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Citigroup Inc. (NYSE: C) Chief Executive Vikram Pandit talks a good game about boosting the fortunes of the embattled Wall Street bank. The problem is that it's just that ... talk.Pandit on Friday announced he had bought $7 million worth of stock in the New York-based bank. Today, he is expected to show his appreciation to those whose hard work made his undeserved bonus possible by firing 53,000 Citigroup employees.
Notice, I used the "f" word and not "layoffs." A "layoff" leaves open the possibility that these workers may get called back. Given the state of the economy, odds are pretty poor that many of these workers will find employment in the financial services industry anytime soon. Many of these "downsized" sell-siders would like to work for buy-side firms such as mutual funds because they are not as subject to the whims of the stock market. Trouble is, they are not doing much hiring these days either. Many former Citigroup workers will have to find work in other industries.
The shear magnitude of the job cuts is mind blowing. They account for 14% of Citigroup's staff. Can you imagine if General Electric Co. (NYSE: GE), or some other Fortune 500 company, slashed its payroll by that amount? The implications would be huge. For Citigroup, whose shares are down 67% this year, the implications are huge. It seems investors want even more drastic measures as shares opened down 3%.
But what of Pandit, who somehow convinced Citigroup to shell out some $600 million for his hedge fund, which later failed? During his nearly year-long tenure at Citigroup, nothing has gone right. He got into a nasty corporate power-struggle with Sallie Krawcheck, the well-regarded head of the company's wealth management division. He lost the battle to acquire Wachovia to Wells Fargo (NYSE: WFC). Of course, the economy continues to go down the drain, hurting the company's profit.
Want to know what went right for Pandit? His pay. The executive has earned more than $200 million in compensation. That's unconscionable.
Citigroup needs to fire Pandit immediately and head with its tin cup to the Treasury Department before it's too late. Otherwise, the white knights might not want to ride to the company's rescue.
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Reader Comments (Page 1 of 1)
11-17-2008 @ 10:58AM
Randy said...
FKN AMAZING!!! $200 million......that just isnt right!
11-17-2008 @ 12:23PM
Tom said...
How about laying off Robert Rubin who made 15 million a year for the last 10 years in doing nothing? At least Pandit is trying to do something and clean up the mess that Rubin, Prince and Weill left him.
11-17-2008 @ 2:06PM
alan said...
Congratulations, Mr. Berr for telling it like it is. This once great company has been sooooooo mismanaged, I fear there will be no return from the brink.
Mr. Pandit is mearly following in the footsteps of Mr. Prince. They truely are the dynamic duo who have consistently made one strategic blunder after another.
I guess it would have made too much sense to put a BANKER in the position of CEO rather than a lawyer and a funds guy.
The major blame for this mess lies at the feet of the Board of Directorswho took no active interest/control of the company.
These jerks were too busy screwing up the companies they leading and only paid Citi lip service
I especially like Dick Parsons and his bang up job at Time Warner. And now there is talk he may be considered for Chairman at Citi !!
With moves like this, there is no hope for Citi. It will be relegated to play the role of a 90 pound weakling in financial services.
My condolences to the shareholders and staff !!!
11-19-2008 @ 11:59AM
Ron said...
Bonuses to executives, while the rank and file are laid off is an example of capatalism run amok. These guys should be the first ones fired. They are the ones responsible for getting the company into the dire straits it finds itself. They should be stripped of any current bonuses and stock options, and should be required to pay any bonuses back that they received when the company was losing money. As for me I will cancel my citibank credit card if they go ahead with executive bonuses and I will try to convince every business friend I have to do the same.
11-18-2008 @ 9:01PM
Ron said...
Pandit has to be relieved ASAP. Totally unqualified for the undertaking he was appointed for. Totally, totally (obviously).
11-21-2008 @ 1:07AM
Allen said...
KARMA
200 million pay plus 800 million for Mr. Pandit b/s hedge fund company and nothing for the 52,000 plus 25,000 in June that lost everything, no job these days means your pretty much dead...
Great system we have