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Citigroup urges shareholders to approve compensation as advisory firm dissents

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Citigroup urges shareholders to approve compensation as advisory firm dissents

CitigroupInc. further defended its compensation practices in an April 7proxy form in the wake of proxy advisory firms urging shareholders to voteagainst the bank's say-on-pay proposal.

Citigroup said that the firms, ISS and Glass Lewis, comparedCitigroup to peergroups that "bear little resemblance" to the bank or tothe firms against which it competes.

It also detailed some considerations that went into itsincentive compensation decision-making for management in 2015, including thefirm's improved financial results, no "new headline control issues,"no Federal Reserve objection to the bank's submitted capital plan and thecontinued reduction of Citi Holdings. The bank also experienced increasedcapital and liquidity levels and improvements in internal, nonfinancial areassuch as ethics and culture training.

The proxy pointed out that the bank outperformed its peergroup on many key metrics, but has still kept CEO Michael Corbat's pay belowall but one of his U.S. peers.

"The difficult socio-economic environment that hasexisted for the past eight years, combined with uncertainties related to stillevolving regulatory regimes, have made the task of restructuring Citi anarduous one," the company said. "Management still has much to do toachieve their and the board's objectives, but we believe they are on the righttrack and that our incentive compensation awards are an important and reasonablysized recognition of the significant progress that has been made to date."

The proxy form comes in response to shareholder advisoryfirms detailing their concerns on the bank's pay practices. Glass Lewisbelieves there is a "disconnect" between pay and performance andinsufficient disclosures with respect to financial performance metricscorecards, according to a report that was republished April 6. It also saidthe bank does not disclose individual bonus limits. The firm noted that underthe long-term incentive plan, named executive officers are rewarded if thecompany underperforms the market, and that the compensation committee retains a"high level" of discretion in determining financial incentiveamounts. It graded the pay practices at Citigroup as a "D" — thefifth consecutive year that it gave the bank a "D" or an"F" — and said shareholders should be concerned about the disconnectbetween pay and performance.