Frustrated shareholders are gearing up to unseat top directors at both Citigroup ( C) and Bank of America ( BAC) at upcoming annual meetings. The American Federation of State County and Municipal Employees, or AFSCME, is urging Citi shareholders to vote against re-electing six of the troubled companies' directors. Separately, CtW Investment Group on Thursday formally asked BofA shareholders to dump Chairman and CEO Ken Lewis. CtW also wants investors to vote against re-electing governance committee chair Thomas Ryan and lead director O. Temple Sloan at the company's annual meeting on April 29. "Mr. Lewis is responsible for an ill-advised acquisition of Merrill Lynch that transformed a bank well positioned to weather the financial crisis into one of its most costly casualties," CtW wrote in a letter to shareholders. "Subsequent missteps have further compromised his credibility with investors and regulators. "With
BofA's share price down 79% in six months and financial markets still unstable, BofA's board of directors urgently needs to recruit a CEO who can restore investor and regulatory confidence," CtW said in the letter. "Removing directors Lewis, Ryan and Sloan is the first step in this process." In a letter directed at Citi shareholders on Thursday, AFSCME, an institutional investor overseeing more than $850 million in assets through pension plans, is looking to replace directors that currently or recently have served on the company's Audit & Risk Management Committee. They include: John Deutch, Citi's audit committee chairman and a professor at Massachusetts Institute of Technology and former Defense Department Secretary, Dow Chemical ( DOW) chairman and CEO Andrew Liveris, Xerox ( XRX) Chairwoman and CEO Anne Mulcahy and Judith Rodin, the head of the Rockefeller Foundation.
AFSCME also wants shareholders to vote against two other longtime Citi directors and former committee members -- Alain Belda, the current chairman of Alcoa ( AA) and C. Michael Armstrong, the chairman of Johns Hopkins Hospital. Belda has been a director at Citi and its predecessors since 1997. Armstrong has been a director since 1989. "During these committee members' tenures, the Audit & Risk Management Committee failed to protect shareholders from excessive exposure to credit, market, liquidity and operational risk," the letter states. "It is time for longtime culpable directors to leave the board to allow a fresh start for Citi, which needs to rebuild its brand and credibility as a financial institution," AFSCME adds. "We believe that these board members failed to fulfill their risk management responsibilities as members and former members of the committee." The shareholder proposal comes as the company undergoes sweeping changes both on its board and at management level due to its precarious position throughout the credit crisis. Citi has recognized some $64 billion in writedowns since the crisis began in mid-2007, according to AFSCME. The stock has fallen more than 95% since that time. If the proposal passes Citi could in effect have nearly an entirely new board by this time next year. Early this year senior advisor Robert Rubin said he would not seek re-election. Citi's chairman Sir Win Bischoff was forced out of his position. Citi's former lead director Richard Parsons has taken his place.
Earlier this month, Citi also named four new directors to its board, two of which are former bank CEOs from US Bancorp ( USB) and Bank of Hawaii ( BOH ). Two more board members will have reached retirement age by the time of the company's annual meeting on April 21. CtW's letter comes just days after high-profile investor Jerry Finger formally launched his campaign to strip BofA's Lewis of his chairman title and unseat Sloan and one other board members. Lewis had called the acquisition of Merrill Lynch, formally completed on Dec. 31, the "deal of a lifetime" at the time it was announced last fall. Unfortunately the deal has caused the company massive headaches as it struggles to digest the troubled investment firm. Shares of Citi were falling 3.1% to $2.86 on Thursday. BofA's stock was down 1.2% to $7.61.