Don't Blame—or Pity—Former Citibank CEO Vikram Pandit Too Much

It's no fun being in charge after the music has stopped. That's the lesson Vikram Pandit has learned after maybe quitting and maybe getting fired from the top spot at Citibank in a shocking move.

For Citibank, the music had certainly stopped by October 2007. Credit markets had frozen a few months prior, losses on subprime securities were piling up, and even bigger losses were rapidly reaching the point where they could no longer be hidden. It was bad enough that then-analyst Meredith Whitney (correctly) predicted that Citi would have to take the fairly radical step of cutting its dividend to preserve cash. Which is all to say that Pandit, who started as CEO in December 2007, really isn't to blame for the subsequent 89 percent decline in Citi's stock price. The chart below, via Joe Weisenthal of Business Insider, shows you what a near-death experience looks like.


Of course, it's not as if Pandit did a good job. The real credit for Citi not going to zero belongs to Tim Geithner, who resisted calls to nationalize any of the big banks. He preferred pouring $45 billion into Citi, on top of the panoply of Fed lending programs and FDIC debt guarantee that kept it, and the rest of the financial system, on life support. Pandit didn't exactly taken advantage of this second chance at banking life. He sold off Citi's stake in brokerage firm Smith Barney for far less than Citi valued it, and appears to have been caught flat-footed by the nascent mortgage rebound. Then there was Citi failing its most recent Fed stress test -- not to mention shareholders voting down Pandit's proposed pay package this past year.

Not that Pandit really needed much more pay. While CNBC's Maria Bartiromo imagines Pandit as an ascetic figure who accepted a symbolic one dollar salary the past few years, the reality is he was very, very well compensated for a very, very mediocre performance. Including the $165 million Citi paid for his hedge fund when they brought him on in 2007, Pandit made $261 million during his five-year tenure with the bank. Oh, and don't forget that Citi ended up taking a $202 million write-down on Pandit's hedge fund.

Yes, Pandit was dealt a terrible hand. But he played it poorly -- and won a big payout anyway.