Friday, March 16, 2012
Even CEOs can speak too soon and promise too much only to find they are left exposed and humiliated. Here is a case. Citigroup CEO Vikram Pandit promised investors a return of capital until the Federal Reserve gave the bank a failing mark in a stress test of capital adequacy. Citigroup's stock took a beating as a result. What possessed him to speak before he should have? Perhaps he felt pressure from investors. Perhaps he really did think he could restore the dividend and repurchase shares. If so, he was out of touch with regulators, which raises questions about his command of his job. Now he has to submit another plan and wait for the Federal Reserve again. He won't make the same mistake twice, but once was quite enough. One wonders whether his IR chief and/or corporate communications executive cautioned him before he made his promise the first time. If not, they have learned a lesson as well.