These excerpts taken from the C DEF 14A filed Mar 20, 2009.
Evelyn Y. Davis, Editor, Highlights and Lowlights, Watergate Office Building, 2600 Virginia Ave., N.W., Suite 215, Washington, DC 20037, owner of 1,260 shares, has submitted the following proposal for consideration at the annual meeting:
RESOLVED: That the stockholders of Citigroup assembled in Annual Meeting in person and by proxy hereby request the Board of Directors to have the Company furnish the stockholders each year with a list of people employed by the Corporation with the rank of Vice President or above, or as a consultant, or as a lobbyist, or as legal counsel or investment banker or director, who, in the previous five years have served in any governmental capacity, whether Federal, City or State, or as a staff member of any CONGRESSIONAL COMMITTEE or regulatory
agency, and to disclose to the stockholders whether such person was engaged in any matter which had a bearing on the business of the Corporation and/or its subsidiaries, provided that information directly affecting the competitive position of the Corporation may be omitted.
REASONS: Full disclosure on these matters is essential at Citigroup because of its many dealing with Federal and State agencies, and because of pending issues forthcoming in Congress and/or State and Regulatory Agencies. Last year the owners of 215,850,154 shares, representing approximately 6.4% of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy FOR this resolution.
Citi recruits and selects its directors, officers, employees, and outside professionals on the basis of their qualifications, expertise, and integrity. When Citi hires a former governmental worker, it is subject to numerous federal, state, and local laws that regulate the activities of officials after they leave government service. In addition, Citis Code of Conduct requires employees to be sensitive to activities, interests, or relationships that might interfere with, or even appear to interfere with their ability to act in the best interests of Citi and its stakeholders.
sec rules already require Citi to describe in public filings sent to or available to all stockholders the business experience during the past 5 years of all of its directors and executive officers. Please see this proxy statement for a description of the business experience of each of our directors and Citis 2008 Form 10-K Report for a description of the business experience of each of our executive officers. Disclosure of prior government service of the additional people covered by the proposal would not provide any meaningful information in our opinion.
The Firefighters Pension System of the City of Kansas City, Missouri, Trust, 414 East 12th Street, 12th Floor, City Hall, Kansas City, MO 64106, beneficial owner of 100 shares; and The City of Philadelphia Public Employees Retirement System, Two Penn Center Plaza, Philadelphia, PA 19102, beneficial owner of 79,631 shares, have submitted the following proposal for consideration at the annual meeting:
RESOLVED, that the shareholders of Citigroup Inc. (Company) hereby request that the Company provide a report, updated semi-annually, disclosing the Companys:
Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:
The report shall be presented to the board of directors audit committee or other relevant oversight committee and posted on the companys website to reduce costs to shareholders.
Sisters of St. Francis of Philadelphia, 609 South Convent Road, Aston, PA 19014, beneficial owner of 21,072 shares; Friends Fiduciary Corp., 1515 Cherry Street, Philadelphia, PA 19102, beneficial owner of 25,000 shares; School Sisters of Notre Dame Cooperative Investment Fund, 345 Belden Hill Road, Wilton, CT 06897, beneficial owner of 464 shares; Benedictine Sisters of Monasterio Pan de Vida, Apdo, Torreón, Coahuila, Mexico, CP 27000, beneficial owner of 500 shares; Benedictine Sisters of Mount St. Scholastica, 801 S. 8th Street, Atchison, KS 66002, beneficial owner of 3,947 shares; Benedictine Sisters of Virginia, 9535 Linton Hall Road, Bristow, VA 20136-1217, beneficial owner of 2,000 shares; MMA Praxis Core Stock
Fund, 1110 North Main Street, Goshen, IN 46527, beneficial owner of 63,200 shares; School Sisters of Notre Dame of St. Louis, 320 East Ripa Avenue, St. Louis, MO 63125, beneficial owner of 2,150 shares; Benedictine Sisters of Borne, TX, 285 Oblate Drive, San Antonio, TX 78216, beneficial owner of 900 shares; and School Sisters of Notre Dame Milwaukee Province, 13105 Watertown Plank Road, Elm Grove, WI 53122, beneficial owner of 23,265 shares, have submitted the following proposal for consideration at the annual meeting:
Our company is one of the nations largest credit card issuers, with tens of billions of dollars in outstanding credit card loans to consumers.
Amid the economic uncertainty sparked by the sub-prime mortgage crisis, some banks are turning to their high-margin credit card divisions to help offset their losses elsewhere.
In the wake of declining home values and the inability to tap into this source of funds, many Americans are turning to credit cards as a last source of capital to get them through difficult times.
