This excerpt taken from the C DEF 14A filed Mar 20, 2009.
Statement of William Steiner
Special meetings allow shareowners to vote on important matters, such as electing new directors, that can arise between annual meetings. If shareowners cannot call special meetings, management may become insulated and investor returns may suffer. Shareowners should have the ability to call a special meeting when a matter is sufficiently important to merit prompt consideration.
Fidelity and Vanguard have supported a shareholder right to call a special meeting. The proxy voting guidelines of many public employee pension funds also favor this right. Governance ratings services, such as The Corporate Library and Governance Metrics International, take special meeting rights into consideration when assigning company ratings. This proposal topic also won from 55% to 69%-support at the following companies (based on 2008 yes and no votes):
It is important for Citigroup to enable shareholders to call a special meeting because our board is composed of too many overextended directors. According to the Corporate Library www.thecorporatelibrary.com, an independent investment research firm, Board composition at Citigroup represented a concern for shareholders due to the high concentration of active CEOs on the board.
Four of our directors were active CEOs at other public companies (Alain Belda of Alcoa, George David of United Technologies, Anne Mulcahy of Xerox and Andrew Liveris of Dow Chemical). This raised concern about the ability of these individuals to dedicate enough time to properly supervise the affairs of Citigroup.
In addition, two directors were potentially conflicted outside-related directors (Roberto Hernandez Ramirez and Sir Winfried F. W. Bischoff Chairman of our Board). Mr. Hernandez Ramirez was non-executive chairman of our companys Mexico subsidiary (Banco Nacional de Mexico) and received $2.6M in security services from Citigroup in 2007. Meanwhile, Mr. Bischoff was our acting Chief Executive Officer from November 2007 to December 2007. This raised concerns about our boards ability to remain an independent and effective counter balance to management.
The above concerns shows there is need for improvement. Please encourage our board to respond positively to this proposal:
Special Shareowner Meetings
Yes on 12
In 2006, the proponent submitted a proposal requesting that the board amend Citis by-laws to give holders of at least 10% to 25% of the outstanding common stock the power to call a special shareholder meeting. In 2007, Citis board of directors adopted an amendment to Citis by-laws to give to stockholders that own at least 25% of the outstanding shares of the Companys common stock the right to call a special meeting. Notwithstanding that Citi has implemented the proponents proposal, he has submitted the current proposal with the same essential objective.
The 2007 amendment to Citis by-laws meets the essential objective of the proposal by giving stockholders the ability to call special meetings when a significant, though minority, of them consider it is necessary to do so. Indeed, the arguments advanced by the proponent in support of the proposal focus exclusively on the benefits of giving stockholders such ability. The proponents modification of the numerical percentage of stock necessary for stockholders to call a special meeting is the only difference between the new proposal and the provisions of the by-laws.
Holding a special meeting of our stockholders would be a costly undertaking, involve substantial planning, and require us to commit significant resources and attention to the legal and logistical elements of such a meeting.
Moreover, lowering the percentage to 10% would permit one or a few stockholders who own a smaller percentage of Citis common stock to call a special meeting that may serve their narrow purposes rather than those of the majority of our stockholders. The board believes the decision to call a special meeting of stockholders should remain at the 25% ownership level, which is an appropriate threshold for a company of Citis size. Most large companies that have special meeting by-law provisions set the threshold at 25% or higher.
The proposal also seeks to ensure that any by-law provisions on special meetings not contain any exclusion or exception conditions, to the fullest extent permitted by state law, that apply only to stockholders but not to management or the board. Citis by-law provisions do not contain any such exception or exclusions. As requested by the proposal, Citi by-law provision does have a minimum stock holding condition.
The special meeting provisions contained in Citis by-laws already satisfy the request contained in the proposal to allow stockholders to call special meetings. Citi has complied in all material respects with the essential objective of the proposal by giving stockholders the right to call a special meeting.