Citigroup Inc., The McGraw-Hill Cos. and Merrill Lynch & Co. Inc. had directors who sat on too many other corporate boards and who received an unusually high percentage of disapproval votes from shareholders, according to The Corporate Library.
The findings stem from an effort by the Portland, Maine-based independent research firm to identify governance risk factors that might have contributed to the decline of more than a dozen mostly financial companies last year. The research excluded executive compensation.
American International Group Inc., like Citigroup and McGraw-Hill, which owns credit rating agency Standard & Poor's, had three board members who received unusually high disapproval votes from investors between July 2007 and December 2008, the report said. All three companies are based in New York.
"In comparison to the largest U.S. companies, these numbers are truly remarkable," said Ric Marshall, chief analyst at Corporate Library.
Sir Win Bischoff, Citigroup's chairman, also was on the boards of McGraw-Hill and two other companies, according to the report.
He received the highest percentage of "withhold" votes from shareholders 38.6% while at McGraw-Hill of any other board member examined.
Shareholders can express their symbolic disapproval of management's board nominees by withholding their votes in annual balloting.
Standard & Poor's of New York is among the largest credit-rating agencies that have been sharply criticized by lawmakers and analysts for inflating the ratings on bonds comprising pooled mortgages that later collapsed, helping to fuel the financial crisis.
Two other McGraw-Hill directors, Chief Executive Harold McGraw III and Edward Rust, were among the top five directors who also received the highest percentage of disapproval votes from shareholders, the report said.
At Citigroup, Mr. Bischoff, who also had been acting chief executive in 2007, was scheduled to step down on Feb. 23 and be replaced by Richard Parsons, former chairman and chief executive of Time Warner Inc. of New York.
Mr. Parsons, who has been a Citigroup director for a dozen years, ranked sixth among board members with the highest disapproval ratings, with 30.6% of shareholders withholding their votes from him, the report said. A Citigroup spokeswoman declined to comment.
Board oversight at financial institutions leading up to the financial crisis will be the subject of a Securities and Exchange Commission probe under new Chairman Mary Schapiro, the Washington Post reported last week.
The Corporate Library's research focused on 17 troubled companies, including AIG, Bank of America Corp., Citigroup, the Federal National Mortgage Association, Lehman Brothers Holdings Inc., Morgan Stanley and Wachovia Corp. for the 18-month period through the end of last year.
During that period, these companies lost more than $1.3 trillion in shareholder value, the report said.
Representatives at AIG, Citigroup, McGraw-Hill and Bank of America, which now owns Merrill, declined immediate comment.
Efforts to reach Messrs. Bischoff, McGraw, Rust and Parsons through a Citigroup spokeswoman weren't immediately successful.
Neil Roland is a reporter for Crain Financial Group