Citigroup’s annual shareholder meeting is today, and despite the fact that the bank announced a first-quarter profit of $1.6 billion last week, it’s a pittance compared to the $28 billion they lost last year; confidence in CEO Vikram Pandit is not exactly high, and the FT this morning reported that officials at the FDIC are considering replacing the CEO if the bank needs more government aid. Other than the fact that we have a soft spot for Lil’ Vikram, here are two reasons why they shouldn’t do that.
It Won’t Really Work: Firing a CEO is like screaming your head off instead of having a rational discussion. It feels good at the time, but ultimately, it doesn’t really help all that much. Citigroup is a gigantic steaming pile of crap, and knocking off the guy sitting on top of it won’t really serve to make that pile any smaller. It might even just prolong the process of fixing it, since the new CEO will just have to sort through all of the garbage to learn where all of the problems are, spend time drawing up a new plan that may or may not work, and as we saw with Merrill Lynch CEO John Thain, possibly spend a good deal of time and money redecorating the office due to the untenable décor of the prior CEO. It’s rearranging deck chairs on the Titanic, as they say.
It Allows Them to Escape Accountability: For those just tuning in, the Citigroup board did fire the CEO: Vikram’s predecessor, Chuck Prince
(whom Time today awesomely calls “a well-meaning dolt”). This turned out to be a major blessing in disguise for Prince, who managed to escape nearly all of the criticism that was due to him after he ran the giant into the ground over the previous four years. It was instead heaped on Pandit, and Prince was able to actually be hired as a “consultant.” Ditto Stan O’Neal, who drove Merrill Lynch into the ground, then sat back on his hefty severance package and watched his replacement, John Thain, take the fall.