Updated from 2:43 p.m. EDTCitigroup ( C) shares skyrocketed more than 50% Monday, after it named -- as expected -- four new independent members to its board of directors, including two former bank CEOs. Citi's new board members include Jerry Grundhofer, former chairman and CEO of US Bancorp ( USB), Michael O'Neill, the former chairman and CEO of Bank of Hawaii ( BOH) , William Thompson, the retired CEO of Pimco and Anthony Santomero, who was most recently a senior advisor at McKinsey & Co. and a former president of the Federal Reserve Bank of Philadelphia. Published reports on Friday had identified the four executives. Shares surged as high as $2.68, but closed up 30.9% to $2.33 on Monday. "This is a solid slate of candidates with extensive banking and financial services experience, a deep understanding of international credit and equity markets, and first-hand knowledge of the governing regulatory system," Citi's chairman Richard Parsons said in a statement. "These outstanding individuals will be great stewards for Citi as it navigates the ongoing challenges in the present environment and works to restore profitability," Parsons added. "As I said earlier this year, we are committed to reconstituting the board with a majority of new independent directors. The election of these candidates will be a major step toward achieving our goal." Citi has received a total of $45 billion along with the backing of some $300 billion in assets from the U.S. Treasury. The company recently reached an agreement with the government for it to convert a portion of its preferred stake into common shares. The change will allow Citi to build its tangible common equity ratio, which has increasingly been scrutinized by investors and analysts as a measure of banks' capital levels.
Critics have been calling for an overhaul at Citi and other troubled banks' board of directors in light of the financial crisis. Citi's board currently has 15 directors. Three directors have already announced they will depart from the New York-based bank's board. Roberto Hernandez Ramirez, the chairman of its Mexican banking operations, has said he won't stay on beyond his current term. Robert Rubin, a former Treasury Secretary who was a longtime Citi board member, and Sir Win Bischoff, most recently chairman at Citi, both have announced their retirement from the bank. Two more board members -- Kenneth Derr, the retired chairman of Chevron ( CVX), and Franklin Thomas, a consultant at TFF Study Group -- will have reached retirement age by the next month's annual meeting, the company said. The remaining 10 directors are up for re-election, Citi said. The company will consider future additions as well, it said. Separately on Monday, Citi detailed the compensation it paid in 2008 to CEO Vikram Pandit and other top executives. Pandit made $10.8 million last year, according to the company's proxy statement issued on Monday. Most of Pandit's compensation for the year was in the form of restricted stock and stock options, which have declined in value since their grant date. Pandit, along with former chairman Sir Win Bischoff, CFO Gary Crittenden and former senior advisor Robert Rubin declined bonuses and other incentive/retention compensation for 2008 "in light of Citi's performance and other extraordinary circumstances of 2008," the proxy said.
The value of the restricted stock and options Pandit was granted at the time of his hiring has also descended to the gutter as the markets tanked. The package, once worth roughly $37 million, is now down to just $1.8 million. The bonus pool for the top 51 Citi executives was cut by 43% vs. 2007. The bonus pool for the top 15 management executive committee members was reduced by 57%, while the structure of the awards was also changed, Citi said. Pandit also said that he will accept $1 as salary until Citi returns to profitability -- which might not be so far away. In a memo earlier this month, Pandit said the company was "profitable" for the first two months of this year and that Citi was having its best quarter to date since the third quarter of 2007. Citi also disclosed losses its executives took on their stakes in Old Lane Partners, the hedge fund Citi bought from Pandit, Head of Institutional Clients John Havens and Chief Risk Officer Brian Leach. Citi bought a stake in the hedge fund in 2007. At the time, part of the agreement called for a "substantial portion" of the purchase price paid to the executives to be invested into the fund until July 2011. According to the proxy, $100 million of the sale price was invested into the fund on the behalf of Pandit and Havens and an additional $10.8 million invested for Leach. As the markets collapsed last year, Citi ended up purchasing just about all of the assets in Old Lane last June. Pandit and Havens took a roughly 20% loss on their investments as did Leach. The funds are being held in a private account, Citi said.