William D. Cohan, a former M&A banker and well known business writer, wrote a clever blog piece entitled Citigroup’s Last Best Hope that appeared in today’s Daily Beast. Cohan makes the argument that Citi’s new Chairman Richard Parsons does not as many people suggest have a monumental task ahead in choosing new independent members for Citigroup’s board. Citi as part of its deal for more government funds agreed to make major changes in the bank’s board. According to Cohan,
Much ink has been spilled lately about the challenging “hurdles” Citigroup—the US government-affiliated financial giant—now faces in finding at least six new board members to fill current or forthcoming vacancies on its 15-member board. As part of the deal reached last week, where the US Treasury will own 36 percent of the company, Citigroup Chairman Richard Parsons agreed that the majority of the board would comprise “new independent directors as soon as feasible.”
… The problem for Parsons in finding a few more good men (or women) to serve alongside him, according to the conventional wisdom, is that the potential liability from peeved shareholders and creditors that Citi’s directors are—and will likely continue to be—exposed to as a result of the bank’s ongoing financial difficulties make the job anything but plum. And, of course, there is also the small matter that the board itself—despite the heroic efforts of the Treasury to make it appear not the case—will be watched over ever so carefully by a Very Big Brother.
But, as usual, the conventional wisdom is wrong. In fact, there are many reasons why serving on the Citigroup board at this very moment can be a stimulating and richly rewarding experience. First, Citigroup indemnifies board members against most legal consequences of decisions they make as Citi directors. Besides, how bad could their decisions be at this point anyway? The stock is already trading at $1.50 a share (down 40 percent alone on Friday). How much lower can it go? Second, being part of the effort to craft and to implement the resuscitation of one of the largest financial institutions on the planet could be the intellectual challenge of a lifetime.
And third, the part-time position should be looked at as a form of patriotic government service, which it surely is…
Cohan’s piece goes on to recommend a number of out of the box suggestions for the board. While I agree it is important Citi’s board be changed, I am not certain many of Cohan’s suggestions are correct but he certainly has some unusual suggestions. Check out the story and the names he suggests.