And then there were two.
On Tuesday, Citigroup became the latest of the major global banks to replace the CEO who was in charge when the financial crisis erupted in late 2008.
The giant bank announced that CEO Vikram Pandit, as well as the company’s president and chief operating officer, John Havens, would be leaving. It also announced that Pandit would be replaced by Michael Corbat, who has been serving as Citi’s CEO for Europe, the Middle East and Africa.
Now, only the CEOs of two major banks—JPMorgan Chase and Goldman Sachs, both of which rebounded better than Citi and many other banks—remain in the same jobs they held in September 2008.
The move came as a big surprise on Wall Street. Executives were in “shock” by the management upheaval, reports the Wall Street Journal, and a Bloomberg View columnist reported receiving a text Monday evening from one Citi’s largest shareholders, Prince Alwaleed, praising Pandit’s most recent quarterly results (which showed Citi beating earnings estimates). As recently as August, a report about succession planning at Citi said a CEO change was not “imminent” and that Pandit had “told colleagues that he intends to stay for several years.”
It is always difficult to read the tea leaves of a CEO departure announcement to know what really happened. Did Pandit truly resign, or was he pushed? If he did just decide to up and leave, the board was certainly quite prepared with a backup.
Some reports say the exit happened after Pandit clashed with the board over strategy and operating performance. Others report he was forced out. And Sheila Bair, the former FDIC chairwoman who has been a big critic of Pandit, told CNBC that Corbat has strong operational skills and called this “a good move,” saying that it was “time for a new chapter.”
A new chapter may indeed be what Citi’s board is looking for. Pandit’s five-year tenure was tumultuous, to say the least. However good the most recent quarter may have been, share prices still dropped 89 percent during his tenure. Just six months ago, 55 percent of shareholders voted against his $15 million pay package, despite the fact that he had famously taken just a $1 salary in 2009 and 2010. And though Citi had gotten out from under the government money it had taken during the financial crisis, Pandit’s tenure was always going to be associated with the bailout and the financial crisis.
To me, that’s what makes the timing of the announcement less surprising. Now that things are on an upswing, a change at the top gives Citi’s board a chance to move forward strategically with someone who’s not tied to the past.
Even if the seeds for 2008’s reckoning were sown before Pandit took charge, some crises are just too big for leaders to ever untangle themselves from them completely. Like it or not, it can be hard for investors and employees to stop associating leaders with the vestiges of the past. As one analyst told CNBC, Pandit may have simply reminded too many people of the financial crisis: “Maybe it’s just nice to have a fresh new face in there in the CEO job.”
Jena McGregor is a columnist for the Washington Post’s On Leadership section.
More from On Leadership:
Like On Leadership? Follow us on Facebook and Twitter: