Citi finally looks out for shareholders
October 16, 2012
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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.
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