Resolved: Shareholders request that the Board of Directors undertake a review and institute policy changes, including amending the bylaws and any other actions needed, to minimize the indemnification of directors for civil, criminal, administrative or investigative claims, actions, suits or proceedings, to the fullest extent permissible under the General Corporation Law of the State of Delaware and other applicable laws. Such policies and amendments should be made effective prospectively only, so that they apply to any claims, actions, suits or proceedings for which the underlying activities occur and the claims are asserted subsequent to both the enactment of the policy changes and the renewal of the director’s board membership.
The proponent is convinced that Citigroup’s policy of maximum indemnification of corporate directors provides excessive protection from liabilities in the event that they fail to perform their duties as fiduciaries.
The list of regulatory actions, scandals and controversies related to Citigroup over the past decade is too lengthy to enumerate within the word limitation of this resolution. However, the proponent references a November 9, 2011 article by Bloomberg BusinessWeek entitled: “Citigroup Settlement For $285 Million Is ‘Fair,’ SEC Says,” related to the resolution of claims that the bank intentionally mislead investors in collateralized debt obligations. Headlines like these leave little doubt that the company has a significant and costly deficit of internal controls.
Citigroup has repeatedly had to rely on the U.S. government for a “bailout” or lifeline, and according to an October 31, 2009 New York Times article entitled “Can Citigroup Carry its Own Weight?,” the entity now known as Citigroup has been rescued by the U.S. government at least four times in the past 80 years. The latest taxpayer-supported rescue of Citigroup totaled almost $100 billion following the 2008 financial meltdown, according to an August 22, 2011 article by Business Insider.
The current bylaws provide for indemnification of directors “to the fullest extent permissible under the General Corporation Law of the State of Delaware.” Maximizing such corporate protection eliminates personal exposure of directors, even for certain improper, illegal or criminal behaviors that violate their fiduciary duties. The proponent’s intention is to incentivize company directors to exercise maximum fiduciary oversight of the corporation. Our company’s activities are clearly in need of greater supervision and accountability.
The proponent asks of other shareholders: How long should we allow our company’s errant behavior to continue? Shouldn’t we insist on more from the Board?