Citigroup puts up 4 nominees for board seats

NEW YORK - Citigroup Inc., whose biggest shareholders may soon be US taxpayers, nominated four new board members in a government-induced shake-up after the Obama administration orchestrated the bank's third rescue attempt in five months.

Citigroup picked former finance-industry executives Jerry Grundhofer, Michael O'Neill, William S. Thompson, and Anthony Santomero as nominees, the New York-based bank said yesterday. Investors will vote at the bank's April 21 shareholder meeting.

The government pressed Citigroup to revamp its board to show Wall Street and the public that companies face consequences when the United States is forced to take extraordinary steps to save them, an administration official said last month. Treasury last month agreed to take a 36 percent stake in the bank after a $45 billion government infusion failed to stem losses.

"Any time you bring new blood it's a good thing," Charles Elson, director of the University of Delaware's John Weinberg Center for Corporate Governance, said before the nominees were made public. "The shareholders wish they had done this sooner."

Citigroup rose 55 cents, or 30.9 percent, to $2.33 in New York Stock Exchange composite trading. The stock has fallen 65 percent this year.

Grundhofer, 64, is a former U.S. Bancorp chief executive and director at Lehman Brothers Holdings Inc. Ex-US Marine O'Neill, 62, headed Bank of Hawaii Corp. and helped oversee Bank of America Corp.'s merger with NationsBank Corp. Thompson, 63, retired last year as co-head of Pacific Investment Management Co., the biggest bond-fund manager. Santomero, 62, is a former president of the Federal Reserve Bank of Philadelphia who was most recently a senior adviser at McKinsey & Co., Citigroup said.

"They've gone to great lengths to significantly improve their board," said Thomas Brown, CEO of New York-based hedge fund Second Curve Capital LLC. "However, the board doesn't run the company. It's the management that's still the critical issue. It's a great start. It's a better start than I could have hoped for."

At least 10 of Citigroup's directors were board members in the years leading up to the fourth quarter of 2007, when the company began five quarterly net losses totaling $37.5 billion. They served under former chairman Sanford "Sandy" Weill, who built the financial colossus through acquisitions over two decades. Weill, 76, retired in 2006.

In a regulatory filing yesterday, Citigroup said chief executive Vikram Pandit, 52, had total compensation of $10.8 million in 2008. The package includes a salary of $958,333, stock awards valued at $8.2 million, and options valued at $1.6 million. Most of the stock award was a $7.7 million sign-on bonus in January 2008. Pandit was also granted $37.2 million in options and restricted stock last year.