(Bloomberg) — Last year, Citigroup Inc. hired Vis Raghavan, a rainmaker from rival JPMorgan Chase & Co., to lift its banking fortunes.
Now, Citigroup is being forced to spell out the details of Raghavan’s own fortune to avoid the ire of a prominent shareholder advisory firm.
Earlier this week, Glass Lewis & Co. recommended that shareholders vote against Citigroup’s executive compensation proposal at its April 29 shareholder meeting. The firm questioned whether the bank was disclosing enough about a $52 million make-whole award to be paid in coming years to its new banking head Raghavan, according to a person with access to the report.
That prompted an unusual filing from Citigroup on Wednesday, which provided a breakdown of Raghavan’s compensation. It offered more detail than a March 18 filing. Raghavan was also paid $22.6 million for his work at Citi last year.
The move helped persuade Glass Lewis to flip its recommendation Thursday. “Although wary of the sizeable sign-on awards to Mr Raghavan, the supplemental proxy material filed by the company provides a meaningful discussion,” Glass Lewis said in its updated note. “As such, a vote against the proposal is not fully warranted.”
Representatives for Glass Lewis and Citigroup declined to comment.
Advisory firms like Glass Lewis have taken on the role of wardens policing surging pay for senior Wall Street executives, frequently dinging banks for doling out rewards that don’t match the company’s underlying performance. Just last week, Glass Lewis rebuked “excessive” bonuses being handed out to Goldman Sachs Group Inc. Chief Executive Officer David Solomon and his deputy and recommended shareholders vote it down.
Raghavan’s jump to Citigroup marked a marquee hire for CEO Jane Fraser, who is pressing ahead with the bank’s biggest restructuring in decades. The hard-charging dealmaker is tasked with reviving the business to make it more competitive against industry leaders like Goldman and JPMorgan.
At the time, Raghavan was running JPMorgan’s investment banking franchise as well as operations across Europe, the Middle East and Africa. That perch put him in line for some lucrative payouts.
In its filing Wednesday, Citigroup said that to incentivize Raghavan to leave his prior employer, they agreed to compensate him for some $52 million in deferred equity and cash awards that he had to forfeit at JPMorgan.
The equity portion of the payout will be granted to Raghavan over a period of seven years, reflecting the deferral period required by UK regulators for what he gave up at JPMorgan.
The provisions to pay Raghavan “reflect standard practice,” the bank wrote in its filing this week, which didn’t give a reason for laying out the extra justifications.
(Updates to add banker’s prior title in ninth paragraph.)
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