Citigroup’s Chief Executive Officer, Vikram Pandit, was apparently pushed out by that company’s board of directors after five years in that position. And Bloomberg reports that during that time, Pandit earned $261 million while the company, the third largest American bank, lost 90% of its stock value.
Citigroup shares rose 1.6 percent to close yesterday at $37.25 in New York. While the stock gained 39 percent this year through Oct. 15, it was down about 90 percent since Pandit was publicly named as CEO in December 2007, when losses tied to the brewing financial crisis drove out his predecessor, Charles O. “Chuck” Prince…
If no alterations are made to Pandit’s compensation, Citigroup will have paid him about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.
The way we pay corporate executives in this country is appallingly stupid and gets all the incentives wrong. A CEO’s earnings should be contingent on the performance of the company, and not just the stock performance (stocks are booming now, but that doesn’t mean we have healthy companies or a healthy economy). There should be metrics beyond the price of stock, and if those metrics are met, the CEO should be paid for that performance. The same goes for other types of executives at the company.