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Citigroup (C)
Citigroup Nominates New Directors
Citigroup was back in the news today, but not because of disappointing quarterly results or an increase in the government's stake in the company. The company announced on Monday that it has nominated four new directors as part of the company's revamping strategy. Citigroup confirmed that former Philadelphia Fed chief Anthony Santomero, former U.S. Bancorp Chief Executive Jerry Grundhofer, former Bank of Hawaii Corp. Chief Executive Michael O'Neill and William S. Thompson, former co-head of bond giant Pimco have been nominated as candidates. The news comes as a result of increased scrutiny by federal officials about the current directors at the company. Why are federal officials trying to oust the company's current directors? Could a new group of directors really return this company to the fame and glory that it once had?
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Many analysts, employees, and spectators knew that this day would come. Ever since the federal government took a stake in the company and started putting pressure on new Citigroup Chairman Richard Parsons to oust some longtime directors. Citigroup's biggest shareholder may soon be U.S. taxpayers, so it was almost inevitable that the company would give in to the government's demands. For months now, federal officials have been criticizing the 15-person board for not properly overseeing and regulating the company as it became more exposed to various risks. At least 10 members on this board were there during Citigroup's five quarterly losses totaling $37.5 billion, so it came as no surprise as to why federal officials wanted this board changed. Federal officials want the company to show that it is committed to digging itself out of its current grave. Federal officials are also hoping that this revamp in directors will show U.S. taxpayers that the company is on the right path to improving its stability and positioning itself in a manner that prevents it from having to ask for additional bailout funds.
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The bank announced in February that three of the current directors would not seek re-election at the upcoming annual meeting. The company also reported that Frank Thomas and Kenneth Derr will reach retirement age. This news took some pressure off Chairman Richard Parsons mainly because he would simply have to find replacements and not actually go through the process of ousting these directors. The task of finding replacements was easier said than done. Company officials knew that every nominee they proposed would be subject to scrutiny by federal officials, so they tried their best to nominate the best candidates.
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The nominated candidates bring a wealth of knowledge and experience that may be just what the company needs to change the direction that it is currently heading. All of the nominees have held high-ranking positions at their respected companies and have a proven track record of success. These directors also bring an independent form of view and can offer a fresh set of suggestions that the company so desperately needs. Citigroup is trying to step away from having a board made up of Fortune 500 chiefs and is looking to employ directors that have more experience with the financial industry. Only time will tell if this truly was the right decision for the company. Shareholders and taxpayers are looking for results, so a new board of directors better deliver.
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Time is ticking for the Citigroup and if this new group of directors is confirmed, they will definitely have to put in the necessary work to help the company achieve better results in the near future. Federal officials are closely watching the company and will definitely continue applying pressure to company officials to make the necessary adjustments to protect the government's stake in Citigroup. Shares of Citigroup rose on the news.
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