A peek inside annual meetings for the big banks, where small shareholders get to talk directly to executives.
Kai Ryssdal: Shareholders at FirstMerit Bank, a regional bank out of Akron, Ohio, took their lead from their peers at bigger and better-known Citigroup today. They rejected a $6 million pay package for their chief executive. Same as Citi shareholders did the other day for CEO Vikram Pandit.
Matthias Rieker covered the Citigroup meeting down in Dallas for Dow Jones Newswires. So we called him up to get a sense of what actually happens at these annual meetings. Welcome to the program.
Matthias Rieker: Hi, how are you?
Ryssdal: I'm good. Thank you. So tell me what it was like in that Citigroup shareholders meeting when they decided that they didn't want to pay Vikram Pandit $15 million.
Rieker: So when the vote was actually announced it was at the end of the meeting and people were already ready to leave. So the reaction was surprisingly calm.
Ryssdal: It sounds almost boring.
Rieker: It was. There were a couple of shareholders who actually made fun of that and Chairman Parsons' responded...
Ryssdal: Dick Parsons is the chairman, yeah.
Rieker: Exactly. How comfortable it is for him and the company to be in Dallas away from New York.
Ryssdal: Right. When these meetings are in New York -- not just for Citi, but for all these big banks and companies -- what's it like? I've got visions of a hotel conference room that has weak coffee and stale cheese danishes in the foyer and then everybody goes in and sits down and listens to some discussion.
Rieker: That is pretty much correct.
Ryssdal: OK. Good.
Rieker: Sometimes you don't get coffee at all. Last year was actually the first year in several years that Citi started serving coffee again, which was noted at the time as one of the signs that the company had improved.
Ryssdal: Come on, no. Really? We get coffee and that's why...
Rieker: It was. But most banks actually have it within their headquarter building. Maybe 50 people attend. It's usually regulars.
Ryssdal: Is it possible for an average shareholder, somebody who owns 100 shares of Citi or Wells Fargo or whatever, to go in there and get a turn at the mic and talk to the CEO and say, 'Why are you driving my shares into the ground?' I mean, does that happen?
Rieker: Yes, it happens quite a bit. Most of the people who speak are actually shareholders who own a couple of shares or a couple of hundred shares. This is their opportunity. And they ask questions from why is the share price down to why don't you do more to support retail banking customers. It's a broad, broad range of things. Even political questions about the economy, about the president.
Ryssdal: So here comes the extremely cynical question and it goes like this: Are these meetings any more than some kind of kabuki theater where the board members say what they're going to say, the shareholders and the big institutional investors say what they're going to say, and then everybody goes about their merry way and nothing really changes?
Rieker: The meeting in Dallas clearly shows that there can be changes. You can influence company behavior through these shareholder meetings. If you look at other parts of the world, in Europe for example, companies frequently have to hire soccer stadiums to fill all the people in who want to speak at these meetings. So if we think about democracy and corporate democracy, this is really a platform for people and the more shareholders make the same suggestions and have the same demands, the more management will have to listen.
Ryssdal: And they get coffee too now?
Rieker: They do get coffee at some meetings, not all.
Ryssdal: Matthias Rieker covers banking for the Wall Street Journal and Dow Jones Newswires. Thanks a lot for your time.
Rieker: Thank you.