CEO Succession Planning Issues at Citigroup: Vikram Pandit's Exit

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"There has not been a clear strategic direction and focus. He did a good job as far as the transition but now it is time for a new chapter".

- Sheila Bair, Former Chairman of FDIC , in October 2012.

"At the end of the day, Vikram was not the right guy for the job. He was a good interim CEO who was given a challenging job but it wasn’t a job where he was going to win a popularity contest".

- Anthony Polini, Analyst at Raymond James Bank , in October 2012.

"The timing and the way in which it was done are unsettling, but I think a lot of people wanted to see Vikram Pandit gone. He just reminded them of the financial crisis. He’s been there since December 2007. Maybe it’s just nice to have a fresh new face in there in the CEO job".

- Erik Oja, Equity Analyst at Standard & Poor's Capital IQ , in October 2012.

In November 2012, Citigroup Inc. (Citigroup) in its filing with the US Securities and Exchange Commission (SEC), declared that it would pay US$6.65 million in incentive awards to its former CEO Vikram Pandit (Pandit), who had unexpectedly resigned from his position in October 2012. The company also mentioned that it would pay its former President and COO, John Havens, US$6.79 million. According to Michael O'Neill (O'Neill), Chairman of Citigroup, "Vikram steered Citi through the financial crisis, realigned its strategy, bolstered its risk management processes, and returned it to profitability.

John's focus on our institutional businesses increased our capabilities and helped steer our clients through volatile times.... Based on the progress this year through the date of separation, the board determined that an incentive award for their work in 2012 was appropriate and equitable."

In December 2007, Pandit was named as the CEO of Citigroup. He was credited with successfully guiding the once struggling company during the financial crisis. Pandit focused on rebuilding capital and restructuring the company. During his tenure, Citigroup became profitable and was able to repay approximately US$45 billion in federal bailout.

However, Pandit's efforts were not sufficient to convince regulators, shareholders, or the board members to retain him in the top position. According to media reports, the Citigroup board was not pleased with Pandit's strategy and performance. On October 16, 2012, just a day after Citigroup reported strong quarterly results, Pandit resigned. He was replaced by Michael L.Corbat (Corbat), Citigroup's former Chief of Operations in Europe, the Middle East, and Africa. "Mike Corbat has demonstrated outstanding leadership qualities and the ability to sharpen our focus on achieving strong, sustained operating performance," said O'Neill.

Pandit's sudden departure came as a shock to the financial world. "I'm just as surprised as anybody else. This may be a sign that he wants to move on and maybe a sign that they're ready for the next era of leadership," said Robert Benmosche, CEO at AIG . However, Pandit had few supporters who believed that he was the right person for the job. According to Matthew H. Burrell, analyst at Wells Fargo & Company , "Corbat's elevation strikes us as a positive for Citi, as it brings an experienced banker into the CEO's role. We believe investors and possible regulators will benefit in the intermediate term from their background as traditional bankers."...

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