Citi's CEO Pandit exits after board clash

English: Vikram Pandit, Chief Executive Officer, Citi, USA; Co-Chair of the World Economic Forum on Latin America, captured during the World Economic Forum on Latin America in Rio de Janeiro, Brazil, April 29, 2011. (Photo credit: Wikipedia)

New York, Oct. 17,  stock investing .- Citigroup Inc's Vikram Pandit quit as chief executive on Tuesday after months of simmering tensions with the board – an abrupt change that surprised investors and employees of the third-largest U.S. bank. Pandit told Reuters the decision to leave was his own, and that he had been contemplating the move for some time. Multiple sources within and outside the bank said Pandit’s departure followed months of tension with Chairman Michael O’Neill over a range of issues, including compensation and the role of Chief Operating Officer John Havens. On Tuesday, Havens also resigned.

Pandit has been involved in some high-profile snafus this year, including the bank selling the remaining stake of its retail brokerage business to Morgan Stanley at a loss. Senior executives were mostly stunned by Pandit’s departure. It is not clear precisely what led Pandit to quit, but the decision to swiftly name Corbat as CEO is a clear sign that O’Neill is now fully in control of the bank, according to one person familiar with Citigroup. In the 1980s, Corbat worked at Salomon Brothers, an investment bank that eventually became part of Citigroup, while Pandit and Havens are both veterans of Morgan Stanley.

Citigroup shares rose as much as 2 percent as some investors said they were not sorry to see Pandit leave. During his tenure, he was known to have adamantly opposed any break-up of Citigroup, something some money managers argued would increase shareholder value. In afternoon trading, Citigroup shares rose 0.8 percent to $36.95. The board’s relationship with Pandit was already under pressure after shareholders rejected the CEO’s pay package in an advisory vote in April. He was awarded more than $15 million in 2011 compensation, but 55 percent of shareholders voted against it. The pay issue was thought to still be a source of friction internally.

O’Neill’s ascension to chairman and the addition of new board members earlier this year upended the status quo and likely set the stage for disagreements on strategic direction between the chairman and the CEO, a second person familiar with the situation said. A third person familiar with the bank told Reuters that Pandit and O’Neill clashed because the chairman wanted the CEO “to get in line soldier-style.” A Citigroup spokeswoman declined to comment on accounts of friction with the board. Investors were taken aback by the news.

“It’s not a shock that (Pandit) is no longer there, but the surprise is this is all happening very quickly. Why is he leaving immediately?” said Mike Holland, chairman of New York-based Holland & Co, which oversees more than $4 billion of assets. “I’m not a Citi shareholder, but if I were, I’d be disappointed that Havens is gone, in some ways more than Pandit,” Holland added.... Continue to read.

Related articles

• Vikram Pandit quits as Citigroup chief executive (guardian.co.uk)
• Citigroup's CEO Vikram Pandit steps down (marketday.nbcnews.com)
• Vikram Pandit Resigns As Citi Ceo (businessinsider.com)