March 16 (Bloomberg) -- Citigroup Inc., whose biggest shareholders may soon be U.S. taxpayers, nominated four new board members in a government-induced shakeup after the Obama administration orchestrated the bank’s third rescue attempt in five months.

Citigroup picked former finance-industry executives Jerry Grundhofer, Michael O’Neill, William S. Thompson and Anthony Santomero as nominees, the New York-based bank said in a statement today. Investors can vote on the choices at the bank’s April 21 shareholder meeting.

The government pressed Citigroup to revamp its board to show Wall Street and the public that companies face consequences when the U.S. is forced to take extraordinary steps to save them, an administration official said last month. The U.S. Treasury last month agreed to take a 36 percent stake in the bank after a $45 billion government infusion failed to stem losses.

“Any time you bring new blood it’s a good thing,” Charles Elson, director of the University of Delaware’s John Weinberg Center for Corporate Governance, said before the nominees were announced. “The shareholders wish they had done this sooner.”

Citigroup rose 55 cents, or 31 percent, to $2.33 as of 4:07 p.m. in New York Stock Exchange composite trading. The stock has fallen 65 percent this year.

U.S. Bancorp

Grundhofer, 64, is a former U.S. Bancorp chief executive officer and director at Lehman Brothers Holdings Inc. Ex-U.S. Marine O’Neill, 62, headed Bank of Hawaii Corp. and helped oversee Bank of America Corp.’s merger with NationsBank Corp. Thompson, 63, retired last year as co-head of Pacific Investment Management Co., the biggest bond-fund manager. Santomero, 62, is a former president of the Federal Reserve Bank of Philadelphia who was most recently a senior adviser at McKinsey & Co., Citigroup said.

“They’ve gone to great lengths to significantly improve their board,” said Thomas Brown, CEO of New York-based hedge fund Second Curve Capital LLC. “However, the board doesn’t run the company. It’s the management that’s still the critical issue. It’s a great start. It’s a better start than I could have hoped for.”

At least 10 of Citigroup’s directors were board members in the years leading up to the fourth quarter of 2007, when the company began five quarterly net losses that totaled $37.5 billion. They served under former Citigroup Chairman Sanford “Sandy” Weill, who built the financial colossus through acquisitions over two decades. Weill, 76, retired in 2006.

UBS Board

Citigroup announced its nominees as UBS AG, the Swiss bank that this month proposed replacing its chairman, nominated Michel Demare, Ann Godbehere and Axel Lehmann to the board, adding finance and risk experts as it revamps its top corporate body.

In January, Citigroup named former Time Warner Inc. Chief Executive Officer Richard Parsons to replace Win Bischoff as chairman, and long-term board member Robert Rubin also announced he won’t stand for re-election. The bank said director Roberto Hernandez Ramirez won’t stand for re-election.

Last month the bank announced that three directors won’t seek re-election, while two board members, Franklin Thomas and Kenneth Derr, will reach retirement age. At the time, the bank said it would have a majority of new independent directors “as soon as feasible.”

In a regulatory filing today, Citigroup said Chief Executive Officer Vikram Pandit, 52, had total compensation of $10.8 million in 2008. The package includes a salary of $958,333, stock awards valued at $8.23 million and options valued at $1.61 million. Most of the stock award was a $7.73 million sign-on bonus in January 2008. Pandit was also granted $37.2 million in options and restricted stock last year.

U.S. Bancorp

Grundhofer was CEO of U.S. Bancorp, Minnesota’s largest bank, from February 2001 until December 2006, a position he took after his brother John “Jack” Grundhofer retired. He served as chairman from December 2002 until December 2007. He’s on the board of Ecolab Inc. and served on the board of Lehman Brothers Holdings Inc. before it filed for bankruptcy protection in September.

Thompson retired as the CEO of Pimco in 2008 and still serves on the board of Pacific Life Insurance Co., where he is chairman of the investment and finance committee, according to the firm’s Web site.

He also sits on the board of Allianz Dresdner Asset Management, the parent company of Pimco. Thompson holds a master’s degree from Harvard Business School and a bachelor’s degree in civil engineering from the University of Missouri, Columbia.

Bank of Hawaii

O’Neill was the CEO and chairman of Bank of Hawaii from 2000 through 2004. He was briefly CEO of Barclays Plc in 1999 until he had to resign because of ill health. Prior to that, he helped oversee BankAmerica Corp.’s merger with NationsBank Corp. BankAmerica shares more than doubled between 1996 and 1999 when O’Neill was vice chairman and chief financial officer.

O’Neill is a graduate of Princeton University, where he received a degree in European civilization, and he has a master’s in business from the University of Virginia.

Santomero was president of the Philadelphia Fed from 2000 until 2006. Previously, he was a finance professor at the Wharton School of the University of Pennsylvania and deputy dean of the school. He received his doctorate in economics from Brown University and a bachelor’s degree in economics from Fordham University.

Santomero “is the kind of individual who looks beneath the surface and is an extremely good communicator with his fellow board members,” said William Hecht, chairman of the Federal Reserve Bank of Philadelphia and a fellow board member with Santomero at RenaissanceRe Holdings Ltd.

To contact the reporters on this story: Josh Fineman in New York at jfineman@bloomberg.net; To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net

Last Updated: March 16, 2009 16:10 EDT