{"id":5373,"date":"2012-10-16T00:00:00","date_gmt":"2012-10-16T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/10\/citigroup_inc_ceo_vikram_pandi"},"modified":"2022-04-28T13:55:55","modified_gmt":"2022-04-28T18:55:55","slug":"citigroup-inc-ceo-vikram-pandi","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/citigroup-inc-ceo-vikram-pandi\/","title":{"rendered":"Citigroup Inc. CEO Vikram Pandit Resigns"},"content":{"rendered":"

After months of tensions with Citigroup\u2019s (C) <\/a>board of directors, Chief Executive Officer Vikram Pandit has turned in his resignation. Taking his place as CEO will be Michael Corbat.<\/p>\n

According to several sources, Pandit\u2019s decision to leave comes after months of tension with Chairman Michael O\u2019Neill over numerous issues, including the role of Chief Operating Officer John Havens and regarding compensation. Havens stepped down on the same day as Pandit. (Reuters reports that one person familiar with the investment bank says that this means that O\u2019Neill is now in full control.) During a conference call with analysts and investors, O\u2019Neill offered reassurances while noting that outside candidates had been considered before Corbat\u2019s appointment.<\/p>\n

With Pandit\u2019s departure, Citigroup shares rose up to 2%, with some investors expressing relief that he is gone. Pandit was at the helm when the financial firm took a loss when it had to sell the stake it had left in its retail brokerage business to Morgan Stanley (MS)<\/a>. He also opposed breaking up the bank in any way, which some believed could have raised shareholder value. Proposals for these changes could come back onto the table now that he is gone. <\/p>\n

Pandit\u2019s relationship with the board wasn\u2019t helped after shareholders recently turned down the CEO pay package. While he was awarded over $15 million in compensation last year, 55% of shareholders did not approve it. <\/p>\n

According to Reuters, Pandit, who says he is leaving of his own accord, believes he has accomplished his aims since becoming Citigroup CEO in December 2007 and that putting his successor in place now makes sense because plans are in development for 2013 when a new strategy will be executed. <\/p>\n

Meantime, Havens\u2019 departure also isn\u2019t a surprise to many, as he and Pandit have close career ties. They worked together at Morgan Stanley and Old Lane Partners LP. Some inside Citigroup considered their relationship to be an obstacle. Pandit moved to Citigroup after Old Lane Partners, which was his private equity firm and hedge fund, was acquired by the bank for $800 million.<\/p>\n

Since the mortgage crisis, banks are under pressure regarding their profits, which haven\u2019t been helped by unimpressive investment returns and unspectacular capital market activities. The Wall Street Journal reports that according to private equity firm JC Flowers & Co., the return on equity among financials should \u201cnormalize to historic levels\u201d even though the economic crisis has resulted in a \u201cmajor long-term evolution.\u201d<\/p>\n

In the firm\u2019s mid-year report to investors, Chairman J. Christopher Flowers said this normalization would occur because financial service companies are needed if the economy is to work properly. He stressed that with economic growth, financial service companies will periodically need more capital to stimulate this, and, as a result, they won’t be able to attract new capital unless ROEs and valuations adjust accordingly. Flowers said that this would occur via price changes and business mix shifts. Also per the WSJ, his view is in contrast to that of KKR & Co. global macro and asset allocation head Henry McVey, who recently reported that while the financial services industry is experiencing changes, more intense regulation will likely cause the firms\u2019 performance and returns to keep lagging. <\/p>\n

Citi’s CEO Pandit exits abruptly after board clash<\/a>, Reuters, October 16, 2012 <\/p>\n

Pandit Is Forced Out at Citi<\/a>, The Wall Street Journal, October 17, 2012 <\/p>\n

\nMore Blog Posts:<\/strong>
\nTexas Securities Roundup: Morgan Stanley Smith Barney Sued Over Financial Adviser\u2019s Ponzi Scam, Judge Dismisses Ex-GE Executive Whistleblower\u2019s Lawsuit Over His Firing, & Ex-Stanford Financial Group CIO Pleads Guilty to Obstructing the SEC\u2019s Probe<\/a>, Stockbroker Fraud Blog, July 3, 2012 <\/p>\n

Citigroup Inc.\u2019s $590M CDO Putative Class Action Settlement Gets Preliminary Approval from District Court<\/a>, Stockbroker Fraud Blog, September 13, 2012 <\/p>\n

Institutional Investor Securities Roundup: FHFA Can Start Discovery in MBS Litigation Against Banks, SEC Sues Puerto Rico Man Over Alleged $7M Scam, and Assets of Two Colorado Men are Temporarily Frozen Over Alleged Promissory Note Ponzi Scheme, Institutional Investor Securities Blog, August 31, 2012 <\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

After months of tensions with Citigroup\u2019s (C) board of directors, Chief Executive Officer Vikram Pandit has turned in his resignation. Taking his place as CEO will be Michael Corbat. According to several sources, Pandit\u2019s decision to leave comes after months of tension with Chairman Michael O\u2019Neill over numerous issues, including the role of Chief Operating […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3820,3752],"tags":[],"class_list":["post-5373","post","type-post","status-publish","format-standard","hentry","category-citigroup","category-financial-firms"],"yoast_head":"\nCitigroup Inc. 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