Citigroup Inc. Chief Executive Officer Vikram Pandit’s appointment of John Havens to chief operating officer gives a longtime deputy control of most of the bank without establishing an heir to lead the company.
The promotion of Havens is the third by Pandit since they joined Citigroup in 2007, when the bank bought their hedge fund for $800 million. Before that, they spent two decades together at Morgan Stanley. When Pandit’s tenure ends, Havens will probably leave too, a person briefed on Citigroup’s succession planning said, declining to be named because it’s not public.
Giving Havens, 54, management oversight of continuing businesses accounting for more than 80 percent of the bank’s 2010 profit is designed to free Pandit to travel more and orchestrate the firm’s expansion into emerging markets, the person said. Pandit, also 54, named those markets as No. 1 among his top five priorities in a memo announcing the promotion.
“The chief operating officer needs to handle the day-to- day operations of the company,” said Pri de Silva, an analyst with CreditSights Inc. in New York. “That person needs to be someone who focuses on execution. This allows Vikram to focus on things like strategy and the future.”
In October 2007, when Pandit was promoted by then-CEO Charles O. “Chuck” Prince to oversee trading and investment banking, Pandit promoted Havens into his old job of overseeing hedge funds and private equity. In March 2008, after Prince was ousted and Pandit took his place, Havens became head of trading and investment banking. The bank hasn’t had an operating chief since Robert Druskin, Prince’s deputy, left in December 2007.
“Vikram is probably very comfortable with Havens in terms of his loyalty, his skills, his expertise, his knowledge of the investment-banking business,” said Michael Driscoll, visiting professor with Adelphi University in Garden City, New York and a former Bear Stearns Cos. managing director.
Havens, who was also named president, didn’t respond to messages seeking comment on the management changes. Shannon Bell, a spokeswoman for the company, declined to comment on the promotion beyond yesterday’s statement.
Citigroup, the third-largest U.S. bank by assets, hasn’t said whom it would appoint if Pandit were to leave. Prince’s ouster forced the bank to run a two-month search for a replacement at a time when executives were trying to raise capital because of mounting losses linked to subprime mortgages.
Havens’s appointment reduces the number of executives who report directly to Pandit by about half.
Besides Havens, the only other operating-division managers reporting to Pandit are Manuel Medina-Mora, who oversees the Latin American division and consumer banking in North America, and Michael Corbat, CEO of the Citi Holdings division, created to house businesses marked for sale. James Forese, who was co- head of global markets, will now assume additional responsibility for investment banking, taking over some of Havens’s duties within Citigroup’s institutional business.
“This new management structure will serve the company well as we aim to enter into a new phase of responsible and sustained growth,” Pandit said in a statement yesterday.
While Pandit agreed to cut his own pay to $1 a year in 2009 and 2010, Havens received $11.3 million in 2009 including stock, according to data compiled by Bloomberg. Last year, he received a stock salary valued at $9 million on an annualized basis, according to a regulatory filing in September.
Chairman Richard Parsons announced that same month that the board plans to “compensate Vikram commensurate with the job of CEO” in 2011. Pandit and Havens in July will also receive the final payment from a Citi Private Bank account established to hold the proceeds from the sale of their fund, Old Lane LP. Each of them got $165 million, or $100 million after taxes, according to securities filings.
Citigroup earlier this week reported a fourth-quarter profit of $1.31 billion, falling short of analysts’ estimates, as revenue from stock and bond trading declined. That capped Pandit’s first profitable year since he became CEO.
“While Citi has come a long way in a short time, there is much more to do,” Havens said in yesterday’s statement.
Citigroup’s stock has fallen 7.2 percent this week, closing at $4.76 yesterday, after the company announced earnings Jan. 17. The shares are down 86 percent since Pandit took over in December of 2007.
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