Some Citigroup (NYSE:C) Shareholders Pushing for Reverse Stock Split

With the Citigroup (NYSE:C) share price lingering at around $4, a number of shareholders at the annual shareholders meeting strongly suggested when talking to Citigroup Chairman Richard Parsons that the company move ahead with a a reverse stock split as part of the  strategy of the company.

The suggestion brought out a lot of emotion on both sides of the issue, with pros and cons offered as to why or why not Citigroup should do it.

This wasn’t something brought up by Citigroup management, but probably was a hangover from last years shareholder meeting when approval for going ahead with a reverse stock split was approved by shareholders if the company chose to go that way.

The argument to do a reverse stock split was centered around institutional investors, who shareholders believed would be more apt to invest in Citigroup if the price was higher.

Those opposing the matter said it would bring out those who would short the stock, which would effectively bring it back down in price anyway, negating the purpose for taking that action in their view.

Parsons said at this time the board hasn’t made any decision one way or the other about it, which seemed to imply it hasn’t been taken up lately.

Also talked about at the meeting was earnings per share growth going forward. This was interesting in that Parsons gave far more optimistic guidance than CEO Vikram Pandit did yesterday, making you wonder what that was about.

It seems Parsons wanted to counter the guidance of Pandit because investors know that is the primary element to make decisions on, as the poor economic conditions last year make most companies this year look good, but that isn’t a good metric for investors to make decisions on, so most are looking to guidance, which yesterday wasn’t great from Pandit, suggesting some worry from Parsons over what was said.

Parsons told shareholders they should expect continual growth in earnings, something Pandit didn’t promise, but rather said they were going to be in for a rough and uneven ride. I think Pandit knows better, and his guidance is the more accurate.

Just the fact that guidance was given in opposite directions isn’t a great thing to hear from both the Chairman and CEO of Citigroup, and suggest two different viewpoints on where the company is heading.