Parsons Is a Poor Candidate for Chairman of Citigroup

by: Todd Sullivan November 16, 2008 | about stocks: C    
Todd Sullivan

Todd Sullivan

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The WSJ Reports:

The board of Citigroup Inc (C). is growing increasingly dissatisfied with the financial giant's performance, and some directors are considering replacing Sir Win Bischoff as chairman, according to people familiar with the matter.

One leading candidate is Richard Parsons, Time Warner Inc.'s (TWX) chairman and a member of Citigroup's board. Mr. Parsons ran a New York thrift in the early 1990s and is one of the few Citigroup directors with experience in financial services. He also is part of President-elect Barack Obama's transition economic-advisory board.

Richard Parsons had spent a career in banking and was CEO of Dime Savings Bank of New York when he was named president of Time Warner in 1994, a move that caught many people by surprise. Mr. Parsons is credited with stabilizing the company, mediating between fractious divisions and reorganizing top management. In 2003, the board unanimously elected him to the additional post of chairman, which he continued to hold after stepping down as CEO in 2007. Mr. Parsons said in May he was likely to resign as chairman in 2009.

The possible replacement of Sir Win comes as the New York company's board is adopting an increasingly assertive stance toward overseeing Chief Executive Officer Vikram Pandit and his tightknit team of executives. Those executives took power last December after Citigroup's previous CEO, Charles Prince, stepped down amid mounting losses. Some directors have grown concerned that Sir Win, who is based in London, hasn't been exercising adequate oversight.

It isn't clear how many of Citigroup's directors are agitating for the change, and it's possible that the board will opt to stick with its current chairman.

"I'm not sure it will happen, but it seems likely" that Sir Win will be replaced, said one person familiar with the situation.

Sir Win, who has dual British and German citizenship, was traveling in the Middle East on Wednesday and wasn't immediately available to comment.

Sir Win Bischoff was head of Citigroup's European operations and little known outside the company when he was appointed interim CEO in November 2007. To the surprise of many who expected his leadership to be temporary, Sir Win was named chairman a month later when Vikram S. Pandit became CEO. Sir Win had no hands-on capital-markets trading experience, but had cleaned up after huge losses before, advising the British government on the rescue of Barings PLC after trading losses in 1995.

"Any report that the board is searching for a new chairman is false," a Citigroup spokeswoman said Wednesday evening.

So, Bischoff is being ousted because of lack of "oversight"? Now, his replacement might be Mr. Parsons? This is the same Mr. Parsons who sat there when Citi became the largest holder of mortgage assets in the world. The same Mr. Parsons who defended ex CEO Chuck Prince to the very end.

This has to be a joke. You cannot under any circumstances replace the new guy for "lack of oversight" with an old guy who has been there even longer and oversaw the behavior that practically ruined the bank. It just cannot happen.

Not only should Mr. Parsons not be named new Chairman, he and the other members of the current board ought to be allowed to "pursue other opportunities". They are the ones who oversaw the virtual destruction of the bank, they are to blame.


Disclosure: Long C

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This article has 6 comments:

  •  
    Nov 16 08:38 AM
    too true - the old guard must be replaced or all the bailout money is being wasted!
    Reply | Link to Comment
  •  
    Nov 16 09:55 AM
    Mr. Parsons was a waste of time and money for Time Warner sharesholders. According to Citigroup last years records, this could be the perfect candidate.
    Reply | Link to Comment
  •  
    Nov 16 01:50 PM
    Parsons is definitely old guard. Citi needs new blood that can move quickly to reorganize the company.
    Reply | Link to Comment
  •  
    Nov 16 04:56 PM
    The whole board needs to be canned. This is the practically the board who blessed firing the skilled Jamie Dimon, picking the non-experienced lawyer Chuck Prince, then picking the even less experienced Vikram... and now they have the nerves to suggest that the newly appointed Sir Win Bischoff is the problem?
    Reply | Link to Comment
  •  
    Nov 16 07:33 PM
    Please don't tell me this is the same Parsons that brought AOL to its knees.
    Reply | Link to Comment
  •  
    Nov 17 09:25 AM
    Citi is toast without new blood. TWX needs to shed TWC and get focused.
    Reply | Link to Comment
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