New York: Citigroup Inc Chief Executive Vikram Pandit pledged to repay “every dollar” the third-largest US bank owes to the government, which has pumped $45 billion of capital into the bank.
The embattled CEO spoke at an annual meeting that stretched to roughly six hours, where he and lead director Richard Parsons fielded complaints from investors furious about the 94% plunge in their shares since the beginning of 2007.
“Your board of directors are too terrible for words - they’re dumb,” said Peggy McMahon, who later told Reuters the declining value of her Citi shares resulted in a $250,000 loss.
Citigroup’s annual meeting typically lasts hours, but this one was unusually long. The proceedings are usually dominated by small shareholders angry over their experience in retail branches or with their credit cards, but this year investors focused squarely on who was to blame for the dwindling value of their shares.
Even amid the anger, shareholders elected every director the board nominated, including some accused of lax oversight as the bank’s troubles mushroomed. Investors managing money for institutions often do not attend shareholder meetings but usually dominate the voting.
Every shareholder proposal failed to pass, but some came close to winning, including one that would allow investors to call special shareholder meetings, which received a little less than half the votes cast.
Citigroup’s annual meeting came four days after the bank posted a $1.59 billion first-quarter profit before payments of preferred dividends under the US Treasury Department’s Troubled Asset Relief Program. The results benefited from a big accounting change and improved trading results. Citigroup had lost $37.5 billion in the prior five quarters.
Pandit’s job security has long been a topic of speculation, and the Financial Times on Tuesday said top Federal Deposit Insurance Corp officials have discussed who might replace him if the bank needs more government aid. It said new Chief Financial Officer Edward “Ned” Kelly could be a candidate.
“I intend to see this through,” Pandit told shareholders. Asked why Kelly handled Citigroup’s conference call with analysts to discuss quarterly results, Pandit said it was “only fair” to let Kelly deliver the “good news.”
Pandit stood by Kelly’s comments on Friday that the bank does not plan to change terms of an exchange offer to swap preferred shares for common, giving the government a potential 36% stake in Citigroup.
He also said he wants to restore the bank’s dividend as soon as possible, and said Citigroup, whose shares fell below $1 early last month, was not actively considering a reverse stock split.
US regulators are slated in early May to complete stress tests to determine how well the nation’s largest lenders would fare if the recession proves to be deep and long. Those tests may also decide whether Citi needs more aid.