Vikram Pandit may leave Citigroup Inc without a rich exit package, compensation experts say, although final terms of his departure likely will not be known for several days.
Pandit, who stepped down as chief executive of the bank on Tuesday after months of tensions with the board, is not eligible for a "golden parachute" - a pre-negotiated severance payout - according to Citigroup's most recent annual proxy filing.
Still, as is typical in departures of high-profile CEOs, the company may end up hammering out a financial arrangement with Pandit that would include agreements not to disparage or compete against the bank, executive pay experts said.
Generous CEO exit packages have become a lightning rod for some investors in recent years. At the same time, Pandit's pay has riled many Citigroup shareholders, who rejected his proposed annual compensation in a non-binding "say on pay" vote earlier this year.
The Citigroup board is likely feeling pressure to rein in any further payouts to Pandit, said Mark Borges, a compensation consultant with pay consultancy Compensia.
"If they don't whip him on the way out, they will be second-guessed," he said.
The company declined to comment on financial terms of Pandit's departure, and he did not immediately respond to requests for comment on the matter. In an earlier interview with Reuters, Pandit said the decision to leave was his own and he had been contemplating the exit for some time.
Pandit arrived at the bank in 2007 when it bought his Old Lane Partners hedge fund, landing him $165 million in the deal.
Pandit accepted a $1 salary starting in 2009, after the financial crisis that led to a government bailout of the bank. After Citigroup repaid the bailout funds, his annual salary jumped to $1.67 million in 2011. He was awarded a bonus, options and other payments that year potentially worth about $13.2 million.
This spring, Citigroup shareholders took the unusual step of rejecting a proposed compensation plan for Pandit and other top executives in the say-on-pay vote. Citigroup Chairman Michael O'Neill said late Tuesday that pay issues were "categorically" not the reason for Pandit's departure.
Pandit holds bundles of Citigroup stock options, but the bank's languishing share price has left many of them worthless. He has options granted in 2008 to buy 225,000 shares, but the options are priced at $244 per share and higher. He has options granted last year priced at $41.50 that started vesting in May, but even these are more than 10 percent above Citigroup's current stock price of $37.25.
"Most of what he will leave behind is not actually worth anything at all at the moment," said Paul Hodgson, chief research analyst at GMI Ratings, a corporate governance ratings agency.
Borges said companies often allow departing executives to exercise options up to 60 days after they depart. After that, they usually lose them.
Citigroup has a long-term incentive plan, but Pandit forfeits any awards under the plan by departing before the plan ends, according to the company's proxy statement. Pandit has no pension plan, and leaves with $21.5 million in stock that he already owns, though Hodgson said two-thirds of that is subject to restrictions.
Borges said Pandit's surprise departure may mean his severance package was not negotiated before he left and that the bank's advisers were working "around the clock" to finalize the agreement.
Under a separation plan, the bank could allow Pandit to accelerate his options, receive payments under the long-term incentive plan or negotiate a pro-rated 2012 bonus.
Under federal securities rules, Borges said, public companies are required to disclose material agreements with their CEOs and they are required to disclose executive departures. They have four days to do that under Securities and Exchange Commission rules.
Citigroup said in a securities filing on Monday that Pandit's replacement, Michael Corbat, will receive a salary of $1.5 million.