And then there were two. According to a press release, Vikram Pandit has resigned as CEO of Citigroup (NYS: C) , leaving the company in the hands of Michael Corbat, previously the CEO of the Europe, Middle East, and Africa division. That leaves Lloyd Blankfein and Jamie Dimon as the two remaining CEOs of the top U.S. banks from 2008.
From the day prior to Pandit's appointment as CEO through yesterday's close, Citigroup shares have lost, on a total return basis, 89% of their value. On the one hand, perhaps shareholders should just be glad that the loss wasn't 100%; on the other, it's far from clear that this performance merits compensation totaling hundreds of millions of dollars. Or, as @ObsoleteDogma put it on Twitter:
Indeed. It's particularly galling if you consider that the reason Pandit was up for the job at Citi was because the bank acquired his hedge fund not long before for the princely sum of $800 million (and then shuttered it less than a year later).
Although it comes as a surprise, investors appear to be receiving the news of the resignation and new CEO appointment well: Shares of Citigroup are up 1.25% as of 10:20 a.m. EDT, outperforming not only its sector but also the Dow Jones Industrial Average (INDEX: ^DJI) and the S&P 500 (INDEX: ^GSPC) , which are up 0.75% and 0.67%, respectively. For investors who bought on the day prior to Pandit's appointment, that leaves only a 933% advance to get back to breakeven. No wonder The Motley Fool's top banking analyst thinks "The Only Big Bank Built to Last" isn't Citi. To find out more, click here to request your free report now.
The article Citi and the Absurdity of Banking Compensation originally appeared on Fool.com.
Alex Dumortier, CFA has no positions in the stocks mentioned above; you can follow him @longrunreturns. The Motley Fool owns shares of Citigroup Inc. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.