The proxy advisory firm Egan-Jones recommended Monday that Citigroup Inc. shareholders withhold votes for six incumbent directors at the annual meeting April 21, saying they failed to fulfill their risk management responsibilities.
Citi recorded a $27.68 billion net loss last year on tens of billions of investment writedowns and loan losses. The woes led to a $45 billion capital infusion from the federal government, and it is backstopping losses on about $300 billion of assets.
The six directors — Michael Armstrong, Alain Belda, John Deutch, Andrew Liveris, Anne Mulcahy and Judith Rodin — are or were members of the board's audit and risk management committee. Egan-Jones said they "failed to protect shareholders from excessive exposure to credit, market, liquidity and operational risk."
The firm said Citi's board failed to effectively manage risk, "helping cause the company's current instability and increasing volatility in the global financial markets." It cited as examples of that failure an increase in Citi's exposure to mortgage-related assets, from $28 billion in 2005 to $234 billion in 2006, and an 85% increase in the number of subprime mortgages originated.