According to the Federal Reserve Statistical Release, revolving debt as a percentage of total debt in US households is dramatically increasing and credit card loans are at their highest delinquency rates since 1993.
The sub-prime borrowing class is the most profitable market segment for credit card issuers, and most vulnerable to predatory practices.
Sub-prime consumers, specifically those with FICO credit scores less than 660, are often targeted with fee harvesting cards. These cards, which typically carry a limit of no more than $500, can cost borrowers up to half or more of their credit limit simply in activation and maintenance fees, while positioning the cardholder to unknowingly incur late, over-the-limit and other fees.
Based on an October 2008 report by Innovest, 28% of our companys credit card accounts are classified as sub-prime.
Aggressive and questionable marketing to teenagers and college students often using poor lending criteria has contributed to a rise in undergraduate credit card debt from an average of $2,169 in 2004 to $8,612 in 2006.
Provisions such as universal default, sometimes known as risk-based pricing, unfairly penalize borrowers with higher rates on accounts where they have never missed a payment.
Typical credit card practices such as bait and switch marketing, changes of mailing address, delayed billing, hidden fees and unintelligible cardholder agreements hurt consumers.
Resolved: That the shareholders request the Board of Directors to complete a report to shareholders, prepared at reasonable cost and omitting proprietary information, evaluating with respect to practices commonly deemed to be predatory, our companys credit card marketing, lending and collection practices and the impact these practices have on borrowers.
Trapping consumers in debt under predatory terms that make successful repayment virtually impossible weakens the long-term financial prospects of our company and the national economy as a whole. Credit card policies and practices designed to strengthen (rather than abuse) consumers financial health are in the best interest of our company and its clients.
Citi opposes the types of predatory lending practices described in the proposal. Citi Cards does not engage in credit card lending practices which are predatory. Nor do we engage in questionable service practices. Citi works with customers, community groups, shareholders, religious organizations, elected officials and regulators in setting standards for Citis credit card operations and the consumer finance industry. Citi considers many of our practices to be the best in the industry. In particular, Citi Cards has been specifically cited for its clear and transparent disclosures and card member agreements by federal regulators which are
designed to provide consumers with the most pertinent information. Our credit card practices strike the right balance between providing access to credit for those who need it most while setting consumer protection standards that lead the industry.
Adoption of the proposal would not be in the best interests of Citis stockholders because the report requested would be costly and is unnecessary in light of the comprehensive regulations and procedures that Citi must adhere to in its credit card operations.
Richard A. Dee, 115 East 89th Street, New York, NY 10128, beneficial owner of 120 shares, has submitted the following proposal for consideration at the annual meeting:
The purpose of this proposal is to enable the owners of Citigroup, its stockholders, to actually elect Directors. Its approval will be a first step toward enabling corporate owners to participate in choosing and empowering those responsible for Citigroups future.
It is hereby requested that the Board of Directors adopt promptly a resolution requiring that the Nomination and Governance Committee nominate two candidates for each directorship to be filled by voting of stockholders at annual meetings. In addition to customary personal background information, Proxy Statements shall include a statement by each candidate as to why he or she believes they should be elected.
Stockholders of publicly-owned companies have been made to believe that they elect directors. Not True. Without a choice of candidates, there is no real Election of Directors. What occurs is simply a ratification of the only candidates offered.
Citigroup opposed and defeated my similar 2008 Proposal, charging, incorrectly, that what I proposed:
would inappropriately politicize the process of electing our board and potentially alienate many talented candidates who would choose not to be nominees in this type of election. Moreover, the divisiveness created by competing slates of nominees, some of whom would be supported by the [Nominating and Governance] committee and some of whom would not have the benefit of such support, would potentially undermine the effectiveness of the board that is ultimately elected.
Is there anything wrong with having a board that is politicized to the extent that its members actually and democratically have been elected?
Far too many business executives/directors are neither accustomed to nor happy with competing for positions. On the other hand, their careers show them to have been excellent politicians when it comes to impressing some for whom they have worked. Understandably, many supposedly talented candidates would choose not to be nominees in this type of election. No Surprise. Their credentials and proven effectiveness as business managers would be subjected to unwanted scrutiny by public stockholders.
Citigroup spoke of competing slates of nominees. What I propose has nothing to do with slates. All nominees would continue to be selected and proposed by the Nomination and Governance Committee. All candidates would stand as equals, and those who received the highest numbers of shares voted in their favor (based on the number of positions to be filled) would become directors.
Why do unopposed candidates need what Citigroup called support? Citigroup simply does not want to seek and nominate new director candidates who might end up replacing good old reliables, and if it nominated bozos, it might be obvious. I am convinced that the effectiveness of the board would be improved considerably if new faces are a possibility that becomes a reality.
