CEO Watch - Vikram Pandit, Citigroup Update #3

The ongoing saga at Citigroup continues. Vikram Pandit, who took over as Citigroup’s CEO two years ago, is approaching an imaginary make or break deadline. While Pandit is not responsible for the difficulties Citigroup got itself into, his management style and circumstances have not brightened his star as CEO. Throughout his tenure he has been making top management changes and has slowly addressed many of the problems facing the company, he has not, however, appeared to be a take charge executive and has often surrounded himself in a cocoon with a small group of close executives. According to a story by Eric Dash in today’s New York Times,

“We have made enormous progress in 2009,” Mr. Pandit said on Tuesday. The question is whether Citigroup and its leader are progressing quickly enough to satisfy restive employees and shareholders. Even some Citigroup executives say privately that they are worn out after a seemingly endless stream of late-night calls, emergency meetings and management turmoil.

… Given that showing, Mr. Pandit is under pressure to prove that the company can finally make money. Prince Walid bin Talal of Saudi Arabia, a major Citgroup shareholder, said last week in an interview with the Fox Business Network that he had told Mr. Pandit that the honeymoon was over. “Now it’s time to deliver,” he said.

The bank announced another terrible quarter the other day. while numbers were not a surprise, time is no longer on Mr. Pandit’s side.

For more:

HuffPost

CEO Watch - Vikram Pandit, CitiGroup, Update #2

Damian Paletta and David Enrich wrote an article in the Wall Street Journal about growing pressure from the head of the FDIC, Sheila Bair, on executive management at CitiGroup. According to the reporters,

The Federal Deposit Insurance Corp. is pushing for a shake-up of Citigroup Inc.’s top management, imperiling Chief Executive Vikram Pandit, people familiar with the matter said.

The FDIC, under Chairman Sheila Bair, also recently pressed a fellow regulator to lower the government’s confidential ranking of Citi’s health — a change that would let regulators control the firm more tightly.

It is really difficult to determine how all these forces will ultimately play out and what they will mean for Pandit as well as a number of the executives under him. It is certainly possible his tenure may not extend much longer, we will just have to wait and see.

For more:

Reuters

Recommended Reading - Citigroup's Last Best Hope, The Daily Beast

William D. Cohan, a former M&A banker and well known business writer, wrote a clever blog piece entitled Citigroup’s Last Best Hope that appeared in today’s Daily Beast.  Cohan makes the argument that Citi’s new Chairman Richard Parsons does not as many people suggest have a monumental task ahead in choosing new independent members for Citigroup’s board.  Citi as part of its deal for more government funds agreed to make major changes in the bank’s board. According to Cohan,

Much ink has been spilled lately about the challenging “hurdles” Citigroup—the US government-affiliated financial giant—now faces in finding at least six new board members to fill current or forthcoming vacancies on its 15-member board. As part of the deal reached last week, where the US Treasury will own 36 percent of the company, Citigroup Chairman Richard Parsons agreed that the majority of the board would comprise “new independent directors as soon as feasible.” 

… The problem for Parsons in finding a few more good men (or women) to serve alongside him, according to the conventional wisdom, is that the potential liability from peeved shareholders and creditors that Citi’s directors are—and will likely continue to be—exposed to as a result of the bank’s ongoing financial difficulties make the job anything but plum. And, of course, there is also the small matter that the board itself—despite the heroic efforts of the Treasury to make it appear not the case—will be watched over ever so carefully by a Very Big Brother. 

But, as usual, the conventional wisdom is wrong. In fact, there are many reasons why serving on the Citigroup board at this very moment can be a stimulating and richly rewarding experience. First, Citigroup indemnifies board members against most legal consequences of decisions they make as Citi directors. Besides, how bad could their decisions be at this point anyway? The stock is already trading at $1.50 a share (down 40 percent alone on Friday). How much lower can it go? Second, being part of the effort to craft and to implement the resuscitation of one of the largest financial institutions on the planet could be the intellectual challenge of a lifetime.

And third, the part-time position should be looked at as a form of patriotic government service, which it surely is… 

Cohan’s piece goes on to recommend a number of out of the box suggestions for the board.  While I agree it is important Citi’s board be changed, I am not certain many of Cohan’s suggestions are correct but he certainly has some unusual suggestions. Check out the story and the names he suggests.

Recommended Reading - Boards Refuse to Act Despite Poor Governance, Time.com

Douglas A. McIntyre wrote a piece for Time that attributed many of the recent problems top companies have been facing as a failure of the respective companies’ board of directors. McIntyre is very close to the truth. Boards have for too long just gone along and followed the lead of top management. It is now time for them to accept their real responsibilities to help guide management to make sensible corporate strategy and important business decisions. According to McIntyre,

… Each of these four companies ( referring to Bank of America, Citigroup, General Motors and Ford) has directors who chose not to ask hard questions and demand answers. How does a bank that was making $1 billion a year suddenly make $10 billion? How does a car company that nearly went out of business when oil prices rose sharply over three decades ago decide to reduce spending for the development of fuel-efficient vehicles?

