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(2009) Citigroup:

COMPANY OVERVIEW

Updated 4.15.2009

PDF Reports

Full Analysis In-depth Analysis Primary Analysis

Summary: Huge concerns around Board Effectiveness as well as Senior Management Effectiveness. Overall, Internal Control Environment in terms of the Audit Committee Report Quality is also a concern.

Our evaluation identifies some concerns around the effectiveness of the Board and Senior Management. There are several audit committee members who are on an excessive number of public company boards. A senior executive is an investor in a fund in which Citigroup is invested and has fund withdrawal rights that seem to be tied to his employment at Citigroup. Most directors are also not expressly prohibited from performing consulting services for the company.

On the social and environmental front, Citigroup has reported an increase of carbon emissions in 2008.

Subscribed members can view a detailed analysis of individual sections by clicking on the tabs above.

Is the Board and Senior Management of Citigroup effective?

Responsibilities of an Audit Committee of the Board of Directors generally include providing oversight of the company’s financial reporting, accounting as well as oversight of the audit of financial statements. When you review the number of boards that some members of Citigroup’s Audit and Risk Management Committee serve on, they appear to be over extended . It is difficult to imagine these members being able to devote adequate time and effort to each of their corporate commitments. (Please refer to the tab on ‘Internal Control Environment’).
According to the Proxy statement filed in March 2009, one of the investors in a Hedge Fund that Citigroup purchased and who is now a senior employee at Citi, can withdraw his funds, amounting to multi million dollars, if his employment terminates for any reason. (Please refer to the tab on ‘Internal Control Environment’).
According to the company's Corporate Governance Guidelines, members of the Audit and Risk Management Committee are prohibited from performing consulting services for the company. However, other Board Committee members may provide such services after getting the approval of the Nomination and Governance Board Committee . Not forbidding ALL Board Members from providing consulting services may pose a threat of conflict of interest. (Refer to the tab on ‘Internal Control Environment’).
In August 2008, Citigroup announced changes with respect to the Board’s Executive Committee. (Please refer to the tab on ‘Board of Directors and Management').

Has Citigroup as a company reduced its environmental impact?

The company has reported an increase in the total CO2 emissions in 2008 as compared to 2007. (Please refer to the tab on 'Social and Environment').
Our sources for gathering all relevant information include Citigroup’s Proxy Statement filed in March 2009 as well their Eighth Annual Citizenship Report.

Detailed Scorecard

SCORECARD & FACTSHEET

Board Size: 13 (as per 2008 Proxy Statement filed in March 2009.)

Board of Directors Compensation ($): Cash- $75,000; Deferred Stock Award- $150,000

Total CO2 emissions(metric tons): 2008-14,27,416; 2007- 14,19,551

Amount received in Government Bailout ($): $50 Billion

Total CEO compensation for 2008($): $10.82 million

Chief Risk Officer: Brian Leach

Changes in Chief Risk Officer over the past 2 years**: Twice (Jorge Bermudez appointed in 2007 succeeded by Brian Leach in 2008. Jorge Bermudez retired after 33 years of service.)

Tenure of Chief Risk Officer in this position: Brian Leach has held the position of Chief Risk Officer at Citigroup since March 2008.

** Why do we look at ‘Changes in Chief Risk Officer’? Companies, where we observe quick changes to senior risk positions (in case of companies in the finance industry) are high on our ‘watch’ list.

SCORECARD & FACTSHEET

2.00 Less than 20% of the directors are women directors

5.00 The board is required to perform regular annual assessment of its performance on a group and individual basis.

4.00 None of the board members serve on more than 3 Board Committees.

2.00 The Board's Governance Principles have not laid limits on the number of directorships that a director may hold beside this company. This is subject to review by the Nominating and Governance Committee on a case by case basis.

5.00 The Board of Directors has a governance committee

5.00 A committee of the Board of Directors provides oversight of the environmental and social responsiveness of the company.

5.00 The Board of Directors has a nominating committee.

3.00 Between 10%-25% of Board members are CEO's of other public companies

2.00 Some directors are directors of 3 or more public companies including this one.

3.00 Each of the directors attended at least 75% of the meetings of the Board and the committees of the Board on which he or she served during fiscal 2008.

5.00 The CEO and chairman are different persons.

1.00 Some directors on Board Committees that oversee Audit, Risk Management, Asset Quality etc do not have direct experience in a field related to the company's primary line of business.

