Why Citigroup Matters to You
Reading between the picket lines.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
Citigroup (NYSE:C) CEO Vikram Pandit -- and his top lieutenant, President and COO John Havens -- unexpectedly resigned from their posts this morning, a day after posting better-than-expected earnings. While the stock remains 93% below 2007 levels, this was as graceful an exit as there could have been, all things considered, and word on the Street is that it wasn't exactly their choice.
I worked at Morgan Stanley (NYSE:MS) with both of these guys way back in the day; in fact, Mr. Havens was one of the first people to interview me in 1990 and Mr. Pandit was the last person to say goodbye when I resigned in 1997. My belief then and to this day was that Pandit's interest had everything to do with my leaving to join one of the biggest hedge funds on the Street and little to do with me as a young man trying to find his way.
I'm not here to pass judgment on their performance; by all accounts, they were dealt an extremely tough hand and played it to the best of their ability. Yes, they had the benefit of a $45 billion bailout, but they were not the stewards when the decisions were made that created the conditions for the bailout. At 55 and 56 respectively, Mr. Pandit and Mr. Havens have likely aged well beyond their years.
Yesterday afternoon on the Buzz & Banter, I offered the following thoughts:
Governments the world over have made no bones about their distaste for speculation. They look at Wall Street as profiteers who benefit at the expense of Mom and Pop America. They see hedge funds as acceptable casualties of war and shed no tears for fund managers grappling with performance anxiety. Someone has to pay, and as far as they're concerned, it should be those who have already been paid.
In many ways, the populous has every right to be angry as a chosen few benefit in our bifurcated world. In others, and as we've seen before, the unintended consequences of policy -- both written and implied -- may create more profound issues than what was being addressed in the first place. I've said it before and I'll say it again: These are historical times, flush with obstacles and by extension, opportunities.
If no changes are made to Mr. Pandit's compensation, Citigroup will have paid him roughly $261 million in the five years since he became CEO, according to Bloomberg. That's a heckuva lot of money, enough that his family, children, and grandchildren won't have to sweat to put food on their table or a roof over their heads. Perhaps it was time to step away from the spotlight and enjoy the most precious commodity, that of time; maybe, just maybe, there's more to it than that.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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