Boards have some understandable reluctance to cross some lines if they may not have a tangible effect on company results. The Apple (AAPL) board clearly decided that Steve Jobs had some right to his privacy about his health. That may have been bad for investors. No one may ever know.

Several of America’s most famous companies have fallen on very hard times recently and investors might want to ask whey their boards appear to have done nothing demonstrable to help shareholders.

The short piece is worth a quick read.  Let’s hope boards get a chance to read the piece as well. 

It's Official, Richard Parsons to Be Citigroup Chairman

The rumors are over, Richard Parsons, the former chairman of Time Warner, will be Citigroup’s Chairman effective February 24.  According to The New York Times Bischoff said,

he would not stand for re-election and would retire later this year.    

The Times went on to say,

Regulators have pressed the struggling financial giant to shake up its board and replace Mr. Bischoff in an effort to regain investors’ trust. Staggered by losses, Citigroup has sought two financial lifelines from Washington. 

The issue gained new urgency last week, when Citigroup announced a drastic plan to split itself in two, effectively undoing the landmark merger that formed the company a decade ago. 

Be sure there is more management turmoil to come and the possibility of nationalization remains an option open to the new government. Let’s wait and see if real change can come under Parsons.

For more:

Crains   

Times online  

Telegraph UK  

Financial Times  

Hollywood Reporter     

CEO Watch - Vikram Pandit, Citigroup

The continuing financial saga at Citigroup continues to remain front page news.  The latest moves at the bank ( Smith Barney - Morgan Stanley JV, moves to further break up the bank) all seem to be counter to the strategy Pandit has been professing for some time.  As these changes move closer to reality and Pandit continues to lose supportive allies, e.g., former U.S. Treasury Secretary Robert Rubin (resigning as Citi board member), the pressure on Pandit will only get greater.    

Let it be said, Pandit inherited a nearly impossible situation when he came in as the new CEO but its getting far more difficult to see how he can remain in his position.  More and more the U.S. government seems to be a powerful force behind the bank’s latest moves.  We will just have keep watching as changes dribble out and pressure builds on Pandit.   Pandit’s greatest hope and possible salvation as CEO is to become a “true believer” in the current changes and push hard for more dramatic and quick changes.  He must acknowledge that the global financial supermarket that was Citi must now come to an end.  Sandy Weil’s vision for Citi can no longer be valid.  

To get a sense of what he might do, check out the Breakingviews.com section in today’s International Herald Tribune.  I hope he can find the way to make things happen for the bank.  

For more:  

Fierce Finance  

Reuters  

NY Times Dealbook 

Crains

Huffington Post 

Citi's Executive Management Shaky?

The weekend and early today saw a spate of articles speculating that Citigroup is under pressure from regulators to replace its chairman, Winfred Bischoff.  Speculation has arisen that Richard Parsons former CEO and chairman of Time Warner and a current Citigroup board member might replace Bischoff should he leave.  According to a story by Eric Dash in today’s International Herald Tribune,

U.S. government banking regulators are pressing Citigroup to shake up its board and replace its chairman, Winfried Bischoff, in an effort to restore confidence in the beleaguered financial giant. 

Richard Parsons, chairman of Time Warner and a Citigroup director, has emerged as the leading candidate to succeed Bischoff as Citigroup’s chairman, people briefed on the situation said Sunday night. While the timing was uncertain, the change could come as early as this week. 

A shift in the Chairman would only mean greater pressure on Citi’s current and struggling CEO, Vikram Pandit.  With the possible spinoff of Citi’s Smith Barney division into a joint venture with Morgan Stanley, which came to the fore this past week, and the continuing pressure on Citi for a breakup of other divisions — can Pandit survive? 

Questions will continue to be asked as to whether Pandit is the right person to handle these types of changes and if not, who might the bank turn to handle the job?   This all comes after former U.S. Treasury Secretary Robert Rubin resigned his board seat at the bank.  Rubin has always been considered an ally of Pandit’s.  In the midst of the continuing crisis at Citi according to Time Magazine which relies on a Wall Street Journal piece,

Citi’s board has given Pandit a vote of confidence. 

Is it deja vu or does the board really support Pandit or is it just continuing to fail in its responsibilities?  I anticipate more key management changes at the bank over the next few weeks.  Stay tuned.  

For more:   

UPI  

 Fox Business News  

Ft.com Gapplerblog  

Portfolio.com

Fool.com  

Financial Times (update 1/15)

Citi May Be Considering Replacing Chairman

According to the Wall Street Journal (sub req.) , who quoted unnamed sources, members of Citi’s C (NYSE) board are considering changing its chairman, Sir Win Bischoff.  According to the story,

The board wants closer oversight of the efforts of chief executive Vikram Pandit and his team…

 The Journal’s unnamed sources also speculated that Richard Parsons, chairman of Time Warner and a member of Citi’s board, is being considered as Bischoff’s replacement.  It would seem the bank could come up with a more judicious and appropriate candidate.  According to Felix Salmon on SeekingAlpha,

The one option being mulled right now — replacing Win Bischoff with Dick Parsons — is clearly taken straight from the deckchairs-on-the-Titanic playbook. Parsons, remember, is the man about whom Joe Nocera said that “all his professional life, he’s wanted to be seen as someone who never seems to break a sweat”. In any case, Bischoff isn’t the problem. The problem is that Vikram Pandit gave himself altogether too much time to get smaller, and then decided his best chance at salvation was to get bigger — by buying Wachovia. Now, it’s too late: the die has been cast. Will Citi buy Chevy Chase Bank? It really doesn’t make any difference either way.