5.00 All the directors except the CEO are outside directors.

2.00 Directors who have entered into business transactions with the company sit on the Public Affairs Committee.

5.00 The company has adopted a Related Persons Transactions Policy

5.00 For every regularly scheduled Board meeting held there was an 'independent directors only' meeting held.

5.00 The CEO does not hold any other director post in any other public company except this one.

5.00 The Compensation committee consists of multiple outside directors and the CEO is not a member of the compensation committee

5.00 Only non management directors are compensated for their work on the Board.

5.00 During the time, that senior management of the company changed, the company did not experience external auditor turnover or a qualified audit opinion or any management disagreements with auditors.

5.00 There have been no disagreements between the management and its auditors concerning adoption of any accounting standards or accounting principles.

1.00 The Board of Directors does not have a committee that oversees the quality of the company's assets.

5.00 There is no Board level Executive committee. The Nomination and Governance Committee has been given the power to act for the Board between meetings.

1.00 There has been a change in the 'C' level executives or directors of the company due to reasons other than retirements in the past six months.

3.00 Less than 10% directors do not not own any stock in the firm and they are not all newly elected.

5.00 All directors own some stock in the company. Source: Proxy Statement (issued 2008)

5.00 None of the directors or executive officers have pledged their shares or stock.

3.00 The directors are required to own a specified value of common value stock but it is reset at age 65. Most non employee directors are near the age of 65.

5.00 The Audit Committee charter requires at least an annual evaluation of the independent registered accounting firm by requesting a report on that firm's internal quality processes that is peer reviewed or performed by the firm itself.

3.00 It has not been disclosed by the company whether the Audit Committee has presented findings of the evaluation of the independent registered accounting firm's internal quality processes to the full board .

5.00 There are no fees paid to the external auditor that pertain to non audit matters.(Non audit matters include those matters not related to audit or tax matters.)

5.00 According to Citigroup's Corporate Governance Guidelines, members of the Audit and Risk Management Committee may not serve on more than three public company audit committees, including the Audit and Risk Management Committee of Citigroup.

5.00 The Audit and Risk Management committee met 12 times.

1.00 Some Audit Committee members are CEO's of other public companies.

5.00 An Audit Committee Financial Expert has been identified in the annual report or the proxy statement

3.00 The Audit Committee members are not specifically compensated for their active participation in the company's Audit Committee matters.

5.00 The responsibility to review the independence of the external auditors vests with the Audit Committee

4.00 The Audit Committee does not approve, review and provide oversight for all 'Related party' transactions but another board committee is responsible for such oversight.

5.00 The Audit committee alongwith the Governance Committee approve all related party transactions.

2.00 Audit Committee members are directors of 3 or more public companies including this one.

5.00 The Audit Committee report states that the financial statements were reviewed and discussed by the Audit Committee members along with the management and external auditors

5.00 There were no material weaknesses/significant deficiencies that were identified and disclosed under item 9a (Controls and Procedures) of the Annual/Quarterly report.

2.00 The Audit Committee report does not explicitly state that it performed all the duties and responsibilities that its charter required it to perform

5.00 All the members of the Audit Committee are independent

1.00 There were instances of high value transactions between the company and directors or senior management or immediate family members during the year.

2.00 As per Citigroup's Corporate Governance Guidelines, all non management directors may enter into consulting contracts with the company after approval from the Nomination and Governance Committee.

5.00 The Audit Committee charter requires the Audit Committee to separately meet with management, external auditors and internal auditors to enable it to most effectively perform its oversight function

2.00 The Audit Committee Charter requires the Board's Audit Committee to meet at least 4 times during the year.

5.00 The Audit Committee charter states that the Audit Committee is responsible for the review of procedures to receive, retain and treat complaints received regarding any accounting, internal control or audit matters.

5.00 The Audit Committee performs an annual review of the Audit Committee charter.

5.00 The Audit Committee charter was last updated on March 13th 2009.

5.00 The Audit Committee charter does not provide for the allocation of some of the Audit Committee duties to another committee or a different group of persons outside the Audit Committee.

5.00 The Audit Committee charter places responsibility for risk management and risk assessment oversight on the Audit Committee members. This includes meeting periodically with management to discuss the Company?s major risk exposures.

5.00 The Audit Committee charter includes a requirement for an annual evaluation of the Audit Committee

5.00 The charter places responsibility to appoint external auditors on the Audit Committee.

2.00 The Corporate Social Responsibility Report does not outline clear environmental goals and steps to achieve those goals.

2.00 The Corporate Social Responsibility Report does not specifically provide any information on company participation in women oriented social projects or specific information on lending to women entrepreneurs.

1.00 The Corporate Social Responsibility Report does not specifically provide any information on the company's efforts aimed at encouraging women suppliers.

2.00 The CSR does not specifically provide any information on the company having set up targets to ensure adequate representation of women in the workforce.

