantageous it will be to get government out of our lives and end reasonable regulations on cynical and greedy people like this, think again about what that actually means and who will benefit.