If approved, this proposal will enable Citigroup stockholders to bring about director turnover and replace any or all directors if they become dissatisfied with the results of their policies and/or company performances. That is not a happy prospect even for those able to nominate their successors.
Please vote FOR this proposal.
Citi has an effective process in place for identifying and electing candidates to the board of Citi. It would be disadvantageous to Citi and its stockholders to change the existing processes as recommended in this proposal.
The board has established a process for identifying and nominating director candidates that has resulted in the election of highly qualified and capable members dedicated in their service to Citi. The nomination and governance committee recommends to the board the desired composition and size of the board and carefully considers nominees for directorships from a select group of individuals who are both professionally qualified and legally eligible to serve as directors of Citi. Nominations from stockholders, properly submitted in writing to our Corporate Secretary, are referred to the committee for its consideration. An outside consultant assists the nomination and
governance committee in finding and evaluating candidates. The committee makes its recommendations to the board based on its judgment as to which of these candidates will best serve the interests of our stockholders. The stockholders annually vote on the entire board, under a majority vote standard.
The proposal calls for the committee to nominate twice as many candidates as there are positions to be filled. This would inappropriately politicize the process of electing our board and certainly alienate many talented candidates who would choose not to be nominees in this type of election. Moreover, the divisiveness created by competing slates of nominees, some of whom would be supported by the committee and some of whom would not have the benefit of such support, would potentially undermine the effectiveness of the board that is ultimately elected.
The Free Enterprise Action Fund, 12309 Briarbush Lane, Potomac, MD 20854, owner of 4,580 shares, has submitted the following proposal for consideration at the annual meeting:
Carbon Principles Report
Resolved: The shareholders request that the Company prepare by October 2009, at reasonable expense and omitting proprietary information, a Carbon Principles Report. The report should describe and discuss how the Companys implementation of the Carbon Principles has impacted the environment.
Coal is used to provide 50 percent of the U.S. electricity supply. The burning of coal by U.S. electricity utilities is clean and safe for the environment. Air emissions are regulated by states and the federal government. Since burning coal is the least expensive way to produce electricity, consumers benefit from low electricity rates.
In February 2008, Citigroup adopted the so-called Carbon Principles, one purpose of which is supposedly to strengthen environmental...risk management in the financing and construction of electricity generation.
We believe, however, that the Carbon Principles unfairly and unnecessarily stigmatize the conventional use of coal to produce electricity. Moreover, there is no commercially available or financially viable alternative to the conventional use of coal. See Steven Milloy, Candidates Dont Come Clean on Coal, FoxNews.com, October 16, 2008, http://www.foxnews.com/story/0,2933,439321,00.html.
We want the Company to describe the environmental impacts of its implementation of the Carbon Principles so that shareholders can determine for themselves whether such impacts are worth the reputational damage being inflicted on the source of 50 percent of the U.S. electricity supply.
The Carbon Principles are carbon risk guidelines associated with climate change for advisors and lenders to power companies in the United States. These Principles are the result of an intensive effort by Citi and other firms, leading power companies and environmental organizations to create an approach to evaluating and addressing carbon risks in the financing of electric power projects in the United States. The need for these Principles is driven by the risks faced by the US power industry as utilities, independent producers, regulators, lenders and investors deal with the uncertainties around regional and national climate change policy. Given these uncertainties and risks in the current political environment, Citi chose to deal with them in a way that supports our clients and addresses the reality of the countrys power needs and energy supply mix. We do not believe that these Principles unfairly and unnecessarily stigmatize the use of coal, and in fact outline intelligent due diligence and risk management processes that enable the financing of conventional power generation. The extent to which the Carbon Principles apply to any given transaction is determined in accordance with the established
framework for such reviews. A description of this framework is publicly available on the Carbon Principles website
(http://www.carbonprinciples.org/). Citi has incorporated these Principles into its internal Policy, risk management frameworks and decision-making processes as deemed appropriate by Management. Citi has committed to report publicly on its implementation of the Principles via its Corporate Citizenship Report.
There is no regulatory requirement to produce either a Citizenship Report or a Carbon Principles Report. Decisions to prepare or not prepare such reports must take into account the allocation of funds and resources that would need to be devoted to such efforts, as well as the propriety of making such disclosures. The Company, in compliance with regulatory requirements, and voluntarily with respect to Citis Corporate Citizenship Report, provides reports in a manner and to the degree deemed appropriate by management. Further disclosure of the type requested in the proposal would not, in the Companys opinion, be appropriate.
