In a move that surprised Wall Street and financial regulators, Citigroup’s CEO resigned this morning — effective immediately. Vikram Pandit, who took the helm of the banking giant in 2007, also resigned from the company’s board of directors.
The Tuesday morning announcement comes one day after Citigroup posted better-than-expected earnings for the third quarter. According to a report by CNBC, the Treasury Department was not advised that a change in leadership was coming.
“This is a complete shock. No one expected this whatsoever,” said Jim Cramer, host of CNBC’s “Mad Money.” The divisions were all in very good shape, I don’t even want for a second to tell people that there was anything in the works to make this happen. There was nothing … this was the quarter where you give him a big raise, he was under a lot of pressure but he got this right.”
According to a report in the Wall Street Journal, senior executives at the company were also in the dark.
A senior Citigroup banker in Asia said the news came as a complete surprise. He said executives in Asia, Citigroup’s fastest-growing regions, were blindsided by the news in part because they expected a well-orchestrated succession plan to be in place before Mr. Pandit resigned.
Pandit has faced a skeptical public and combative shareholders since he led the company through a $45 billion government bailout. In April, shareholders rejected his proposed compensation plan.
Adding to the chorus of negativity is the recent publication of a book by former FDIC chairman Sheila Bair, which portrayed Pandit as inept and inexperienced.
But for someone with that sort of reputation, Pandit was paid quite well, according to a story by Bloomberg.
If no changes are made to Pandit’s compensation package, Citigroup will have paid him about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.
President and Chief Operating Officer John P. Havens, also resigned effective immediately.
Michael Corbat, chief executive of the company’s Europe, Middle East and Africa division, was named the new CEO. Here’s some background information on him.