News

Loading...

Wednesday, October 17, 2012

Pandit Rhymes with Bandit!

Vikram Pandit earned over $200 million for driving Citigroup's stock price into the ground:


I can wreck your company's value just as nicely, and I would do so for only a few million! Headhunters, you can easily find my email address on the Internet.

(Hat tip Brad DeLong.)

7 comments:

  1. Vikram Pandit earned over $200 million for driving Citigroup's stock price into the ground.

    That's obviously not what he earned it for. With just as much truth, I could say, "Vikram Pandit earned over $200 million for breathing!"

    If you ever bought my PIG to Capitalism, you will see a brilliant defense of golden parachutes.

    ReplyDelete
  2. "That's obviously not what he earned it for."

    Bob, are you being serious here? If I say, "The Yankees paid A-Rod $27 million to hit only 18 home runs this year," obviously I am not claiming that's what they *intended* him to do when they paid him. I'm saying that is the actual result they got.

    'With just as much truth, I could say, "Vikram Pandit earned over $200 million for breathing!""

    Again, I can't believe you are serious here. I am talking about the actual performance of Citigroup's stock price during his tenure as CEO. You don't think that is a little more relevant to evaluating his performance than is the fact he happened to breath during his tenure?

    "If you ever bought my PIG to Capitalism, you will see a brilliant defense of golden parachutes."

    This was his total pay during his tenure there, not a golden parachute.

    And do we really need to see more evidence that libertarians are the unwitting dupes of the super-wealthy?

    ReplyDelete
  3. Gene, you really have little basis for your incredulity here, since you just made your trenchcoat post.

    ReplyDelete
  4. But most and maybe all banking stocks are down from their five-year high.

    So we have to discount the sensitivity of the individual stock to market returns. What we need to know is the Alpha, or the stock performance over and above market returns (or market losses in this case).

    It is also possible that banking stocks were severely overvalued back in 2007, and now they reflect what they always should have been worth. After all, banking companies are VERY difficult to value, speaking as someone trained in valuation and financial modeling.

    ReplyDelete
  5. But most or all banking stocks are down from their five-year high. So it may have to do with overall market sentiment about the entire industry. Not with the individual company.

    What about Citi's performance compared to the overall banking index? Did the stock fall as deeply as most banking stocks or less so?

    Besides, what if the market severely overvalued banking companies back in 2009? Quite possible - as someone trained in valuation and financial modeling, I know that banks are the hardest to value correctly.

    ReplyDelete
    Replies
    1. Prateek, I don't think most are down *that* much. But you clearly have access to the Internet: why are you asking me to do this research for you? If you want to show I have been unfair to Pandit, show me! I can admit I was wrong.

      Delete
  6. I looked up the Stoxx Banking 600 Index.

    I think I was quite wrong, and you were quite right.

    5 years ago, Stoxx Banking was at 450. Today, it is at 150.

    Citi was 300 then but is at around 30 to 40 today.

    So while banking stocks have fallen by 66%, Citi has fallen even more steeply by about 90%. So yes, Prof. Callahan, Vikram Pandit's tenure at Citi probably did involve doing something terribly wrong.

    ReplyDelete