The New York Times provides an account today that describes a long campaign by Citigroup Chairman Michael O'Neill to oust former CEO Vikram Pandit. It happened a lot like a love affair: very slowly at first, and then suddenly all at once.
The story is provoking outrage because it appears that Citi investors were misled about Pandit's resignation. Pandit and O'Neill portrayed the resignation as voluntary, with O'Neill going so far as to say on an investor call: "Vikram submitted his resignation and we expected it."
As the Times makes clear, that's hardly the full story.
It's technically true in the same way that it's technically true to say that the Titanic's captain steered the ship into the bottom of the sea. Never mind about the iceberg.
There are now cries for the Securities and Exchange Commission to investigate O'Neill's statements. At the very least, they hardly seem like the kind of candid disclosure investors might hope for. Perhaps the best that can be said for O'Neill's statement is that it never was plausible in the first place, so maybe no one was actually misled.
My sources don't dispute the details of the report in the Times although they do provide some color about why O'Neill might have been comfortable with making his statement.
A person briefed on the matter—a person who is not, by the way, O'Neill—says that O'Neill and other board members did not expect Pandit to quit immediately. They expected that Pandit would agree to stay on during a transition period.
Instead, Pandit resigned on the spot. The board was, the person says, caught off-guard.
Although the board had agreed to three draft press releases that included an announcement of Pandit's immediate resignation, they had not expected that outcome. They had not, for example, yet drafted a release that Michael Corbatt would be taking over as CEO immediately, although they were anticipating naming him as Pandit's successor at a later point.
So from the perspective of O'Neill, Pandit's resignation really may have seemed voluntary. At least, the immediacy of the resignation was voluntary.
- by CNBC Senior Editor John Carney
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