(Bloomberg News) Citigroup Inc. investors approved a reverse stock split as Chief Executive Officer Vikram Pandit said the plan, along with a renewed dividend, will attract more investors to the New York-based bank's shares.

"These actions open doors for more potential investors to buy in," Pandit said Thursday in remarks prepared for the company's annual shareholders meeting in Manhattan. "Some institutional investors will not buy stocks that trade at less than $10 or $5 per share or that do not pay a dividend."

Investors voted to approve the reverse split, elected all the company's nominees to the board of directors and rejected shareholder proposals including one that would require an independent review of internal foreclosure controls.

Some attendees at the Hilton hotel called on Citigroup to buy back shares and work to increase the current price instead of carrying out the reverse stock split and dividend payment. Shares have fallen almost five percent so far this year.

Citigroup, ranked third by assets among U.S. lenders, plans to convert every 10 common shares into one new common share at the close of trading on May 6 and start paying a dividend of 1 cent a share in the current quarter.

"Cut expenses, take the proceeds and reduce the shares outstanding," said Vincent Russo from Eastchester, New York, who said he owned about 55,000 shares. "Not a reverse split. That's the easy way out."

Other shareholders were concerned that the split wouldn't reduce volatility as Pandit said, and that short-sellers would drive down the price.

Citigroup Shares

"There's a conspiracy out there against Citi," said Russell Forenza of Ridgewood, New Jersey, who said he owns more than 20,000 shares. Short-sellers borrow shares and sell them in anticipation of buying back at lower prices, pocketing the difference as profit.

Citigroup's stock tumbled to about $1 during the financial crisis, and the company suspended dividends as it struggled to stay afloat. The shares sold for $4.55 at the end of trading Thursday on the New York Stock Exchange.

Pandit, 54, steered the company back to profitability after losses tied to subprime home loans forced it to seek a government bailout during the financial crisis. The bank's capital plan passed a Federal Reserve review earlier this year, clearing Citigroup to resume a one-cent dividend and repurchase stock.