Governance Firm Rates Citigroup Worst of Class

June 9, 2003 ( - A corporate governance research firm has given Citigroup the dubious distinction of having the least effective board among large American companies.

According to a survey by the Portland, Maine-based The Corporate Library (TCL), Citigroup received an “F” on an “A” to “F” scale. Also getting raspberries in addition to Citigroup were:

  • Allstate Corporation
  • Emerson Electric Company
  • Gemstar-TV Guide International
  • Honeywell International, Inc.
  • JP Morgan Chase & Co.
  • Loews Corporation
  • SBC Communications Inc.
  • Verizon Communications Inc.
  • Walt Disney Company

In the case of Citigroup, CEO Sanford Weill and the board have a “business as usual” approach and have not demonstrated sufficient personal accountability, the TCL claimed.

The Corporate Library believes that one of the most significant indicators of overall board effectiveness is CEO compensation.  “Directors who cannot say no to excessive pay are not adequately representing the interest of the shareholders,” said Paul Hodgson, TCL senior analyst for executive compensation.  Failure to insist on a strong pay-performance link and limit overall compensation levels on behalf of shareholder interests were a key factor in each of the boards in TCL’s bottom ten list of America’s largest public corporations.Another key area of TCL concern is shareholder accountability.  

TCL’s ratings announcement also includes special mention of boards that have shown particular distinction.

  • When AMR’s then-CEO Don Carty lost credibility, the board responded promptly by forcing him out, earning it a special TCL “best under pressure” citation (See  Executive Comp Issue Could Ground AMR Labor Deal ).
  • The Corporate Library also saluted Colgate-Palmolive CEO Reuben Mark for his commitment to standards of conduct.

The Corporate Library is a research firm that provides data and analysis of corporate governance issues. The latest survey covered 1,700 largest companies.