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Citi Shareholders Vent at Meeting

Despite a tense four-hour gathering, though, the bank said all 14 members of its board were relected.


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shareholders on Tuesday expressed frustration and outrage over the financial titan's poor performance over the past year at the company's annual meeting in New York.

Shareholders barraged Citi on a myriad of issues, calling for, among other things, changes on the board of directors and the breakup of its sprawling businesses. Bank executives also endured complaints about executive compensation levels and questions on whether it would further cut its dividend. Roughly 1,000 participants attended the four-hour long meeting held in midtown New York, not far from Citi's headquarters.

Vikram Pandit, in his first annual meeting as CEO of the bank, attempted to assuage angry shareholders by reaffirming his commitment to providing long-term shareholder value. Citi is undertaking a "meaningful" re-engineering effort, he said. Citi on Friday

posted a $5.1 billion first-quarter loss

and said it was slashing 9,000 jobs to cut costs.

"The actions we have taken are firmly rooted in our belief in accountability," Pandit said.

Despite shareholders' frustration with Citi's board, the bank said after the meeting that all 14 directors were re-elected to Citi's board by a two-thirds vote.

As the credit crisis persists and home values decline, in some areas 20% or more, Citi has had to write down billions of subprime-related securities while dealing with increasing loan losses on in its consumer businesses.

Pandit said capital management was "critical" as Citi is looking to rid itself of "non-core" assets. The bank also underwent a $6 billion preferred offering on Monday, Pandit said.

Separately, the New York bank on late Monday declared a 32-cent dividend on its common shares, unchanged from the quarter before. The announcement come as some relief to shareholders, who already endured a 41% cut to it dividend in January.

Oppenheimer & Co. analyst Meredith Whitney, who correctly called that Citi would have to cut its dividend last fall months before it did, in February said the bank would likely have to cut its dividend further and raise more capital.

Citi is not alone among cash-starved banks resorting to cutting their dividend.

National City


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on Monday slashed its payout and said it was raising $7 billion to shore up its capital base.


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did the same last week and

Washington Mutual

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earlier this year.

Merrill Lynch



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also have raised money from outside investors to shore up capital bases.

Wachovia shareholders railed against the bank's management in its annual meeting in Charlotte, N.C., according to published reports. And WaMu shareholders also

angrily questioned

the bank's direction in a meeting last week.

Bank of America

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, however, on Monday said it would not cut its dividend after posting a

$1.9 billion first-quarter loss


When asked by a shareholder on Citi's intentions relating to its dividend, Pandit said the company has not changed its dividend policy.

But several shareholders stood to express their disappointment at Citi's board of directors, blaming them for their part in the losses Citi has taken, suggesting that a restructuring of the entire board take place.

The board of directors "have been asleep for years," one shareholder said.

Richard Ferlauto, director of corporate governance and pension investment at the union American Federation of State, County and Municipal Employees (AFSCME), informally proposed that Citi undergo a break-up of its consumer and commercial businesses.

"The subprime credit meltdown has brought into focus the company's fundamental flaw that investment banking and commercial banking cannot be effectively managed or risks sufficiently controlled under the Citi umbrella," Ferlauto said.

Still, none of the nine shareholder-led proposals passed, including a proposal by AFSCME to

implement a shareholder vote on executive pay packages

. Still, approximately 38% of the shareholders voted for the so-called say-on-pay proposal, according to preliminary results.

Investor activism has ramped up within the financial services sector as the subprime mortgage crisis unfolded into a full-blown consumer-led recession. Last week, WaMu succumbed to shareholder pressure by changing the way it calculates top executive's cash bonuses this year by including credit-specific targets, which were originally left out. In addition, director Mary Pugh, one of the two directors blamed for WaMu's missteps as the housing crisis worsened, resigned just hours before the Seattle thrift's annual meeting.

Shares of Citi rose fractionally on Tuesday.