From reports in the media, Citigroup’s CEO was ousted by the
Chairman. From statements like “unnamed sources” at Citigroup to inferences
about the Chairman’s relations with the incoming CEO, the situation has been
made to sound like conspiracy.
Chairman. From statements like “unnamed sources” at Citigroup to inferences
about the Chairman’s relations with the incoming CEO, the situation has been
made to sound like conspiracy.
Until October 15th, Vikram Pandit was the CEO of
Citigroup. It is said that Michael O’Neill, Chairman at Citigroup, called Mr.
Pandit into his office. O’Neill is said to have given Pandit three options:
Citigroup. It is said that Michael O’Neill, Chairman at Citigroup, called Mr.
Pandit into his office. O’Neill is said to have given Pandit three options:
you
resign immediately, resign effective at the end to of the year or you’re fired
without cause. He chose to resign immediately.
On the street, the rumors say that O’Neill wanted to remove
Pandit since he became Chairman in April of this year. People believe that
O’Neill was envious of Pandit because he was unable to become the CEO of
Citigroup in 2007. To make matters worse, Pandit’s right hand man and COO, John
Havens, was approached by three board members and told he had the same
opportunity to resign. After putting up a fight, he resigned.
Pandit since he became Chairman in April of this year. People believe that
O’Neill was envious of Pandit because he was unable to become the CEO of
Citigroup in 2007. To make matters worse, Pandit’s right hand man and COO, John
Havens, was approached by three board members and told he had the same
opportunity to resign. After putting up a fight, he resigned.
The real reasons the board asked for both resignations is
unclear. While Citigroup’s earnings were positive for the 3rd
quarter, the stock price dropped 89% during Pandit’s tenure. Some believe the
reason was because the Federal Reserve rejected Citigroup’s request to buy back
shares and increase the dividend. Along those lines, the board believed that if
Pandit would have created better relationships with regulators it would have
been easier for him to get the fed to honor his requests.
unclear. While Citigroup’s earnings were positive for the 3rd
quarter, the stock price dropped 89% during Pandit’s tenure. Some believe the
reason was because the Federal Reserve rejected Citigroup’s request to buy back
shares and increase the dividend. Along those lines, the board believed that if
Pandit would have created better relationships with regulators it would have
been easier for him to get the fed to honor his requests.
The succeeding CEO to Pandit is Michael Corbat. Corbat had
been serving as Citigroup’s CEO for Europe, the Middle East and Africa. Before
that, Corbat headed Citi Holdings, the unit that holds the bank’s soured assets
and O’Neill was the board member overseeing relationships with federal
regulators for that unit. The 2 of them took trips to Washington, DC together.
Because of that, the board believes that Corbat had developed better
relationships with regulators.
been serving as Citigroup’s CEO for Europe, the Middle East and Africa. Before
that, Corbat headed Citi Holdings, the unit that holds the bank’s soured assets
and O’Neill was the board member overseeing relationships with federal
regulators for that unit. The 2 of them took trips to Washington, DC together.
Because of that, the board believes that Corbat had developed better
relationships with regulators.
While there are many rumors about Panits resignation, to
much information is based on unnamed sources. No one, outside of the board, is
absolutely certain why Pandit and Havens were asked to resign. The fact
Citigroup is under investigation by the Securities and Exchange Commission does
not help. Nevertheless, as long as Citigroup continues to effectively serve its
stakeholders, it may never matter. Perhaps it is simply a case of a CEO doing a
great job of turning around an underperforming corporation in times of crisis
and now the board believes different talent is required to move forward.
much information is based on unnamed sources. No one, outside of the board, is
absolutely certain why Pandit and Havens were asked to resign. The fact
Citigroup is under investigation by the Securities and Exchange Commission does
not help. Nevertheless, as long as Citigroup continues to effectively serve its
stakeholders, it may never matter. Perhaps it is simply a case of a CEO doing a
great job of turning around an underperforming corporation in times of crisis
and now the board believes different talent is required to move forward.
It does, however, point to how much power the board,
especially the Chairman, can have over the career of a CEO in any company. It
points to the fact that all leaders need to know who their stakeholders are as
well as the expectations. In Pandit’s case, he may have lost touch with both
the board and regulators. In turn, this left him vulnerable to being
blindsided.
especially the Chairman, can have over the career of a CEO in any company. It
points to the fact that all leaders need to know who their stakeholders are as
well as the expectations. In Pandit’s case, he may have lost touch with both
the board and regulators. In turn, this left him vulnerable to being
blindsided.
If you are a leader, know your stakeholders, their needs and
the resources required, including time, to fulfill those needs. At some point,
we all answer to someone.
the resources required, including time, to fulfill those needs. At some point,
we all answer to someone.
What do you think? I’m open to ideas. Or if you want to
write me about a specific topic, please let me know.
write me about a specific topic, please let me know.