"Shareholder Value" Isn't the Same as "Shareholders' Values"

If "shareholder value" is the rallying cry for the current crop of crony capitalists -- which is why they so "valiantly" repel attempts to regulate their industry -- why is it that shareholder votes are non-binding?

Yesterday, as reported by the New York Times' Jessica Silver-Greenberg and Nelson D. Schwartz, and others (e.g., Slate's Matthew Yglesias, here, or here for the American Banker's report), Citigroup shareholders voted down a $15 million pay package for Vikram S. Pandit, the banking giant's chief executive officer.

The Times reporters quoted an analyst with Credit Agricole Securities, who said that excessive pay has long been a problem at Citigroup, which has had the unhappy combination of poor stock performance among large banks together with some of the highest compensation for its top executives.

Pandit took a symbolic $1 / year salary in 2009 and 2010, which then got boosted to $1.67 million last year (plus $5.3 million cash bonus) -- despite the fact that Citi's shares fell 44%.

Another analyst noted, "CEO's deserve good pay but there's good pay and there's obscene pay."

The shareholder vote, known as "say on pay", is part of the Dodd-Frank financial-reform law which requires that public companies give their shareholders the opportunity to express the approval, or lack thereof, for executive compensation packages. To date, very few shareholders have opposed the packages presented. Shareholder votes are not binding.

According to the Times article, "Richard D. Parsons, who is retiring as Citigroup chairman, said that he takes the vote seriously and Citi's board will carefully consider it."

Considering it, of course, is not the same as following it.