Citigroup announced this week that it had appointed new chairs of three board committees: audit and risk, nomination and governance, and personnel and compensation.

The company is the latest financial firm to try to address shareholder anger over mortgage-related losses by changing its board leadership. In early June, Washington Mutual named new chairs to its finance and personnel committees after the two former panel leaders received more than 42 percent opposition. On June 30, Swiss firm UBS announced a new risk and strategy committee, appointed a new senior independent director, and said that four directors would leave the board in October.

The committee shakeup at Citigroup, one of the world’s largest financial firms, had been expected by investors. Before its annual meeting in April, the New York-based company pledged to undertake periodic committee chair rotations. The AFL-CIO labor federation urged investors to vote against then-audit and risk committee chair C. Michael Armstrong, but dropped its campaign after Citigroup announced the rotation plan. Armstrong still serves on the board, but is no longer a member of the audit and risk committee.

Board member John Deutch, who previously held no chairmanships, has been named to lead the audit and risk committee, Citigroup said in a July 22 press release. Richard Parsons, former chair of the compensation committee, will head the nomination committee, while former nomination panel chair Alain Belda will lead the compensation committee. Both Belda and Parsons received significant withhold votes at Citigroup’s annual meeting, with 30 and 31 percent opposition, respectively. The withhold votes appeared to stem from investor concerns over the company’s compensation practices, including the retirement package for former CEO Charles Prince. Also this week, the company named Lawrence Ricciardi, a former IBM executive, to the board as a new independent director.

“We're pleased to see that Citigroup is fulfilling the commitment it made to investors earlier this year and look forward to working with the new board leadership,” AFL-CIO Associate General Counsel Damon Silvers told Risk & Governance Weekly.

However, Richard Ferlauto, director of corporate governance and pension investment at the American Federation of State, County, and Municipal Employees, says the union sees little value in rearranging committee chairs. “What we really need is new blood on the board that will expand strategic vision for the future of the company that includes focus on the core business,” Ferlauto told R&GW.

Richard Clayton III, research director at the Change to Win Investment Group lauds the move. “I think that it’s valuable for members of the committees to get some sense of what the other committees are doing,” Clayton told R&GW. “It contributes to an atmosphere of collective responsibility.” Earlier this year, Change to Win threatened to oppose Citigroup directors if the company did not report on how it tried to mitigate credit losses, but the labor investment group ultimately did not wage an opposition campaign.

Also this week, AFSCME called on Citigroup to outline clearer strategies for share growth. In a July 21 letter to board chair Sir Winfried Bischoff, the labor union writes that much of Citi’s financial underperformance is due to a lack of a coherent financial strategy. In the past year, the company’s share price has fallen approximately 60 percent--from above $50 in July 2007 to about $20 this week. The letter also comes after the July 18 release of Citigroup’s second quarter earnings statement, which documented a $2.5 billion profit loss.

Still, the $2.5 billion loss is less than the minimum of $3 billion that Wall Street analysts expected. The loss was half that of the first quarter, when mortgage-related investments resulted in a $5.1 billion loss. CEO Vikram Pandit wrote in the earnings release that writedowns in Citi’s securities and banking businesses decreased by 46 percent last quarter.

In AFSCME’s letter, Chairman Gerald McEntee claims that Citi is in continued financial danger from its multiple and diversified non-core businesses. “While the stock price has been dropping in large part because of the mounting subprime losses, we contend that much of the current depression of the stock price reflects investor confusion over Citigroup’s sprawling makeup,” McEntee wrote. He goes on to say that the “unwieldy jumble” of diverse businesses under the Citi name blinded it to subprime-related risk.

Pandit, who took over in December after Prince’s resignation, is implementing a restructuring plan that will cut costs by $15 billion in the next three years, according to the earnings release. The company has shed a number of its subsidiaries--including the April sales of commercial finance division CitiCapital to General Electric, and the Diner’s Club International credit division to Discover. AFSCME lauded the sale of non-core assets, but suggested that Citi might ultimately benefit from breaking into two separate entities--one for securities and investment banking, and one for retail banking.