Angry shareholders descended on Citigroup's ( C) shareholder meeting on Tuesday, but had little effect advancing their agenda at the beleaguered bank. Citi attempted to appease the roughly 1,500 angry shareholders that attended its annual meeting at a hotel in midtown Manhattan by saying the forum would be more shareholder-friendly. Chairman Richard Parsons, who moderated the meeting, said the nine shareholder-led proposals would be discussed before the management proposals, to promote the fact that it was a shareholders meeting, first-and-foremost, and in an attempt to prioritize investor concerns. The company also set up a help-desk for shareholders who had any personal problems regarding business with the company. But while shareholders were able to vent their frustration to management and directors of a company that has seen its share price drop from a high of more than $50 a share at the end of 2006 to barely $3 a share today, shareholders sounding off -- not to mention several outbursts -- at the meeting did little to win support for any of the shareholder proposals. Of the nine proposals offered by shareholders, all were rejected, according to preliminary results announced later in the meeting. Still, two proposals were rejected by just a mere few percentage points. Citi's directors, which includes CEO Vikram Pandit, won reelection with an affirmation between 70% and 90%, the company said. One shareholder voiced the opinion of many, when he said he voted against all the directors this year and specifically asked whether it really mattered.
"Where does that go?" he asked to chairman Parsons. The shareholder described the director elections as "very similar to the one they held in Cuba," where longtime dictator Fidel Castro passed on power to his brother, Raul, after falling into ill health. Another shareholder proposal, which did not pass, suggested that director seats should have two nominees, so that director turnover would happen more quickly if shareholders became "dissatisfied with the results of their policies and/or company performances," according to written commentary on the proposal. Citi, under pressure from the government and investors, has been revamping its board of directors to include more members that have specific banking and financial experience. Citi's board, in the wake of the company's multibillion losses, have been blamed for being asleep at the wheel while the company forayed into risky investments and loans that have become illiquid in the banking crisis that has gripped the economy over the past year. Five directors have since stepped down from their positions, while four new directors, including former executives of US Bancorp ( USB) and Bank of Hawaii ( BOH) have joined its ranks. Shouts and cheers from the audience greeted these changes, while one shareholder in particular yelled, "Thank God you're gone!" in referring to former senior advisor and director Robert Rubin's departure. Large pension shareholder, the American Federation of State County and Municipal Employees, or AFSCME, urged Citi shareholders to vote against re-electing six other directors. Smaller individual shareholders also expressed disinterest in Citi's board.
One questioned how it was possible that several directors that were present as the stock fell from its high of $55 to under $1 at one point last month are still on the board. "Do you consider this to be talent? I don't," he said. Still, shareholders went away angry as other questions went unanswered, or they were told to repeat them during the question-and-answer part of the meeting. Shareholders wanted to know such things as why former chairman and CEO Charles Prince was allowed to effectively "retire" in 2007, thereby giving the disgraced executive access to his restricted stock, despite the problems under his watch. Others wanted to know why management still went ahead with its plans to spend $400 million on naming rights for the new home of Major League Baseball's New York Mets, Citi Field, given the company's problems. Investors also had questions regarding the upcoming stress tests, among other things. Citi is required by regulators to keep mum on the tests for now, but Treasury Secretary Timothy Geithner on Tuesday sparked a big stock market rally after indicating that most banks have sufficient capital to weather the financial downturn. Shares rose 10.2% to $3.20 on Tuesday.