Citi's Dreadful Succession Planning

by: Felix Salmon May 23, 2008 | about stocks: C    
Felix Salmon

Felix Salmon

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Sandy Weill is sniping at Chuck Prince via the FT - again. Why? It makes him look like a petty and bitter old man, rather than any kind of elder statesman of finance.

Interestingly, this time he's not just blaming Prince, he's blaming the rest of the Citigroup board as well, including Bob Rubin:

Mr Weill said he and the board should have fostered competition among Citi's top managers for the chief executive post rather than handing the job to Mr Prince ...
The comments by Mr Weill, who remains chairman emeritus and a large shareholder in Citi, raise questions over its succession planning - a key duty of corporate boards. Eight of Citi's 14 current directors, including former Treasury Secretary Robert Rubin, chairman of Citi's executive committee, were on the board at the time of Mr Prince's appointment.

Clearly the board was under Weill's heavy thumb at the time, and incapable of organizing themselves on the succession-planning front. But that doesn't explain how they managed to make exactly the same mistake when Prince resigned: it turned out that there was no succession plan in place then, either.

The board does now have its own chairman, Win Bischoff, who is not also the CEO. That's good. But I wonder how far he's come in terms of planning for a successor to Vikram Pandit. After all, if Pandit carries on the way he's going, there's a good chance he won't last long.

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This article has 5 comments:

  •  
    May 23 12:02 PM
    Citi has had an abysmal succession strategy for years, even in the days of John Reed when he made it clear to every senior executive that none of the them had a chance of succeeding him. Sandy's attempt to shift blame and rewrite history is therefore no surprise. What Sandy conveniently forgets is that he helped foster a corrupt compliance environment where golden boys like Jack Grubman were allowed to flagrantly circumvent the rules. The Board picked the right man, Chuck Prince, to clean things up. But no one ever thought Chuck, once the compliance mess was resolved, could provide strategic leadership to grow the company. That is where Sandy and the rest of the Board failed the shareholders. They did not have the courage to admit that Chuck was not the right man for the long haul. So, like Chuck, they decided to keep dancing as the music of Citi's demise played on.
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  •  
    May 24 09:47 AM
    On the previous comment by Crane..those have been my thoughts also ..precisely...and I'll second them.....but with regard to Mr. Reed...had he succeeded as the sole Chairman/CEO instead of Mr. Weil I do believe you would have seen an effective succession plan and there would never have been the compliance mess that Sandy's people from Travelers created. Then there would have been no need for Mr. Prince to have to tackle that mess and succeed as CEO. (PS Let's give him credit for cleaning up a horrible compliance AND legal mess....and roast him for not realizing that he should retire or hire a CEO after that mess was cleaned up.) I have sympathy for Mr. Prince once in a while in those few moments when I stop crying over my losing half of my holings value under his "stewardship"... Such is life!.


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  •  
    May 24 09:54 AM
    Forgot to include on other item from above...I disagree with Mr. Salmon quite strongly on Mr. Pandits performance to date. He has done a wonderful job and is deflating this behemoth and righting it's course slowly but surely. folks, Citigroup is a LARGE aircraft carrier...not a PT boat!....Instant expectations by the Street (yes that's US and people like Salmon) create pressure on CEOs to perform for the near term while disregarding what is in the best interests of the company LONGTERM. Mr. Pandit is taking a longterm view AND executing according to that view.
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  •  
    May 24 02:18 PM
    You are too kind.

    Weill created an immoral cesspool of management lackeys and a compliant board of directors who have presided over one of the biggest destructions of capital of any American corporation.

    The tolerance for this and the continuing defense of this bank because of its international presence (which I have been hearing about from most Wall Street analysts for over 20 years) never fail to amaze me.

    Where is the disgust? The call for real change?

    Why is no really smart money making a strategic investment?
    Probably because the parts are not worth more than the whole, a fiction that many still cling to.

    Why are all injectors of additional capital passive? Because there is a reason to have confidence in management and the board? I don't think so.

    Members of the board who have been so since Weill's time should all be ashamed of themselves and resign. Reuben should be the first-- without a golden parachute.

    This stock will not be a buy until that happens.
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  •  
    May 25 01:40 AM
    The author has to stop sniping at Pandit. Pandit has done remarkably well, and I don't see anyone who can point out to specific actions to criticize. Mostly just whining.
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