Shareholders press Citigroup on CEO pay

Press Advisory
For Immediate Release - April 15, 1999
Contact:Betsy Leondar-Wright
(617) 423-2148 x13

Shareholders press Citigroup on CEO pay; Weill salary questioned in fortune cookies

PHOTO OP: Tuesday, 4/20, 8:30 - 9 am
Carnegie Hall, 57th St & 7th Ave, NYC

Citigroup shareholders will vote Tuesday April 20 on a shareholder resolution that calls on the company to establish a maximum ratio between the pay of the CEO and that of the lowest-paid worker in the company.

Outside the corporate shareholder meeting at Carnegie Hall, New York City, from 8:30 to 9:30 am, supporters of the resolution will offer shareholders fortune cookies filled with messages on runaway CEO pay. They will dramatize the out-of-control wage gap at Citigroup by contrasting one fortune cookie, representing a bank teller's $30,000 salary, with wheelbarrows full of 5,566 fortune cookies representing co-CEO Sanford Weill's $167 million pay.

"Citigroup CEO Sanford Weill makes more in 22 minutes than the typical bank teller makes in one year," reads one of the six fortune cookies being distributed. Another reads, "If the minimum wage ($5.15) grew as fast as CEO pay since 1960, it would now be $55.70. Vote YES on 6!"

Roger Rath and Judy Weiss, Citigroup shareholders and members of Responsible Wealth, will present the resolution, which is part of a national campaign, profiled in the April 8 Wall Street Journal, addressing the wage gap between CEOs and average workers.

Resolution proponents were prompted to act by the threat that the growing wage gap poses to working Americans. According to Business Week's current issue, CEOs now earn an astounding 419 times the pay of average blue-collar workers. Citigroup's co-CEO Sanford Weill is one of the most outrageous examples: his $167 million in compensation makes him 1998's third-highest paid executive. Weill is also Number 2 on Business Week's list of executives who gave shareholders the least for their pay and Number 5 on the list of those executives whose companies performed the worst relative to pay.

Co-CEO John Reed had a 138 percent pay increase to $9.5 million from Citigroup last year after the merger of Citicorp and Travellers, as well as $88 million in unexercised stock option gains. Citigroup estimates that 10,400 workers will be laid off due to the merger.

Responsible Wealth's members and supporters have introduced shareholder resolutions about wage inequities at nine companies so far this year: AlliedSignal, AT&T, BankAmerica, BankBoston, Citigroup, Computer Associates, General Electric, Huffy, and R.R. Donnelley. Some of the resolutions, such as at Citigroup, ask the company to set a reasonable ratio between CEO pay and the lowest-paid full-time employee in the company. Others ask the company to report on this ratio. One resolution asked the company to conduct a pay equity study by race and gender.

The first of the resolutions, on pay equity, at the Chicago-based R.R. Donnelley & Sons, on March 25, garnered a surprising 16.2% vote, or 13 million shares. This is a very strong showing given the low turnout and the voting procedures that favor management positions on proxy resolutions. According to the Investor Responsibility Research Center, shareholder resolutions seeking to limit CEO pay averaged 9.2% of the vote in 1998.

"Responsible Wealth is on our way to generating 100 million votes this year for greater shared prosperity," RW Director Scott Klinger said. "Many Americans now see CEO pay as out of control. Even Federal Reserve Chairman Alan Greenspan has publicly criticized such lush compensation and severance packages."

United for a Fair Economy is a national nonprofit organization that spotlights growing economic inequality and advocates shared prosperity. UFE recently published Shifting Fortunes: The Perils of the Growing American Wealth Gap.

Responsible Wealth, a UFE project, is a growing network of over 400 businesspeople, investors and affluent individuals in the top 5 percent of income and wealth working together to reverse the trend of growing economic inequality.

Remarks of Judy Weiss at Citigroup Annual Meeting -- April 20, 1999

Good morning, my name is Judy Weiss. In addition to being a shareholder of Citigroup I am also a member of Responsible Wealth, a nationwide network of business leaders and investors who have joined together to address the growing economic divide in America. This year, Responsible Wealth members have introduced nine shareholder resolutions on economic inequality with U.S. corporations, including Citigroup.

There is growing recognition in America that executive compensation is out of control. Earlier this year, Federal Reserve Chairman Alan Greenspan testified before Congress that shareholders are wasting their money on lucrative CEO compensation and severance packages. Mr. Greenspan concluded, however, that there was little the government could do to address this concern. While the government's hands may be tied, shareholders' hands are not.

Our company has been repeatedly singled out for its excessive CEO compensation. In a year when Citigroup's performance faltered and thousands of employees lost their jobs, Citigroup's co-chair Mr. Weill was the third highest paid CEO in America, and our other co-CEO, Mr. Reed, received a generous increase in his compensation, including a tripling of his bonus. In fact, according to Business Week, Mr. Weill ranks among the top five executives who gave shareholders the least bang for the buck and whose companies did the worst relative to their pay over the past three years.

In 1998, the average large company American CEO's compensation was 419 times that of the average manufacturing worker, up from 326 times last year and 42 times as recently as 1980. At Citigroup, Mr. Weill's compensation is probably more than 5,000 times higher than the lowest paid employee. That's staggering. Let me give you a graphic illustration to make these enormous numbers more real.

A few blocks from this hall, the Empire State Building rises 1,454 feet above the New York City skyline. If Mr. Weill's $167 million total compensation in 1998 were represented by the height of the Empire State Building, how tall would the buildings represented by other Citigroup workers be? The typical teller or back office worker, earning $30,000 a year, would be represented by a building just three inches tall. A well-compensated Citigroup manager, earning $100,000 a year, would be represented by a building just 10 inches tall.

Such towering discrepancies between corporate leaders and those they seek to lead create obvious problems within the corporation. The short-term nature of present compensation policies offer a perverse incentive that rewards the few at the top for laying off large numbers of workers. This leaves the majority of workers more economically insecure, fearful that their jobs too will be downsized or restructured. Pay practices that encourage disloyalty to workers foster worker disloyalty in return.

I see the sorrowful effect of the growing divide between the have more and the have less every day in my work trying to improve the health of children and families in this country. It's shameful!

It's time for a change! It is time to re-think the incentives we offer leaders of our corporation. It is time to look at the large option grants offered our leaders who already have options worth millions of dollars, and ask "how much incentive is enough?" It is time that we refute the "great person theory of shareholder value" that one person is responsible for the vast creation of wealth. It is time that we openly discuss the effects of concentrated wealth on our company, on the economy and on our democracy.

Our proposal offers one simple solution to begin this discussion. We ask that Citigroup establish a ratio between highest and lowest paid workers. We ask that the success of our company's leaders be linked to the success and security of their colleagues, the co-creators of value for shareholders, customers and society.

America stands at an important crossroads. Will we head into the next century as a nation divided by two sets of economic values: one that operates on a "winner takes all" principle, the other founded on the deeply seated American dream that all people who work hard deserve economic security and the opportunity to improve their lot in life? The answer to this question is up to us -- as people -- as citizens -- and as shareholders.

Mr. Weill, you certainly deserve your reputation as a corporate leader. You also are known for your strong support of minority business development and socially-responsible investing. I was taught by my parents that with privilege comes responsibility. We stand before you today to challenge you to be a leader in the movement toward responsible wealth.

Please vote "FOR" resolution number 6. Thank you.