Executive Compensation Linked To Stock Performance

Citigroup gave its CEO Michael Corbat $11.5 million for 2012, but Corbat's compensation going forward may be more closely tied to shareholder performance. After Citigroup lost its vote on say-on-pay last year, the company announced that it would link its executive pay to stock performance and return on assets. As one shareholder advocate group said, the new measure was "far from perfect, or even good, but it's less terrible than it used to be." Two of the reasons we would agree are the use of ROA and the exclusion of a risk measure. ROA is an accounting measure, which allows for leeway in calculating the inputs. Additionally, the plan does not account for risk, an important variable when examining returns.