5.00 The level of CO2 emissions has been calculated for the period covered by the report

5.00 The company encourages volunteerism in its employees.

1.00 For the year under review, the energy/electricity consumption reported by the company has been more as compared to the last year.

3.00 The company has achieved compliance with ISO 14001 for a few of its locations.

5.00 There is a board committee responsible for managing the social and environmental efforts of the company.

5.00 The bank has provided details on how the money it borrowed under the TARP program has been spent or allocated.

1.00 The percentage of recycled paper in the total paper consumed has increased in 2007.

2.00 The Bank's CSR does not showcase specific instances where the bank has been active in lending to minorities, the disadvantaged or aimed at encouraging community businesses.

5.00 The company is a signatory to the Equator Principles. The Equator Principles set benchmarks for sustainable and socially responsible investments.

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Each of the directors attended at least 75% of the meetings of the Board and the committees of the Board on which he or she served during fiscal 2008.

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There have been no disagreements between the management and its auditors concerning adoption of any accounting standards or accounting principles.

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There has been a change in the 'C' level executives or directors of the company due to reasons other than retirements in the past six months.

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None of the directors or executive officers have pledged their shares or stock.

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The directors are required to own a specified value of common value stock but it is reset at age 65. Most non employee directors are near the age of 65.

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The Audit Committee charter requires at least an annual evaluation of the independent registered accounting firm by requesting a report on that firm's internal quality processes that is peer reviewed or performed by the firm itself.

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It has not been disclosed by the company whether the Audit Committee has presented findings of the evaluation of the independent registered accounting firm's internal quality processes to the full board .

5.00

There are no fees paid to the external auditor that pertain to non audit matters.(Non audit matters include those matters not related to audit or tax matters.)

5.00

According to Citigroup's Corporate Governance Guidelines, members of the Audit and Risk Management Committee may not serve on more than three public company audit committees, including the Audit and Risk Management Committee of Citigroup.

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The Audit and Risk Management committee met 12 times.

1.00

Some Audit Committee members are CEO's of other public companies.

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An Audit Committee Financial Expert has been identified in the annual report or the proxy statement

3.00

The Audit Committee members are not specifically compensated for their active participation in the company's Audit Committee matters.

5.00

The responsibility to review the independence of the external auditors vests with the Audit Committee

4.00

The Audit Committee does not approve, review and provide oversight for all 'Related party' transactions but another board committee is responsible for such oversight.

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The Audit committee alongwith the Governance Committee approve all related party transactions.

2.00

Audit Committee members are directors of 3 or more public companies including this one.

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The Audit Committee report states that the financial statements were reviewed and discussed by the Audit Committee members along with the management and external auditors

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There were no material weaknesses/significant deficiencies that were identified and disclosed under item 9a (Controls and Procedures) of the Annual/Quarterly report.

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The Audit Committee report does not explicitly state that it performed all the duties and responsibilities that its charter required it to perform

5.00

All the members of the Audit Committee are independent

1.00

There were instances of high value transactions between the company and directors or senior management or immediate family members during the year.

2.00

As per Citigroup's Corporate Governance Guidelines, all non management directors may enter into consulting contracts with the company after approval from the Nomination and Governance Committee.

5.00

The Audit Committee charter requires the Audit Committee to separately meet with management, external auditors and internal auditors to enable it to most effectively perform its oversight function

2.00

The Audit Committee Charter requires the Board's Audit Committee to meet at least 4 times during the year.

5.00

The Audit Committee charter states that the Audit Committee is responsible for the review of procedures to receive, retain and treat complaints received regarding any accounting, internal control or audit matters.

5.00

The Audit Committee performs an annual review of the Audit Committee charter.

5.00

The Audit Committee charter was last updated on March 13th 2009.

5.00

The Audit Committee charter does not provide for the allocation of some of the Audit Committee duties to another committee or a different group of persons outside the Audit Committee.

5.00

The Audit Committee charter places responsibility for risk management and risk assessment oversight on the Audit Committee members. This includes meeting periodically with management to discuss the Company?s major risk exposures.

5.00

The Audit Committee charter includes a requirement for an annual evaluation of the Audit Committee

5.00

The charter places responsibility to appoint external auditors on the Audit Committee.

2.00

The Corporate Social Responsibility Report does not outline clear environmental goals and steps to achieve those goals.

2.00

The Corporate Social Responsibility Report does not specifically provide any information on company participation in women oriented social projects or specific information on lending to women entrepreneurs.

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The Corporate Social Responsibility Report does not specifically provide any information on the company's efforts aimed at encouraging women suppliers.

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The CSR does not specifically provide any information on the company having set up targets to ensure adequate representation of women in the workforce.

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