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Citi's Pandit a Symbol of Banker Excess

Oct 16, 2012
Ron DeLegge

After raking in $261 million in compensation while Citigroup's stock lost a breathtaking 91%, Vikram Pandit's CEO heist is over.

Citigroupís Vikram Pandit is no longer the companyís CEO. According to sources, Citigroupís board showed him the door. And it was probably about time. 

Earlier this year, Citigroupís shareholders got smart by rejecting a plan to pay Pandit $15 million. Privately, that didnít sit too well with him.  (VIDEO: Municipal Bonds - Myth vs. Reality)

Last year, he received a $1.67 million salary and a $5.3 million cash bonus Ė chump change, by global banking standards. In 2010 and 2011 he got a $1 annual salary, which is probably 0.75 cents more than he deserved.

Lest I remind you, Pandit took Citigroupís shareholders to the cleaners.

Over his five-year tenure, Pandit collected around $261 million including $165 from the purchase of his hedge fund named ďOld Lane Partners LP.Ē Shortly after acquiring the fund, Citiís shareholders got smacked with a $202 million write-down.

Citigroup, like many banks, has a real talent for picking underperforming CEOs and then paying them too much. (See Citiís former CEO Charles Prince.)

Relative to its peer group, Citiís stock performance versus S&P financials (NYSEARCA:XLF) says it all.

Over the past five years, Citi lost -91.29% in value compared to a -50.71% loss for XLF. Thatís a whopping 40.58% difference! (See chart below) Furthermore, Citi has also underperformed other peer yardsticks like the SPDR S&P Bank ETF (NYSEARCA:KBE). (As a side note, more investors should do what we do at - benchmark individual stocks versus their peer sector ETFs to get a more accurate grasp of actual performance. Stocks that consistently underperform their sectors are usually bad investments.) 

Nobody knows whatís next for Pandit the Bandit. But $261 million for 91% compounding losses was a good heist while it lasted.

And the painful memories of 91% losses over the past five years will be hard for Citigroupís shareholders to forget. But as last place teams like to say: "Thereís always next year."

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