We’re not sure that anyone ever believed that Vikram Pandit was acting purely of his own volition when he stepped down as chief executive officer of Citigroup (C) earlier this month, whatever Mr. Pandit or Citi Chairman Mike O’Neill said—now there’s less reason to believe the official account of Mr. Pandit’s departure.
According to Jessica Silver-Greenberg and Susanne Craig at The New York Times, Mr. Pandit met with Mr. O’Neill on the day before he resigned, and presented with a choice between three already prepared news releases:
One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his. The abrupt encounter, described by three people briefed on the conversation, included a terse comment by the chairman, Michael E. O’Neill: “The board has lost confidence in you.”
Mr. Pandit, as we know, “chose” to resign immediately. “After five extraordinary years, I have decided to step down as CEO of Citi,” he wrote in a memo distributed to Citi employees. “Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup,” he said in a press release announcing his “decision.”
And Mr. O’Neill answered:
“Well let me start with pay. The answer to that is categorically no. Our statement is clear, Mike. Vikram offered his resignation, and the Board accepted it. Again, we have been engaged in a process for a little over two years. CEO succession is a critical part of any bank’s, or any company’s for that matter, governance process. And I think we built a rather robust one. So I am proud of what we have done. And we were very well-prepared when this occurred. So I don’t think there is an issue as it relates to governance. I think we were there, and we are delighted to have Mike in the seat.”
At Business Insider, Henry Blodget is scandalized by Citi’s “huge lie by omission,” and he has every reason to be: If the Times account is true, the bank withheld from shareholders material information about the firm.
But reading The Times’ account, it’s not hard to understand why Mr. O’Neill chose a path of omission, given his behind-the-scenes machinations to gain board support for a move:
By August, the chairman had the support of at least a handful of board members, including Diana Taylor. Some directors felt that Mr. Pandit had left them out of the loop at times.
Mr. O’Neill continued to build his case for a leadership change in individual meetings, according to several people familiar with the discussions. He chose to meet with the board members most loyal to Mr. Pandit last. In some of these discussions, he told the board members that the decision to replace Mr. Pandit was already backed by a majority of the 12-person board, according to people familiar with the discussions.
Given all that, there was delicious second-layer of truthfulness to Mr. O’Neill’s comments in the press release announcing Mr. Pandit’s departure. “We respect Vikram’s decision,” the chairman said of the move he’d apparently engineered.