New York: In a "dramatic boardroom coup", Citigroup Chairman Michael O'Neill had worked for months on the ouster of banking giant's India-born CEO Vikram Pandit, who was "stunned" after being asked to go even after delivering improved results, a media report on Friday said.
O'Neill told Pandit in an "abrupt encounter" at the end of the day on October 15 that "the board has lost confidence in you", The New York Times said in a report.
55-year-old Pandit was offered a choice between three news releases which said he had resigned effective immediately, that he would resign effective at the end of the year or that he had been fired without cause.
"A stunned Pandit chose to resign immediately. Even though Pandit and the board have publicly characterised his exit as his decision.. .The chairman maneuvered behind the scenes for months ahead of that day to force Pandit out and replace him with Michael L Corbat, the board's chosen successor," the NYT report said.
O'Neill, who had been on the board since 2009, had for long vied for Pandit's position of CEO, the report said.
O'Neill, 66, had been meticulously building a case for Pandit's ouster since taking over as chairman this year, first meeting privately with less-satisfied board members and then drawing in others until Pandit had virtually no allies left, the report quoted people who were aware of the developments as saying.
The "dramatic boardroom coup" at the bank's Park Avenue headquarters here had rankled some people at Citi, the report said adding that some senior executives felt the decision to let go Pandit was "needlessly ruthless" given that he had successfully steered the once struggling bank through one of its most difficult times in the financial crisis, repaid nearly 45 billion dollars in federal bailout, rebuilt capital and focused on restructuring the sprawling institution.
Pandit was receiving congratulatory e-mails about the bank's better than expected earnings report the morning of the day he was let go.
The report said seeds of the turmoil between Pandit and O'Neill were planted in April when O'Neill took over as chairman from Richard Parsons.
O'Neill's ascent was described as bad news for Pandit by those close to the India-born CEO, regardless of how the bank was faring.
While the board transition appeared to go smoothly initially, "beneath the gaiety tensions between Pandit and O'Neill were already building", the report said.
It added that O'Neill used the setback that the bank suffered when the Federal Reserve rejected its proposal to buy back shares and increase its dividend to shareholders.
O'Neill persuaded some board members that a better relationship with regulators could have avoided the public failure.
While some board members felt that the Federal Reserve had needed to reject the capital plans of one bank to lend credibility to its stress tests, others blamed Pandit for allowing Citi to become that bank.
Compared with his predecessor, O'Neill took an unusually active managerial role at Citigroup, visiting trading floors and asking detailed questions about some of the business lines.
This involvement agitated Pandit, according to the people briefed on the matter, the report said.
O'Neill continued to make his case over the summer, raising concerns about Pandit's knowledge of certain business issues to a handful of board members he considered sympathetic.
By August, he had managed to get the support of at least a handful of board members, some of whom thought Pandit had left them out of the loop at times, NYT said.
O'Neill also continued to press for a leadership change in individual meetings and chose to meet with the board members most loyal to Pandit last.
In some of these discussions, he told the board members that the decision to replace Pandit was already backed by a majority of the 12-person board, the report said.
O'Neill had grown comfortable with Corbat as Pandit's successor and a few weeks before confronting Pandit, O'Neill called Michael L Corbat in London to tell him that there was a possibility he might be called upon in the near term to become the chief executive.
Discussions among the board members accelerated while Pandit was in Japan at the annual meeting of the International Monetary Fund and the World Bank.
When Pandit returned to New York to prepare for the quarterly earnings call, he had no inkling of what was awaiting him, people close to him were quoted as saying.
O'Neill was putting the final touches on his plan and summoned Corbat from London back to New York, telling him that Pandit would very likely be resigning soon, the report said.