The Zacks Analyst Blog Highlights: Citigroup, JPMorgan Chase, U.S. Bancorp, Nissan Motor and Ford Motor

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Apr 24, 2012, 09:30 ET

CHICAGO, April 24, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Citigroup Inc. (NYSE: C), JPMorgan Chase & Company (NYSE: JPM), U.S. Bancorp (NYSE: USB), Nissan Motor Co. (OTC: NSANY) and Ford Motor Co. (NYSE: F).

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Here are highlights from Monday's Analyst Blog:

Citi Sued Over Executive Pay

Citigroup Inc. (NYSE: C) has hit the headlines again and this time over its compensation policy for its top executives. In fact, according to a Reuters report, a suit has been filed by a shareholder against the CEO - Vikram Pandit, and the directors, over their pay packages.

According to the allegations, Citi's board has awarded its top executives an excessive pay package for a period of their service when the company's performance has been disappointing. Notably, the compensation awarded to top Citi executives in 2011 amounted to$54 million and included $15 million for Citi's CEO. Hence, by awarding such an elevated level of compensation, the top executives have breached their fiduciary duties, the lawsuit claimed.

The suit comes after the shareholder's refusal to approve Citi's executive pay packages at the company's recent annual meeting. In a period of disappointing revenue figures and a fall in stock price, shareholders believe that the executives do not deserve such excessive pay outs.

Besides, Citi has also failed to clear the stress test this year while a number of its rivals such as JPMorgan Chase & Company (NYSE: JPM) and U.S. Bancorp (NYSE: USB) could make it through. This also raises questions about the capital position of Citi and postpones any plan of the company to go for dividend hikes and share buybacks. Notably, Citi has failed to significantly enhance shareholder value following the financial crisis and this has somewhat weakened its competitive position.

The suit has been filed as per a provision of the Dodd Frank Reform Act. The provision in particular is "say on pay" which gives shareholders the right to vote on the compensation of the executives.

Though the suit has been termed by Citi as one without any merit and its dismissal will be sought by the company, we believe that if the suit can make through and win, then it will reinforce the power of shareholders on have a control over the executives' pay packages. This should in turn inspire the top executives to perform better so as to earn a higher compensation.

Citi shares are maintaining a Zacks #3 Rank, which translates into a short-term Hold rating.

Nissan Infiniti Goes to China

Nissan Motor Co. (OTC: NSANY) declared that its Infiniti brand will commence production of cars in China from 2014. The company formed a joint venture with Dongfeng Motor in China with the sole purpose of launching production in the world's largest auto market.

Two of Nissan's Infiniti models will be produced in the factories run by Nissan and its Chinese partner. With this, Infiniti brand, which was introduced in China in 2007, will launch its first-ever production outside Japan. The brand plans to introduce the M35hL sedan, which has been designed for Chinese businessmen and government executives, featuring an extended back seat and gas-electric hybrid engine.

Apart from the Infiniti models, Nissan plans to launch D50, a car that will be sold under the brand name Venucia and to be manufactured jointly by Nissan and Dongfeng. The launching of new electric cars in China is also on the company's agenda. The decision gained credence with the Government's announcement of a launch of 5 million electric cars by 2012. The company aims to sell 500,000 vehicles by 2016.

China witnessed a downfall in automobile sales to 2.5% in 2011 from 35% in 2010. However, sales expected to grow 5% in 2012, which is stronger than that of the United States and Europe. Automakers, owning very few businesses in China, ardently look forward to expand its market in China in the coming years. The expansion will also be able to meet Chinese consumers' preference for foreign car brands.

Apart from Nissan, Ford Motor Co. (NYSE: F) recently announced the construction of an assembly plant in the eastern city of Hangzhou for $760 million. The plant will double the company's production capacity in China to 1.2 million automobiles per year.

Nissan Motor, founded in 1933 and headquartered in Yokohama-shi, Japan, together with its subsidiaries, engages in the manufacture and sale of automotive products, industrial machinery, and marine equipment, primarily in Japan, North America, and Europe. The company offers passenger cars, trucks, buses, forklifts, light commercial vehicles, power trains, and parts, as well as sales financing activities. Currently, the company retains a Zacks #1 Rank, which implies a Strong Buy rating for the short-term.

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