American Federation of Labor and Congress of Industrial Organizations, 815 Sixteenth Street, N.W., Washington, DC 20006, beneficial owner of 3,200 shares, has submitted the following proposal for consideration at the annual meeting:
Resolved, shareholders of Citigroup Inc. (the Company) urge the Compensation Committee of the Board of Directors to adopt a policy requiring senior executives to retain 75% of the shares acquired through compensation plans for
two years following the termination of their employment (through retirement or otherwise), and to report to shareholders regarding the policy before the Companys 2010 annual meeting. The policy should prohibit hedging transactions that are not sales but offset the risk of loss to the executive. This proposal shall cover only compensation awards under a new equity plan or a compensation arrangement with its executives.
Equity-based compensation is an important component of senior executive compensation at our Company. According to the 2008 proxy statement, equity-based awards, including stock and stock option awards, accounted for between 23% and 80% of total compensation for the
Named Executive Officers (NEOs). Of the $64.4 million in compensation paid to the 7 individuals listed, $22.7 million, or 35%, came from stock awards and stock options.
Requiring senior executives to hold a significant portion of the shares received through compensation plans after their termination of employment forces them to focus on the Companys long-term success and better align their interests with that of shareholders. The absence of such a requirement lets NEOs walk away without facing the consequences of actions aimed at generating short-term financial results. The current financial crisis has made it imperative for companies to reshape compensation policies and practices to discourage excessive risk-taking and promote long-term, sustainable value creation.
When Charles Prince, former chairman and CEO of our Company, was forced out in November 2007, he was allowed to retain more than $28 million in unvested stock and options that vested immediately and, under the terms of his separation agreement, he could exercise the options and cash out over the next two years, according to the 2008 proxy.
The Aspen Principles, endorsed by both The Business Roundtable and the Council of
Institutional Investors, urge that senior executives hold a significant portion of their equity-based compensation for a period beyond their tenure.
A 2002 report by a commission of The Conference Board endorsed the idea of a holding requirement, stating that the long-term focus promoted thereby may help prevent companies from artificially propping up stock prices over the short-term to cash out options and making other potentially negative short-term decisions.
Our Company requires senior executives to hold at least 75% of the equity awarded to them while theyre employed by Citigroup. We believe the NEOs should be required to hold equity awards for at least two years after termination to ensure executives share in both the upside and downside risk of their actions while at the Company.
We urge shareholders to vote for this proposal.
As discussed on page 16 of this proxy statement, Citi has long had one of the most restrictive stock ownership commitments of US corporations, requiring the board and members of Citis management executive committee to hold 75% of the net shares delivered to them pursuant to awards granted under Citis equity programs, subject to the provisions contained in the commitment. Members of the senior leadership committee must hold 50% of the net shares delivered to them.
As part of its compensation program, Citi ordinarily awards restricted or deferred stock to employees as part of their annual bonus compensation. For 2008, members of the Executive Committee will receive significantly larger proportions of their bonuses in deferred compensation than will other employees. Restricted and deferred stock awards generally vest over a 4-year period and, for the most senior executives, are subject to the holding requirements of the stock ownership commitment. Because senior executives receive a large portion of their incentive compensation in the form of restricted or deferred stock, and
have to hold 75% of that stock during their tenure at Citi, Citis senior executives hold a significant proportion of their net worth in Citi stock, creating a strong alignment between the interests of these executives and those of Citis long-term stockholders.
Requiring Citis executives to continue to hold these shares for 2 years following their departure from Citi is unnecessary because there are compensating controls in place to prevent the types of behavior the proposal is designed to address. Post-departure holding periods are designed to prevent executives from taking actions that would cause the price of a companys stock to rise as they depart in order for them to be able to sell their holdings at a high price before the behavior of the executive is discovered and corrected.
As noted above, Citis executives receive awards of restricted stock that generally vest over a 4-year period. For executives who meet certain age and service requirements, unvested shares continue to vest following their departure from Citi on the original vesting schedule. Accordingly, for at least 3 years following their
departure, Citis executives continue to have shares vest. It would not be in their interest to artificially drive up the share price for the short term to sell their shares immediately following their departure, if for the 3 years following their departure they would still have shares that they could not sell at the artificially high price because they would not have vested in time. Such shares could only be sold following their
vesting which would presumably be at the corrected price.
In addition, Citi has a clawback policy under which Citi can recoup executive compensation that over time proves to be based on inaccurate financial or other information. As a result, any concerns about Citi executives taking irresponsible actions to drive up the stock price would also be addressed by the clawback.
