Did Pandit say "resign?"
Well, I hope you weren't stupid enough to actually believe that.
Two weeks ago, the CEO of Citigroup (C), Vikram Pandit, quit unexpectedly, startling the company's shareholders and employees.
To listen to both Pandit and Citigroup tell it, the decision was Pandit's: After a few years at the helm, it was just time to do something else.
Here's Citi: The Board of Directors of Citigroup today announced that Vikram Pandit has stepped down as the Company's Chief Executive Officer and as a member of the Board, effective immediately... Michael E. O'Neill, Chairman of the Citigroup Board of Directors, said: "We respect Vikram's decision."
Well, to anyone with even distant familiarity for what passes for honesty in corporate communications, these statements were highly incomplete--at best.
"Nobody leaves these jobs voluntarily," says Wall Street Veteran William Cohan in the accompanying video with my colleague Aaron Task. Pandit "wasn't ready to leave, he did not want to leave. This came upon him suddenly."
Within hours, some reporters got closer to the truth: Pandit had resigned after a "clash" with the board.
Within a few more hours, the first real truth came out: Pandit had been canned.
Now, two weeks later, Susanne Craig and Jessica Silver-Green at the New York Times have reported the full story: Pandit was canned after a methodical boardroom coup orchestrated by Citi's new chairman, Michael O'Neil, who took over as Chairman in April.
O'Neill launched his campaign to oust Pandit soon after he became chairman, the NYT reports. He started by working over board members who were lukewarm on Pandit. Once he had their support, he moved to Pandit loyalists, eventually winning enough of them over that the rest of the board had no choice but to go along. (In a tantalizing detail, the NYT suggests that O'Neill may have won over some Pandit supporters by saying that the majority of the board already wanted to can him when this was not, in fact, the case.)
Once O'Neill had the board behind him, he summoned Pandit to his office and offered him three choices:
- Resign now
- Announce your plan to resign at the end of the year
- Get fired
Pandit, not surprisingly, chose the former.
Now, technically, the decision to resign was, in fact, Pandit's, as the announcements from both Citi and Pandit stated.
But let's be serious: Pandit was fired.
Citi's board fired Pandit for reasons that have not yet been publicly revealed.
Maybe those reasons were sound. Maybe they weren't. Maybe, as the NYT suggests, Chairman O'Neill has always had it in for Pandit because O'Neill was passed over for the CEO job in favor of Pandit. But whether the board's logic was sound is not what's at issue here.
What's at issue is whether Citi was honest with its employees and shareholders about why Pandit left.
And the obvious answer is "no."
A CEO leaving a company is a highly material event. Shareholders and employees deserve to know the truth about the circumstances that led to the departure.
The shareholders of Citi absolutely did not know the truth about why Vikram Pandit quit. The statements that were issued were technically correct, but they contained a huge lie by omission.
Citi shareholders have every reason to feel misled and angry about that.
And more broadly, given that this sort of statement is apparently what passes for forthrightness and transparency at a major global corporation, it's no wonder that everyone thinks that companies are totally full of crap.
- Vikram Pandit