SEC Won't Order Citigroup Vote
Apr. 15, 2003
WASHINGTON (AP) _ Federal securities regulators said Monday they won't make Citigroup put to a vote by shareholders a labor union's proposal for nominating candidates for the banking giant's board.
The Securities and Exchange Commission also announced that it will examine current rules governing such votes cast by shareholders in companies, known as proxies, with an eye to possible changes to make the process more democratic.
The SEC asked staff in its Division of Corporation Finance to submit proposals by July 15 after consulting with pension funds, shareholder advocate groups, corporate officials and other interested parties.
The American Federation of State, County and Municipal Employees, whose pension fund is a major shareholder in Citigroup, had proposed that Citigroup allow shareholders or groups of shareholders that hold 3 percent or more of its stock to nominate candidates for the board of directors.
The five SEC commissioners voted unanimously to let stand the previous ruling by its staff that federal securities laws do not require Citigroup to put AFSCME's proposal to a vote by all Citigroup shareholders.
Spokesmen for New York-based Citigroup, the nation's largest financial institution, had no immediate comment.
The SEC action came as Citigroup reported its net income totaled $4.1 billion, or 79 cents a share, in the first quarter. That was above the 77 cents expected by analysts surveyed by Thomson First Call. The first-quarter results compared with net income of $4.84 billion, or 93 cents a share, a year earlier. At that time, Citigroup still owned Travelers Property Casualty Corp., which it spun off last year. Excluding the Travelers' income and a $47 million charge for an accounting change, income in January-March 2002 was $3.48 billion, or 66 cents a share.
AFSCME declined immediate comment on the SEC's decision regarding Citigroup. Gerald McEntee, the union's president and chairman of its pension plan, called the SEC's planned review of proxy rules ``an important decision that will lead to shareholders having equal access to corporate proxy statements.''
``There is a desperate need for shareholder democracy, and today's decision was an important step in that direction,'' McEntee said in a statement.
SEC Chairman William Donaldson said the time has come ``for a thorough review of the proxy rules and regulations to ensure that they are serving the best interests of today's investors, while at the same time fostering sound corporate governance and transparent business practices.''
Over objections by the mutual fund industry, the SEC in January decided to force mutual funds to disclose to investors how they voted on decisions at the companies whose shares they hold. The move, which will significantly change the way mutual fund companies operate, was a victory for the AFL-CIO umbrella labor organization. Its pension fund is a major investor.
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