Citigroup CEO Resigns Abruptly

The abrupt resignation of Citigroup CEO Vikram Pandit and COO John Havens, announced this morning by the company, caught many observers by surprise.  Pandit took the reins in December 2007 after his company Old Lane was purchased by Citi for $800 million in July of the same year. He oversaw the company through the worst of the recession, with stock falling as much as 90 percent. Pandit was replaced by insider Michael Corbat who had been CEO of Citigroup’s Europe, Middle East and Africa division. The reason for the immediately-effective departure is unclear, particularly since the move comes one day after reporting a 35 percent gain in third quarter earnings.  “Abrupt CEO exits such as this tend to come from a place of conflict.  It may have resulted from disagreement with the board about the direction of the company.  It may have been some personal issue that caused the quick exit.  We may never know, since companies and the individuals each share a strong reluctance to divulge the reason for the departure, as it may impact one or both parties’ reputation, earning potential, or stature within their respective communities,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc., the international outplacement firm, which tracks and reports monthly on CEO turnover.  Through September the firm has recorded 891 CEO changes, including 83 in the financial services sector.  The year-to-date total is down slightly (3.3 percent) from a year ago.  Is this abrupt change indicative of a more volatile environment for CEOs, in general? How can succession planning stave off PR problems resulting from abrupt leadership changes? Are more announcements such as these likely to follow on Wall Street?


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