In surprise move, Citigroup CEO steps down

Vikram Pandit, who steered Citigroup through the 2008 financial crisis and the years afterward, abruptly left the bank Tuesday, stepping down as CEO and a director. Pandit, 55, was replaced immediately by Michael Corbat, 52, CEO of Citigroup's Europe, Middle East and Africa division.
By DANIEL WAGNER Published: October 17, 2012
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Vikram Pandit, who steered Citigroup through the 2008 financial crisis and the years afterward, abruptly left the bank Tuesday, stepping down as CEO and a director.

The move shocked Wall Street, and Citigroup offered no explanation. There was no hint of the departure Monday, when the bank discussed its strong third-quarter earnings in calls with financial analysts and reporters.

A second top executive resigned as part of the shake-up: President and Chief Operating Officer John Havens, who also was CEO of Citi's Institutional Client Group.

Pandit was replaced by Michael Corbat, 52, CEO of Citigroup's Europe, Middle East and Africa division. Corbat joined the bank in 1983, just after graduating from Harvard.

The Wall Street Journal reported the exits followed a clash between Pandit and the company's board over strategy and business performance, including at the group run by Havens.

In a conference call late Tuesday with analysts and reporters, Corbat and Citigroup Chairman Michael O'Neill remained vague.

“What happened is that Vikram submitted his resignation and we accepted it,” O'Neill said more than once. Corbat said the changes do not reflect any desire to change Citigroup's strategic direction.

Analysts suspected there was more to the story. Pandit's departure from the board is a clear indication “this was a complete and unexpected break” between Pandit, 55, and Citi directors, said Chris Whalen, a bank analyst and senior managing director of Tangent Capital Partners in New York.

If Pandit's disagreements with the board were recent, his trouble with shareholders had been brewing. They rejected his 2011 pay package in a nonbinding vote this spring.

Since joining the bank in December 2007, Pandit has made at least $56.4 million, according to data compiled for The Associated Press by Equilar, an executive pay research firm. That includes salary, bonuses, benefits, perks and stock awards. Pandit also made about $165 million from a buyout of his ownership stake in Old Lane Partners, a hedge fund he founded that was acquired by Citi.

Many shareholders were frustrated by Pandit's failure to boost Citigroup's stock price that was decimated in the 2008 financial crisis. The day Pandit was named CEO, Citi's stock closed at $332.30, after adjusting for a reverse stock split last year. It closed Tuesday at $37.25, up 59 cents for the day.

Citi's stock was by far the worst-performing major bank stock over the past five years, having lost 91 percent of its value, versus a 6 percent gain for Wells Fargo and a 2 percent gain for JPMorgan Chase.

Still, on Monday, Citigroup's stock rose to its highest level since April.

Facing the crisis

In his five-year tenure, Pandit slimmed the bank by selling businesses, sought and then repaid multiple federal bailouts, and helped right its balance sheet after billions in losses on bad mortgage investments made before he took the helm.

Citi now is the country's third-largest bank, with $1.9 trillion in assets. It trails only JPMorgan, with $2.3 trillion, and Bank of America, with $2.1 trillion.

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