The deadline for voting online is April 21st. My proposal, #8 on Citi’s proxy (page 97), would bring proxy access (page 40) to our company by allowing shareowners to place board nominees on Citi’s proxy. Don’t be fooled by Citi’s opposition statement, which calls the ownership thresholds “low.” In reality, 1% of Citi is huge; about $1.4B.
The largest shareowners at Citi, Vanguard and SSgA have never initiated an activist campaign but they might vote for candidates put forward by other investors. Public pensions are more likely to take the activist role and nominate candidates. The four largest public pension funds combined — CalPERS (35%), New York State Common (0.33%), CalSTRS (0.18%), and Florida SBA (0.17%) — would barely hold enough shares to nominate three board members directors under my proposal.
Another group with at least 25 shareowners could possibly nominate another 3 directors. Neither party could coordinate with the other. Neither party, nor even both combined, could ever win a majority of board seats under this proposal, but they could start to change the culture of Citigroup.
It wouldn’t be easy but if these funds, or others, put in the time to coordinate efforts, vet candidates and run them for office, we would have a real contest of ideas. Look at the proxy and you’ll see only statements of qualifications – nothing about how directors plan to grow our company or improve its faded reputation. Proxy access would drive competition among board candidates. Competition leads to better candidates — and they’ll be working for shareowners, not our CEO Michael L. Corbat.
- Citi is the only major bank to fail its Federal Reserve stress test two out of four times.
- According to GMI Ratings, Citi has a higher accounting and governance risk than 89% of all companies in North America.
- 5 of our board members serve on at least 3 boards. Citi is large and complicated. No one really knows it top to bottom. Citi had 22 full board meetings last year. Directors can’t provide adequate oversight if their time is split between 3 or 4 boards.
- The culture at Citi needs changing. In March alone:
- SEC investigates allocation and trade of corporate bonds, to determine if Citi favors big investors over small
- SEC announced investigation into fraud at Mexican unit
- Citi announces earnings restatement of 2013 accounts as a result of alleged $235M Mexican fraud
- FDIC investigates Citi for collusively suppressing interest rate
- Citi agrees to pay $1.1M to settle claims it violated short-selling rules.
- Swiss Competition Commission investigates possible manipulation of foreign exchange rates.