This excerpt taken from the C DEF 14A filed Mar 20, 2009.
Statement of Kenneth Steiner
Cumulative voting won 54%-support at Aetna and greater than 51%-support at Alaska Air in 2005 and 2008. It also received greater than 53%-support at General Motors (GM) in 2006 and 2008. The Council of Institutional Investors www.cii.org recommended adoption of this proposal topic. CalPERS also recommend a yes-vote for proposals on this topic. Nonetheless our directors made sure that we could not vote on this established topic at our 2008 annual meeting. Reference: Citigroup Inc. (February 22, 2008) no action letter available through SECnet http://secnet.cch.com.
Cumulative voting allows a significant group of shareholders to elect a director of its choice safeguarding minority shareholder interests and bringing independent perspectives to Board decisions. Cumulative voting also encourages management to maximize shareholder value by making it easier for a would-be acquirer to gain board representation. It is not necessarily intended that a would-be acquirer materialize, however that very possibility represents a powerful incentive for improved management of our company.
The merits of this Cumulative Voting proposal should also be considered in the context of the need for improvements in our companys corporate governance and in individual director performance. For instance in 2008 the following governance and performance issues were identified:
D in Overall Board Effectiveness.
High Governance Risk Assessment
Very High Concern in executive pay.
Richard Parsons chaired the Citigroup executive pay committee, a committee with a track record of overpaying. Kenneth Derr due to his directorship concerning the Calpine Corporation bankruptcy.
The above concerns show there is need for improvement. Please encourage our board to respond positively to this proposal: