Published October 16, 2012
Citigroup's Vikram Pandit is no longer the company's CEO. According to sources, Citigroup's board showed him the door. And it was probably about time.
Earlier this year, Citigroup's shareholders got smart by rejecting a plan to pay Pandit $15 million. Privately, that didn't sit too well with him.
Last year, he received a $1.67 million salary and a $5.3 million cash bonus - chump change, by global banking standards. In 2010 and 2011 he got a $1 annual salary, which is probably 0.75 cents more than he deserved.
Lest I remind you, Pandit took Citigroup's shareholders to the cleaners.
Over his five-year tenure, Pandit collected around $261 million including $165 from the purchase of his hedge fund named "Old Lane Partners LP." Shortly after acquiring the fund, Citi's shareholders got smacked with a $202 million write-down.
Citigroup, like many banks, has a real talent for picking underperforming CEOs and then paying them too much. (See Citi's former CEO Charles Prince.)
Relative to its peer group, Citi's stock performance versus S&P financials (XLF) says it all.
Over the past five years, Citi lost -91.29% in value compared to a -50.71% loss for XLF. That's a whopping 40.58% difference! (See chart below) Furthermore, Citi has also underperformed other peer yardsticks like the SPDR S&P Bank ETF (KBE). (As a side note, more investors should do what we do at ETFguide.com - benchmark individual stocks versus their peer sector ETFs to get a more accurate grasp of actual performance. Stocks that consistently underperform their sectors are usually bad investments.)
Nobody knows what's next for Pandit the Bandit. But $261 million for 91% compounding losses was a good heist while it lasted.
And the painful memories of 91% losses over the past five years will be hard for Citigroup's shareholders to forget. But as last place teams like to say: "There's always next year."
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