NEW YORK, N.Y. – Citigroup has paid its former CEO Vikram Pandit, who resigned abruptly last month, a bonus of $6.7 million for work he did for the bank this year.
The bank, which disclosed the payment in a regulatory filing Friday, also paid its former chief operating officer John Havens, who left the bank at the same time Pandit did, $6.8 million. Citi characterized the payments as “incentive awards” and said the two executives weren’t entitled to any severance payments as a result of their departures.
The executives will get 40 per cent of the money right away, and the rest will be paid in installments through 2017.
Citi said Pandit and Havens will continue to vest in deferred stock and deferred cash incentive awards previously granted to them. Those were worth $8.8 million for Pandit and $8.7 million for Havens.
Pandit’s sudden departure from Citi on Oct. 16 shocked the financial industry. Citi gave no explanation at the time, but it was widely reported that Pandit had fallen out of favour with the company’s board. The bank was embarrassed by several missteps including failing a financial checkup this spring with the Federal Reserve, which refused Citi’s request to raise its dividend.
Pandit joined Citi in 2007 and steered the bank through the financial crisis. He accepted a token $1 in compensation in 2010 as the bank righted itself. His pay increased to $15 million in 2011, roughly in line with most of his counterparts. But Citi’s shareholders, unhappy with a 44 per cent plunge in the bank’s stock price that year, rebuked Citi by rejecting his pay package in a non-binding vote this spring.
In the filing, Citi’s chairman, Michael O’Neill, said in a statement that Pandit and Havens made important contributions to Citi that warranted the payments.
“Vikram steered Citi through the financial crisis, realigned its strategy, bolstered its risk management processes and returned it to profitability…” O’Neill said. “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.”
As part of the agreements Citi made with Pandit and Havens granting the payments, the two executives agreed not to become affiliated with another major bank or to poach Citi executives or clients for a year.