AFSCME Employees Pension Plan, Washington, and Trillium Asset Management filed a shareholder proposal to have Citigroup explore a corporate restructuring that could lead to the divesting of some business units.
The proposal, filed by the American Federation of State, County and Municipal Employees and by Trillium on behalf of its client, the Benedictine Sisters of Mount St. Scholastica, wants Citigroup to create a special committee of outside directors to explore ways to enhance shareholder value, including possible divestiture.
Lee Saunders, AFSCME president and chairman of the $960 million defined benefit plan's board of trustees, said in a statement that there's a $50 billion difference between the market value and Citigroup's own asset valuation, and “it is high time that the board gave shareholders a plan for recovering this value.”
“We think they are in so many different businesses, and it hasn't worked out well for them. They're trading below book value,” said Lisa Lindsley, director of capital strategies for the union and its pension plan, in a telephone interview.
While the AFSCME pension plan has just 76,602 Citigroup shares, “we've always been very active shareholders,” Ms. Lindsley said.
Trillium Asset Management, which has $1 billion in assets under management for individual and institutional clients, including the Benedictine Sisters of Mount St. Scholastica, who hold roughly $9 million worth of Citigroup shares, or less than 0.01%, said Jonas Kron, vice president and director of shareholder advocacy and corporate engagement for Trillium.
Trillium started evaluating Citigroup earlier this year, “and we came to the conclusion that this is really an issue for all shareholders to vote on,” Mr. Kron said in an interview. “We have concerns about the complexity of the company, and we think they need to do something about it. We're not pushing a specific plan.”
Mr. Kron said that before the company's April shareholders meeting, “we're going to be bringing this proposal to other shareholders and encourage them to have discussions.”
AFSCME and Trillium decided to file the shareholder proposal jointly after similar discussions, Ms. Lindsley and Mr. Kron said.
Citigroup spokesman Mark Costiglio noted that the company has sold more than 60 businesses and reduced parent Citi Holdings' assets by more than $600 billion in recent years. “Our capital levels are among the highest in the industry and we expect to continue to build capital by generating earnings in our core banking businesses and by continuing to reduce non-core assets,” Mr. Costiglio said in an e-mail.