CEO Watch - Vikram Pandit, CitiGroup, Update #1

As the government’s bank stress test results come closer to being released, rumors continue to fly that Citi’s CEO Vikram Pandit may be forced to become a sacrificial lamb. While not over impressed with the results he has had over his short stint as CEO, Pandit was never dealt a good hand from the beginning of his tenure. He has certainly made a serious effort to address the bank’s problems. Mark DeCambre wrote a story that appeared in today’s New York Post entitled CEO STRESSED OUT, TREASURY’S TEST MAY FORCE OUSTER OF CITI’S PANDIT. According to the story,

… sources tell The Post that regulators think they might have to make the bold move of removing Pandit to signal Washington is taking as hard a line with the banks as it did with General Motors when it effectively ousted GM CEO Rick Wagoner.

While DeCambre may be correct, I suspect Pandit will keep his position for awhile. The risks of changing him right now while his tenure has been so short may actually make the situation worse. Time will tell. Stay tuned.

Recommended Reading - Vikram Pandit to Get The Heave-Ho?, Dealbreaker

Dealbreaker early today, prior to Citi’s shareholder meeting, talked about speculation that Vikram Pandit, Citgroup’s CEO, could be forced out should the bank have to go back to the government trough for further funds. According to a story in the Financial Times referred to in the Dealbreaker piece,

… senior officials at the FDIC have been talking Pandito replacements, in the event the bank needs more cash-money. Apparently successors include new CFO Ned Kelly, old CFO Gary Crittenden, and an unnamed new board member.

I suspect Pandit will be around at Citi for a while. Unlike Lewis at the Bank of America, Pandit while not demonstrating extraordinary leadership talent has not made the kind of blunders Lewis has been saddled with. Time will tell.

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Clusterstock

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)

Recommended Reading - Rescue Memo to Vikram Pandit, NY Times Dealbook

Paul Pendergast, who writes under the name of Jack Flack, wrote a memo in today’s New York Times Dealbook entitled Rescue Memo to Vikram Pandit.  The memo is a worthwhile read outlining clever ideas on what Pandit needs to do to save his job.  According to the author,

… if you want to avoid hearing Gasparino (CNBC reporter) speculating on behalf of your critics every couple of weeks, you’ll need to make sure you manage perception as well as you manage reality. Unfortunately, you’re not particularly good at that, which is actually a common affliction among strong analytical thinkers like you. 

Flack goes on to outline a number of key areas Pandit needs to focus on:

Be yourself …, 

Stop not-apologizing …,  

Define the model …,  

Push a real purpose …,  

Steward publicly …,  

Forget internal …,  

Manage Bob…   

If you follow Citi or are interested in the plight of financial CEOs, the memo is a must read.

Recommended Reading - Putting a Value on a C.E.O., NY Times Dealbook

Andrew Ross Sorkin wrote a terrific column today in the New York Times Dealbook.  His piece provided a brief but incisive  overview of the issues surrounding the controversy over CEO pay and performance.  Sorkin starts off the column asking why Vikram Pandit, Citigroup’s embattled one year old CEO, should remain in his position.  According to Sorkin,

Many Americans, including many people on Wall Street, would argue that an executive with a record like that (referring to Pandit) should get paid little or nothing.  

The reference to Pandit related more to the problem than Pandit’s actual circumstances or his own opinion on what should take place with regard to Pandit.  In the piece Sorkin goes on to review what many of the specialists in the field think and what options exist for improving the problem.  If you are at all interested in executive compensation and performance check it out. 

Recommended Reading - Citi: From Bad to Worse

Felix Salmon wrote a blog in Portfolio.com yesterday calling for a change at the top of Citi.  He does not believe Vikram Pandit, Citi’s CEO, is capable of handling the severe problems currently facing Citi.  In the blog Salmon wrote,

When Vikram Pandit became Citi’s CEO, he can hardly have expected to keep it if the share price fell to single digits. Now that it’s at $7, I think it’s time for Pandit to offer his resignation. The task facing Citigroup now is not to build a “global universal bank”; it’s to stay alive. And Pandit has given no indication he’s up to that particular job.  

Check it out.  

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Finlay on Governance