Vikram Pandit, Citigroup's (C) ousted chief executive officer, will get about $6.7 million in 2012 compensation and will forfeit some awards tied to a $40 million retention package granted last year.
John Havens, who resigned last month as Citigroup's chief operating officer on the same day as Pandit, will get about $6.8 million for 2012 and also forfeit some awards, the New York- based lender said yesterday in a regulatory filing. Citigroup is the third-largest U.S. bank by assets.
"Based on the progress this year through the date of separation, the board determined that an incentive award for their work in 2012 was appropriate and equitable," Chairman Michael E. O'Neill said in the filing. "While Citi will also honor all past awards that they are legally entitled to, there are no severance payments. Awards to which they are not legally entitled have been forfeited."
Citigroup directors led by O'Neill are managing the fallout from the ouster of Pandit, 55, and Havens, 56, last month after they spent about five years running the bank. The board forced out Pandit after concluding that he mismanaged operations and damaged the lender's credibility, a person familiar with the matter said at the time.
Pandit and Havens will also keep a combined $17.6 million in deferred stock and cash awards that are part of previous annual packages, according to the filing.
Pandit said last month he doesn't regret any decisions from his tenure running the bank. "It's hard to come up with things we should have done differently," he said in an off-camera interview for Bloomberg Television.
The $6.7 million adds to the $56 million Pandit received from Citigroup in annual compensation packages, including some stock awards that have declined in value. The lender paid Pandit $165 million when it bought his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO.
Pandit replaced Charles O. "Chuck" Prince, who was ousted in the face of mounting losses tied to subprime mortgages. Citigroup took a $45 billion bailout in 2008 and lost $27.7 billion that year. Pandit accepted a $1 annual salary for much of 2009 and 2010 until the bank returned to profitability and repaid taxpayers.
"Vikram steered Citi through the financial crisis, realigned its strategy, bolstered its risk-management processes and returned it to profitability," O'Neill said in the statement.
Havens, who founded Old Lane with Pandit, received $165 million from that deal, filings show. Citigroup gave Havens annual compensation packages worth at least $33.8 million for 2009, 2010 and 2011, including stock awards. The bank didn't disclose his compensation for the two preceding years.
Pandit and Havens worked for decades together at New York- based Morgan Stanley (MS) before leaving in 2005 to found Old Lane. Citigroup will terminate their employment on Nov. 30, the filing shows. Combined, the two men will leave the bank after receiving more than $400 million in payments and awards.
Shareholders rejected Citigroup's 2011 executive compensation plan in a non-binding vote in April, amid criticism that it allowed Pandit to collect millions of dollars in awards too easily. The board promised to discuss his pay with top shareholders.
"Vikram has been overall very well compensated for the five years," Sheila Bair, former Federal Deposit Insurance Corp. chairman, said in an interview on Bloomberg Television. "I do support the board and the decision they made. I think it's a strong signal opening a new chapter."
Citigroup didn't disclose the value of the awards that Pandit and Havens will forfeit.
Pandit's lost payouts include awards tied to a $40 million multiyear retention plan awarded last year, according to the filing. The board created the deal, which was separate to his annual compensation, as part of an effort to retain him as CEO. Havens will forgo awards including a profit-sharing plan he entered last year.