The front page of Thursday's
Wall Street Journal features
an anonymously sourced story about a dispute among directors at
Citigroup Inc. Evidently some want to oust chairman Sir Win Bischoff,
but from the tone of the story, it appears as if they may not have
enough support to end his short tenure -- otherwise the story would
announce his ouster. The story also prompts questions, like who leaked
it? What do they have to gain? And what does this mean about CEO Vikram
Pandit's future?
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Bischoff took the chairmanship a year ago when Pandit was tapped
as CEO. Both men effectively replaced Chuck Prince, who was ousted over
massive loses associated with mortgage troubles. The honeymoon period
for Citi and its new chiefs was short to nonexistent, given the
worsening credit crisis. However, the relationship between board and
senior management may have been particularly aggravated after Citi lost
the bidding war with Wells Fargo & Co. for troubled Charlotte-based
bank Wachovia Corp.
The disgruntled board member who spoke to the Journal may have
different motives. If he lacks support from others, he may have floated
the story to gauge or even rouse shareholder support for the idea. If
he gets shareholder support, the rest of the board may follow.
Of course, tensions on Citi's board may go deeper than just
Bischoff. While the Journal story doesn't touch on Pandit's future, the
media has been questioning it since the bank lost the Wachovia battle.
Additionally, the Journal story has riled commentators to again
question Pandit's future. For example, Douglas McIntyre of 24/7 Wall St. wrote:
Pandit's tenure has been marked by tens of billion of dollars in
losses and bumbling in his attempts to decide which business units the
bank should keep and which should go. He said at one point that he
would cut Citi's expense base by 20%. There is not much evidence to
show that Pandit is even close to that goal.
Pandit was also the engineer of Citi's failed bid to buy Wachovia, more evidence of his very modest competence.
Then there is the case of Richard Parsons, the former Time Warner
Inc. CEO and chairman, Citi director and Obama insider. The Journal leaker
mentioned Parsons as a possible successor to Bischoff. Parsons then
followed up in a Bloomberg interview
Thursday expressing his support for Pandit, but made no reference to
Bischoff. Parsons, who has run a thrift, is known for his unflinching
calmness, as noted by the Financial Times' columnist John Gapper:
It seems to me that Mr Parsons prospers at times of crisis because
that brings to the fore his particular talents. He is a calming,
avuncular influence on organisations that are going through turmoil and
are uncertain about their future.
Clearly, a cool, Obama-like head may be exactly what
Citigroup needs right now (and the ties to the new administration,
which, after all, sort of owns Citi, can't hurt either). At the very
least, Parsons might restore some order to a board, which the Journal
story, by its very existence, suggests he's lost control of. - Matthew Wurtzel
See story from The Wall Street Journal
See story from DealBook
See interview of Parsons from Bloomberg
See story from 24/7 Wall St.
See story from John Gapper at the Financial Times
See story about Obama's advisors from Dealscape
See story about Parsons' mayoral ambitions from Dealscape
Matthew Wurtzel is the editor of Dealscape
Comments
Pandit, came on board, got a $117 million in his pocket for Old Lane Partners that was soon put to death. Do you think the Board should have had ANY CLUE AT THAT POINT?
Oh yeah, Dick Parsons, sure is doing a great job as CEO, don't ya think? Let's now make him Citi Chairman an see how rapidly he can bankrupt this once great bank.
I'm sure the combined "talents" of both Mr. Pandit and Mr. Parsons will be an unstopable force!! God help Citi.