By Tatiana Bautzer and Pritam Biswas
(Reuters) -Citigroup CEO Jane Fraser was elected as chair of the board of directors, the bank said in a filing on Wednesday.
As Fraser - who became Citi's CEO in 2021
- takes on the dual mandate, Citi joins major U.S. banks that have given the chair role to their CEOs, including JPMorgan Chase, Goldman Sachs and Bank of America.
Fraser replaces John Dugan, who has been chair since 2019 and will now become lead independent director. The board also granted a one-time equity award of $25 million that will vest fully within five years, to ensure "leadership continuity", according to the filing.
The board says Citi's recent performance improvement "is directly tied to Fraser's track record as CEO" and cites as accomplishments the international business divestitures, hiring new executives, simplifying the bank's structure and making progress on regulatory issues.
The move comes nearly three months after peer Wells Fargo also handed its top boss, Charlie Scharf, board chairmanship, along with a one-time special equity grant of $30 million in restricted share rights and stock options.
Such concentration of operational control and governance has previously prompted calls from influential proxy advisers to separate the two positions to bolster corporate governance. Goldman and BofA rejected such a proposal last year.
"We conclude that its new CEO pay continues a long tradition of paying in excess - or in this case at least before - proper performance," analysts at Wells Fargo said in a note, adding that Citi remains their top pick.
"From 2000-2009, CEOs at Citi were paid more than any other bank (excluding Goldman Sachs) even though the stock declined by far more than any other firm," they added, referring to the more than 92% fall in Citi shares through the time period.
Wells Fargo has an 'overweight' rating and a price target of $125 for Citi, compared with the $115 median target across Wall Street, according to data compiled by LSEG.
Citi did not immediately respond to a Reuters request for comment.
In a statement, Dugan said, "Citi is in a fundamentally different place than it was when these roles were separated."
Fraser said in a statement that the bank has shown it can grow returns to shareholders.
(Reporting by Pritam Biswas and Ateev Bhandari in Bengaluru; Editing by Anil D'Silva, Daniel Wallis and Shinjini Ganguli)
