Grudging praise for Citigroup chairman
So now that the dust is settling a bit on the Vikram Pandit exit mess at Citigroup, what more can be said about the Citigroup board?
Two lines of thought have emerged in the aftermath of the decision to oust former CEO Pandit. In one view, the board acted recklessly and imperially, without thinking through how a legitimate CEO transition should occur. In the other view, the board reflects a new activism when it comes to corporate governance, a sign that directors are taking their jobs seriously.
So which view is correct? My sense is that they both are.
For support, we I turn to an essay in the HBR. "Independent boards of directors are still the best mechanism — or the least worst one — for holding business leaders accountable, even if many boards have failed in their attempts to do this, often in spectacular fashion. Much of the Citigroup commentary has focused on the behind-the-scenes campaign of Citigroup board chair William O'Neil to oust Pandit and his stark ultimatum during a one-on-one confrontation: resign now, resign at the end of the year, or be fired. Many have criticized O'Neil for his ham-handedness, saying this was rude to Pandit, demoralizing to essential Citi leaders, lacking in clear public rationale…But the tactics surrounding the decision should not obscure the potential importance of the decision itself."
All in all, the board no doubt felt it was acting in the best interests of shareholders.
"Let us not over-praise O'Neil," the essay says. But let's also give him some credit.
- here's the article