Connecticut Retirement Plans & Trust Funds, 55 Elm Street, Hartford, CT 06106-1773, beneficial owner of 3,306,354 shares has submitted the following proposal for consideration at the annual meeting:
RESOLVED, that stockholders of Citigroup Inc. (Citigroup) urge the board of directors to adopt a policy that Citigroup shall include in the Compensation Discussion and Analysis section of the proxy statement the following information:
Committee (the Committee), in the last full fiscal year;
As long-term owners, we believe that a companys pay practices reflect how well a board aligns management and shareholder interests. The current financial crisis has made clear that executive compensation at many companies is on an unsustainable trajectory and has become unmoored from company performance.
As compensation has become more complex, board compensation committees are increasingly turning to compensation consultants to craft executive pay packages. We believe a potential conflict of interest exists at companies
like Citigroup in which firms are hired to do work for both the boards compensation committee and the company or its management. We note that Citigroups most recent proxy statement characterizes Mercer Human Resource Consultings additional engagements with Citigroup as substantial, but does not disclose the fees paid to Mercer for either compensation consulting or other services.
The potential conflict of interest stems from the fact that executive compensation consulting is often much less lucrative than providing other kinds of services, such as employee benefits
management, information technology, and actuarial consulting. One independent consultant has estimated that executive compensation consulting accounts for only between .5% and 2% of total firm revenue. (Comment Letter of James F. Reda & Associates LLC on S7-03-06, Proposed Rules on Executive Compensation and Related Party Disclosure, at 5 (Apr. 6, 2006)) A 2007 study by the House Committee on Oversight and Governmental Reform, using data subpoenaed from consulting firms, found that on average, consulting firms that provided both executive compensation and other kinds of consulting were paid nearly 11 times more for
the other consulting than for the executive compensation services.
Given the key role compensation consultants play, we believe that stockholders should be given the information needed to assess the independence of the boards compensation consultant. This proposal urges Citigroup to disclose facts we think stockholders would view as material to the consultants independence and the objectivity of its advice.
We urge stockholders to vote FOR this proposal.
Citis executive compensation policies are administered by the personnel and compensation committee, which is composed entirely of independent directors. The committee strives to ensure that the Companys compensation programs are appropriate for retaining and properly incentivizing its executives, as well as being in line with industry standards and, the programs of peer companies, and to that end, engages two compensation consulting firms to assist the committee.
As explained in the cd&a, the committee has engaged Independent Compensation Committee Adviser, LLC (icca) as its independent consultant for executive compensation matters. icca reports solely to the committee and the committee has sole authority to retain, terminate, and approve the fees of icca. icca advises the committee on its compensation decisions, provides it with a report and evaluates the quality of the comparative peer and other data provided to the committee by Mercer Human Resources Consulting (Mercer) and Towers Perrin (Towers). icca does no other work for Citi. The amount the personnel and compensation committee approved for payment to icca in 2008 is disclosed in the cd&a.
Citi also receives data, evaluations and advice regarding executive compensation from Mercer and Towers, which have the resources and expertise to collect, analyze and provide comprehensive compensation information.
Mercer provides substantial other services to Citi, a full description of which is set forth on page 50 of this proxy statement. The disclosure of compensation paid to a consultant is relevant when seeking to determine the independence of a consultant. Because the personnel and compensation committee does not rely on Mercer as an independent consultant and the committee has engaged a separate fully independent compensation consultant, there is no reason to disclose the fees paid to Mercer or Towers Perrin.
This proxy statement contains extensive disclosure on executive compensation matters, consistent with the rules and regulations of the sec. Citis proxy statement already contains pertinent disclosure on the engagement of and its relationship with icca, Mercer and Towers Perrin. See page 50 of this proxy statement, where Citi discloses the roles of, and work undertaken by, icca and Mercer in assisting the committee with compensation matters.
William Steiner, 112 Abbottsford Gate, Piermont, NY 10968, beneficial owner of 5,850 shares, has submitted the following proposal for consideration at the annual meeting:
RESOLVED, Shareowners ask our board to take the steps necessary to amend our bylaws and each appropriate governing document to give holders of 10% of our outstanding common
stock (or the lowest percentage allowed by law above 10%) the power to call special shareowner meetings. This includes that such bylaw and/or charter text will not have any exception or exclusion conditions (to the fullest extent permitted by state law) that apply only to shareowners but not to management and/or the board.
Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021, beneficial owner of 1,544 shares, has
submitted the following proposal for consideration at the annual meeting:
These excerpts taken from the C DEF 14A filed Mar 13, 2008.
Ray T. Chevedden and Veronica G, Chevedden Family Trust, 5965 S. Citrus Ave, Los Angeles, CA 90043, beneficial owner of 384 shares, has submitted the following proposal for consideration at the annual meeting: