Citigroup Shareholders Re-Elect Dinosaurs As Directors
The FT reported yesterday that Citigroup CEO Vikram Pandit was one goverment dollar away from the chop – their source said: “It is unthinkable that Vikram could stay on if Citi requires more federal funds”. But in the subsequent shareholder meeting that followed, Pandit stood his ground, vowing to stay at Citi and pay back all the money that it’s borrowed from the government.
He’s had to endure the sight of less sub-primed competitors like Goldman Sachs and JP Morgan announcing fabulous profits last week; Citi did post a $1.6bn profit, but this figure was buoyed by a weird accounting rule that debt declining in value must be valued at market rates, leading to an artificially inflated earnings figure; it also got bolstered by selling off units, 22 of which have gone since the crisis began. There were still $7.3bn of absorbed bad assets last quarter bringing the total since the crisis began to $39bn, and with unemployment as it is, that’s only going to continue.
But despite this, all the banks’ incumbent directors got re-elected, including Pandit, who said: “I intend to see this through because there is not more important place to be than Citi”. Fair enough maybe, as Pandit is a relative newcomer and recently bought 850,000 shares in the bank as a show of solidarity, but why on earth have shareholders re-elected auditors like John Deutch (pictured above with the word “catastrophe” looming behind him), Alain Belda, and C. Michael Armstrong, who in the Charles Prince era all oversaw Citi’s purchase of the CDOs that ended up crippling the bank?
Deutch is a chemist by trade, who was refused ongoing access to top secret documents when he was head of the CIA after he left them on his home computer – not exactly screaming “prudence” or “diligence” is it? And why has a chemist been given auditing responsibilities at director level of Citigroup anyway? Meanwhile Armstrong is the bozo who mismanaged AT&T’s expansion into cable and broadband, prompting the company, saddled with $60bn debt, to sell off its newfound assets at a loss. And the lead director, Alain Belda, is the former head of Alcoa who managed to lose Alcan to Rio Tinto last year; he’s still on the board at Alcoa, and given the current plight of the company, will he see his Citi position as anything but an extra title and income?
Do the shareholders actually ever want to see a dividend again? Because by re-electing these dinosaurs (Belda’s 65, the others over 70) who don’t know an SIV from an SUV, that’s not what’s going to happen. Plus Citi are still paying directors who have left, but are trying to show restraint by not providing coffee and doughnuts. Did everyone have a bowl of crazy for breakfast yesterday?
There were some vocally pissed-off shareholders to be fair. “If we had the right to vote for somebody else, anybody else, I don’t care even if it was Bernie Madoff, he’d do a better job than the current board”, said one; “thank God you’re gone”, shouted another at the departing board members. But for every angry shareholder, there were two more ready to ignore the professional advice and mumble something about stability and allowing the status quo to go unchallenged. Well, it’s your funeral!
Posted by Ben Beaumont-Thomas in Hot Money | April 22, 2009 11:56AM |