I have never owned Citi shares until I began purchasing it in the pre-market today, preferring to root my bank exposure in JPM and BAC. To me, the appointment of Vikram Pandit as CEO was an extremely poor decision. What exactly in his background, aside from political savvy – a requirement for ascension in the sell-side world, qualified him to lead what was the world’s largest, most complex financial institution during the worst financial crisis ever seen? Perhaps it was his ability to sell his mediocre hedge fund, that would subsequently fail, to Citi for nearly a billion dollars? I guess the then BOD valued negotiating skills more than commercial bank experience.
Pandit’s tenure was marked by numerous missteps: the submission of his plan to return capital to shareholders resoundingly rebuffed; the sale of the brokerage arm to Morgan Stanley, consummated for an astounding $4.7 billion less than he had apparently advised the BOD it was worth in the sale – an even more enormous miss when taking into account that the final price was settled at less than $13.5 billion; and what about the stock price – it has lagged all the other major banks and still hovering near its ’09 lows.
John Haven’s picture hangs in the man cave of every block trader who ever traded on Wall Street. Those who move on from block trading on the sell-side find themselves working at hedge funds, playing golf, or in extreme cases, dispatching taxis. In fairness, Havens is very bright and did a fine job running the institutional equity department at Morgan Stanley but again, not exactly qualified to run a major commercial bank.
I chuckle at the pundits espousing how surprised everyone was about this move, alleging something nefarious. Citi just reported their quarter, their financials and disclosures never more current than today. Given that, it was the best time to make this move. Of course this took the press and rank and file by surprise; BOD’s don’t hold open meetings. I applaud Citi’s BOD for their discretion. As to questions about Pandit’s compensation, we finally get a shareholder base that paid attention to the performance of its stock, aligning CEO’s compensation to shareholders interests. Let this be a warning shot to other CEOs. And to those who had questions about Pandit’s stewardship but now bemoan his firing after a “great” quarter – com’on! After years of disappointments, expectations were finally reduced to his level of expertise.
On the positive side, both Havens and Pandit punched above their weight but were far less than ideal stewards of Citi’s fate.
Perhaps I’m just jealous.