Thursday, May 24, 2018
Business

In a surprise, Pandit steps down as Citigroup CEO

Vikram Pandit, who steered Citigroup through the 2008 financial crisis and the choppy years that followed, abruptly left the bank Tuesday, stepping down as CEO and as a director.

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

A second top executive resigned as part of the shakeup: president and chief operating officer John Havens, who was also CEO of Citi's Institutional Client Group, which serves global companies, banks and governments.

Pandit was replaced immediately by Michael Corbat, 52, a Citigroup lifer who had been CEO of its Europe, Middle East and Africa division. Corbat joined the bank in 1983, just after graduating from Harvard.

The Wall Street Journal reported that the departures 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 financial analysts and reporters, Corbat and Citigroup chairman Michael O'Neill remained vague about the sudden change. "What happened is that Vikram submitted his resignation and we accepted it," O'Neill said.

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 that "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.

"This shows how dysfunctional this organization is, to have this event unfold this way," Whalen said.

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

Since joining the bank in December 2007, Pandit has made total compensation of at least $56.4 million, according to data compiled for the Associated Press by Equilar, an executive pay research firm.

Many shareholders were also frustrated by Pandit's failure to boost Citigroup's stock price, which was decimated during the 2008 financial crisis and remains far below where it was when Pandit took over.

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