Citi's Hands-On Chairman

By SUZANNE KAPNER

Michael E. O'Neill is remaking the chairman's office at Citigroup Inc.

Since taking over for Richard Parsons three months ago, Mr. O'Neill, a longtime bank executive, has been peppering employees, executives and fellow directors with questions about how Citigroup works and what it does to make money.

"How important is technology to what you do?" he asked foreign-exchange traders at one meeting, according to a person who was there. Mr. O'Neill has taken a close interest in operations during meetings with employees in New York and London, said people close to the company.

Bloomberg News

Michael O'Neill, former chief executive officer of the Bank of Hawaii, arrived for a Citigroup shareholders meeting in New York in April 2009.

The new chairman's attention to the operational side contrasts with Mr. Parsons, who focused more on the job's diplomatic aspects. Mr. Parsons stepped down in April after three years as chairman and more than 16 years on Citigroup's board.

The 65-year-old Mr. O'Neill, who a decade ago turned around Bank of Hawaii Corp. and briefly ran Barclays PLC, is a "nitty-gritty operations guy" who "understands what he doesn't understand," say people close to the company.

Mr. O'Neill also has begun sounding out large shareholders about the executive-compensation plan shareholders rejected this spring in a black eye for the company, these people said.

Through a spokesman, Mr. O'Neill declined to comment.

Ranking high on Mr. O'Neill's list of priorities is how to boost returns at the No. 3 U.S. lender by assets, at a time when new regulations, a sluggish economy and fears that some stretched European nations will default on their debt are depressing bank profits.

Citigroup shares have given up all the gains they clocked earlier this year, closing Monday at $25.34, down 53 cents. That is 37% below the stock's level a year ago and down 93% from their prefinancial crisis high.

With his hands-on approach, Mr. O'Neill is expected to complement Vikram Pandit, Citigroup's chief executive, with whom he is said to have a good relationship, and to shake up what has been derided by critics in the past as a passive board.

Mr. O'Neill has told colleagues that his goal is to understand the company well enough "so that when Vikram tells him what he wants to do, he can push back," said a person familiar with his thinking. According to another person who knows him, Mr. O'Neill has been "dissatisfied with the level of granular detail on the board and wants to roll up his sleeves and get more involved."

Bank boards often have been populated by large customers and "used as a way to cement business relationships," not to "monitor shareholder interests," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. The financial crisis made such cozy relationships less acceptable, he said.

Mr. Elson said that Mr. O'Neill had the "right qualities" to be chairman, including a deep knowledge of the industry and an ability to act as a "mediator between the board and the CEO in a way that doesn't damage that relationship."

Also on Mr. O'Neill's agenda: How to deal with the embarrassment that Citigroup suffered in April when shareholders rejected its executive-compensation plan, including $14.9 million awarded to Mr. Pandit in 2011. As chairman of the board-level committee that oversees personnel and compensation issues, Mr. O'Neill has been meeting with large shareholders to get their views, according to people familiar with the matter.

In keeping with his tendency to examine different sides of an issue before making a decision, Mr. O'Neill is talking with all large shareholders—not just those who voted "no." Citigroup is unlikely to change compensation that already has been granted but will probably modify future awards to better align pay and performance, people familiar with the situation said.

A Citigroup spokeswoman declined to comment.

Mr. O'Neill, who served in the U.S. Marines—and has been known to tell employees, "If you don't like the boos, don't get on the stage"—is less of a charmer than his predecessor. In that respect, he is similar to the 55-year-old Mr. Pandit, who is said to feel more comfortable with Mr. O'Neill than he did with the more gregarious Mr. Parsons, according to people close to the company.

Mr. Parsons helped Citigroup rebuild relationships with regulators after the company took $45 billion in aid during the financial crisis—money it has since repaid.

One area in which Mr. O'Neill would like to get more up to speed is the institutional side of the business. "There are a lot of gaps he wants to fill in about the trading business," said one person familiar with his thinking.

Mr. Pandit declined to comment but has said in the past that Mr. O'Neill is a "great partner" and that his "experience and acumen as a banker is highly valued."

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com

A version of this article appeared July 24, 2012, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Citi's Hands-On Chairman.