Use access key #2 to skip to page content.

Citi finally looks out for shareholders

Recs

0

October 16, 2012 – Comments (3) | RELATED TICKERS: C

By now most have noticed in business news that Vikram Pandit has resigned (along with his lieutenant, Citi COO John Havens) as CEO of Citigroup.  Shareholders should be relieved to receive this news.  I was never a fan of Pandit from the start.  He somehow convinced Citi's board to buyout his Old Lane Partners hedge fund so that he could take the job at Citi back in 2007.  City then took a massive ($200MM-plus) write-down on that investment the very next year.  In the time that Pandit has been at Citi his compensation (approximately $261MM in 5 years, plus another $165MM for his share of Old Lane) has been at or near the top of the global banking industry,but his leadership has produced average to below average results. If anything is missing from this story it's the need for

Citi's entire compensation committee to resign after so unjustly enriching Pandit for such poor results. The committee is comprised of board members:  Michael O'Neill, Joan Spero, Diana Taylor, William S. Thompson Jr, and Ernesto Zedillo (President of Mexico 1994-2000).  They've done a crap job and should admit as much through the act of resignation from the committee. 

I credit Pandit for optimizing his compensation package during the past five years.  But I give greater credit to Citi shareholders who finally stopped hitting the snooze on their investor alarm clock to take notice of the fact that they were overcompensating a very average (or slightly below average) top executive.  My hope is that this is the first of many compensation realignments to come.  Banking and Private Equity executives have been grossly overcompensated for their performance the past five years ---- they should be sharing profits rather than getting oversized minimum salaries for crap performance and glorified government lobbying activities. 

 

3 Comments – Post Your Own

#1) On October 16, 2012 at 4:07 PM, L0RDZ (78.57) wrote:

Pandit's compensation was ridiculous,  his decision making extremely suspect, compensation once again oh my G as to how much money  they paid this guy in total based upon the purchase of his hedge fund, his salary, stock options, and walking away compensation in addition to the usual perks of CEO's.

What saved  Citi ???  the govment,  tax payer money and ridiculous  zero rate loans  from the fed.   What did most bankers do with the money ?  loan it back to the government at higher rates.

Genius ?  or  could a  three year old with a basic understanding of  get money for nothing and than lend it safely and securely back to your  original lender at a higher rate.  Ponzi scheme ?

What else did citi do ?  heard that they gobbled up plenty of smaller banks through out the world ?  and didn't they sell like a prized division to Morgan Stanley ~  losing close to 3 billion on its sale ?  Smith Barney ?

Why did Victor  abruptly leave  along with  his lietenaunt ?  money !!!!!!!!!!!!!!!!!!!!

Funny  how  accepting  an one dollar salary  for one year and he still earns  several  hundreds of millions of dollars  over the 5 years he managed to retain  the job  he should have never earned in the first place.

Nice work if you can get it.

So how much money did he expect in base salary to stay ?  4x 5 times easily what they plan on paying the new guy.

So far only  Jamie Diamond  and  lloyd Blankfien  remain  among the top  Ceo's  since  the  07 collapse of the entire world's financial system.

And the gov-me nt also saved their behinds with low interest rates and an almost unlimited source of funding for their operations.

Too big to fail.

Where can I sign up for these benefits ?

 

Apparently  the new  Ceo will make only 1.5 million in salary.

 

Report this comment
#2) On October 17, 2012 at 1:40 AM, ikkyu2 (99.14) wrote:

Sandy Weill didn't leave Pandit much to work with and a lot of the underperformance of C was baked in when he took the job.  He and the board both knew he was being brought in as a fall guy, like Stan O'Neal at Merrill - take the position, which was more than he'd earned, serve a few years that were destined not to be salad years, then take the "accountability" hit, take his lavish compensation, and not have another CEO job ever again.  And if he managed to turn the place around given the headwinds, well, that's like a free option.

Now they bring back the insider, Corbat, just as business is starting to take off again. Same old stuff, different day.

Report this comment
#3) On October 17, 2012 at 10:52 AM, kbtoys99 (< 20) wrote:

The only reason CITI's Earnings were even good this quatrter was the dip into reserves. This company is an undecipherable mess right now. Sheila Bair has called out CITI for having ZERO strategic direction. And there are quiet rumors circulating that CITI has taken over JPM short book on silver. I wouldnt touch this stock with a 10 foot pole.

Report this comment

Featured Broker Partners


Advertisement