C itigroup’s common stock dropped below $1.00 this morning. A share of one of the most storied financial institutions in America, with a Dow Index moniker that straddles the globe, now trades in pennies. We have consistently predicted more surprises and greater mishaps as a result of a governance system that has failed to function for years, if it ever did, and a board of directors that long ago lost any shred of credibility. But not even a modern Nostradamus could have foretold a descent of this depth.
Millions of shareholders have all but disappeared. Billions in share value have been obliterated. Yet with all this, CEO Vikram Pandit is still on the scene and most of the directors responsible for the disaster, including chairman Richard D. Parsons and Robert Rubin, are in their chairs. A question for these esteemed gentlemen seems appropriate: Will you still be there when the signs come down, the doors are finally closed and Citigroup is formally buried, or do you have some other plan to survive without investors and without any significant market capitalization?
It would appear that the only hope for investors at this point is that the U.S. government, which is the largest single shareholder with plans to convert all its holdings into (now worthless) common shares, will assert its responsibilities and immediately replace the crew on this disaster-plagued ship. Could anyone do worse? It does not serve public confidence to see taxpayers’ investment of $45 billion vanish into thin air, or to have the stock of this institution take on the appearance of something you would find in a Family Dollar store, whose shares, by the way, currently trade around $30 and whose market cap is about the same size now as Citigroup’s.
If Citigroup’s boardroom does not grasp the stark realities that face this institution, one can only hope the West Wing will.
Neither Citigroup’s board nor its CEO offered any comment regarding the company’s stunning plunge to penny stock status, before or after today’s closing bell. Contrast this with GE’s management, which got out in front when that stock breached the $10 mark earlier this week. The message Citigroup’s boardroom conveyed to investors was “your’re on your own.” Investors might want to consider sending a similar message to Citigroup’s CEO and directors. Incidentally, Family Dollar Stores (NYSE:FDO) was one of the few winners on the NYSE today, closing near its 52 week high at $30.66, up 12.43 percent on the day. Citigroup closed at $1.02. It was an all-time low.