Individual investors in Citigroup Inc. who were diluted by 81 percent during the past year tried to amplify what little say they had left at today’s annual meeting.
“We want our dividend back,” shareholder Vincent Russo told Citigroup Chairman Richard Parsons, who presided over the meeting at the Hilton New York hotel. “That dividend was helping me pay for my mortgage, my property tax, and contributing to charities.” Russo, of Eastchester, New York, said he owns about 55,000 shares.
The meeting, like the two previous shareholder gatherings since Chief Executive Officer Vikram Pandit took over in December 2007 following the ouster of Charles O. “Chuck” Prince, became a venue for small investors to vent their frustration over losses caused by banks in the financial crisis. There was no shouting this year from the audience of more than 1,000, as there was in 2009, and Parsons adjourned after four hours, avoiding a repeat of last year’s six-hour-plus session.
All 15 board candidates were elected, each getting at least 92 percent of the votes, Citigroup General Counsel Michael Helfer said. All six management-sponsored proposals passed, including measures to approve the bank’s executive compensation plan, authorize a reverse split of Citigroup’s stock and pay $1.7 billion of stock to employees. A reverse split would put the stock price at a level more typical of a global company than the current price of below $5.
All six shareholder-sponsored proposals failed.
The results of corporate elections often are at odds with the ire expressed at the meetings because most shares are held by institutional shareholders who vote by proxy and rarely attend, said Warren Neel, executive director of the Corporate Governance Center at the University of Tennessee. They get favored access to management to address their concerns, he said.
The attendees are a “vocal minority,” Neel said. “The only thing they have is the podium to express their passion.”
Parsons, 62, and Pandit, 53, have issued more than 23 billion new shares since March 2009 to bolster a weakened capital base and repay $45 billion of bailout funds. The U.S. government alone owns 7.7 billion shares, a 27 percent stake that dwarfs the 5.5 billion shares outstanding a year ago.
Citigroup is a fundamentally different company and “positioned for growth,” Pandit told the shareholders. The bank yesterday posted a $4.43 billion first-quarter profit, the highest since the second quarter of 2007.
“I feel a whole lot better than I did a year ago,” he said. “We are doing what many of the critics and pundits said could not be done.”
Citigroup eliminated its dividend in early 2009. Pandit said the shareholder payout won’t return until regulators decide how much capital banks should hold.
The Treasury Department, which got its stake last September when $25 billion of the bailout funds were converted into common stock, said in a statement that it voted for all 15 directors. The Treasury also voted for the reverse stock split and the proposal authorizing the issuance of stock to employees.
Tim Massad, a lawyer with the department’s Troubled Asset Relief Program, attended the meeting as the government’s representative, Treasury spokesman Andrew Williams said. The government voted proportionately on other ballot issues, according to the statement.
“Treasury is a reluctant shareholder in private companies,” the department said. The government last month hired Morgan Stanley to manage the sale of the shares this year.
Prince, Rubin Booed
Barbara Aires, a nun with Sisters of Charity of St. Elizabeth in Convent Station, New Jersey, spoke in favor of a shareholder proposal advocating greater disclosure of collateral used to support over-the-counter derivatives.
Perennial attendee Evelyn Y. Davis railed against the selection of former Mexican President Ernesto Zedillo as a new director, complaining that he wasn’t in attendance. He was traveling, Parsons said. As in previous years, the mention of Prince, 60, and former Executive-Committee Chairman Robert Rubin, 71, drew boos.
Kenneth Steiner of Great Neck, New York, who said he owns 14,000 shares, applauded the departure of three board members who served in the years leading up to the bank’s near-collapse: former Xerox Corp. Chairman Anne Mulcahy, former AT&T Inc. Chairman Michael Armstrong and former Central Intelligence Agency Director John Deutch.
‘First Good Thing’
“I’m going to thank them for leaving,” Steiner said. “It’s the first good thing they did for the shareholders.”
Russell Forenza, 66, a retiree based in Ridgewood, New Jersey, said the reverse stock split would simply make it easier for Wall Street traders to drive the price back down.
“The boys on the street, they’ve got a conspiracy against Citigroup,” Forenza said. “Don’t you understand that?” Forenza offered to join the board, and said he could get the stock price above $50 within three years.
The shares rose 1.8 percent today to $4.97 at 4:15 p.m. in New York Stock Exchange composite trading. At the end of 2006, they were at $55.70.
Russo called for Parsons to resign, saying it would create a “clean slate.”
Parsons, a former Time Warner Inc. chairman who has served on the board since 1996 and took over as Citigroup’s chairman in early 2009, said in an interview beforehand that the meeting is “all part of the process.”
“It’s important that the shareholders once a year get to come and express their concerns,” he said.
The Citigroup gathering may be the best barometer of the mood of individual investors everywhere, said Carole Lynn Steiner of New York (no relationship to shareholder Kenneth Steiner), who said she has been attending for “10 to 15 years” and owns “a few hundred shares.”
“You can sum it up with this meeting in the aggregate of all the companies, with the disgust,” Steiner said.