Risk & Compliance

More Dissenters Oppose Citi Directors

But Citigroup's annual meeting won't be a sequel to the Disney debacle, say governance experts.
Dave CookApril 15, 2004

On Tuesday the New York State Common Retirement Fund — which has $118 billion of assets and 22.4 million Citigroup shares — announced plans to withhold votes for two Citi director’s at the company’s annual meeting April 20, reported The New York Times.

A day earlier, the California Public Employees’ Retirement System also announced that it would oppose the duo — chairman of the board Sanford Weill and director Charles Prince. The largest U.S. pension fund, Calpers has $167 billion of assets — and holds 26.7 million Citigroup shares.

The two announcements seem to echo the sentiments of Nell Minow, founder of the Corporate Library, a governance-research group. “When we issued our first board-effectiveness ratings of 2,000 companies last year, Citigroup was dead last,” said Minow, reported the Times. “I’ve been waiting a long time for people to see what we regard as serious corporate governance deficiencies at Citigroup.”

So when two such “heavyweight institutional investors” plan to withhold their votes — and when one is the “500-pound gorilla” of the group, as the Times describes Calpers — is Sandy Weill headed for a Michael Eisner moment?

Not likely, suggested Ralph Ward, publisher of the Boardroom Insider, according to Reuters. “Shareholders are willing to put up with a lot of governance irregularities if the financial results are strong.” Citigroup reported 2003 profits of $17.9 billion, added the wire service, and its share price has risen by nearly one-third since last year’s annual meeting.

The Times also noted that State Street Corp., Barclays Bank, and Fidelity Investments, each control more than 200 million Citigroup shares, far more than Calpers. Indeed, added the paper, since Citigroup’s outstanding shares number about 5 billion, it will be “difficult for any single shareholder, no matter how large, to agitate successfully against the bank. “

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