While I do not find myself in complete agreement with Salmon’s overall sentiments, I do not find Parsons the right person for the challenge.  His allegiance to Pandit might actually serve as a hindrance to helping Pandit.  If the board replaces Sir Win they need to find someone who intends to go toe-to-toe with Pandit and his team. 

For more:  

The Deal.com (11/14 update)

Bloomberg

Biz Journal   

MarketWatch     

CEO Watch - Citigroup Update 2 - Pandit Gets the Nod

Vikram Pandit was appointed Citgroup's new CEO today. For details read Eric Dash's story in The New York Times piece. The bank also picked Winfried F. W. Bischoff, the acting chef executive, as chairman.

For more:

CNN Money (Fortune)
TimesOnline
Crain's New York
CNN Money
Washington Post
USA Today
BusinessWeek

CEO Watch - Citigroup Update 1

If you think it is easy to fill the CEO position for one of the largest banks in the world, you may want to reconsider. The new CEO for Citigroup will have to sign off on the company's financial statement, something many of us might not be willing to do right now. According to a story in the Financial Times,

Josef Ackermann, chief executive of Deutsche Bank, has turned down an approach from Citigroup about taking charge of the US bank, underlining the lack of high-profile external candidates for the job.

Mr Ackermann was asked if he would be interested in becoming Citigroup’s chairman and chief executive following the resignation of Chuck Prince. He “was approached, but said he was not available”, according to someone familiar with the matter.

Who else out there has turned down the job? We will just have to wait and see. Many people continue to predict it will be current Citi employee Vikram Pandit. Stay tuned.

For more:

Dealbook
Forbes Blog
CNN Money

CEO Watch - Citigroup's Search for New CEO, Update 5

Rumors continue to abound that current Secretary of Treasury, Hank Paulson and former head of Goldman Sachs, will be leaving the treasury post to head up Citigroup. Paulson who was a star at Goldman has failed to light any stars at Treasury might be an interesting choice. I am skeptical about the rumor but thought it was worth mention.

For more:

BloggingStocks
DealBook

Recommended Reading - Forbes, Wanted CEO of major corporation

In light of the recent two major CEO changes (Merrill and Citigroup) Geoff Colvin of Forbes wrote an interesting piece on CEO succession planning. Obviously, the article was written after both aforementioned companies failed to have a succession plan in place. Take a look.

CEO Watch - Charles Prince, Citigroup Update 3

Can Prince continue to hold on to his position in spite of continuing bad news impacting the firm? Rumors were flying through the markets today that Citi might need $30 billion in short term loans. The rumors hurt the market and continue to put unending pressure on Citi.

Can Prince really withstand the pressure and will the board continue to back him?

For more:

Deal Journal
Times Online UK
Seeking Alpha
FT

Latest TV Interview on Key CEO Turnovers

Earlier today, I was interviewed Pat Bolland on the Business News Network. The TV interview focused on the problems facing CitiGroup's CEO, Chuck Prince, the recent ouster of Sprint's CEO, Gary Forsee and the accounting-related scandal that resulted in the recent resignation of Alex Lidow, CEO of International Rectifier.

If you wish to view the interview click here or go to BNN and scroll down to today's interview which took place around 10:05 AM EST.

For more on Forsee's Exit from Sprint see:

Kansas City Star

CEO Watch - Prince, CitiGroup Update

Chuck Prince responded yesterday to the furor surrounding his management of Citigroup. The bank announced a major reorganization along with key management changes. The question is whether the changes are enough to quell outside calls for his his head. According to a piece by Landon Thomas, Jr. and Eric Dash in today's New York Times,

Citigroup announced that it would combine its investment banking and alternative investment units, bringing the groups together under one leader. Vikram S. Pandit, a former Morgan Stanley executive who runs Citigroup’s alternative investment division, will lead the new group, to be called the institutional client group.

For full details on the changes see Citigroup's press release.

Prince remains under pressure and stays on our CEO Watch List.

For more see:

Financial News
Crains
Newsvine
Bloomberg Update
Times Online UK
Seeking Alpha
BloggingStocks

CEO Watch - Chuck Prince, Citigroup

Just as things were getting better for Chuck Prince the credit crisis roared its ugly head. Prince is once again under the gun and this time he may be forced to give up. As the bank warned on Monday that its third-quarter profit would slide 60 percent pressures grew again for Prince's head.

For more on the growing story:

IHT
24/7 WallStreet
Washington Post
FT
FT AlphaVille
AOL Money & Finance
Bloggingstocks