The anger was evident at Citigroup Inc.'s annual meeting, where all nominated directors were elected but shareholders took turns at the microphone to vociferously object to the bank's performance over the past year.
The meeting is usually a well-attended affair lasting many hours as shareholders air their grievances, and Tuesday's gathering was as somber and full of ire as ever. When Chairman Richard Parsons recognized the five departing members of the board, who include ex-chairman Win Bischoff and former U.S. Treasury Secretary Robert Rubin, one man from the audience yelled out: "Thank God you've gone!"
Despite the rancor on the floor, all returning directors and four new ones were elected with at least 70 percent of the vote, according to preliminary results. And while some shareholder proposals came close to passing, preliminary results showed that none did.
Citigroup CEO Vikram Pandit tried to bring a more upbeat atmosphere to the ballroom at the New York Hilton hotel, emphasizing to shareholders that Citigroup is not the same company it was just a year ago, when it was became clear the bank was buckling under the weight of billions of dollars in bad debt.
In his opening remarks, Pandit said the four new board members will bring "new eyes" to the bank. He also discussed the "new structure" that has split the bank into two parts, and the "new strategy" and "new beginning" that the company is embarking on.
"Citi is one of the great business opportunities of our age," Pandit said. He added: "I believe to my core that Citigroup has what it takes to rebound, what it takes to rebuild."
The four nominees include former U.S. Bancorp CEO Jerry Grundhofer; former Bank of Hawaii CEO Michael O'Neill, former Philadelphia Federal Reserve President Anthony Santomero; and William S. Thompson Jr., former CEO of bond investment manager Pimco.
While many shareholders have been calling for change at the board level for years, some say the new nominations don't go far enough.
Kenneth Steiner, who said he owns about 10,000 shares, supported a proposal that would require the company to nominate two candidates for every board position instead of just one.
"Right now, it's a non-election, basically," Steiner said. "We know who's going to win."
Shareholders — many in suits, a few in baseball hats and jean jackets, and one in a bedazzled red satin cap — brought up other issues, too, questioning Citigroup's underwriting standards for credit cards, the government's involvement in the bank, executive compensation and the decision to sponsor the New York Mets ballpark, Citi Field.
Evelyn Y. Davis, a long-time shareholder who every year takes several trips to the microphone, called the Citi Field deal the "most stupid thing" and a waste of shareholder money.
Other shareholders called the board "Byzantine," "communist" and "socialist."
Steiner said it is ridiculous that a board composed of CEOs and former CEOs gets a say in Citigroup executive's compensation while shareholders do not.
"It's like having the Yankees determine the salary of the Mets," he said.
Through it all, the six-foot-four Parsons remained polite and unflappable as he conducted the meeting from his podium; one shareholder called him a "gentleman." Pandit was similarly calm as he stood at his own podium on the opposite side of the stage.
Parsons, known as an adroit manager, broke the tension at times with humor. When a shareholder asked if any U.S. government representatives were in attendance, he said to laughter from the audience: "If they're foolish, they can raise their hand."
Chuck Jones, who said he owned about 25,000 Citi shares, asked Parsons and the board whether they were betting on Citigroup's recovery and buying Citigroup shares.
"How many of these directors," Jones asked, "bought Citi at a dollar a share?"
"I wish I had," Parsons said with a chuckle. Citigroup's shares have tripled since dropping to 97 cents in early March.
Citigroup has gotten $45 billion in government funding, and a portion of that will soon be converted into common shares.
Citigroup last week posted its best quarter since 2007, but still reported a $966 million loss to common shareholders. Before dividends paid to preferred shareholders, Citigroup posted net income of $1.6 billion. The figure relieved investors to some extent — the bank benefited from strong bond trading, low borrowing rates and severe cost-cutting.
But they remain concerned Citigroup could have sharp losses ahead of it. Loan losses and reserve builds for future loan losses amounted to $10 billion. Furthermore, accounting rules allowed Citigroup in the first quarter to take a $2.7 billion gain in its derivatives, because it, counterintuitively, benefited from the declining value of its debt.
Angry shareholders are nothing new to Citigroup. It has been several years since shareholders started calling for the ouster of ex-CEO Chuck Prince as Citi's stock lagged its peers. That finally happened in late 2007, but was then followed by a string of quarterly losses and three government bailouts.
So this year's meeting was marked by not only ire, but exhaustion. After about four hours of shareholder commentary on proposals, before the preliminary vote results were even released, the audience of several hundred in the midtown Hilton ballroom had dwindled by about half.
"How many more years do you have to sit through a shareholder meeting like this before you get it right? You need a new director core," said Richard Ferlauto, director of pension and benefits policy for the American Federation of State, County and Municipal Employees. Ferlauto proposed to vote against the board members on Citigroup's audit and risk committee.
Still, more than five hours into the meeting and after the preliminary results were released and Citigroup's directors exited the building, dozens of shareholders still lined up to vent and pose questions to Pandit and Parsons. Many circled around to ask more than one.
Some of those questions: Are the managers who caused Citigroup's problems really all gone? Will Citigroup pass the government's stress test? If Citigroup has enough capital, why is it diluting common stock by converting the government's investment into common shares?
Pandit's answers: As far as he knows; he believes so, but let's wait; and because extra capital will make it even stronger as it tries to lend in a weak economy.
"This," Pandit said, "is a once-in-a-generation thing we're going through."